SIMMI KOHLI,NEW DELHI vs. ITO, NEW DELHI

This appeal is filed by assessee against the Order dated 14.2.2014 passed by the Ld. CIT(A)-XXVIII, New Delhi relating to Assessment Year 2005-06 on the following grounds:-

addition to the Income of the assessee towards unexplained cash deposits in the bank account u/s 69A of the Income Tax Act in the facts & circumstances of the case.

5. The Ld. AO erred in law & on facts in making aforesaid additions of Rs.107500/-, Rs 28200/- and Rs 1720000/- and the Ld. CIT (A) erred in confirming the said additions to the Income of the assessee while ignoring relevant evidence placed on record and considering irrelevant material in the facts & circumstances of the case.

6. The Ld err (A) erred in law and on facts in observing that the receipts of loan from family members were in violation of section 269SS and the appellant is liable to penalty u/s 271-D in the facts & circumstances of the case.

2. The brief facts of the case are that assessee filed her return of income on 01.8.2005 declaring an income of Rs. 1,05,525/- supported by salary certificate issued by the RD Public School, Krishan Vihar, New Delhi and computation of income. The return of the assessee was processed u/s. 143(1) of the Income Tax Act, 1961 (in short “Act”) at the returned income. Subsequently the case of the assessee was selected for scrutiny as per CASS list generated on 26.7.2006. Accordingly, notice u/s. 143(2) of the Act dated 26.7.2006 was issued and in response to the same, assessee herself attended the proceedings on 24.8.2006. Another notice u/s. 143(2) of the Act cum questionnaire issued to the assessee by the earlier AO and thereafter a notice u/s.143(2) dated 26.9.2006 was issued and in response to the assessee’s husband Sh. Rajiv Kohli attended the proceedings and filed part reply to the questionnaire issued to the assessee on 24.8.2006 and the case was adjourned to 22.11.2006 and thereafter to 29.11.2006 and further to 26.12.2006. On 26.12.2006 the assessee attended the proceedings alongwith her husband and filed some of the details called for. On the specific information received on AIR, summons u/s. 131 of the Act were issued to the Branch Manager, Allahabad Bank, Bhera Enclave, Paschim Vihar, New Delhi calling for the statement of account and other documents in respect of SB A/c No. 101753. During the course of assessment proceedings the AO asked the assessee about the details of investment in the property situated at B- 1234, Ansal’s Palam Vihar, Gurgaon and in response to which the assessee submitted that the said property has been purchased by the assessee from the funds arranged from various sources. The AO observed that the assessee was not able to substantiate the amount of loan taken from the various family members. Assessee further submitted the confirmations from the family members, however, the AO disregarded the same and made the additions in the hands of the assessee. AO further observed that since the brokerage was paid in cash by the assessee and the assessee could not produce any evidence to substantiate the same, the amount of brokerage paid was also not genuine and the addition was made in the hands of the assessee amounting to Rs. 1,07,500/- u/s. 69 of the Act on account of unexplained disinvestment in house property. AO further observed that assessee had deposited a sum of Rs. 28,200/- and Rs. 17,20,000/- on account of unexplained cash deposits in the bank accounts on various dates and made the addition in the hands of the assessee. AO asked the assessee to submit the details of the salary income of the assessee and assessed submitted that she was working as Vice Principal in RD Public School, Delhi and drawing salary of Rs. 20,075/-, but AO alleged that since the salary certificate issued by the school shows the salary of Rs. 1,40,525/- was paid to the assessee, thus the addition of Rs. 5,000/- (Rs. 1,40,525 – Rs. 1,32,525) (as offered in computation of income) was made in the hands of the assessee. Accordingly, the AO completed the assessment at Rs. 21,08,426/- u/s. 143(3) of the Act vide order dated 20.03.2007. Against the assessment order dated 20.03.2007, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 14.2.2014 has dismissed the appeal of the assessee by confirming the action of the AO. Aggrieved with the impugned order dated 14.2.2014, assessee is in appeal before the Tribunal.

3. At the time of hearing, Ld. Counsel for the assessee stated that lower authorities erred in making and confirming the additions of Rs.107500/-, Rs 28200/- and Rs 1720000/- to the Income of the assessee while ignoring relevant evidence placed on record and considering irrelevant material in the facts & circumstances of the case and on the basis of some doubts, which is not sustainable in the eyes of law. In support of his contention, he filed a Written Synopsis and Paper Book containing pages 1-59 in which he has attached the copy of acknowledgement of original ITR alongwith computation of income; copy of salary certificate issued by RD Public School dated 31.8.2004; copy of notice dated 19.1.2007 issued u/s. 143(2) of the Act; copy of reply filed by the assessee dated 19.2.2007; copy of reply filed by the assessee dated 9.3.2007; copy of reply filed by the assessee dated 20.3.2007; copy of notice dated 30.11.2007 issued u/s. 143(2) of the Act; copy of reply filed by the assessee dated 12.12.2007; copy of letter issued by RD Public School dated 19.3.2007; copy of bank statement for AY 2005-06 of the savings bank account with Bank of Baroda; copy of details of monthly cash deposits and withdrawals for AY 2005-06 from bank accounts with Allahabad Bank and Bank of Baroda; copy of bank statement for AY 2005- 06 of the bank account held with Allahabad Bank; copy of bank book for bank account with Allahabad Bank for AY 2005-06; copy of Bank book for bank account with Bank of Baroda for AY 2005-06; copy of confirmation from Father in law of the assessee; copy of bank account of the husband of the assessee with Canara Bank; copy of delivery receipts with respect to the business of the husband of the assessee; copy of written submissions filed before the Ld. CIT(A) dated 14.5.2009; copy of written submission filed before the Ld. CIT(A) dated 14.5.2009; copy of Remand Report issued by the AO dated 02.9.2011; copy of written submission filed before the Ld. CIT(A) dated 4.2.2014, which were not properly appreciated by the revenue authorities.

4. On the contrary, Ld. DR relied upon the orders passed by the revenue authorities and stated that Ld. CIT(A) has rightly confirmed the additions in dispute, which does not need any interference. Therefore, the appeal filed by the assessee may be dismissed.

5.1 Apropos ground no. 1 relating to addition of Rs. 1,07,500/- on account of unexplained investment in house property u/s. 69 of the Act is concerned, it is noted that assessee has purchased a property for a total sum of Rs. 12,26,500/-. The AO accepted the explanation in respect of Rs. 11,19,000/- and therefore, made the addition in respect of balance amount of Rs. 1,07,500/- the amount with the assessee was raised from assessee’s own past savings and the amount taken from the brother, brother in law and father in law. In this connection, it is observed that the assessee has filed detailed explanation before both the lower authorities alongwith the confirmations, but both the lower authorities have rejected the explanation of the assessee. However, on perusing the details and the facts of the case, I am of the considered view that the explanation has been rejected merely on the basis of doubts, which is not sustainable in the eyes of law. However, in the present case the amount involved is not so big as cannot be assumed to have been arranged from the close relatives i.e. brother, brother in law and father in law. I further note that it is a common practice that while purchasing property, brother, brother in law and father in law etc. do provide support. The amount of Rs. 20,000/- or Rs. 30,000/- by such close relatives cannot be disbelieved. Accordingly, the addition made by the AO and further confirmed by the Ld. CIT(A) on this account is not tenable, hence, the same is deleted and accordingly, the ground no. 1 raised by the assessee is allowed.

5.2 Apropos ground no. 2 & 3 relating to addition of Rs. 28,200/- on account of explained cash deposits in the bank account and addition of Rs. 17,20,000/- on account of unexplained cash deposits in the bank account u/s. 69A respectively are concerned, it is noted that these were the amounts deposited in the bank account of the assessee and the assessee has given detailed explanation that these amount deposited by the assessee’s husband who is engaged in purchase and sale of old vehicles. Further, it is observed that the bank account for which the addition has been made is not of the assessee and was being maintained by the husband of the assessee. It is also noted that the AO while making the addition of cash deposits in the bank accounts of the assessee, has not considered the amount of cash withdrawals from those accounts. It was further observed that AO in his notice issued u/s. 143(2) of the Act dated 19.1.2007/05.02.2007 has noted the fact that the withdrawals of the assessee are at Rs. 18,76,355/- from her savings bank account maintained in Allahabad Bank for her day to day expenses / commitment as required during the year 2004-05 relevant to assessment year 2005- 06, (as shown at page no. 6 of the Paper Book), which establishes that the amount of cash deposits in the bank account is from the withdrawals only which has already been accepted by the AO. However, in the present case the AO has not considered the amount of withdrawals while making the addition, which is not tenable in the eyes of law, therefore, the same are hereby deleted and accordingly, the ground no. 2 & 3 stand allowed.

5.3 Apropos addition of Rs. 5,000/- on account of difference in salary income raised in ground no. 4 is concerned. On perusal of the impugned order of the Ld. CIT(A), it is seen that this ground was not raised before the Ld. CIT(A), hence, the same is dismissed as such.

Order pronounced on 20/12/2019.