KAVITA ARORA,LUCKNOW vs. THE DEPUTY COMMISSIONER OF INCOME TAX, RANGE - 2, LUCKNOW

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH ‘A’, LUCKNOW BEFORE SHRI A.D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA No.28 to 30/Lkw/2022 Assessment Years: 2012-13 to 2014-15 Kavita Arora, Vs. DCIT, 3-Lalbagh, Range-2, Lucknow-226001 (U.P.) Lucknow PAN: AANPA 0573B (Appellant) (Respondent)

Appellant by Shri K.R. Rastogi, CA And Shri Shubham Rastogi,CA Respondent by Shri Pankaj Sachan, DR Date of hearing 01/06/2022 Date of pronouncement 29/07/2022 O R D E R PER BENCH:

These three appeals has been filed by the assessee against the separate orders of ld. CIT(A)-1, Lucknow dated 15.09.2020, 15.09.2020 and 17.09.2020 respectively. The grounds of appeal taken by the assessee in these appeals are reproduced below: ITA No. 28/Lkw/2022 “(1) The Ld. CIT (Appeal) 1, Lucknow erred on facts and in law in upholding the initiation of proceeding u/s 148 of I.T. Act without appreciating the reasons for initiating the proceeding do not meet the requirement of Law, hence they are invalid and subsequent assessment made is also void. (2) The Ld. CIT (Appeal) erred on facts and in law in upholding the addition of Rs. 5,00,000/- u/s. 68 of I.T. Act without appreciating that the said advance was received through cheque from Mr. Ramesh Pratap Singh as against property dealing, however due to feeding mistake the name is wrongly mentioned as Sunil Kumar in the Balance Sheet.

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(3) The Ld. CIT (Appeal) erred on facts and in law in upholding the addition of Rs. 13,82,750/- u/s. 69B of I.T. Act regarding Investment made in chit fund on monthly basis, solely on technical ground, inspite of the fact that the details of investment made from Bank Account has been furnished and funds were given out of surplus funds available in bank account during the year. (4) The addition upheld is highly excessive, contrary to the facts, law and principle of natural justice and without providing sufficient time and opportunity to have its say on the reasons relied upon by him.” ITA No. 29/Lkw/2022 “1. The Ld. CIT (Appeal) 1, Lucknow erred on facts and in law in upholding the initiation of proceeding u/s 148 of L.T. Act without appreciating the reasons for initiating the proceeding do not meet the requirement of Law, hence they are invalid and subsequent assessment made is also void. 2. The Ld. CIT (Appeal) erred on facts and in law in upholding the addition of Rs. 12,80,000/- u/s 69 of I.T. Act which includes Rs. 10,00,000/- being gift received through banking channel from her mother and Rs. 2,80,000/ from her sister through banking channel. 3. The Ld. CIT (Appeal) failed to appreciate that during appellate proceeding confirmation of the gifts by donors, their copy of ITR and copy of bank statements were submitted. It is explained that gifts were given by donors out of income, old saving in the form of FDR available bank. These details were not doubted, however solely on technical grounds being unregistered gift deeds the addition of Rs. 12,80,000/- has been upheld. 4. The addition upheld is highly excessive, contrary to the facts, law and principle of natural justice and without providing sufficient time and opportunity to have its say on the reasons relied upon by him.”

ITA No. 30/Lkw/2022 “(1.) The Ld. CIT (Appeal) 1. Lucknow erred on facts and in law in upholding the initiation of proceeding u/s 148 of I.T. Act without appreciating that reasons for initiating the proceeding do not meet the requirement of Law, hence they are invalid and subsequent assessment made is also void. (2) The Ld. CIT (Appeal) erred on facts and in law in upholding the addition of Rs 15,00,000/- u/s 69B of LT. Act without appreciating that investment has been made in chit fund on monthly basis

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through cheques and the relevant details and bank statement for this investment has been furnished before lower authorities. (3) The Ld. CIT (Appeal) failed to appreciate that the advance/investment has been shown in the Balance Sheet, however due to feeding mistake, incorrect name was mentioned. The addition has been upheld on the technical ground without appreciating the payments towards chit fund investment were made on monthly basis out of surplus funds available in the bank account and these payments were not doubted. (4) The addition upheld is highly excessive, contrary to the facts, law and principle of natural justice and without providing sufficient time and opportunity to have its say on the reasons relied upon by him.” 2. At the outset, ld. AR invited our attention to the petition for condonation of delay, which happened to be of 457 days in ITA Nos. 28 and 29/Lkw/2022 and 455 days in ITA No. 30/Lkw/2022. The ld. AR submitted that the appeals were to be filed on 14.11.2020, 14.11.2020 and 16.11.2020 respectively but the appeals has been filed on 10.03.2022 and 11.03.2022 respectively. The ld. AR submitted that the assessee was living with her mother and there was no other member other than assessee to look after her ailing mother and as she was ill and suffering from heart problem and problem of blood pressure, the assessee was busy in looking after for her medical treatment. It was submitted that eventually the mother of assessee expired on 05.05.2021. The ld. AR further submitted that the assessee also got infected with COVID and therefore she could not open her income tax profile and moreover she had not received the hard copy of order of ld. CIT(A). The ld. AR submitted that when the assessee received penalty notice and telephonic call from the income tax department regarding outstanding demand, the assessee opened her income tax profile and down loaded the order of ld. CIT(A) and thereafter she engaged a lawyer and filed the appeals. It was submitted that the assessee had duly furnished a notarized and signed affidavit in support of her contentions for delay in filing the appeals. Without prejudice to the above, it was submitted that the Hon'ble Supreme Court had suo motu vide order vide order dated

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10.01.2022 had extended the period of limitation and had excluded the period of limitation w.e.f. 15.3.2020 to 28.02.2022 to be excluded for the purpose of counting any limitation. Therefore, in view of these facts and circumstances, it was prayed that the delay in filing the appeals being unintentional be condoned and appeals be heard on merit. 3. The ld. DR did not raise any objection for condonation of delay in filing the appeals. Finding the reasons for delay in filing the appeals plausible because of the various reasons mentioned in the petition for condonation of delay we condoned the delay and ld. AR was asked to proceed with his argument. 4. The ld. AR, at the outset submitted that he will not be pressing Ground No.1 in all the three appeals, therefore, the same may be dismissed as not pressed. 5. Coming to Ground No.2 in ITA No. 28/Lkw/2022, the ld. AR submitted that the assessee had received an amount of Rs.5.00 lacs through cheque in her bank account against agreement to sell for Flat No. BG01 situated at Lucknow from Smt. Sunita Singh wife of Mr. Ramesh Pratap and in this respect our attention was invited to P.B. pgs. 1 to 8 where a copy of bank account of the assessee was placed and wherein the said amount of Rs.5.00 lacs was found credited. It was submitted that the ld. CIT(A) has upheld this addition by holding that the assessee had failed to establish the genuineness of the above transaction whereas the fact of the matter is that the assessee had received such amount against sale of its flat and in this respect our attention was invited to P.B. pgs. 9 to 10 where a copy of agreement to sell was placed. The ld. AR submitted that the only reason for rejecting the claim of the assessee was that she had initially stated it to have been Shri Sunil Kumar and then she stated to have received from Ramesh Pratap Singh. The ld. AR submitted that the assessee had inadvertently written the name of Sunil Kmar, whereas from the copy of agreement

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itself it is clear that the said amount was received from Mrs. Sunita Singh wife of Ramesh Pratap Singh and in the bank account the name of Ramesh Pratap Singh has been mentioned. Therefore, in view of these facts and circumstances, it was prayed that this issue may be set aside to Assessing Officer for re-verification. 6. Regarding the other issues of addition of Rs.13,82,750/- which the ld. CIT(A) has upheld u/s. 69B of the Act, the ld. AR submitted that the assessee was a member of kitty amounting to Rs.1,25,000/- and Rs.20,000/- per month which she was paying to various kitty members and in this respect our attention was invited to P.B. pgs. 24 to 29 where a copy of such kitty agreement of Rs.1,25,000/- per month was placed. It was submitted that the assessee has been paying these amounts to various kitty members invidually but in the books of account, ledger account in the name of Carrier Chit Fund Company which was manging such kitty was mentioned. Our attention was invited to P.B. pg. 36 where a ledger account in the name of Carrier Chit Fund was placed and wherein an amount of Rs.10.00 lacs in the form of Rs.1,25,000/- paid each month out of bank account of the assessee was placed and our attention further invited to P.B. pg. 39 where another account ledger related to kitty amounting to Rs.13,82,750/- was placed. The ld.AR submitted that ld. CIT(A) has wrongly upheld these addition u/s. 69B of the Act as unexplained investment which are not unexplained but are duly reflected in the books of account of the assessee and assessee has been paying these amounts out of her bank account through cheques. The only reason for sustaining the addition by ld. CIT(A) is the wrong mentioning of account in the books of account in the name of Carrier Chit Fund Company instead of debiting the same individually to the kitty members. The ld. AR further submitted that during AY 2013-14 i.e. succeeding year the assessee had received an amount of Rs.23,75,000/- as her share of kitty from various members and in this respect our attention was invited to copy of bank account of the assessee placed at

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PB pgs. 37 to 48. Our specific attention was invited to PB pgs. 45 to 47, where such receipts from various kitty members was found credited in the bank account of the assessee. In view of above facts and circumstances, it was prayed that the addition sustained by ld. CIT(A) be deleted. 7. Coming to appeal in ITA No. 29/Lkw/2022, the ld. AR submitted that in this year, the only issue is regarding addition of Rs.12,80,000/- u/s. 69 of the Act. The ld. AR submitted that assessee had received a gift of Rs.10.00 lacs from her mother and Rs.2,80,000/- from her sister and the only reason for not accepting the contention of the assessee is that the ld. CIT(A) held that the fact of making gifts from the bank accounts of the donors was not clear. The ld. AR submitted that it is an undisputed fact that both mother and sister of the assessee are having PAN numbers and are filing regular income tax returns. It was submitted that the assessee had duly submitted the copies of ITRs of both the persons a copy of which is placed in P.B. pgs. 5 and 15 and 17 respectively. It was submitted that the assessee had also submitted a copy of gift deed of mother which is placed at P.B. pgs. 6 and 7. It is was submitted that copy of bank accounts was also submitted from where the payments were made to assessee and in this respect our attention was invited to paper book pgs. 1 and 2.Therefore, in view of above facts and circumstances of the case and evidences, it was prayed that upholding of an addition only on the basis of the finding that the entries are not clear from the copy of bank account and ignoring all evidences is not justified and it was prayed that the same may be deleted.. 8. Coming to appeal in ITA No. 30/Lkw/2022, the ld. AR submitted that in this year ld. CIT(A) has upheld the addition of Rs.15.00 lacs which the Assessing Officer had made u/s. 69B of the Act. The ld. AR invited our attention to copy of same kitty agreement dated 10.4.2013 submitted before authorities below wherein the names, address and PAN of

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members was mentioned and our attention was invited to P.B. pgs.1 to 20 where the copy of such agreement was placed. It was submitted that said chit funds was managed by Shri Rahul Om Arora, who is a Director of Carrier Chit Fund Company. The ld. AR submitted that the said amount of Rs.1,25,000/- per month was being paid out of bank account of the assessee directly to the members of the kitty but instead of debiting to the individual accounts of the members the amount was being debited to the accounts of Carrier Chit Fund Company. It was submitted that in the AY 2012-13 also the Assessing Officer had made similar additions on account of same kitty. It was submitted that the investment was made out of the declared sources and out of bank account of the assessee and the amount of payment has been received by the assessee in F.Y. 2016-17 and our attention was invited to P.B. pgs. 23 to 27 where such amount was credited to the bank account of the assessee and in view of these facts and circumstances, it was submitted that the additions sustained by the ld. CIT(A) are not in accordance with facts of the case and the same may be deleted. 9. The ld. DR, on the other hand, placed reliance on the orders of authorities below and submitted that in respect of kitty payments claimed to have been made by the assessee, the assessee was not able to demonstrate that payments made to Carrier Chit Fund Company P. Ltd. were in fact payments to various kitty members and therefore ld. CIT(A) has rightly upheld the additions u/s. 69B of the Act. Regarding the issue of gifts alleged to have been received from mother and sister of the assessee, the ld. DR submitted that in the absence of verification from the bank accounts of donors, the ld. CIT(A) has rightly upheld the additions. 10. We have heard the rival parties and have gone through material placed on record. We find that the first ground in all these appeals relates to a legal issue wherein the assessee had challenged the legality of

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reopening u/s.148 of the Act but which the ld. AR has not pressed therefore Ground No.1 in all the appeals is dismissed as not pressed. 11. First of all, we take up appeal in ITA No. 28/Lkw/2022 on merits. In this appeal, the first issue raised by the assessee is regarding payment of Rs.5.00 lacs which he has claimed that she had received against sale of some flat situated in Lucknow and our attention was also invited to P.B. pgs. 1 to 8, where a copy of bank account of the assessee was placed and wherein the said amount of Rs.5.00 lacs has been found credited. We also note that P.B. pgs. 9 and 10 is copy of agreement to sell wherein the assessee had made an agreement for sale of a flat to Smt. Sunita Singh, wife of Ramesh Pratap Singh. We find that in the ledger account where the said amount of Rs.5.00 lacs has been credited the name of Ramesh Pratap Singh has been mentioned. The only reason for making and sustaining the addition is that the assessee earlier claimed to have received this amount from Shri Sunil Kumar and then she changed her stand and stated that the said amount has been received against the sale of flat. We find that this issue requires readjudication and reverification on the part of Assessing Officer therefore this issue is remanded back to the Assessing Officer who should make a fresh order in this respect after going through the relevant records and documents. In view of above Ground No.2 in ITA No. 28 is allowed for statistical purposes. 12. Coming to Ground No.3, regarding issue of addition of Rs.13,82,750/-, we find that the assessee is a member of two kitties one of Rs.1,25,000/- per month and one of Rs.20,000/- per month. Both kitties were being managed by Carrier Chit Fund P. Ltd. and the assessee in her books of account has been debiting the monthly payment of Rs.1,25,000/- to this account instead of to various kitty members to whom payment of Rs.1,25,000/- per month was being made. The said payment has been made out of the known sources of the assessee and from the bank account of the assessee and the only

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reason for sustaining the addition is that the assessee in her books of account mentioned the name of Carrier Chit Fund Pvt. Ltd. instead of debiting the same to the individual members. The assessee has also received back such contribution of kitty in the succeeding year and in this respect our attention was invited to P.B. pgs. 37 to 48, where a copy of complete bank account of the assessee was placed and wherein such sum of Rs.1,25,000/- from various members has been found credited. Similar is the position with regard to another kitty of Rs.20,000/- per month which has been debited to the Carrier Chit Fund P. Ltd. instead of members of the kitty. These amounts invested out of bank account of the assessee and recorded in the books of account cannot be said to be unexplained investment u/s. 69B of the Act, specially in view of the fact that these were received back also in the succeeding year and therefore, we reverse the order of ld. CIT(A) in this respect and allow Ground No.3 of the appeal in ITA No. 28/Lkw/2022. 13. Ground No.4 is general and do not require any adjudication. 14. In view of above, appeal in ITA No.28/Lkw/2022 is partly allowed for statistical purposes. 15. Now Coming to ITA No.29/Lkw/2022, we find that in this appeal there is only one issue of gift of Rs.12,80,000/- received from mother and sister of the assessee respectively. The assessee had received gift of Rs.10.00 lacs from her mother and Rs.2,80,000/- from her sister. The donors are both having PAN numbers and are regularly filing the returns of income and both have paid amount of gifts out of the bank account. The copy of return of income of mother is placed at P.B. pgs. 5 and 15. Similarly, sister of the assessee is filing income tax returns, a copy of which is placed at PB pg.17. The gift from mother and sister are supported by a gift deeds, a copy of which is placed at PB pgs. 6 to 7 and 13 to 14 respectively. The ld. CIT(A) has upheld this addition only by saying that entries in the bank account of the donors are not visible and

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has ignored all other documentary evidences which are clearly in favour of the assessee. The entry in the bank account of mother is quite visible as can be seen from pg.1 of paper book where an amount of Rs.10,00,000/- has been found debited. Therefore, we reverse the order of ld. CIT(A) in this respect and therefore Ground Nos. 2 and 3 of appeal in ITA No.29/Lkw/2022 is allowed. 16. Now coming to Ground Nos. 2 and 3 of appeal in ITA No.30/Lkw/2022, we find that in this year, the Assessing Officer has made an addition of Rs.15.00 lacs u/s. 69B of the Act, which is the similar addition, which was made by Assessing Officer during AY 2012-13. This addition also represents the kitty payments of Rs.1,25,000/- per month, which the assessee has been paying out of her books of account and was duly recorded in the books of account. The only mistake done by assessee is that instead of debiting the kitty amounts monthly to the accounts of different kitty members, the assessee kept on debiting the same to the account of Carrier Chit Fund P. Ltd. This investment in the form of kitty was also received back by assessee in AY 2016-17, which fact is verifiable from PB pgs. 23 to 27, where a copy of bank account of the assessee is placed and where such amounts has been found credited in such account. In view of these facts and circumstances, the Ground Nos. 2 and 3 in appeal in ITA No.30/Lkw/2022 is also allowed. 17. In the result, the appeal in ITA No.28/Lkw/2022 is partly allowed for statistical purposes and appeal in ITA Nos. 29 and 30/Lkw/2022 are partly allowed.

(Order pronounced in the open court on 29/07/2022) Sd/- Sd/- (A.D.JAIN) ( T. S. KAPOOR ) Vice President Accountant Member Dated: 29/07/2022 Aks

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Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. The CIT(A) 5. D.R., I.T.A.T., Lucknow By Order

Asstt. Registrar