DHARAM RAJ SINGH,NEW DELHI vs. ITO, WARD- 61(4), NEW DELHI

assessee has raised following grounds:- “1. On the facts and circumstances of the case, learned CIT (A) erred in upholding the initiation of proceeding u/s 148 without cogent and tangible material in the possession of the AO.

The facts in brief are that the assessee has filed his return of income on 8.12.2009 declaring income of Rs. 2,45,470/-. Thereafter information was received from ITO ward 60(1) New Delhi enclosing the information received from ACIT, Central Circle, Bareilly, that during the course of search and seizure operation carried out from 18.9.2014 in the case of Rohilkhand Medical College, certain documents and papers were found and seized which revealed that assessee has paid cash in the form of donation/ capitation fees amounting to Rs. 12,00,000/- during the relevant financial year for the admission of his son in Rohilkhand Medical College. Based on this information, the assessee’s case was reopened u/s 148. During the course of assessment proceedings, the assessee was asked to submit the bank statement and explain the source of the payment of Rs. 12,00,000/-. However, the assessee denied any such payment made and asked for the further information about any such payment made to the College. However, the AO added the said amount as undisclosed income of the assessee. The said amount has also been confirmed by the CIT(A) in his appellate order. Ld. CIT has incorporated the ‘reasons recorded’ and the information as well as the scanned copy of seized documents to show that capitation fee of Rs. 12,00,000/- was paid in cash on various dates for the admission of assessee’s son in the Rohilkhand Medical College. Based on this, Ld. CIT (A) has affirmed the validity of reopening. Assessee before the authorities below had requested for supply of documents and the information received by the department as he had categorically denied of giving any kind of cash donation. However, Ld. CIT (A) without providing any information had confirmed the addition.

After hearing both the parties, we find that based on seized documents found during the course of search in the case of Rohilkhand Medical College, addition has been made on the ground that assessee has paid certain cash amount as donation/ capitation fee for the admission of his son in the medical college. If the assessee has denied any such transaction, then it was incumbent upon the department to provide all those materials on the basis of which addition has been made. Simply an entry in the third parties books or diaries any adverse inference cannot be drawn against the assessee, especially when the assessee has denied such transaction and no material has been recovered from the assessee. In such a case, either the cross examination should have been allowed to the assessee after providing all the material and information or atleast Assessing Officer should have ascertain the fate of such noting of cash receipts in the hands of the person searched and what was the stand of the searched person in the statements recorded during the course of search in the case of Rohilkhand Medical College. Accordingly, in the interest of justice, we feel that matter should be restored back to the file of the Assessing Officer, who shall confront all the material and also provide opportunity to cross examine the person in whose possession such seized documents was found; and also whether any such statement has been recorded in the case of searched person whereby assessee’s name has been implicated on the basis of seized material. AO shall provide due opportunity to the assessee to represent his case. Accordingly appeal of the assessee is allowed for statistical purposes.