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

This is an appeal filed by the Assessee directed against the order of ld.Commissioner of Income Tax(Appeals)-Central, Pune Appeal No.PN/CIT/CIT(A)C/154/MNN/2014-15/45 dated 15.05.2014 for the Assessment Year 2006-07 passed u/s154 of the Act. The Assessee raised following grounds of appeal: “On the facts and in the circumstances of the case the ld. CIT(A) has erred in sustaining the addition of Rs.28,70,000/- which represents the alleged advance made to and the interest due from M/s.Surjan Fitness and Ankur Structures Pvt. Ltd. Basically overlooking the fact that the said alleged transaction relates to Sinhgad Technical Education Society and secondly the said allegation and view is based on totally an incorrect appreciation of the facts without attempting to verify the correctness of the explanation offered by the appellant. The above ground of appeal may kindly be allowed to be amended, altered, modified etc. in the interest of natural justice.”

Brief facts of the case are that the assessee is the President of Sinhgad Technical Education Society. A search was carried on assessee. As per the intelligence information gathered by the department, it was revealed that Management’s of various educational institutions in and around Pune were accepting hefty amounts towards capitation fee/donation/on money from the prospective candidates for admitting them to the various courses conducted by these Educational Institutions. 2.1 During the search action, it was found that a cash of Rs.1,26,81,775/- and jewellery of Rs.45,92,610/- was found, for which no proper explanation given by the assessee, therefore, the cash of Rs.1,20,00,000/- and Jewellery of Rs.40,90,206/- was seized. Subsequent to this search action, the case was assigned to ld.Dy.Commissioner of Income Tax (Central Circle)2(2), Pune. The ld.Dy.Commissioner of Income Tax (Central Circle)2(2) Pune passed the Assessment Order on 31/12/2007.The Assessing Officer has discussed the issue of Loan transaction with Srujan Fitness Pvt. Ltd., Ankur Structural Pvt. Ltd in para 11 of the order. AO arrived at the decision based on the seized documents that the Assessee had given Loan of Rs.35 lakhs to Srujan Fitness Pvt. Ltd. and Ankur Structural Pvt. Ltd. but assessee failed to explain the source of the cash loan. Therefore, AO added Rs.25,00,000/- during the year under consideration and Rs.10,00,000/- in earlier year. Aggrieved by the Assessment order the Assessee filed appeal before the Commissioner of Income Tax(Appeal),(Central) Pune. The ld.Commissioner of Income Tax(Appeal) passed order on 11/03/2014. However, subsequently the Commissioner of Income Tax (appeal) Central realised that there were some apparent mistakes in the Order dated 11/03/2014. Appellant assessee claimed

There is delay of 550 days in filling appeal. The Appellant assessee has filed an affidavit with application for condonation of delay. The appellant submitted that he had filed an appeal before the Hon’ble ITAT against the Order of Commissioner of Income Tax(Appeal), Central, dated 11/03/2014 within time, then, on receipt of the rectification order, he amended the grounds. However, subsequently he had been advised that a separate appeal needs to be filed against the Rectification Order dated 15/05/2014. Therefore, he filed the present appeal against the Rectification Order dated 15/05/2014 belatedly.

The ld.Authorised Representative(ld.AR) made a written submission as under : “7. CIT(A) in his order dated 11.03.2014 has confirmed the major additions made by AO. However has not decided Ground No.1(d) regarding addition of Rs.28,70,000/- in respect of principal in interest from Srujan Fitness and Ankur Structures Pvt. Ltd. Refer below para 6.2 on page 57 of the CIT A order, No decision was given by CIT(A).

The appellant has filed an appeal before Hon’ble Bench against this addition confirmed by CIT(A) U/Sec. 154 of the Act and taken only 1 ground of appeal and raised following contentions:

On the other hand, the Ld.Departmental Representative(ld.DR) relied on the orders of the Assessing Officer(AO) and ld.CIT(A).

We have considered the submissions of both the parties, analysed the orders of the lower authorities. Hon’ble ITAT Pune in assessee’s own case in AY 2005-06 has observed as under: Quote 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

The facts are same in the year under consideration. Therefore, respectfully following the Hon’ble ITAT Pune’s order mentioned above, the issue is set aside to the file of the Assessing Officer. The AO shall verify all the facts, provide appropriate opportunity to the Assessee, then decide the issue afresh. Thus, the Ground No.1 is allowed for statistical purpose.

Thus, the Appeal of the assessee is Allowed for Statistical Purpose. Order pronounced in the open Court on 6th May, 2022.