ASHOK KUMAR SINGH,GHAZIPUR vs. INCOME TAX OFFICER, WARD - 3 (5), GHAZIPUR

The facts relating to the case are stated in brief. The assessee is working as Principal of Sahdeo Sanskrit Maha Vidyalay, Maharaj Ganj, Ghazipur. The AO received information that the assessee has deposited a sum of Rs.24,05,100/- in cash in the savings bank account maintained with ICICI Bank and also paid a sum of Rs.75,000/- as insurance premium. Hence the AO reopened the assessment of the year under consideration by issuing notice u/s 148 of the Act. The AO issued notices to the assessee, but there was no proper compliance from assessee’s side. The AO also noticed

In the appellate proceedings before Ld CIT(A), the assessee made detailed submissions. (The assessee has also filed written submissions before us.) With regard to the sources of deposits, the main submissions can be summarized as under:-

The Ld CIT(A) called for a remand report from the AO and the report given by the AO may summarized as under:- 1 (a) With regard to TDS deducted from Salary account of the assessee, the AO observed that the Form 26AS relating to AY 2010-11 and 2011- 12 do not reflect the TDS amount of Rs.94,211/- as claimed by the assessee. Hence the AO observed that the TDS claim should be rejected.

The Ld CIT(A) confirmed all the additions and did not even give relief of Rs.2,86,640/- also. Aggrieved, the assessee has filed this appeal before the Tribunal.

We heard the parties and perused the record. Under the provisions of Income tax, all receipts are not taxable, i.e., only those receipts which constitute income of the assessee can be brought to tax. One exception to this rule is the deeming fictions incorporated in the Income tax Act, which make certain receipts taxable, even though they may not constitute income in the hands of the assessee. For example, unexplained cash credits are brought to tax u/s 68 of the Act. Similarly, unexplained bank deposits/investments can also be brought to tax u/s 69 etc. However, if the assessee offers explanation to the satisfaction of the AO with regard to cash credits and investments, then the AO should not bring those amounts to tax. There should not be any doubt that the satisfaction that should be arrived at by the AO should be objective satisfaction.

The aggregate amount of deposits assessed in the hands of the assessee is Rs.32,00,505/-. The AO has accepted for granting relief to the extent of Rs.2,86,640/- in the remand report, being the amounts transferred from one bank account to another bank account. We noticed that the Ld CIT(A) did not grant relief for this amount and in our view, the same is not justified. Accordingly, we direct the AO to grant relief of above said amount of Rs.2,86,640/-.

With regard to the transfer of funds (Grants in aid received from UGC) from College account to the assessee’s account, the explanation of the Ld A.R was that the college was constrained to transfer the same to the assessee’s bank account in order to comply with the rules of UGC relating to requirement of utilizing them within a prescribed period. It was submitted that the amounts so transferred have been used for college purposes only. We notice that the AO has expressed the view that the assessee did not furnish Rules and Regulations, which permit such kinds of transfers and use of funds. In our view, if the college admits that the grants in aid amounts have been transferred to assessee’s account on behalf of the college and later it was utilized for college purposes, then amounts so transferred cannot be brought to tax in the hands of the assessee, because:- (a) the owner of funds, viz., College itself would be admitting that its funds have been transferred to the assessee’s account on its behalf, in which case, the sources of funds would stand explained.

Accordingly, we are of the view that both the above said claim of the assessee with regard to transfer of grants in aid amounts, examination fees, donations requires fresh examination at the end of AO in accordance with the principles discussed above. Accordingly, we set aside the order passed by Ld CIT(A) on these issues and restore them to the file of AO for examining the same in accordance with the above said principles. We also direct the assessee to furnish all evidences including confirmations obtained from the College and such other information and explanations that may be called for by the AO. After examining them objectively, the AO may decide the issue afresh.

With regard to the claim of TDS credit of Rs.94,211/-, we direct the assessee to get necessary TDS certificate from the college and furnish the same to the AO for allowing credit.

With regard to the insurance premium payment of Rs.75,000/-, it is the claim of the assessee that the same has been paid out of his salary savings and in our view, considering the smallness of amounts, the same can be accepted. Accordingly, we direct the AO to delete this addition.

In the result, the appeal filed by the assessee is treated as allowed for statistical purposes.