SMT. SUNITA SINGH,NEW DELHI vs. ITO, NEW DELHI

1. That on the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in confirming the addition of: a) Rs.5,00,000/- being cash deposited in her bank account on 16.12.2008, and b) Rs.5,00,000/- being cash deposited in her bank account on 13.02.2009 as undisclosed income of the appellant by invoking section 68 of the income-tax Act, 1951.

That on the basis of documentary evidences filed during appellate proceeding and the facts narrated to him, the learned Commissioner of Income Tax (Appeals) ought to have accepted the genuineness of the amounts received from her relatives i.e. Father, Sister and Father-in-law and their creditworthiness. 2.1 That the learned Commissioner of Income Tax (Appeals) failed to appreciate the evidences filed and submissions made during the appellate proceedings and the case law relied upon on behalf of the appellant. 2.2 That the learned Commissioner of Income Tax (Appeals) failed to appreciate that the facts of the cases relied upon by him, in rejecting the appellant’s submissions, are entirely different from the facts in the present case. 2.3 That the observations of the lower authorities and the reasons for rejecting the appellants stand are based on surmises and conjectures and are contrary to the facts on record.

That on the facts and circumstances of the case and in law, the Commissioner of Income Tax Appeals erred in confirming the addition of Rs.80,298/- being expenses incurred for operating Chandanvan Tiny Tots School.

The facts related to this issue in brief are that the assessee filed the return of income on 31.03.2010 declaring an income of Rs.1,86,040/- which was processed on 06.09.2010. Later on, the case was selected for scrutiny on the basis of AIR information of cash deposited in bank account amounting to Rs.15,99,000/-. The AO asked the assessee to explain the source of cash deposited amounting to Rs.15,99,000/- in ICICI Bank Ltd., New Delhi. The assessee submitted that the following gifts were received from the relatives:

Being aggrieved the assessee carried the matter to the ld. CIT(A) and filed copy of bank account as under: Transaction Cheque Withdrawal Deposit Narration Date No. 16.12.2008 5,00,000.00 Cr By Cash new a/c. Sunita Singh 02.01.2009 5 ,00,000.00 Dr. Dr. Tran for funding A/c. 027414006127 02.01.2009 5 ,00,000.00 Cr 027414006127 Closure proceeds 03.01.2009 5,00,000.00 Dr. Dr. Tran for funding A/c. 027414006138 13.02.2009 5, 00,000.00 Cr By cash 26.02.2009 500121 5,00,000.00 Dr. Cash paid : self 19.03.2009 2,00,000.00 Cr By cash 21.03.2009 2,00,000.00 Cr By cash 23.03.2009 17391 3,00,000.00 Dr Cash paid: self 31.03.2009 1,99,000.00 Cr By cash

It was submitted that the cash deposits of Rs.2,00,000/- each on 19.03.2009 and 21.03.2009 were out of cash withdrawals of Rs.5,00,000/- on 26.02.2009 and similarly cash deposits of Rs.1,99,000/- was out of the cash withdrawals of Rs.3,00,000/- on 23.03.2009, however, the AO added Rs.5,99,000/- in the assessment order, in spite of the assessee’s submission that those were out of cash withdrawals from 7 Sunit Singh earlier date, on the ground that no evidence was submitted by the assessee to substantiate the contention.

The ld. CIT(A) after considering the submissions of the assessee observed that the assessee had withdrawn Rs.5,00,000/- on 26.02.2009 and Rs.3,00,000/- on 23.03.2009. Therefore, the preponderance of probabilities was in the favour of the assessee. Accordingly, addition of Rs.5,99,000/- was deleted.

As regards to the balance addition of Rs.10,00,000/- which comprises of cash deposits of Rs.5,00,000/- each on 16.12.2008 and 13.02.2009. The submission of the assessee was that the said deposits were out of the gifts received from the relatives. The source of cash deposits made on 16.12.2008 was stated to be out of the gift of Rs.3,50,000/- received from her sister Smt. Anita Singh on 12.12.2008. As regards to the deposits of Rs.5,00,000/- on 13.02.2009. The assessee’s submission was that this was out of gift of Rs.5,00,000/- received from her father on 29.01.2009 and gift of Rs.2,50,000/- received from her father-in-law on 27.01.2009. It was submitted that the father-in-law had agricultural income amounting to Rs.3,00,000/- which was shown in the return of income for the assessment year 2009-10 and similarly father had an income of Rs.3,45,517/- in the assessment year 2010-11. The ld. CIT(A) asked the assessee to prove the genuineness of those gifts by intimating the occasion and the existence of reciprocity of 8 Sunit Singh those gifts. According to the ld. CIT(A), the assessee was unable to prove the genuineness or state the occasion for the gifts and that the sister of the assessee did not file the return of income, father-in-law had only shown the agricultural income and the assessee was unable to intimate the details of income declared by the assessee’s father. He, therefore, was of the view that creditworthiness of the three donors and genuineness of those gifts was not proved. The ld. CIT(A) sustained the addition of Rs.10,00,000/-.

Now the assessee is in appeal. The ld. Counsel for the assessee strongly supported the orders of the authorities below and further submitted that the assessee received the gifts from her sister Smt. Anita Yadav who was employed as a teacher in Government School, Yamuna Nagar, Haryana. It was further stated that husband of her sister expired in a road accident in 2006 and thereafter her sister shifted to Mathura and got employed as a teacher in Senior Secondary School, Mathura. It was further submitted that Smt. Anita Yadav received approximately Rs.35,000/- per month from the Haryana Agricultural University, Hisar, where her deceased husband was employed, as family pension. Therefore, sufficient amount was available to make the gift. It was further submitted that all the three donors furnished the confirmation of gift and explained the source for making the gift. It was contended that father-in-law of the assessee was assessed to tax and her father was retired as Colonel from Indian Army and had given gift to the assessee 9 Sunit Singh amounting to Rs.5,00,000/- which was sufficient to make the deposits in the bank. It was further submitted that the assessee furnished the affidavit of the donors contents of which were not controverted. Therefore, the addition made by the AO and sustained by the ld. CIT(A) was not justified. It was further submitted that there can be no occasion for gift from the relatives. The reliance was placed on the judgment of the Hon’ble Delhi High Court in the case of CIT Vs Suresh Kumar Kakar (2010) 324 ITR 231.

In his rival submissions the ld. DR strongly supported the orders of the authorities below and further submitted that the assessee did not disclose the occasion of gift and had not fully explained the source for making the gift. Therefore, the addition was rightly made by the AO considering the gifts as non-genuine and the ld. CIT(A) was fully justified in confirming the addition. The reliance was placed on the following case laws: � Rajeev Tandon Vs ACIT (2007) 294 ITR 488 (Del.) � ACIT Vs Rajeev Tandson (2007) 108 ITD 560 (Del.) 12. I have considered the submissions of both the parities and carefully gone through the material available on the record. In the present case, it appears that the source of deposits in the bank account on 16.12.2008 and 13.02.2009 was stated by the assessee to be out of the gifts received from her sister Smt. Anita Yadav, father-in-law and father. All the three persons gave the confirmation of giving the gifts to the assessee, they 10 Sunit Singh explained their source in the confirmation and also filed the affidavit. The sister of the assessee Smt. Anita Yadav was assessed to tax having PAN Number AERPY4688P (copy of which is placed on the record and mentioned in the gift deed), she was working as a teacher and also received compensation after the death of her husband, she was also getting family pension, so she was having sufficient amount to make the gift of Rs.3,50,000/-. Similarly the father-in-law of the assessee was assessed to tax, he was having agricultural income and disclosed the source for making the gift. He gave the confirmation dated 10.02.2009, copy of which is placed at page no. 1 of the assesse’s compilation, copy of his acknowledgment is placed at page nos. 6 & 7, copy of his bank account is at page nos. 8 to 10 wherein cash withdrawals had been shown to substantiate the source of the gift. Father-in-law of the assessee Sh. Onkar Singh, gifted Rs.2,50,000/- on 27.01.2009, he had shown agricultural income of Rs.3,00,000/- in his return of income for the year under consideration, so it cannot be said that he was not having the sufficient amount to make the gift to his daughter-in-law. The assessee also furnished the copy of the gift deed for a sum of Rs.5,00,000/- received on 29.01.2009 from her father Colonel Dharm Vir Yadav who had stated in the said gift deed that he was getting a handsome salary throughout his carrier and income tax was deducted from his salary income and that he worked as a Solider Board Secretary, after his retirement under Haryana Government. The assessee also furnished the 11 Sunit Singh copy of PAN number of Sh. Dharam Vir Yadav which is placed at page no. 32 and also furnished the affidavit of her brother Sh. Ashok Kumar (copy of which is placed at page nos. 34 & 35) in the said affidavit it is mentioned that his father was not feeling well and died on 04.01.2009 and that he had given a cash amount gift of Rs.5,00,000/- to his sister Smt. Sunita before his death. Therefore, considering the totality of the facts of the present case as discussed hereinabove, I am of the view that the assessee duly explained the source of the gifts received from her sister, father-in-law and father. Therefore, the addition amounting to Rs.10,00,000/- made by the AO by considering the gifts as non-genuine and sustained by the ld. CIT(A) was not justified. Accordingly, the same is deleted.

The another issue vide Ground No. 3 relates to the confirmation of addition of Rs.80,298/- sustained by the ld. CIT(A) being expenses incurred for operating Chandanvan Tiny Tots School.

The facts related to this issue in brief are that the AO during the assessment proceedings noticed that the assessee filed bank statement of Chandanvan Tiny Tots School maintained with PNB, Mathura wherein cash had been deposited amounting to Rs.2,00,298/- and nothing was debited. He further observed that no income from Chandanvan Tiny Tots School had been declared. He, therefore, considered the cash deposits of 12 Sunit Singh Rs.2,00,298/- as unexplained and added the same to the income of the assessee.

Being aggrieved the assessee carried the matter to the ld. CIT(A) and submitted that the assessee had shown tuition income of Rs.1,20,000/- in the profit and loss account, therefore, separate addition of Rs.2,00,298/- was unwarranted. It was further submitted that the gross receipts from Chandanvan Tiny Tots School was deposited in her account with Punjab National bank and net receipts of Rs.1,20,000/- was shown as tuition income in the profit and loss account.

The ld. CIT(A) after considering the submissions of the assessee observed that the assessee had not produced any evidence regarding the expenses of Rs.80,298/- incurred for M/s Chandanvan Tiny Tots School and had not given any reason as to why those expenses were not debited in the profit and loss account for the relevant assessment year while crediting the tuition income of Rs.1,20,000/- in the profit and loss account. He, therefore, sustained the addition of Rs.80,298/- (Rs.2,00,298 – Rs.1,20,000).

Now the assessee is in appeal. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the tuition income was deposited in the bank account and withdrawal was made from the bank for making the expenses. Our 13 Sunit Singh attention was drawn towards page no. 29 of the assessee’s paper book which is the copy of bank account wherein net credit balance of Rs.2,09,652/- had been shown. It was further submitted that the assessee withdrew amounts from the bank account on various dates to meet out the expenses and had shown the net income from tuition in the profit and loss account instead of showing gross receipts on credit side and expenses on debit side of the profit and loss account. Therefore, the addition made by the AO by ignoring the aforesaid vital facts and sustained by the ld. CIT(A) was not justified.

In his rival submissions the ld. DR supported the orders of the authorities below.

I have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is noticed that the assessee was depositing receipts from tuition in her bank account maintained with Punjab National Bank in the name of Chandanvan Tiny Tots School and also had shown withdrawals, so it cannot be said that only deposits were there in the bank account as alleged by the AO. It is also an admitted fact that the assessee had shown the net income amounting to Rs.1,20,000/- on account of tuition fee. In the present case, the assessee deposited the entire tuition fee in her bank account withdrew the amount to meet out the expenses from the said bank account and had shown net income from tuition in the profit & loss 14 Sunit Singh account. Therefore, the addition made by the AO and sustained by the ld. CIT(A) to the extent of Rs.80,298/- was not justified and therefore, the same is deleted.

In the result, the appeal of the assessee is allowed. (Order Pronounced in the Court on 02/01/2017)