SHRI AJAY KUMAR,NEW DELHI vs. ITO, NEW DELHI

The learned AR inviting attention to the record submitted that notice under Section 148 was issued to the assessee in view of the fact that an amount of Rs. 13,16,950/- odd was found deposited in his saving bank account No. 022501002509 with ICICI Bank. Inviting attention to para 3 of the assessment order, it was submitted, that it had been claimed that the amount was contribution from his various family members consisting of their accumulated savings and withdrawals from their respective banks etc. In support of the said claim confirmations, ITR’s and copies of bank statements of the family members were placed on record. The Assessing Officer discarded the same and made the additions holding that the creditworthiness of the parties was not proved from the ITR’s filed. It was his submission referring to para 4 of the assessment order that the assessee lived in a joint family alongwith his brothers, father and these arguments have been reproduced in the order itself. Due to the medical problems of the assessee where repair of the house also become an urgency, the family members arranged loans ranging from Rs. 1 lakh to Rs. 2 lakh directly deposited in his bank account funds from their savings/earning etc. Only the amount advanced by his real sister was an amount of Rs. 5,00,000/- which too had been returned back through the banking channels. The deposits from the family persons noted in para 5 of the assessment order itself are from the following : i. Sh. Gyan Chand Bhardwaj (father) - Rs. 1,00,000/- ii. Sh. Ajay Kumar (wife) - Rs. 1,53,500/- iii. Smt. Dimple (wife) - Rs. 1,46,300/- iv. Sh. Arun Kumar (Brother) - Rs. 2,00,000/- v. Smt. Kamal Kanti (Sister) - Rs. 5,00,000/- vi. Smt. Sarojini (Bhabhi) - Rs. 2,16,950/- 2.1. Merely because the family members of the assessee did not have taxable income, saving from working at either in private employment or as adhoc government out sourced employees or self employed, presumption has been drawn that they cannot make savings.

The learned Sr. DR relying upon the orders of the tax authorities submitted that no doubt the assessee has been claiming that on account of a financial crisis in the case of the assessee who had health problems the family members have contributed and they have also accepted this fact but the assessee has failed to demonstrate the specific bank account where from the money has been advanced or the savings and flow of money to the assessee.

I have heard the submissions and perused the material available on record. I find that in the facts of the present case, I am unable to concur with the reasoning and the finding of the CIT(A). The reasons for the same are set out herein after. A perusal of the record shows that it is an admitted fact, that the specific funds have been advanced to the assessee by close family members like his father who is stated to be a retired government employee; by his wife who is stated to be engaged in performing odd jobs; by his brother Sh. Arun Kumar and his sister-in-law Smt. Sarojini. The persons are stated to be self-employed and only Smt., Kamal Kanti i.e. the sister of the assessee who has advanced a major sum of Rs. 5 lakh is stated to be an ad hoc government employee and even she is stated to have been earning a salary which is not taxable. The admitted fact on record is that these persons have filed their confirmations affirming that they have advanced the specified funds from their savings and have also supported the said claim by way of filing of affidavits. It is seen that the tax authorities have not cared to discuss the contents of the affidavits let alone rebut the same. It is not a case that astronomically huge sums have been advanced from their savings to the assessee. The advances of Rs. 1 to 2 lakhs cannot be considered to be impossible amount considering the Strata to which the family belongs. The family members have consistently supported the claim of the assessee that the funds were advanced in order to meet the urgent financial requirements of repairs to the house in which the assessee alongwith his family consisting of these very family members except the married sister all stayed at the same premises as per record. During this period when the funds were required for repair it has been consistently claimed that the assessee was having heart problems and had also undergone angioplasty. In fact in the case of the 5 Lacs advanced by the sister, it has been stated that it was specifically for a surgery which ultimately was not necessary and on account of this fact the funds were paid back to the sister by using the banking channels. The evidence remains un-rebutted on record. The insistence of the tax authorities to demonstrate the flow of money from the banking channels to the assessee of these small meagre amounts in the circumstances is casting an unnecessary burden on the assessee. It is not a sin to be below the taxable limits. The efforts of the marginalized sections to better their lifestyle should be applauded and their transition from below taxable limit to becoming potential tax payers should be encouraged and watched out for event for the economy. The process and transition should not be made painful. It cannot be over emphasized that the adjudicating authority necessarily needs to always bear in mind the facts and realities of the population which comes before it. Simply because the tax payer belongs to the Strata who has never had taxable income and all his family members also fall in the same Strata on this ground alone the claim cannot be thrown out. The claim being that these specific family members had savings of the stated amount which were advanced to the assessee in his time of financial and medical emergency. The presumption that only a taxpayer can save and non-tax paying citizens cannot be presumed to save is a presumption based on no data and has to be consigned as being a conjecture . Suspicions and surmises however strong cannot take the place of facts and evidences. In the case at hand confirmations and affidavits are consistently in support of the claim. The standards of proof which would have been ordinarily applied to the taxpayers who work in the organized sector cannot be insisted upon in the facts of the present case. Margin has to be kept in mind about the handicap with which a financially literate person lives. Due to lack of adequate and appropriate advice, the financially illiterate person suffers from the handicap of not even knowing that supporting facts and unimpeachable evidence could have been retained from the raw data of everyday economic activity carried out by him and his family members.

Considering the specific socio economic strata wherefrom the family members of the assessee come from and considering the amounts advanced, I am of the view that in these peculiar facts and circumstances, the insistence of the tax authorities to insist upon adhering to the strict proof of evidences which a tax payer employed in organized sector can demonstrate would not serve the ends of justice. The standards of proof and evidence which are ordinarily applied to the tax payers who come from a relatively comfortable socio economic organized strata would be an unfair and impractical insistence in the peculiar facts of the present case. The grassroot reality of existential reality cannot be ignored and if it is ignored it is ignored at its peril namely that the vast population in not having ancestral wealth to look forward necessarily either survives on its own efforts or on efforts and endeavours of the state. In order to ensure that more and more population lives a meaningful life by creating its own means of livelihood and leads on to creation of its wealth, the reliance on the crutches provided by the State in the interests of the State itself should be encouraged and facilitated. The reality of the lowest socio-economic strata is that each family member irrespective of his/her age, health, gender or education perforce endeavours to be a financially and viable contributing member by carrying out small, full or part-time activity or procuring/creating small jobs at times at the cost of the formal education of the young children. Looking at the amounts involved in the hands of the 5 members except the sister who is claimed to be working in some ad hoc level of government employment but still not having taxable income I am of the view that the family members in the facts of the present case have successfully demonstrated that they had advanced their saving to the assessee who admittedly has utilised the funds for repair etc and the funds have been advanced during the time that the assessee perceived to be having life-threatening health problems the claim deserves to be allowed. At the cost of repetition in the case of the sister it is a fact that the amount has also been returned back again by using banking channels. In these peculiar facts and circumstances I find that the addition has wrongly been made and sustained in the hands of the assessee while so holding it is deemed appropriate to record that the said order shall not be a precedent in the case of the assessee in future as the conclusions and findings have been arrived at on the basis of peculiar facts wherein it is a one-time event in the hands of the assessee and considering the smallness of the amounts involved.

Regarding the second additions made by the Assessing Officer wherein the AO has disallowed the claim of interest of Rs. 1,43,357/- supported by form no. 16 has payment for availing housing loan from ICICI bank supported by the certificate only on the grounds that sale deed was executed in favour of the assessee’s wife Smt. Dimple who was earning money through odd jobs affirmed by her. In these peculiar facts, I find that the interest paid on housing loan could not have been disallowed. Accordingly the said addition is directed to be deleted. The learned AR at the time of hearing argued only ground nos. 1and 2 which accordingly stand allowed. The said order is pronounced at the time of hearing itself .