HOTEL SURYA PVT. LTD.,PUNE vs. ITO WARD 11(1), PUNE, PUNE

Accordingly, statutory notice u/s 143(2) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) was issued and served on the assessee. In the meantime, a survey action u/s 133A of the Act was conducted on 24.10.2018 at the premises of the assessee company. During the survey, statements of the directors of the assessee company Smt. Neena Nitin Gupta and Shri Nitin Gupta were recorded on oath wherein he was requested to explain the cash deposits of Rs.12 crores in IDBI Bank during the demonetization period. The directors explained that the cash deposit was only Rs.6 crores. It was further stated that the said amount had been received from Shri Vinay Arahana, Authorized Partner of Rosary Education Group due to cancellation of deal in respect of additional premises and expansion of Hotel Surya Pvt. Ltd. It was further stated by the assessee that the transaction was done by the previous owners and over a period of 4 years. It was also stated in this regard that relationship of the assessee company with Rosary Education Group and its Authorized Partner viz. Shri Vinay Arahana was only for one particular deal which did not materialize and the said deal was cancelled and closed in the year 2016. The assessee vide his answer to question no 10 of the statement recorded during the course of survey stated that PAN and confirmation of the party will be submitted by 02.11.2018. The survey was mainly conducted to recover the outstanding demand of Rs. 38,20,563/-.

Subsequently, the Assessing Officer obtained the bank statement from IDBI Bank u/s 133(6) of the Act. From the said statement, he noted that there were cash deposits of Rs.12,18,000/- on 30.11.2016, Rs.30,000/- on 01.12.2016, Rs.6 crores on 02.12.2016 and Rs.80,000/- on 10.01.2017. Thus, the total cash deposits during the financial year 2016-17 amounted to Rs.6,13,28,000/-. The Assessing Officer issued a show cause notice asking the assessee to explain the source of such cash deposits. However, despite sufficient opportunities granted by the Assessing Officer, there was no proper compliance from the side of the assessee except stating that as per the agreement i.e. MOU dated 23.03.2012 and Cancellation Deed dated 23.11.2016 are supporting evidences which should be considered. It was further stated that Shri Vinay Arahana is out of country and after his return, he will be produced before the Assessing Officer. However, the assessee neither produced the said person nor proved with any supporting evidences regarding the receipt of cash of Rs.6 crores on account of cancellation of the MOU. The Assessing Officer, therefore, made addition of Rs.6,13,28,000/- to the total income of the assessee by observing as under: “6. From the discussion above, it is evident that the assessee company has failed to prove with supporting documentary evidences that the cash of Rs.6,00,00,000/- was received in the event of cancellation of MOU. Neither the concerned person was produced for verification in this office nor did he submit any confirmation in this regard. As such, it is clear that the assessee company failed to substantiate the cash deposits of Rs.6,00,00,000/- made on 02.12.2019. As regards the balance cash deposit of Rs.13,28,000/- also, the assessee failed to prove source of the same and genuineness too. Therefore, the onus on the assessee company to prove genuineness and sources of the entire cash deposits of Rs.6,13,28,000/- was not discharged by the assessee with supporting evidences. Hence, as per provisions of section 68 of the IT Act 1961 an addition of Rs.6,13,28,000/- is made to the total income of the assessee and tax is payable under Section 115BBE of Income Tax Act, 1961. The penal provisions of section 271AAC of the IT ACT 1961 r. w. s 115BBE of the IT Act, 1961 are separately initiated.”

Since the assessee did not appear before the Ld. CIT(A) / NFAC despite number of opportunities granted, the Ld. CIT(A) / NFAC, in absence of any supporting documents before him to substantiate the source of cash deposits in the bank account, sustained the addition made by the Assessing Officer.

Aggrieved with such order of the Ld.CIT(A) / NFAC, the assessee is in appeal before the Tribunal.

The Ld. Counsel for the assessee at the outset submitted that the notices issued by the office of the Ld. CIT(A) / NFAC could not be received by the assessee on account of incorrect e-mail ID. He submitted that in the interest of justice, the assessee should be given an opportunity to substantiate its case before the Ld. CIT(A) / NFAC by filing the requisite details. He accordingly submitted that the matter may be restored to the file of the Ld. CIT(A) / NFAC for fresh adjudication.

The Ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the Ld. CIT(A) / NFAC. He submitted that before the Assessing Officer the assessee could not substantiate the source of cash deposits by producing the relevant details. Before the Ld. CIT(A) / NFAC also there was no compliance from the side of the assessee. Therefore, the order of the Ld. CIT(A) / NFAC should be upheld and the grounds raised by the assessee be dismissed.

We have heard the rival arguments made by both the sides and perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC. It is an admitted fact that despite 8 notices issued by the Ld. CIT(A) / NFAC, there was no compliance from the side of the assessee for which he was constrained to pass the ex-parte order. It is the submission of the Ld. Counsel for the assessee that due to incorrect e-mail ID, none of the notices could be received by the assessee for which there was non- compliance. It is also his submission that given an opportunity, the assessee is in a position to substantiate its case by submitting the relevant details along with documentary evidences. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Ld. CIT(A) / NFAC with a direction to give one final opportunity to the assessee to substantiate its case by filing the requisite details with documentary evidences and decide the issue as per fact and law. The assessee is also hereby directed to appear before the Ld. CIT(A) / NFAC on the appointed date and make its submissions, if any, without seeking any adjournment under any pretext failing which the Ld. CIT(A) / NFAC shall be at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

After hearing both sides, we find the grounds raised in ITA No.395/PUN/2025. We have already restored the issue in to the file of the Ld. CIT(A) / NFAC with a direction to give one final opportunity to the assessee to substantiate its case by filing the requisite details and decide the issue as per fact and law. Following the same reasonings, we restore the issue in Ld. CIT(A) / NFAC with similar directions as in ITA No.395/PUN/2025. The grounds raised by the assessee are accordingly allowed for statistical purposes.

In the result, both the appeals filed by the assessee are allowed for statistical purposes.