RAMINDERJEET KAUR, H.NO. 5623, SECTOR 38, WEST CHANDIGARH CHANDIGARH,CHANDIGARH vs. ASSISTANT COMMISSIONER OF INCOME TAX , CC-2, , CHANDIGARH

Aforesaid appeals by two assessees for Assessment Year (AY) 2020-21 have common issue. First, we take up which arises out of a common order of learned Commissioner of Income Tax (Appeals)-3, Gurgaon [CIT(A)] dated 31- 12-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 153A(1)(b) r.w.s. 143(3) of the Act on 26-09-2022. In the assessment order, Ld. AO has made addition of Rs.12 Lacs which represent transfer of funds from Gyan Jyoti Educational and Social Welfare Society (GJESWS). Another addition has been made for Rs.7.61 Lacs on account of facility of car which is alleged to be in violation of Sec.13(1)(c) of the Act.

The Ld. AR advanced arguments on legal grounds as well as on merits. The Ld. CIT-DR, on the other hand, controverted the arguments of Ld. AR and advanced arguments favoring the case of the revenue. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under. Proceedings before lower authorities 3.1 The assessee filed return of income u/s 139 on 27-02-2021 post search action on the assessee-group on 28-01-2021. The assessee declared income of Rs.5.45 Lacs. In response to notice u/s 153A, the assessee furnished same return of income on 22-09-2021 which was subjected to scrutiny proceedings. 3.2 It transpired that the assessee acted as a Vice President of Universal Educational Society (UES) which was also covered under search action. The assessee also acted as President of Gyan Jyoti Educational and Social Welfare Society (GJESWS). M/s GJESWS was registered with Registrar of Societies and it was running Punjab Group of colleges at Chunni Kalan, Fatehgarh Sahib, Punjab. During search on assessee, incriminating documents were found and seized which were marked as Annexure A-1 to A-4. On the basis of the same, it was alleged by Ld. AO that the assessee and his wife Smt. Raminderjeet Kaur was involved in diversion of trust funds of GJESWS for personal purposes / benefits. The said funds were alleged to be diverted for investments by the assessee in three plots at Mohali as detailed in para 2.2 of the assessment order. 3.3 During the course of search on assessee, a document containing list of assets and liabilities of the assessee was seized as Page No.81 of Annexure A-1. After examining the sources therefore, Ld. AO concluded that the funds of GJESWS were diverted to the assessee and his wife which was to be considered as income from other sources. The funds so transferred to the assessee and his wife during this year by GJESWS amounted to Rs.12 Lacs each and accordingly, added to the income of each of the assessee. 3.4 The addition of Rs.7.61 Lacs represent perquisite value of car which was provided to the assessee by Divya Shiksha Sansthan Trust (DSST). The trust was managing Divya Shiksha Gurukul College of Education, Dear Bassi which was established in the year 2005. Now, this college was part of Universal group of institutions since the year 2012. The assessee acted as member / trustee of DSST and he was holding the post of General / Finance Secretary. However, the assessee did not derive any monetary benefit from DSST except facility of one vehicle as given by the trust to him n the capacity of being its member since October, 2017. The said car was stated to be used for official purposes only. However, Ld. AO alleged that the funds of DSST were misused for personal benefit of specified persons and accordingly, proceeded to add the perquisite value of the car in the hands of the assessee. Accordingly, the approximate cost of fuel, maintenance, insurance, depreciation and driver was computed to be Rs.7.61 Lacs and added to the income of the assessee and the assessment was framed. The Ld. CIT(A) confirmed the assessment against which the assessee is in further appeal before us. Our findings and Adjudication 4. From the facts, it emerges that the addition of Rs.12 Lacs has been made as undisclosed income on the allegation that funds of GJESWS were diverted to the assessee and his wife which was to be considered as income from other sources. Upon perusal of assessee’s ledger extracts in the books of GJESWS as placed on record, it could be seen that the assessee has advanced unsecured loans to GJESWS which has been received back by the assessee through banking channels only. The assessee also receives transport charged from GJESWS for which separate ledger has been maintained. It could be seen that the transfer entries have happened through banking channels only. This being so, the transfer of funds to the assessee could not be said to be undisclosed income of the assessee and the allegation of diversion of fund could not be established. Therefore, this addition is not sustainable on facts. The corresponding grounds raised by the assessee stand allowed.