MEENA GARG,ALWAR vs. ITO, ALWAR

In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of ld. A.O. in not allowing the deduction of Rs. 9850/- U/s 80C. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by allowing the said deduction of Rs. 9850/- U/s 80C.

In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of ld. A.O. is disallowing a sum of Rs. 10,000/- out of total disallowance of Rs. 18,197/- on account of various expenses. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by allowing the said addition of Rs. 10,000/-.”

The assessee is proprietor of M/s Swastik Enterprises and has filed her return of income for the year under consideration on 28/09/2011 declaring total income of Rs. 7,34,277/-. The case of the assessee was selected for scrutiny and the assessment was completed

Ground No. 1 of the appeal is against sustaining the addition of Rs. 11,33,000/- on account of unexplained income introduced in capital

Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld. CIT(A), who after considering

4 The AO has further stated in the order that money has been transferred from the business account without reducing the capital account balance to the savings account of the proprietor and vice-a-versa also. The details of the transactions so carried out have been given in para 1.8 on page 5 of the order. Thus, AO has given a finding that a capital introduction of Rs. 10 lacs by way of cheques from the un disclosed savings account of the proprietor has to be treated as unexplained income of the appellant. Further, it is stated that 1,33,000 has been introduced in the capital account by way of cash contribution and in the absence of any evidence, the same was also held to be unexplained income.

5 The appellant has stated that an amount of Rs. 10 lacs was transferred through the bank account and a cheque no. 370177 of Rs. 5 lacs was introduced on 13-04-2010 and a cheque no. 370178 of Rs. 5 lacs was introduced on 28-04- 2010. The amount of Rs. 1,15,000 was deposited in cash on 15-06-2010 and Rs. 18,000 was deposited on 20-03-2011. The sources of cash deposited are stated to be on account of cash withdrawal of Rs. 65,000 from the bank account on various dates and further amount is on account of savings of pocket money from her husband and occasional gift received. Further, cash deposit of Rs. 18,000 is out of money received from father-in-law.

6 Having considered the evidence placed on record, I find that the transactions of fund transfer between the savings account of the Proprietor and business account have been repetitive in nature and have not been completely reflected in the accounts books. These transactions have not been routed through the capital account of the proprietor. It is seen from the copy of the savings account filed by the appellant in the course of appellate proceedings that there have been frequent transactions between the two accounts, for instance, Rs. 1 lac has been transferred in the savings accounts on 31-07-2010 and Rs. 2 lacs on 04- 01-2011. Similarly, there have been transactions of transfer of funds to M/s Swastik Enterprises of Rs. 7 lacs on 23-01-2010 from the saving account of the proprietor (which though falls in the preceding year). Thus, I hold that appellant has failed to explain the sources of credits and AO was justified in treating the amount of Rs. 10 lacs credited in the capital account on account of bank transfers from the savings accounts as unexplained income of the appellant.

7 Further, I find that as regards, the contribution of Rs. 1,33,000 in cash by the proprietor in the capital account is concerned, the appellant has failed to furnish any supporting evidence to substantiate its contentions. The explanation furnished in this regard is vague and too generalized and is self serving in nature. The appellant has failed to bring on record any evidence with regard to the accumulation of cash and sources thereof. No confirmation, sources of income, etc. of the other persons has been filed to substantiate the contentions. Thus, I hold that appellant has failed to explain the sources of cash credits in the capital account and AO was justified in treating the amount of Rs. 1,33,000 credited in the capital account as unexplained income of the appellant.

8 Thus, I confirm the addition of Rs. 11,33,000 made by the AO on account of unexplained income introduced in the capital account of the appellant.”

Now the assessee is in appeal before me. The ld AR of the assessee has reiterated the arguments as made before the lower

The ld Sr. DR has vehemently supported the order of the lower

I have heard the rival contentions of both the parties, perused

In the result, the appeal of the assessee is allowed for statistical