POONAM SAXENA,ALIGARH vs ITO, WARD 4(1)(5), ALIGARH

Date of Hearing 22.04.2025 Date of Pronouncement 22.04.2025 ORDER, PER BRAJESH KUMAR SINGH, AM,

This appeal filed by the assessee is directed against the order dated 29.12.2023 of National Faceless Appeal Centre (NFAC)/Ld. CIT(A), Delhi, relating to Assessment Year 2017-18 arising out of order u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to ‘the Act’) dated 22.11.2019 passed by the Income Tax Officer, Ward-4(1)(5), Aligarh.

At the time of hearing, the assessee had filed an adjournment petition, which was rejected and the appeal is being decided after hearing both the sides and on the basis of material available on record.

Brief facts of the case:-This case was picked up for limited scrutiny under Computer Access Selection of Scrutiny (CASS) to verify the large cash deposited during the demonetization period. The Assessing Officer noted that the assessee failed to produce any documentary evidence in support of cash deposit of Rs.40 lakhs during the demonetization period and added the same u/s 69A r.w.s. 115BBE of the Act.

Aggrieved with the said order, the assessee filed an appeal before the ld. CIT(A). The Ld. CIT(A) after examining the facts, dismissed the appeal by observing as under:-

“5.3 I have perused all the material on record including the impugned order. The Facts of the case as per the Assessment Order are as under: a) The assessee filed her e-return for the year under consideration declaring total income at Rs. 3,14,410/- only. Subsequently, to verify the large cash deposits during the demonetization period; the case was picked-up for Limited Scrutiny under Computer Access Selection of Scrutiny (CASS). Therefore, notice u/s 143(2) of Income- tax Act, 1961 was issued on 09/08/2018 fixing the and subsequently, notice u/s 142(1) of Income-tax Act, 1961 was issued on 21/01/2019 and 02/07/2019 requiring the assessee to furnish necessary information as mention therein, but the assessee did not comply any of the notice. Thereafter, a show cause notice u/s 144 of Income-tax Act, 1961 was issued on 23/08/ 2019, in compliance to the said notice, the assessee furnished his reply along with the copy of bank statements through system placed on file. b) On perusal of reply of it was noted that, the assessee was enjoying income from house property, business income in the shape of teaching tuitions to students and interest income during the year under consideration. c) The assessee had received rental income of Rs. 57,000/- in cash and Tuition income of Rs.1,94,400/- in cash which was shown in her ITR. While explaining the cash deposit of Rs. 2,95,000/- was made out of Rental income of Rs. 57,000/- in cash and Tuition income of Rs. 1,94,400/- and remaining amount was claimed to be from her past saving. Also, the assessee stated that she had declared income of Rs. 82,83,782/- under Income Declaration Scheme- 2016 on 30/09/2016 and the relevant document were duly submitted which is placed on file and has been verified from the Office of Pr. Commissioner of Income Tax, Aligarh. d) While explaining the cash deposit of Rs. 40,00,000/- during the demonetization period in her saving bank account no. 2961000100065127 maintained with Punjab National Bank, Mahendra Nagar, Aligarh, the assessee stated that the due date for deposit of 1st instalment of tax of income declared under "IDS-2016"scheme, the assessee had collected money from various relatives and friends and had deposited Rs. 40,00,000/- in her saving account no. 2961000100065127.Further, the assessee again filled reply and stated that she had received gifts amounting to Rs. 33,00,000/- from various relatives and had received unsecured loans of Rs. 3,71,500/- from various friends in cash on various occasions during F.Y. 2016-17 and the said amount was deposited by her in her savings account no. 2961000100065127 maintained with Punjab National Bank, Mahendra Nagar, Aligarh. e) In support of this claim, the assessee did not produce the gift deeds as she stated in her reply. The assessee produced only the list of names of Relatives, from whom gift received which was enclosed with the reply. Thus, the AO held that these documents were not sufficient evidence for proving the credit worthiness of these persons for giving gifts and unsecured loans. Therefore, the submission made by the assessee i.r.o amount received as gifts/loans of Rs. 36,71,500/- was not accepted and since, the assessee failed to produce any valid documentary evidence in support of cash deposit of Rs. 40,00,000/- during the demonetization period, the source of income of Rs: 40,00,000/- remained unexplained. Since, the reply offered by the assessee about the source of Income Rs. 40,00,000/- was not satisfactory, the sum of Rs. 40,00,000/- was added to the tofal income of the assessee as per 69A read with the section 115BBE of the IT Act, 1961,, 5.4 After analysis of the Facts of the case as per the assessment order(discussed in para 5.3 of this order) and the reply and submissions of the appellant dated 14.12.2023, following has been noted a) No copy of Gift deed were produced by the appellant during the assessment proceedings. However, during the appellate proceedings, the appellant has produced copies of Gift deeds from 14 Donors, i.r.o. claimed Gift of Rs. 33,00,000/-. The following discrepancies have been noted in all above 14 Gift deeds: i) No PAN details of the donors have been provided. ii) Most important, all the Gift deeds are un- notarized and on plain piece of paper, and hence holds no legal sanctity.

In view of the above, the Gift deeds (which claimed by the appellant to be provided during the assessment proceedings, but were actually not) produced by the appellant are rejected to be held as Evidences. b) In respect of unsecured loans of Rs. 3,71,500/-, no PAN details and addresses of the Creditors has been provided even during the appellate proceedings. Accordingly, the appellant has not submitted requisite evidences to explain the genuineness of the loans. c) In respect of claim of personal savings of Rs.3,28,500/-, the appellant has mere shown returned income for AY's 2013-14 to 2016-17, however, she has again failed to explain the cash deposits instead, i.e. how did she accumulated cash balances in hand. Since the cash balances in hand from her income as on date of deposit to bank account during the year under consideration was not explained and further, no substantial documents in this regard has been produced by the appellant. Accordingly, in these facts and circumstances, I am in agreement with the finding of the Assessing Officer and hold that the appellant is unable to substantiate her claims and is not able to controvert the assessment order. The addition made by the Assessing Officer is therefore confirmed.”

Against the order of the ld. CIT(A), the assessee is in appeal before us by raising the following grounds of appeal:-.

“01. THAT the AO as well as CIT(A)/NFAC has failed to appreciate the gift received by the assessee amounting to Rs.33,00,000/- from blood relatives, but due to lack of lawful knowledge, the assessee prepared the gift deed on plain paper, in these circumstances, the AO as well as CIT(A)/NFAC have failed to call upon or further issued of the notice, for produce the valid gift deed or to issue notice directly to donor for verification of gift deed, but did not so, and AO has passed an order after adding the amount of Rs. 33,00,000/- and CIT (A)/NAC has also upheld the same, which order contrary to fact, bad in law, be deleted.

THAT the AO as well as CIT(A)/NFAC has failed to appreciate that the assessee has received unsecured loans from relatives amounting to Rs. 3,71,500/- from which confirmation were also filed, if the confirmation was not fulfil the required information then AO to call upon or further issue notice, but did not so, and making the addition of Rs. 3,71,500/- and CIT(A)/NFAC has also upheld the same, which order is contrary to fact, bad in law, be deleted.

THAT the AO without appreciation of fact has added the amount of Rs.3,28,500/- as past savings of 4-5 years, whereas showing the worthiness status from her income tax return, the CIT(A)/NFAC has also upheld the addition, which are liable to be deleted.

THAT due to lack of lawful knowledge, not submitted the valid documents, which will be produced before the Hon'ble Court with all objects lawful papers/documents along with supporting evidences.”

In the statement of facts, the assessee submitted as under:-

The appellant is a lady engaged in the business of Teaching students for last several years apart from having income from house property and Interest Income. She filed her return of income for A.Y. 2017-18 showing an income of Rs.3,14,410.00 on 16.02.2018. The assessment was completed under section 143(3) vide order dated 22.11.2019 determining total income at Rs.43,14,410/- after adding Rs. 40,00,000/- under Section 69A read with section 1I5BBE of the Income Tax Act, 1961. Details are discussed as under: - 1) The appellant was regularly filing her return of Income for several years and was continuously showing the income from tuition Business in her earlier returns also. She had accumulated Rs. 3,28,500/- out of her income of earlier years and also for the F.Y. 2016-17 upto 08.11.2016 and had received Gifts of Rs. 33,00,000/- from various close relatives having blood relation with the appellant and had obtained Rs. 3,71,500/- as unsecured loans from various friends, she had also uploaded the copies of Gift Deeds and Loan Confirmations on e- proceedings portal of the Income Tax Department, which the Ld. A.O did not accepted, which is wrong, arbitrary and against the facts of the case. 2) Ld. A.O. had added the total cash deposited in Bank Account under section 69A as unexplained money, which is totally baseless. The appellant had well proved source of receipts through Gift Deeds and Loan Confirmation letters, however, vide Para no. 2 of Assessment Order, the Ld. AO had out rightly denied the submission of any Gift Deed or Loan Confirmation Letter, the Ld AO was well in position to call for confirmation from various lenders and persons giving the gifts, but he never bothered to verify the information and evidences submitted by appellant and passed the order in a very hurried manner without affording the opportunity to appellant to prove the gifts and loans received. Therefore, treating the cash for which source was well proved, as unexplained cash or investment under section 69A is against the Law. The source of income of the assessee already proved in returns of earlier years, hence addition under section 69A is unwarranted, arbitrary and bad in law. 6.1. The Ld. AR for the assessee submitted that both the Assessing Officer as well as the Ld. CIT(A) did not accept the plea of the assessee with respect to gift deeds filed by the assessee and other evidences in support of her claim. It was further submitted that both the Assessing Officer as well as the Ld. CIT(A) failed to call upon or further issued any notice to the assessee to produce the valid gift deed or issued notice directly to donor for verification of the gift deed. The Ld. AR further requested that another opportunity may be given to the assessee to submit cogent evidence before the Assessing Officer and the matter may set-aside to the file of the Assessing Officer for afresh adjudication.

The ld. Sr. DR supported the orders of the authorities below.

We have considered the rival submissions and perused the material available on record. The Assessing Officer as well as the ld. CIT(A) did not accept the evidences submitted by the assessee in support of her claim. However, both the Assessing Officer as well as the Ld. CIT(A) did not inform the assessee about said defects in the evidences submitted by the assessee before rejecting the same. Therefore, we are of the considered view that one more opportunity be given to the assessee to represent her case more effectively before the Assessing Officer with supporting evidences with respect to her claims. We, therefore, set-aside the order Assessing Officer as well as the order of the Ld. CIT(A) and restore the matter to the file of the Assessing Officer for afresh adjudication. The assessee is also directed to appear before the Assessing Officer.

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

Order pronounced in the open court on 22nd April, 2025.

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POONAM SAXENA,ALIGARH vs. ITO, WARD 4(1)(5), ALIGARH