MARUTI N. NAVALE,,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX,,

आयकर अपीलीय अिधकरण “ए” �ायपीठ पुणे म� । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM Sl. ITA No./WTA No. Name of Appellant Name of Respondent Asst. Year No. 1-5 701/PUN/2014 Maruti Nivrutti Navale, DCIT, Central 99-2000 702/PUN/2014 Singhad Technical Circle-2(2), Pune. 2000-01 703/PUN/2014 Education Society, 2001-02 704/PUN/2014 Campus Vadgaon 2002-03 705/PUN/2014 (Badruk), Pune-411041. 2003-04 PAN: AAIPN0909R 6-8 1059/PUN/2014 Maruti Nivrutti Navale, DCIT, Central 2004-05 1060/PUN/2014 Singhad Technical Circle-2(2), Pune. 2005-06 1061/PUN/2014 Education Society, 2006-07 Campus Vadgaon (BK), Pune-411041. PAN: AAIPN0909R 9 5/PUN/2014 Maruti Nivrutti Navale, Addl.CWT, Central 2005-06 (Wealth Tax) Singhad Technical Range-2, Pune. Education Society, Campus Vadgaon (BK), Pune-411041. PAN: AAIPN0909R Assessee by : Shri Suhas P. Bora Shri Sanket Bora Revenue by : Shri S. B. Prasad सुनवाई की तारीख / Date of Hearing : 19.03.2020 घोषणा की तारीख / Date of Pronouncement : 24.06.2020 आदेश / ORDER PER BENCH : There are 9 appeals filed by M. N. Navale (Individual). Out of them is a Wealth Tax Appeal vide WTA No.05/PUN/2014 for the assessment year 2005-06. All the above captioned 9 appeals pertained to assessment years 1999-2000 to 2006-07. All the above 9 appeals emanate from the respective

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orders of the Ld. CIT(Appeals). Considering the common issues and their interlacing of facts/issues, all these appeals are clubbed, heard together and are being disposed of by this composite order. Introduction 2. M. N. Navale files the return of income over many assessment years in the capacity of both Individual and Bigger HUF. There was search and seizure action on the assessee. There exists appeals in this Tribunal filed by M. N. Navale Individual and HUF. The core issue in all these appeals relates to the existence of HUF, agricultural income of the HUF/holdings, capacity to earn agricultural income, source of the assets etc. Earlier, the appeal-HUF were heard by the Tribunal and issues are remanded to the Assessing Officer’s file with certain directions vide the order of the Tribunal dated 15.11.2019. In these present set of appeals- Individual also, the issue of taking loans from the said M. N. Navale- HUF and the sources thereof is one of the common issues for adjudication. The said remand proceedings are still pending with the Assessing Officer. The time barring assessments with the Assessing Officer and the Lockdown of the Income Tax Office due to Covid-19 are stated to be the reasons for delay in completion of the said remand proceedings in the case of HUF. 3. Now, we proceed to adjudicate appeal-wise issues/grounds raised by the assessee in the following paragraphs. ITA No.701/PUN/2014 – A.Y. 1999-2000 4. Before us, ld. Counsel for the assessee read out the following grounds and submitted that these grounds have to be either not pressed or remanded

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to the file of the Assessing Officer for fresh adjudication. The grounds are extracted as under :- “1. On the facts and in the circumstances of case the CIT (A) has erred in sustaining the addition of Rs 1,83,000/- which is alleged as unexplained loan given to one Shri MaskeSaheb overlooking the fact that the relevant details appearing on the loose papers pertain to the period prior to 31.03.1998 and without prejudice further overlooking the fact that said amount gets covered in total withdrawals made by the appellant. 2. On the facts and in the circumstances of case the CIT(A) has erred in sustaining the addition of Rs 3,00,000/- treating the same as unsecured loan form Shri Ingavale disregarding the fact that said loan has been repaid by cheque and necessary confirmation is duly filed. 3. On the facts and in the circumstances of case the CIT(A) has erred in sustaining the addition of Rs 10,37,000/- which factually represents the loan taken from M.N. Navale (Bigger HUF), the addition of which was made by AO only on the ground that according to him the said HUF never existed. 4. On the facts and in the circumstances of case the CIT(A) has erred in sustaining the addition of Rs 10,37,000/- on the ground that despite the admitted fact that the HUF existed, according to him the said loan has not been explained satisfactorily without confronting this new reasoning to appellant and at the same time it is grossly incorrect and illegal. 5. On the facts and circumstances of case the CIT(A) has erred in sustaining the addition of Rs 1,50,000/- treating the same as unexplained investment in Flat without disproving the factual submission of appellant that the said amount was paid by cross cheque and duly reflected in bank statement. The above grounds of appeal may kindly be allowed to be amended, altered, modified etc., in the interest of natural justice.” Ground-wise Adjudication – A.Y. 1999-2000 5. Referring to ground no.1, ld. Counsel for the assessee brought our attention to page 4 and 5 of the Paper Book and submitted that the said addition of Rs.1.83 lakhs is made based on the seized paper, copy of which is placed in the Paper Book. Further, referring to para 8 and 9 of the assessment order made u/s 143(3) r.w.s. 147 of the Act, ld. Counsel mentioned that the said entries were wrongly interpreted for taxing the said amount of Rs.1.83 lakhs in the year under consideration. There is reference to date on the paper and hence, there exists ambiguity on the year of taxation. On the said page, only “1998” is mentioned and no reference to month and date.

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taxing the “entry” in this year. The same cannot be taxed in 2000-01 too. Therefore, we are of the opinion such additions are not sustainable. Accordingly, the ground no.1 raised by the assessee is allowed. 8. Referring to ground no.2, ld. Counsel for the assessee mentioned that the said ground is not pressed. After hearing both the sides, the same is dismissed as not pressed. 9. Referring to grounds no.3, 4 and 5, ld. Counsel mentioned that the addition of Rs.10,37,000/- and Rs.1,50,000/- are relatable to the appeal of Sri M.N. Navale (Bigger HUF). In this regard, the ld. Counsel brought our attention to the order of the Tribunal in the case of Maruti Nivrutti Navale (Bigger HUF) vs. ACIT vide ITA No.367/PUN/2017 and others dated 15.11.2019 and submitted that the Tribunal already recognized the fact about the existence of agricultural lands, the agricultural activities of the certain lands and agricultural income in these cases. Further, ld. Counsel for the assessee submitted that the issue raised in grounds no.3 to 5 may be remanded to the file of the Assessing Officer in the light of the direction given by the Tribunal in assessee’s own case (supra). Further, ld. Counsel mentioned that if the said direction of the Tribunal (supra) is implemented by the Assessing Officer, obviously, the assessee shall have some funds explain the sources. 10. On the other hand, the ld. DR for the Revenue fairly concurred with ld. AR and stated that Assessing Officer is yet to give effect to the order of the Tribunal (supra). Therefore, this issue can be remanded to the file of the Assessing Officer for a decision in the matter after deciding the availability of funds and the facts relating to the availability of agricultural income. The ld.

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DR also submitted no objection of remanding the said issue to the file of the Assessing Officer for a decision in the matter. 11. On hearing both the sides on this issue, we find the categorical finding was already given by the Tribunal (supra) with reference to the agricultural income and the agricultural expenditure in the hands of M.N. Navale (Bigger HUF) for the assessment year 1999-2000 and others. It is also undisputed fact that the Department Authorities are engaged in the time barred issues. Therefore, we are of the considered opinion, that grounds no.3, 4 and 5 should be remanded to the file of the Assessing Officer for fresh adjudication. The direction to the Assessing Officer shall include that (i) the Assessing Officer shall comply with the calculation related exercise by passing a modification order in the hands of M.N. Navale (Bigger HUF) in the time barred manner and (ii) after due calculating of the said agricultural income and also after following the direction of the Tribunal (supra), the Assessing Officer shall examine the availability of funds and also examine the correctness of the claim of loans of Rs.10,37,000/- and a sum of Rs.1,50,000/- and also the sources thereof from M.N. Navale (Bigger HUF). The Assessing Officer shall grant reasonable opportunity of being heard to the assessee in accordance with set principles of natural justice. Accordingly, the grounds no.3 to 5 are allowed for statistical purposes. 12. In the result, the appeal of the assessee in ITA No.701/PUN/2014 for the assessment year 1999-2000 is partly allowed for statistical purposes. ITA No.702/PUN/2014 – A.Y. 2000-01 13. The grounds of appeal raised by the assessee in this appeal are as under :-

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“1) On the facts and in the circumstances of case the CIT(A) has erred in sustaining the addition of Rs 3,90,37,346/- relying on the notings found typed on certain sheets disregarding the valid contention that these loose papers have no evidential value, these are dumb documents and even by going through the details mentioned therein, by any standard it cannot be said that these papers have any relevance to the appellant. 2) On the facts and in the circumstances of case the CIT (A) has erred in sustaining the addition without prejudice to ground no 1 the CIT (A) has erred in not appreciating the alternate condition that if at all any addition is legally warranted it can only be Rs 52,65,627/- that pertains to the Assessment year under consideration and as is evident from working made by Assessing Officer himself. 3) On the facts and in the circumstances of case the CIT (A) has erred in sustaining the addition of Rs 10,20,000/- instead of Rs 8,95,000/- which represents unsecured loan taken from M.N. Navale (Bigger HUF). 4) On the facts and in the circumstances of case the CIT (A) has erred in sustaining the addition of Rs 10,20,000/- instead of Rs 8,95,000/- on the ground that despite the admitted fact that HUF existed, according to him the said loan has not been explained satisfactorily without confronting this new reasoning to appellant and at the same time it is grossly incorrect and illegal. 5) On the facts and in the circumstances of case the CIT (A) has erred in sustaining the addition of 9,23,620/- on the ground that it represents unexplained investment in flat disregarding the fact that at the outset that said fiat belongs to MN Navale ( Bigger HUF) which is also declared in the Partition deed of the said HUF as decreed by civil court Pandharpur. Thus in any case CIT (A) has erred in sustaining the addition in the hands of appellant. The above grounds of appeal may kindly be allowed to be amended, altered, modified etc., in the interest of natural justice.” 14. Grounds no.1 and 2 relate to the addition of Rs.3,90,37,346/- and based on the entries on the seized papers. The same constitutes the interest accrued on certain principal amounts said to have been given by the assessee during the periods from June 1996 to August, 1999. There is no dispute about nature of the entries and they relate to the interest accruals. In this regard, however, the ld. Counsel for the assessee submitted that none of the paper relates/belongs to the assessee. Therefore, the addition is not properly made by the lower authorities. As per the assessee, when the documents do not contain in reference to the name of the owner or the concern and, therefore, the paper constitutes dumb documents. 15. The Assessing Officer in para 4 onwards invoked the provisions of section 132(4A)(i) & (ii) of the Act which talks about the discharge the onus by the assessee in such matter. In para 4.9 of the assessment order, the

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Assessing Officer rejected the claim of the assessee and proceeded to make entire interest income as addition for the said block period. For the sake of completeness, the said para 4.9 of the assessment order is extracted hereunder :- “4.9 The provisions of section 132(4A)(i) & (ii) are clearly applicable to the assessee’s case. The fact remains that the relevant paper was found in the possession of the assessee and in case the assessee has to disown the same it was obligatory on the part to identify the owner of the said paper which has not been done by the assessee About assessee’s contention that the refund of loan or deposit can never be the income of the assessee it is specifically mentioned here that what is being taxed is the amount of interest and not the principal amount which in any case fall beyond the block period. I therefore reject the assessee’s explanation and the entire interest of Rs.3,90,37,346/- being the interest on above FDs is brought to tax on receipt basis since the last mentioned date in each of the paper clearly indicate that these FDs have finally been matured in FY 99/00 relevant to assessment year 2000/01. Penalty u/s 271(1)(c) is separately initiated.” 16. The CIT(A), as per discussion given in para 3.14 and 3.15 of the order of the CIT(A), confirmed the action of the Assessing Officer. For the sake of completeness, the said para 3.14 and 3.15 of the order of the CIT(A) are extracted hereunder :- “3.14 In this regard, the appellant has relied upon the judgment of Hon. Allahabad High Court in the case of Rajpal Singh Avatar 288 ITR 498. However, the case of the appellant is distinguishable on facts. In that case, the documents in question were found in the debris lying in the shop. The writings in the document were in English and it was the submission of the assessees that none of them knew the language. Moreover, in that case what the AO had brought to tax in the hands of the appellant was not the interest amount but the principal whereas there was a clear factual finding that in the seized documents the full year’s interest had been calculated, thereby conveying that the principal amount did not pertain to the relevant PY but to an earlier PY. As regards the decisions in LMJ International, Kumar and Company and Vijaybhai N. Chandrani, these are of no relevance to the issue at hand and relate to the issue of validity of 153A/153C proceedings where no incriminating material is seized relating to the relevant PY. 3.15 As far as submission of the appellant that interest pertaining to the period relevant for A.Y.2000-01 only should be considered is concerned, it may be pointed out that the appellant has not shown the interest pertaining to the period prior to the period relevant for AY 2000-01 in his respective returns of income. The appellant has maintained record in respect of these interests in such a manner that all interest detailed in these documents have to be taxed in A.Y.2000-01. This is also obvious from the fact that summary sheet of page No.41 gives consolidated summary of interest for all the periods in respect of which details of interest have been given in these documents.”

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assessee during the search proceedings. It is not the case of the Revenue that there was any investigation into these papers. No question is raised/asked while recording the statement of the assessee during the search action in this aspect. Therefore, considering the incompleteness of the proceedings of the Revenue to these papers, in our considered view, the addition of Rs.3,90,37,346/- made by the Assessing Officer appears to be premature. Thus, the matter should be travelled to the file of the Assessing Officer for one more round of investigation/recording of statement. It is necessary to establish the relatability/belongingness of the papers to the assessee under consideration. Accordingly, the matter is remanded to the file of the Assessing Officer for fresh adjudication. The Assessing Officer shall grant reasonable opportunity of being heard to the assessee in accordance with set principles of natural justice. Thus, the grounds no.1 and 2 are allowed for statistical purposes. 20. Grounds no.3, 4 and 5 relate to the loans taken by the assessee (individual) from M. N. Navale (HUF) amounting to Rs.10,20,000/- and Rs.9,23,620/- in the year under consideration. The arguments of both the parties on these grounds are similar to that of the grounds no.3, 4 and 5 of the appeal in ITA No.701/PUN/2014 for the assessment year 1999-2000. 21. On hearing both the sides and considering the similar arguments of both the parties, we follow our decision in the grounds no.3, 4 and 5 of the appeal in ITA No.701/PUN/2014 for the assessment year 1999-2000 and the grounds no.3, 4 and 5 of this appeal is allowed for statistical purposes. Accordingly, the grounds no.3, 4 and 5 of the assessee are allowed for statistical purposes.

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appeal. Accordingly, the grounds no.1 and 2 are allowed for statistical purposes. 28. Ground no.3 relates to the addition of Rs.5,40,000/- on account of difference in rent received, relying on a noting found recorded on the loose papers seized during the search and seizure action. Relying on the lease deed placed in the loose papers, the Assessing Officer concluded that the rental value per month of the property of Rs.75,000/- and not Rs.30,000/- as declared by the assessee in the return of income. The Assessing Officer added the difference of monthly rent of Rs.45,000/- totaling to Rs.5,40,000/- in a year. 29. Before us, ld. Counsel for the assessee filed a chart mentioning that the lease deed referred to the STES is not appreciated by the Assessing Officer. The CIT(A) also confirmed the addition made by the Assessing Officer without appreciating all the facts relating to the property. There is no dispute on these facts. The only dispute is with reference to the monthly rent. It is the case of the assessee that at the relevant point of time i.e. A.Y. 2002-03, the property was let out to Sunind Private Limited and the applicability of monthly rent is Rs.30,000/- only. In the subsequent year 2004 onwards, the property is rented to STES with the applicable rent of Rs.75,000/- and this applicable Rs.75,000/- is born out of the records. Therefore, the addition of Rs.5,40,000/- made by the Assessing Officer in the assessment year 2002-03 is not correct. We find the dates and the lease deed are relevant and the rental agreement between the assessee and the STES. This aspect was not raised before the lower authorities as pointed out by the ld. DR for the Revenue. In all fairness, therefore, we are of the opinion that this issue requires re-verification of facts relating to the date of letting out of property to

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the assessee and the date of rent to STES in 2004. Considering the fact that the seized paper or lease deed does not contain the date or the year, the Assessing Officer is directed to re-verify the same and pass a speaking order after granting reasonable opportunity of being heard to the assessee. Accordingly, the ground no.3 is allowed for statistical purposes. 30. In the result, the appeal of the assessee in ITA No.704/PUN/2014 for the assessment year 2002-03 is allowed for statistical purposes. ITA No.705/PUN/2014 – A.Y. 2003-04 31. The grounds of appeal raised by the assessee in this appeal are as under :- “1) On the facts and in the circumstances of case the CIT (A) has erred in sustaining the addition of Rs 5,26,976/- (Correct amount is Rs. 4,85,000/-) which represents unsecured loan taken from MN Navale (Bigger HUF). 2) On the facts and in the circumstances of case the CIT (A) has erred in sustaining the addition of Rs 5,26,976/- (Correct amount is Rs. 4,85,000/-) on the ground that despite the admitted fact that the HUF existed, according to him the said loan has not been explained satisfactorily without confronting this new reasoning to appellant and at the same time it is grossly incorrect and illegal. 3) On the facts and in the circumstances of the case the Assessing Officer has erred in sustaining the addition of Rs 5,40,000/- on account of difference in rent received relying on the noting found recorded on the loose paper which has no evidential value. The above grounds of appeal may kindly be allowed to be amended, altered, modified etc., in the interest of natural justice.” 32. The assessee raised “additional ground” and the same is extracted hereunder :- “On the facts and in the circumstances of the case the Ld CIT(A) having rightly held that addition of Rs 1,25,79,312/- cannot be assessed in the AY 2003-04; nevertheless CIT(A) has grossly erred in giving the finding that said addition can be made in the AY 2004-05, 2005-06 and 2006-07 as such finding/direction is not within the scope of power of Ld. CIT(A).” 33. Grounds no.1 and 2 relate to the addition of Rs.5,26,976/-, the loan received from M. N. Navale (Bigger HUF) as unsecured loan. The Revenue

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authorities denied this claim of unsecured loan mentioned that M. N. Navale (Bigger HUF) did not exist and, therefore, did not have funds. In this regard, ld. Counsel for the assessee submitted that this issue has to be remanded to the file of the Assessing Officer for fresh adjudication in the light of the order of the Tribunal in the case of M. N. Navale (HUF) (supra). In other words, the arguments of both the parties on these grounds are similar to that of the grounds no.1 and 2 of the appeal in ITA No.704/PUN/2014 for the assessment year 2002-03. Thus, our decision in the grounds no.1 and 2 of the appeal in ITA No.704/PUN/2014 for the assessment year 2002-2003 shall apply mutatis mutandis to these two grounds no.1 and 2 of this present appeal. Accordingly, the grounds no.1 and 2 are allowed for statistical purposes. 34. Ground no.3 relates to the addition of Rs.5,40,000/- on account of difference in rent received relying on noting found recorded on the loose papers seized during the search and seizure action. In other words, the arguments of both the parties on these grounds are similar to that of the ground no.3 of the appeal in ITA No.704/PUN/2014 for the assessment year 2002-03. Thus, our decision in the grounds no.3 of the appeal in ITA No.704/PUN/2014 for the assessment year 2002-2003 shall apply mutatis mutandis to this ground no.3 of this present appeal. Accordingly, the grounds no.3 is allowed for statistical purposes. 35. Referring to the “additional ground” (extracted above), ld. Counsel for the assessee submitted that this additional ground relates to the proper assessment year and it is raised before the Tribunal for the first time. It is in the interest of justice that the said additional ground may be remanded to the file of the Assessing Officer for adjudication. The ld. DR has no objection if

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the said ground is remanded to the file of the Assessing Officer. Considering the same, we are of the opinion, the said additional ground is remanded to the file of the Assessing Officer for adjudication afresh. The Assessing Officer shall grant reasonable opportunity of being heard to the assessee in accordance with set principles of natural justice. Accordingly, the additional ground raised by the assessee in the present appeal is allowed for statistical purposes. 36. In the result, the appeal of the assessee in ITA No.705/PUN/2014 for the assessment year 2003-04 is allowed for statistical purposes. ITA No.1059/PUN/2014 – A.Y. 2004-05 37. The grounds of appeal raised by the assessee in this appeal are as under :- “1) On the facts and in the circumstances of case the CIT(A) has erred in sustaining the addition of Rs 24,86,454/- that represented unsecured loan taken from HUF. 2) On the facts and in the circumstances of case the CIT(A) has erred in sustaining the addition of Rs 5,40,000/- on account of rent difference relying on noting found recorded on seized loose pages No 23 to 46 and holding that said property is let out for the monthly rent of Rs 75,000/-. 3) On the facts and in the circumstances of case the CIT(A) has erred in sustaining the addition of Rs 151338/- on account of purchase of jewellary overlooking the fact that the said jewellary is purchased out of the total withdrawals of Rs 456005/- 4) On the facts and in the circumstances of case the CIT (A) has erred in issuing the notice for enhancement of income in respect of an issue which does not arise from the Assessment Order and overlooking the legal position that the powers of the CIT (A) are confined only to the subject matter of appeal and not beyond that. 5) On the facts and in the circumstances of case and without prejudice to the above ground No 4 the CIT (A) has erred in enhancing the income by Rs7000000/- on the ground that it represents the unexplained investment made in purchase of the property situated at village Charoli overlooking the fact that said property has not been purchased by the appellant at all and further overlooking the clinching evidence filed to the effect that the said property has been actually purchased by the Sinhgad Technical Education Society. 6) On the facts and in the circumstances of case and without prejudice to the above ground No 13 the CIT(A) has erred in relying on notings found recorded on the seized loose paper which have no evidential value and is a dumb document.

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7) On the facts and in the circumstances of case and without prejudice to the above Ground No.13 CIT(A) has erred in holding that the unexplained investment is made by the appellant without bringing on record any corroborative evidence including the confirmation of the vendor Shri Shivajirao Kadam or by recording his statement to buttress his view that on money has been paid either by the appellant or the Sinhgad Technical Education Society. The above grounds of appeal may kindly be allowed to be amended, altered, modified etc., in the interest of natural justice.” 38. Referring to ground no.1, ld. Counsel for the assessee submitted that this ground is required to be remanded to the file of the Assessing Officer for fresh adjudication in the light of our direction as given in the context of grounds no.3, 4 and 5 of the appeal in ITA No.701/PUN/2014 for the assessment year 1999-2000. Considering the same, the ground no.1 is remanded to the file of the Assessing Officer for fresh adjudication. The Assessing Officer shall grant reasonable opportunity of being heard to the assessee in accordance with set principles of natural justice. Accordingly, the ground no.1 is allowed for statistical purposes. 39. Referring to ground no.2, ld. Counsel for the assessee submitted that this ground relates to the addition of Rs.5,40,000/- on account of difference in rent received relying on noting found recorded on the loose papers seized during the search and seizure action. In other words, the arguments of both the parties on these grounds are similar to that of the ground no.3 of the appeal in ITA No.704/PUN/2014 for the assessment year 2002-03. Thus, our decision in the grounds no.3 of the appeal in ITA No.704/PUN/2014 for the assessment year 2002-2003 shall apply mutatis mutandis to the said ground no.2 of this present appeal. Accordingly, the grounds no.2 is allowed for statistical purposes. 40. Referring to ground no.3, ld. Counsel for the assessee mentioned that this ground relates to the addition of Rs.1,51,338/- on account of excess

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purchase of jewellery. It is the case of the assessee that the said jewellery was purchased out of the total withdrawals of Rs.4,56,005/-. Bringing our attention to the contents of para 9 and 9.3 of the assessment order, ld. Counsel for the assessee mentioned that the withdrawals of Rs.4,56,005/- including of Rs.1,51,338/- on account of purchase of jewellery should be acceptable proposition. 41. On the other hand, ld. DR for the Revenue strongly objected to the AR’s argument and relied heavily on the order of the Assessing Officer. Further, ld. DR mentioned that assessee has high profile living standard and withdrawal of Rs.40,000/- a month itself is not enough considering his life style. 42. In reply, ld. AR for the assessee left the issue to the Bench for deciding the same on the existent of addition as made by the Assessing Officer. 43. On hearing both the sides on this issue, we are of the opinion that there is a withdrawal to the extent of Rs.4,56,005/-. The disputed investment is only Rs.1,51,338/-. Considering the extent of withdrawal available on records, the addition of Rs.1,00,000/- shall be reasonable. We direct the Assessing Officer accordingly. Thus, this ground no.3 is partly allowed. 44. Grounds no.4 to 7 relates to the addition of Rs.70,00,000/- relying on the seized papers. The Assessing Officer incorporated the same and held that the assessee paid cash for purchase of flat. In this regard, ld. Counsel for the assessee brought our attention to the additional ground raised by the assessee in the assessment year 2003-04 vide ITA No.705/PUN/2014 and mentioned that this issue pertains to the said additional ground which may

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be remanded to the file Assessing Officer. Further, ld. Counsel for the assessee submitted that there is need of adjudication of this issue raised in grounds no.4 to 7 of this appeal. Considering the same, we are of the opinion that this issue should be adjudicated along with additional ground raised by the assessee in assessment year 2003-04 vide ITA No.705/PUN/2014. We direct accordingly. Thus, the grounds no.4 to 7 are allowed for statistical purposes. 45. In the result, the appeal of the assessee in ITA No.1059/PUN/2014 for the assessment year 2004-05 is partly allowed for statistical purposes. ITA No.1060/PUN/2014 – A.Y. 2005-06 46. The grounds of appeal raised by the assessee in this appeal are as under :- “1) On the facts and in the circumstances of case the CIT (A) has erred in sustaining the addition of Rs 60 lakhs on account of on money paid to Mr Wagale and others for purchasing the Bunglow and land apartment thereto. 2) On the facts and in the circumstances of case the CIT (A) has erred in confirming the addition of Rs 10, 50, 000/- on account of alleged cash loan with interest due from M/s Srujan Fitness First Pvt Ltd. 3) On the facts and in the circumstances of case the CIT (A) has erred in directing the Assessing Officer to estimate the annual value of flat at Meera Society equal to 7% of cost of Rs 26,75,000/- overlooking the legal position that this being the vacant flat not let out annual value should be taken as ratable value fixed by Bombay Municipal Corporation. 4) On the facts and in the circumstances of case the CIT (A) has erred in sustaining the addition of Rs 3,90,000/- alleged to be difference of Rent received by interpretating notings on the loose paper erroneously, the contents of which are absolutely irrelevant. 5) On the facts and in the circumstances of case the CIT (A) has erred in sustaining the addition of Rs 5,84,365/- rejecting the unsecured loan from M.N Navale (Bigger HUF). 6) On the facts and in the circumstances of case the CIT (A) has erred in holding that the deemed rent of Rs 3,75,000/- received from NDA property belonging to M.N Navale (Bigger HUF) be taken as its income on verifying its ownership and if it is found that the said property does not belong to HUF the rental income be considered as that of appellant. 7) On the facts and in the circumstances of case the CIT (A) has erred in holding that the deemed rent of Rs 38,400/- received from Flat at Kumar Parisar belonging to M.N Navale (Bigger HUF) be taken as its income on verifying its ownership and if it is found that the said property does not belong to HUF the rental income be considered as that of appellant.

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8) On the facts and in the circumstances of case the CIT (A) has erred in holding that the rent of Rs 38,400/ received from Bunglow at Navsahyadri Society belonging to M. N Navale (Bigger HUF) be taken as its income on verifying its ownership and if it is found that the said property does not belong to HUF the rental income be considered as that of appellant. 9) On the facts and in the circumstances of case the CIT (A) has erred in sustaining the addition of Rs 594000/- in respect of difference of cost paid for acquiring the land at Kusgaon Lonavala, Bunglow at Navsahyadri and NDA property belonging to M. N Navale (Bigger HUF) which claim be examined by Assessing Officer and if found that the said property belongs to Bigger HUF the income should be included as income of said HUF otherwise the income should be considered as that of appellant. 10) On the facts and in the circumstances of case the CIT (A) has erred in sustaining the addition of Rs 49,834/- on account of rent and interest from Sunny System Pvt Ltd in respect of advance given by M.N Navale (Bigger HUF) which claim be examined by Assessing Officer and if found that the said income belongs to bigger HUF the said income be included as income of said HUF otherwise the income should be considered as that of appellant. 11) On the facts and in the circumstances of case the CIT (A) has erred in sustaining the addition of Rs 30,01,065/- which represented the cash deposited by M.N Navale (Bigger HUF) in Central Bank of India. 12) On the facts and in the circumstances of case the CIT (A) has erred in sustaining the following additions : a) Rs. 25,410/- cost of Mobile Handset purchased. b) Rs. 55,811/- Party Expenses. c) Rs. 6,790/-cost of DVD Player. 13) On the facts and in the circumstances of case the CIT (A) has erred in issuing the notice for enhancement of income in respect of an issue which does not arise from the Assessment Order and overlooking the legal position that the powers of the CIT (A) are confined only to the subject matter of appeal and not beyond that. 14) On the facts and in the circumstances of case and without prejudice to the above ground No 13 the CIT (A) has erred in enhancing the income by Rs 55,79,312/- on the ground that it represents the unexplained investment made in purchase of the property situated at village Charoli overlooking the fact that said property has not been purchased by the appellant at all and further overlooking the clinching evidence filed to the effect that the said property has been actually purchased by the Sinhgad Technical Education Society. 15) On the facts and in the circumstances of case and without prejudice to the above ground No 13 the CIT(A) has erred relying on notings found recorded on the seized loose paper which has no evidential value and is a dumb document. 16) On the facts and in the circumstances of case and without prejudice to the above ground No 13 CIT(A) has erred in holding that the unexplained investment is made by the appellant without bringing on record any corroborative evidence including the confirmation of the vendor Shri Shivajirao Kadam or by recording his statement to buttress the view that on money has been paid either by the appellant or the Sinhgad Technical Education Society. The above grounds of appeal may kindly be allowed to be amended, altered, modified etc., in the interest of natural justice.” 47. Before us, at the outset, ld. Counsel for the assessee submitted that the ground no.1 and grounds no.5 to 11 relate to the “unsecured loans” taken

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from M. N. Navale (Bigger HUF). In spirit, all these grounds are identical/similar to the issues raised by the assessee in their appeals for the assessment years 1999-2000 to 2003-04 vide ITA Nos.701 to 705/PUN/2014. Accordingly, for the stated reasonings, ground no.1 and ground nos.5 to 11 are allowed for statistical purposes. 48. Ground no.2 relates to the addition of Rs.10,50,000/- loans given by the assessee to M/s Srujan Fitness Pvt. Ltd.. At the outset, ld. Counsel for the assessee mentioned that this is a case where the addition is made without examining the contents of the seized papers. It is the case of the assessee that it is not a direct case of giving loan to M. N. Navale (Individual). These papers were taken as security for some loan related issues to be obtained STES. There is some problem with the title of lands acquired by STES to match the acquittal loss in future. This kind of arrangement is made by taking an affidavit for some of Rs.10,00,000/- for STES. 49. On the other hand, the case of the Revenue is that the seized page No.20 of the Paper Book is a case of providing loans for interest to the said persons and, therefore, the contents of confirmation given at page 23 of the Paper Book is merely a case of afterthought. 50. After hearing both the sides, we are of the opinion that there is a requirement of investigation into the transactions at length regarding the genuineness of the transactions mentioned at page 20 of the Paper Book. There is also requirement of examining these transactions after confronting the contents to the confirmations filed by Shri Ajay Thosar and others. The discussion given by the Assessing Officer in para 8.4 of the assessment order and the CIT(A) in para 4.5 of the CIT(A)’s order, does not mention the reasons

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for rejection of the assessee’s explanation and the rejection of the contents of the confirmations. Therefore, in all fairness, we are of the opinion that the ground no.2 should be remanded to the file of the Assessing Officer for fresh adjudication. The Assessing Officer shall decide the issue after granting reasonable opportunity of being heard to the assessee in accordance with set principles of natural justice. Thus, the ground no.2 is allowed for statistical purposes. 51. Ground no.3 relates to the addition of Rs.1,87,250/- i.e. 7% of the cost of flat in Meera Society amounting to Rs.26,75,000/-. The background fact of this issue is that there is a document seized during the search action letter dated 12.05.2004 sent by Dr. Nitin Kareer, Treasurer of Meera Cooperative Housing Society Ltd., Mumbai. The assessee invested Rs.45,00,000/- in 8 installments. After working out of the investments, there was a difference of unaccounted amounting to Rs.22,48,490/-, the Assessing Officer called for explanation for the said difference. Considering the re-calculation furnished by the assessee, no addition is made on account of different investment. However, the deemed income was calculated invoking the provisions of section 23(4) of the Act. The Assessing Officer considered the deemed rent of Rs.3,22,000/- relying on the decision in the case of Radha Devi Dalmia vs. CIT, 125 ITR 134. 52. During the first appellate proceedings, as per the contents given in para 6.4 at page 19 of the CIT(A)’s order, the CIT(A) relied on the Hon’ble Allahabad High Court’s judgement in the case of Radha Devi Dalmia vs. CIT, 125 ITR 134 (All.-HC) and found it appropriate to consider 7% of the investment of Rs.26,75,000/- as deemed rent and accordingly, the addition is sustained at Rs.1,87,250/- as determined by the Assessing Officer.

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month, the rent would be Rs.2,10,000/- and for rest of four months, the property was rented to the STES with the monthly rent of Rs.75,000/- comes around Rs.3,00,000/- for that period. The assessee duly disclosed the total amount of Rs.5,10,000/- as only rent for the said property. Explaining the above facts and the background, the Assessing Officer summarily applied the said amount of Rs.75,000/- for the previous year of 12 months and considered notionally. In this regard, ld. Counsel for the assessee submitted that a direction may be issued to the authorities to consider the loose documents under the tenancy of Sunind Systems Pvt. Ltd. and STES and accept the claim made by the assessee after due process to verify and as per law. In our opinion, the proposition should be acceptable. Therefore, the Assessing Officer is directed to examine the loose documents and tally the same with the seized papers and accept the claim of the assessee. The Assessing Officer shall decide the issue after granting reasonable opportunity of being heard to the assessee in accordance with set principles of natural justice. Thus, the ground no.4 is allowed for statistical purposes. 56. Ground no.12 relates to some petty expenses relating to the investment in purchase of Mobile Handset, Party Expenses and DVD Player. Considering the smallness of the figure, ld. Counsel for the assessee left the same to the Bench for deciding the issue. 57. After hearing both the sides and considering the smallness of the figures, we are of the opinion that the ground should be dismissed. We order accordingly. Thus, the ground no.12 is dismissed.

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without refuting the valid objections raised on the view taken by the Bench in the said order. 3) On the facts and in the circumstances of the case the CIT (A) has erred in sustaining the addition of Rs 1, 26, 81,775/- only on the ground that the said cash was found at the residence of the appellant grossly ignoring the fact that the said cash belonged to M.N Navale Bigger HUF and evidenced from the details stated in partition decree awarded by the Civil Court, Pandharpur. 4) On the facts and in the circumstances of the case the CIT (A) has erred in sustaining the addition of Rs.43,23,610/- that represented the value of jewellary seized from the residence of the appellant again grossly ignoring the fact that the said jewellary belonged to M.N Navale Bigger HUF and evidenced from the details stated in partition decree awarded by the Civil Court, Pandharpur. 5) On the facts and in the circumstances of the case the CIT (A) has erred in sustaining the addition of Rs 10,15,22,340/- which is alleged to be the amount of donation collected by STES and siphoned off by the appellant without there being any factual, legal or cogent evidence or material to substantiate both the alleged collection of donation by STES as well as alleged siphoning of donation by the appellant. 6) On the facts and in the circumstances of the case and without prejudice to Ground No 5 the CIT (A) has erred in not appreciating the fact and legal position that the said amount of alleged donation of Rs 10,15,22,340/- has been duly assessed in the hand of Sinhgad Technical Education Society on substantive basis and despite so, erroneously and illegally confirming it’s addition in the hand of the appellant on substantive basis. 7) On the facts and in the circumstances of the case the CIT (A) has erred in sustaining the addition of Rs 7,37,000/- on the ground of unexplained investment in purchase of certain properties and relying on the erroneous information that the cost of those properties is Rs 1,27,67,000/- while the payments supported is only of Rs 1,20,30,000/- and in the process has overlooked the fact that there is no such unexplained investment as the entire cost of Rs 1,27,67,000/- stands supported and reflected in the books of accounts. 8) On the facts and in the circumstances of the case the CIT (A) has erred in not appreciating the fact that the land situated at Kusgaon is purchased by M.N Navale Bigger HUF and has further erred in sustaining the addition of Rs 1,20,000/- which represents the difference in valuation made by approved valuer and cost actually paid overlooking the established practice that the fact that difference being less that 10% it deserves to be ignored. 9) On the facts and in the circumstances of the case the CIT (A) has erred in sustaining the addition of Rs 23,13,000/- for the cash deposited in bank and explained that the same is received from MN Navale (Bigger HUF) the identity and creditworthiness of which are not in dispute besides the genuineness of the transaction. 10) On the facts and in the circumstances of the case the CIT (A) has erred in directing the Assessing Officer to reduce the amount of Rs 30,67,500/- by the amount which was available with M.N Navale Bigger HUF for advancing loan to the appellant by quantifying and ascertaining the generation of agricultural income as per the direction of the ITAT, Pune Bench. 11) On the facts and in the circumstances of the case the CIT (A) has erred in directing the Assessing Officer to reduce the deemed rental income of Rs. 715,961/- by the amount which was available with M.N Navale Bigger HUF for acquiring the properties namely residential flats 101 and 102 at Kumar Parisar, Pune, Bungalow at Navsahyadri and a flat at Mira Housing Society by quantifying and ascertaining the generation of agricultural income as per the direction of the ITAT, Pune Bench. The above grounds of appeal may kindly be allowed to be amended, altered, modified etc., in the interest of natural justice.”

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was deleted and the ground was allowed in favour of the assessee. The contents of para 116 to 118 of the said order of the Tribunal in the case of Sinhgad Technical Education Society (supra) are relevant in this regard. 67. On hearing both the sides on the fate of this decision in the case of Sinhgad Technical Education Society (supra), we are of the opinion that the contents of the said para 116 to 118 are relevant and for the completeness of this order the same are extracted as under :- “116. We find the Assessing Officer while passing the assessment order in the case of Mr. M.N. Navale has referred to the details of seized documents and has corrected the arithmetical error and concluded that the amount of donation comes to Rs.10,15,22,340/- (as against RS.22,04,31,020/- held by him in the assessment order). From the various details furnished by the assessee in the paper book we find the amounts received during the period shown on all loose papers comes to Rs.18,09,68,420/- whereas the total amount deposited during the same period in the bank accounts of various units comes to Rs.24,05,96,921/- (as per para 76 of the paper book). This total deposit covers all the amounts which are marked with ‘->’. Therefore, the allegation of the Revenue that the Managing Trustee and other trustees have siphoned off money of the Trust is not correct. 117. We find the Hon’ble Punjab & Haryana High Court in the case of CIT Vs. Khalsa Rural Hospital and Nursing Training Institute reported in 304 ITR 20 has observed as under (short notes) : “The assessee-trust was running a rural hospital and training institute for nurses. During the course of assessment proceedings u/s.143(3) of the Income-tax Act, 1961, for the assessment year 1997-98, the Assessing Officer noticed that the assessee had claimed exemption u/s.11 of the Act, on the income derived by the assessee. The Assessing Officer disallowed the benefit of section 11 and 12 of the Act to the assessee and made an addition of Rs.40 lakhs on account of capitation fee. The CIT(A) held that the assessee was entitled to exemption u/s.10(22) and this was confirmed by the Tribunal. On appeal to the High Court : Held, dismissing the appeals, that there was nothing on record to show that the assessee-trust was charging any capitation fee. The Assessing Officer had not found any irregularity in the accounts of the trust. There was no document to show that the trust was being run for any purpose of profit except that for educational purposes. The assessee was entitled to exemption u/s.10(22).” 118. We find the Hon’ble Gujarat High Court in the case of CIT Vs. Maulikkumar K. Shah reported in 307 ITR 137 has observed as under (short notes) : “Mere entries in the seized material are not sufficient to prove that the assessee has indulged in certain transactions. If certain documents were found from the possession of the assessee during the course of search operation, the burden lies on the assessee to explain the nature of the transactions recorded in the seized material. The assessee is duty bound to explain discrepancy, if found, on the basis of seized materials vis-a-vis the books of account.

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In a seized diary, the assessee had estimated and mentioned the figures for 66 shops at Rs. 2,38,77,000. The assessee had booked 35 shops as on the date of search. Because of the difference in rates as mentioned in the seized paper and the books of account, the Assessing Officer calculated the on-money. The Commissioner (Appeals) and the Tribunal held that on the basis of the loose papers no addition could be made. On appeal : Held, dismissing the appeal, that from the beginning the assessee was stating that the notings appearing in the diary were rough estimates and estimation was made for submission to the bank for obtaining a loan from the bank. The inference of the Assessing Officer that the assessee had received on-money, i.e., the differential amount as shown in the seized diary and the books of account, was merely based on suspicion and surmises and there was no material to support the conclusion of the Assessing Officer that the assessee had in fact received any on-money. The Assessing Officer had no evidence with him to support his conclusion. The assessee has worked out the floor-wise rate of the shop on the seized paper but it was not possible that every shop could be sold at that price and while selling the shops, many purchasers may pay advance money. Therefore, the rates of all the shops at the time of actual sales could not be the same as estimated in the seized paper. The amount mentioned along with rates per square foot of different floors on the loose paper was in respect of an estimate for the loan from the bank. No other evidence had been shown to justify that these amounts were received from purchasers. The concurrent finding was that on the basis of these loose papers, no addition was justified. Thus, there was no interference called for in the order of the Tribunal. The Supreme Court has dismissed the special leave petition filed by the Department against this judgment.” 118.1 In the light of the above discussion and relying on the decisions cited supra we are of the considered opinion that the Ld.CIT(A) was not justified in upholding the addition of Rs.22,45,06,500/- made by the Assessing Officer on account of donation collected for granting donation. Accordingly, the order of Ld.CIT(A) on this issue is set-aside and the ground raised by the assessee is allowed.” 68. From the above, it is evident that the Tribunal relied on the judgment of the Hon’ble Punjab & Haryana High Court in the case of CIT vs. Khalsa Rural Hospital and Nursing Training Institute, 304 ITR 20 and also the judgment of the Hon’ble Gujarat High Court in the case of CIT vs. Maulikkumar K. Shah, 307 ITR 137 and the relief was granted in favour of the assessee and the addition was deleted. 69. Further, the ld. Counsel for the assessee mentioned that when the substantial addition is deleted and the assessee was found not collecting the donation, the same is not to be added in the assessee too. The ld. Counsel

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pleaded that the a direction is issued to the Assessing Officer merely to comply with the said order of the Tribunal in the case of Sinhgad Technical Education Society (supra) and decide the issue in the light of the existing findings of the Tribunal (supra). Accordingly, we order. The Assessing Officer shall decide the issue considering the said order of the Tribunal (supra) after granting reasonable opportunity of being heard to the assessee in accordance with set principles of natural justice. Accordingly, the grounds no.5 and 6 are allowed for statistical purposes. 70. In the result, the appeal of the assessee in ITA No.1061/PUN/2014 for the assessment year 2006-07 is partly allowed for statistical purposes. WTA No.05/PUN/2014 – A.Y. 2005-06 71. The grounds of appeal raised by the assessee in this appeal are as under :- “1) On the facts and in the circumstances of case the CIT (A) has erred in directing the Assessing Officer that on ascertaining the available funds with M.N Navale (Bigger HUF) to the extent these cover the assets claimed as belonging to HUF, the same should be excluded from the net wealth of appellant The assets claimed as belonging to Bigger HUF are: a. Residential Flat at Flat No. 101, 102 Building No. D,S. No. 59, 1st Floor, at Kumar Parisar Kothrud, Pune - Valued at Rs. 12,05,000/- b. Residential Bungalow at Navsahyadri Soc. Karve Nagar, Pune - Valued at Rs. 52, 76,510/- c. Farm House at NDA Road, Pune - Valued at Rs. 63,30,000/-. d. Flat at Meera Co.Op.-Hsg. Society Oshiwara, Jogeshwari (W) Mumbai - Valued at Rs. 25,51,510/-.” The above grounds of appeal may kindly be allowed to be amended, altered, modified etc., in the interest of natural justice.” 72. Briefly stated the relevant facts include that the assessee filed the return of income declaring total wealth of Rs.6,82,600/-. The assessment was reopened u/s 17 of the Wealth Tax Act, 1957 (W.T. Act) for taxing the following movable/immovable property of the assessee. All the (i) Residential

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Flat at Flat No.101, 102 Building No.D, S. No.59, 1st Floor, Kothrued, Pune; (ii) Residential Flat at Kumar Parisar, Pune; (iii) Residential Bungalow at Navsahyadri Soc. Karve Nagar, Pune; (iv) Farm House at N.D.A. Road, Pune and (v) Flat at Meera Co-op.-Hsg. Society Oshiwara, Jogeshwari (W), Mumbai are the immovable property. 73. The Assessing Officer proposed to tax the net wealth determined at Rs.1,67,23,480/- against the returned wealth of Rs.6,82,600/-. The Assessing Officer treated the said assets as wealth of the assessee and the same is in tune with the order of the Assessing Officer dated 06.12.2007 passed u/s 171 of the Income Tax Act. The Assessing Officer rejected the existence of M. N. Navale (HUF) in this order. Mentioning that the said order u/s 171 of the I.T. Act was the subject matter of litigation, ld. Counsel for the assessee filed a copy of the said order u/s 171 of the I.T. Act and stated that the said order was adjudicated by the Tribunal vide ITA No.149/PN/2010 in the case of M.N. Navale (Bigger HUF) dated 30.03.2012 and upheld the existence of M.N. Navale (Bigger HUF). Thus, the very reasoning for the Assessing Officer treating the said assets as belonged to the M.N. Navale (Bigger HUF) stands reversed now in favour of the assessee. Further, in the first appellate proceedings, the CWT(A) as per the discussion given in para 16.4 of his order dated 11.03.2014 considered the said order of the Tribunal dated 30.03.2012 (supra) and directed the Assessing Officer to allow the appeal of the assessee subject to the verification only about the ownership of the properties mentioned above. 74. Before us, at the outset, ld. Counsel for the assessee mentioned that the Assessing Officer has not yet given effect to the related order of the

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CWT(A). The ld. Counsel for the assessee merely pleaded for a direction to the Assessing Officer to adjudicate the issue as soon as possible. He further mentioned that a similar direction is already given by the Tribunal in the case of M.N. Navale vide WTA Nos.06 & 07/PN/2014 for the assessment years 2006-07 & 2007-08 dated 14.01.2016. For the sake of completeness of this order, the contents of para 5 of the said order of the Tribunal dated 14.01.2016 (supra) are extracted hereunder :- “5. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. The existence of the HUF has been accepted by the Co-ordinate Bench of the Tribunal in ITA No. 149/PN/2010 (supra). Therefore, there is no dispute about the existence of HUF any more now. The only issue is, Whether the assets listed hereinabove are to be included in the net wealth of the individual or the HUF. The ld. AR has submitted that all the assets mentioned above are incorporated in the list of assets in the partition decree awarded by the Civil Court, Pandharpur. However, the said partition decree has not been placed before us by either of the sides. The Commissioner of Wealth Tax (Appeals) has remitted the file back to Assessing Officer with the following observations: “16.4 I have given careful consideration to all the relevant facts and the submissions made on behalf of the appellant. Upon perusal of the appellate orders passed by me in the appellant's I-T case for assessment year 2005-06 and 2006-07, it is found that in respect of all the above mentioned properties, based on the decision of Hon'ble ITAT which has accepted the existence of M.N. Navale, Bigger HUF, I have noted that the issue relating to quantification of income of the Bigger HUF has been set aside to the file of the AO and under the circumstances, I have directed the Ld. AO to ascertain whether the property under consideration belonged to M.N. Navale, Bigger HUF. This ascertainment is to be done on the basis of the order in the case of the Hon. Tribunal in the case of M.N. Navale, Bigger HUF. Accordingly, this ground of appeal is disposed of with a direction to the Ld. AO to exclude the value of the impugned properties from the net wealth of the appellant for the year in case the above-mentioned quantification exercise establishes the sources for acquisition of the properties concerned in the hands of the Bigger HUF. On the other hand, in case the aforesaid exercise precludes the possibility that the properties in question were acquired by the HUF, in such event, the AO is directed to include the value of the aforementioned properties in the net wealth of the appellant. For statistical purposes, this ground may be treated as partly allowed.” We do not find any infirmity in the order of Commissioner of Wealth Tax (Appeals) in directing the Assessing Officer to make addition of assets in the net wealth of M.N. Navale (Bigger HUF) to the extent of matching sources of funds available and the remaining assets, if any in the net wealth of the assessee. The impugned order is reasoned and justified and thus calls for no interference.”

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