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Afsha Talwar F-2, Maharani Bagh New Delhi Vs. ACIT Circle-23(1) New Delhi
June, 25th 2014
                     INCOME TAX APPELLATE TRIBUNAL
                       DELHI BENCH "A": NEW DELHI
             BEFORE SHRI S. V. MEHROTRA, ACCOUNTANT MEMBER
                                    AND
                   SHRI A. T. VARKEY, JUDICIAL MEMBER

                     ITA No. 3202/Del/2013 (Assessment Year: 2003-04)
                     ITA No. 3205/Del/2013 (Assessment Year: 2004-05)
                     ITA No. 3203/Del/2013 (Assessment Year: 2005-06)
                     ITA No. 3201/Del/2013 (Assessment Year: 2006-07)
                     ITA No. 3204/Del/2013 (Assessment Year: 2007-08)


                     Afsha Talwar                 ACIT
                     F-2, Maharani Bagh           Circle-23(1)
                     New Delhi              Vs.   New Delhi
                     PAN: ABZPT6201E

                     (Appellant)                  (Respondent)

                         Appellant by      : Deepak Kapoor, Adv.
                        Respondent by     : Smt A. Mishra, CIT DR


                                        ORDER

PER BENCH

       These appeals are preferred by the assessee against the order of the ld CIT(A)-XI,
New Delhi dated 13.03.2013 for the Assessment Years 2003-04 to 2007-08.

2.     Brief facts:-The undisputed facts is that the assessee is a teacher in Sanskriti
School, Dr. S Radha Krishnan Marg, Chadakya Puri, New Delhi and was in receipt of
salary from the School. A search and seizure operation u/s 132 of Income Tax Act, 1961
(hereinafter ,,the Act) was conducted at her residence on 15.02.2008. It is also
undisputed that the assessee had filed regular income tax returns with the concerned
tax authorities for all the years prior to search and seizure operations. After the search,
the first notice u/s 142(1) was issued by the ld ACIT (Circle 23(1), New Delhi on 17.12.2009
for all the six years for Assessment Year 2002-03 to Assessment Year 2007-08 and another
notice u/s 153A read with section 147 was issued on 24.12.2009 raising about 10-12
queries for all the said years. For the Assessment Year 2003-04 the assessee had filed
income tax return showing an income of Rs. 4,56,793/- whereas, the assessment has
been made on an income of Rs. 10,34,790/- resulting in an addition of Rs. 6,84,000/-.
Similarly for the Assessment Year 2004-05, the assessee had filed her return of income
declaring a total income of Rs. 3,98,334/- , whereas the assessment has been made on
an income of Rs. 6,98,334/- resulting in an addition of income of Rs. 3,00,000/-. Similarly
for Assessment Year 2005-06, the assessee had filed its return of income declaring total
income of Rs. 23,86,590/-, whereas, the assessment has been made on an income of Rs.
                                         Page No. 2

26,71,594/- resulting in an addition of Rs. 2,85,000/- and the entire addition for all these
years were completed within 13 days after issue of statutory notices.

3.     Being aggrieved by the said additions, the assessee filed an appeal before the ld
CIT(A) who was pleased to grant partial relief, however the claim of the assessee that
the increase of amount found in her bank accounts were due to deposit of tuition fee
which she had earned during the relevant period was not accepted by the ld CIT(A).
Aggrieved by the said order of the ld CIT(A) the assessee is before us.

4.     Since the grounds of appeal in all the three years from Assessment Year 2003-04
to Assessment Year 2005-06 are all the same and similar; and the facts and issues for the
Assessment Year 2003-04 to Assessment Year 2005-06 are same, for the sake of brevity
and to avoid repetition the same are taken and adjudicated together. Therefore the
grounds of appeal for Assessment Year 2003-04 is adjudicated for all the said 3 years. The
grounds of appeal for the Assessment Year 2003-04 are as follows:-

       "1.    Because on facts and in law confirming the addition of Rs. 3,41,000/- is
              totally wrong, unjustified and illegal. Assessee had earned income from
              tuition and the cash generated through tuition income has been
              deposited in joint bank account maintained with her husband. Tuition
              income was duly offered for taxation. But ld Assessing Officer taxed the
              cash deposited in bank account and the same was confirmed by ld CIT(A)
              on the basis that cash deposited in bank account are varying.
              Therefore, on the basis taken & method adopted and on the legal
              principle that the income can not be taxed (once when received by the
              assessee and against when deposited in bank account), the addition of
              Rs. 3,41,000/- deserves to be deleted in full.
       2.     Because the addition has been made under section 69 of the Act without
              taking into consideration the explanation of the assessee that the cash
              deposit is out of tuition income which has already been offered for
              taxation in the IT returns and the assessee has paid full tax on the same.
       3.     Because the ld Assessing Officer in the assessment order itself has re-
              produced the explanation to bank entries wherein cash deposit is
              explained out of tuition income. The ld Assessing Officer has taxed the
              tuition income and also taxed the cash deposit in the bank separately.
              Hence the assessment order is perverse. The impugned order which
              confirms the addition is also perverse and is not maintainable."
5.     Apropos single ground i.e. confirmation of addition of Rs. 3,41,000/- claimed by
assessee as tuition fees in her regular return filed as her undisclosed income under
section 69 of the Act.

6.     For the Assessment Year 2003-04, the assessee had filed income tax return
showing an income of Rs. 4,56,793/- whereas, the assessment has been made u/s 153A
read with section 147 on an income of Rs. 10,34,790/- resulting into an addition of Rs.
6,84,000/-.
                                           Page No. 3

7.     Aggrieved by the said addition made by the Assessing Officer, the assessee
preferred an appeal before the ld CIT(A) who has given partial relief to the assessee,
wherein, in respect of addition of Rs. 6,84,000/-, the ld CIT(A) has made a finding that an
amount of Rs. 3,92,000/- added by the Assessing Officer in the hands of the assessee is
not correct, since the very same amount was added and assessed in the hands of the
husband of the assessee, therefore it would not be appropriate to again add it in the
hands of the assessee. And therefore the addition of Rs. 3,43,000/- was therefore
deleted. However, the assessees claim that an amount of Rs. 3,60,000/- which was
shown as income from tuitions was not allowed by the ld CIT(A) and that order of the
Assessing Officer was upheld and confirmed by the ld CIT(A). Aggrieved by this order of
the ld CIT(A) the assessee is before us.




8.     The ld AR submitted that the assessee is a school teacher in Sanskriti School, Dr. S
Radha Krishnan Marg, Chanakya Puri, New Delhi and was in receipt of salary of Rs.
90,793/- from the said school. She had also filed her regular return u/s 139(1) of the Act
on time, for the relevant Assessment Year 2003-04 on 22.09.2003 declaring a total
income of Rs. 4,50,793/- from salary and other sources. She in her return had claimed
that an amount of Rs. 3,63,000/- was received by her as income from tuition and Rs. 69/-
as interest income on saving in the bank. The ld AR brought to our notice of the fact that
notice u/s 143(2) of the Act was issued only on 17.12.2009 and duly served upon the
assessee in person on the same day and it was accompanied with a detailed
questionnaire. In the said notice dated 17.12.2009, the assessee was asked to furnish
statement of affair and income and expenditure account for the Assessment Year 2001-
02 and for Assessment Year 2002-03 to 2007-08. In response to the said notice the
assessee filed the balance sheet as on 31.03.2002 and 31.03.2003 along with capital
account for Assessment Year 2003-04 was submitted on 24.12.2009. The ld AR pointed
out that the assessee had maintained a saving bank account No. 3278 with Dena Bank,
Noida in the joint name with her husband Shri Ashwani Talwar as first name in the said
account. During this period the assessee had also opened a saving bank account No.
50084 with Bank of Baroda, Chankya Puri Branch. In the Bank of Baroda account mainly
the credits are from salary cheaues which amount to Rs. 90,793/- and also certain
amount transferred from the bank account of Shri Ashwani Talwar, husband of the
assessee. It was contended by the ld AR that the following amount was deposited in
cash in joint bank account No. 3278 by the assessee out of her tuition income:-

Date              Amount       Contentions
04.05.2002        25,000       Out of tuition income of the appellant. However the IT
                               Department added the same u/s 69 in the hands of the
                               appellant again.
05.05.2002        1,000/-      Do
                                         Page No. 4

13.08.2002       20,000/-     Do
06.09.2002       20,000/-     Do
16.09.2002       1,00,000/-   Do
01.10.2002       25,000/-     Do
14.11.2002       25,000/-     Do
24.12.2002       40,000/-     Do
07.01.2003       35,000/-     Do
03.02.2003       25,000/-     Do
03.03.2003       25,000/-     Do
9.     Therefore, according to the ld AR, this amount deposited in the account work out
to Rs. 3,41,000/-. And for the relevant Assessment Year the assessee had declared a total
income of Rs.4,50,790/- which included Rs. 3,60,000/- as tuition income also. Yet
according the ld AR the Assessing Officer erroneously added Rs. 3,41,000/- over and
above Rs. 3,60,000/- without giving any credit for Rs. 3,60,000/- which was already taxed
in her hands in the relevant assessment year itself. The ld AR pointed out that after the
search at her premises on 15.02.2008, the first notice was issued only on 17.12.2009 and
the assessment was completed for all the assessment years from Assessment Year 2003-
04 to 2007-08 within a short span of 13 days, which according to the ld AR was too short
a period of time, to assess the assessee for all the six assessment years; and the Assessing
Officer was in a hurry to somehow make some addition and have hastily completed the
assessment proceeding. According to the ld AR, It will be evident from a perusal of the
assessment order itself, wherein, the already taxed income has been taxed again in the
hands of the assessee as undisclosed income, whereas, the income under question was
duly reflected in the regular return filed by the assessee and subjected to tax during the
relevant financial year as tuition income; and the said tuition fee income of Rs. 3,41,000/-
has been added twice by the Assessing Officer, which according to the ld AR is not
permissible as per the Act. Therefore the ld AR pleads that the addition of Rs. 3,41,000/-
for Assessment Year 2003-04 and for subsequent years in respect of tuition fee income of
the assessee should be deleted. On the other hand, the ld DR pointed out the tuition
income should have been spread for 12 months, whereas there were unexplained cash
deposit of bigger amounts, which could not be explained by the assessee even when
the remand report was prepared by the Assessing Officer. The Assessing Officer has
stated that the amount stands unexplained and the assessee has failed to give any
details of the number of students taking tuitions or the money charged from each
student. The ld DR took our attention to various cash deposits which was deposited in the
bank account and which has been termed by the assessee as tuition fees. According to
him the amounts are varying. In one month, it is Rs. 25,000/-, in another months it is Rs.
1,00,000/- and in another month it is Rs. 40,000/-. Therefore it is contended by the ld DR
that it is unlikely that tuition income would vary so much from month to month and it is
also unlikely that the assessee would keep the cash at home and deposit it later. The ld
                                        Page No. 5

DR pointed out that the even an amount of Rs. 1,000/- cash has been duly deposited by
the assessee on 05.05.2002 meaning that if the assessee got any income from tuition she
could have promptly deposited the said income in the bank and not kept it in her house
to accumulate and later deposit as lump sum amount, so the ld DR tries to bring out the
contradiction in the explanation given by the assessee in respect to tuition income
highlighting the lump-sum deposits in the account of the assessee. According to the ld
DR, taking these aspects into consideration the ld CIT(A) has rightly upheld the said
amount deposited in the account as undisclosed source of income and therefore
according to him it is unnecessary to interfere with the impugned order.

10.   We have heard both the parties and have perused the record carefully and have
gone through the case laws cited by both the parties. The assessee who is admittedly a
teacher has been receiving monthly salary from the Sanskriti School in all the relevant
assessment years under adjudication. It is an admitted fact that the assessee has been
filing returns and has been consistently claiming in the said return certain income as her
tuition fee income for the assessment years under adjudication. The amount which has
been reflected as tuition fee income has been shown in the regular return filed u/s 139(1)
and the same was accepted by the revenue authorities. The issue of reopening of all the
assessment years was due to the fact that search was conducted in the premises of M/s.
ATS Group; and search was also conducted in the premises of the husband of the
assessee, Shri Ashwani Talwar and the assessee, Smt. Afsha Talwar situated at F-2,
Maharani Bagh, New Delhi and W-102/5, Anupam Garden, Lane No. 6, Saket, New
Delhi. Thereafter, we find that the assessment u/s 153A of her husband Shri Ashwani
Talwar was carried out by the ACIT, Central Circle, Meerut; whereas the case of the
assessee was completed by the Assessing Officer, ACIT, Central Circle, 23(1), New Delhi.
We also find that the first notice u/s 143(2) was issued on 17.12.2009 along with
questionnaire and the entire assessment for the period was completed on 30.12.2009.
There is no dispute about the fact that the returns were filed by the assessee regularly
every year under section 139(1) and the veracity of the claim of the assessee in respect
to her certain income as tuition fee income has not been questioned in any of the
Assessment Years under challenge by any of the Assessing Officer. Here we find that the
Assessing Officer has made the addition by stating that the assessee has failed to furnish
the name of the students or the number of the students or the fee structure of the
student and on the said grounds within 13 days has formed an opinion that the
assessees claim as vague and added the same as income from undisclosed source,
which according to us cannot be countenanced. Without any specific incriminating
materials on record which are either collected during search operation or during the
153A proceedings the Assessing Officer ought not, merely on the basis of conjecture
                                        Page No. 6

and surmises, cannot base the impugned addition as income from undisclosed income;
and moreover it has to be taken note that the said income was a disclosed income and
not undisclosed income as held by the authorities below; and it need to be appreciated
that the assessee is admittedly a teacher in a private school and assessees regular
returns were accepted by the Assessing Officers before and she had been earlier
taxed for the said tuition income in those years; In the light of the facts and
circumstances, we find that the impugned addition of the tuition income, as income
from undisclosed source is not permissible in the eyes of law particularly even in the year
under consideration, sum of Rs. 3,60,000/- has been declared and assessed as tuition
income. There is no material to show that Rs. 3,41,000/- is from a source other than the
tuition income; therefore the impugned addition made by the Assessing Officer and
later on confirmed by the ld CIT(A) in respect of tuition fee income, which the assessee
has been consistently claiming cannot be said to be her income from undisclosed
source; and her claim in the regular return filed in respect to tuition income being
accepted and taxed by the predecessor Assessing Officers cannot be discarded in the
absence of any specific incriminating materials to suggest otherwise; and we hold that
the impugned addition based on conjectures and surmises as erroneous and therefore
have to be set aside ; and we direct the Assessing Officer to delete all the additions
made by the Assessing Officer and confirmed by the ld CIT(A) in respect to the claim of
the assessee in respect to tuition fee income for all the Assessment Year under
consideration from Assessment Year 2003-04 to Assessment Year 2007-08.

11.   In the result the appeal preferred by the assessee on this ground succeeds and
we allow the same.




12.   In respect of assessment 2006-07 the ground of appeal are as follows:-
      "1.    Because on facts and in law and on grounds taken and basis adopted,
             confirming the addition of Rs.3,90,000/- made u/s 69B of the Act is totally
             wrong, unjustified and illegal.
      2.     Because the ld CIT(A) did not take into consideration the payment of Rs.
             3,90,000/- made by the assessee to M/s Shah Construction out of her
             savings bank account with HDFC bank. The CIT(A) also ignored the
             confirmation certificate from M/s Shah Construction filed.
      3.     Because facts and in law addition of Rs. 31,989/- made under section 69C
             of the Act is totally wrong, unjustified and illegal.
      4.     Because the ld CIT(A) wrongly held that after investing in house
             construction, the cash balance would not be sufficient to make the
             expenditure of Rs. 31,898. The construction expenditure were incurred by
             cheque out of HDFC Bank.
      5.     Because the ld CIT(A) has herself added entire amount of Rs. 3,90,000/- as
             unexplained investment in house without considering cash in hand
             available with assessee. Hence the impugned order is perverse and
             contradictory, therefore, not maintainable in law.
                                         Page No. 7

       6.     Because the addition of Rs. 11,012/- on account of difference in interest
              income is totally wrong, unjustified and illegal. Ld Assessing Officer took
              interest income of Rs. 77,924/- as against income of Rs.77,112/- offered by
              assessee. As there is difference of interest income is only Rs. 812/-
       7.     Because the ld CIT(A) failed to appreciate that only addition of Rs. 812/-
              required to be made.


13.    Apropos confirmation of the addition of Rs. 3,90,000/- made u/s 69B of the Act on
account of construction of house.

14.    Brief facts are as follows:- During the year under consideration, the assessee/
appellant had shown construction on a plot of land at a cost of Rs. 3,90,000/-. The
Assessing Officer sent an inspector to inspect the site. The inspector stated in his report
that the appellant had constructed a hall, dining room, kitchen and bath and servants
quarter on the premises. A copy of this report was given to the appellant. The Assessing
Officer also obtained information from the DM specifying the rate of construction for
residential premises for stamp duty purposes. The Assessing Officer then asked the
appellant as to why a rate of Rs. 5,500/- sq meter as per the notified rates may not be
applied for estimating the cost of construction on the said plot of land. The appellant
stated that the cost of construction was 3rd class and the construction was of a
temporary nature. And further the husband of the appellant being in construction
business could procure raw material and labour at the cheapest rates. The appellant
submitted before the Assessing Officer a valuation report of a Government approved
registered valuer who estimated the cost at Rs. 3,72,000/-.    The     Assessing    Officer
ignored the registered valuers report and took the DMs notified circle rate as the basis
and estimated cost of construction at Rs. 5,60,000/-. Besides, he estimated an amount of
Rs. 2,00,000/- for the filing and landscaping of the lawn. The total cost was thus
estimated at Rs. 7,60,000/-. The Assessing Officer stated that after considering all the
cash available with the appellant, the explained source of investment was Rs. 1,18,351/-.
The balance of Rs. 7,60,000/-Rs. 1,18,351/- i.e. Rs. 6,41,649/- was considered as
unexplained investment.

15.    Aggrieved by the said order of the Assessing Officer, the assessee filed an appeal
before the ld CIT(A) who was pleased to grant partial relief to the assessee, by
accepting the value of the construction worked out by the registered valuer and which
was claimed by the assessee at Rs. 3,90,000/-. However, he held that that the said
amount spent on construction to be unexplained investment u/s 69B of the Act. Being
aggrieved by the said order of the ld CIT(A), the assessee is before us.

16.    The ld AR submitted that the appellant duly explained the source of investment of
Rs. 3,90,000/- being payment made to M/s Shah Construction, a proprietary concern of
                                        Page No. 8

Mr. A. K. Shah who was the co-director with the husband of the appellant. According to
the ld AR, the bank statement of the assessees bank account clearly shows that the
cheque of Rs. 3,90,000 has been issued to M/s Shah Construction on 21.12.2009 and took
our attention to the copy of bank account and confirmation certificate by M/s Shah
Construction. According to the ld AR, the AO had no reason to assume that the
construction money was spent out of undisclosed income. Neither any query was raised
by the AO, in this respect nor did the AO cared to consider the bank account submitted
by the appellant during the assessment proceedings. Further it was submitted by the ld
AR that addition of Rs. 3,90,000/- paid by the appellant out of her saving bank account
with HDFC bank, the cash as worked out by the ld AO was also available with the
appellant. The ld AR submitted that the AO has totally ignored the bank statement filed
and explanation given during the assessment proceedings. Therefore according to the
ld AR, this goes to show that the addition has been made in haste on the basis of
conjectures and surmises and the same ought to be deleted in full. On the other hand
the ld DR relied upon the order of the Assessing Officer and ld CIT(A) and does not want
us to disturb the same.

17.   We have heard both the parties and have perused the records. We find that the
ld CIT(A) has held after considering the report of the registered valuer and the claim of
the assessee as to the cost of construction was accepted to be Rs. 3,90,000/-. However
the only dispute is that whether the assessee had this amount (disclosed income) in her
hands to finance the construction. According to the ld CIT(A), since the Assessing Officer
had held that the tuition income claimed by the assessee in her duly filed returns and
which were taxed in the relevant Assessment Years to be undisclosed income, he held
the entire investment made on the construction i.e. 3,90,000/- to be from that of
assessees undisclosed income. This reasoning of the ld CIT(A) cannot be sustained for
the simple reason that we had already held that the assessee/ appellant was in receipt
of tuition income which was regularly reflected by her in her duly returned income filed
u/s 139(1); and regularly brought to tax and has been as a fact taxed in the hands of the
assessee; and moreover we find that the assessee/ appellant had sufficient disclosed
income in her saving banks accounts (P.B.53) to finance the construction; and the
amount of Rs. 3,90,000/- has been paid by cheque from HDFC Bank account on 21st
December 2005; and M/s. Shah Construction has confirmed vide document dated
23.11.2009 that it has received Rs. 3,90,000/- from assessee. So we delete the said
impugned addition of Rs. 3,90,000/-. Therefore this ground of the appeal is allowed.

18.   Apropos addition of Rs. 31,989/- u/s 69C of the Income Tax Act, 1961.
                                        Page No. 9

19.    Brief Facts:   That during the course of search u/s 132 certain documents/
receipts of cash were found from the residential premises of the appellant and the same
are the following

       (a)    Receipt No. 5563. Dated 05.08.2005 issued by Noida Authority in respect of
              payment of Rs. 344/- on account of water charges.

       (b)    Receipt No.43843 dated 31.07.2005 issued by Noida Authority in respect of
              payment of Rs. 15,800/- on account of water charges deposited on
              12.07.2005 in original bank of commerce.

       (c)    Copy of challan No. 7023 whereby a sum of Rs. 1,400/- has been deposited
              in cash on 23.11.2005 in Canara Bank, Sector-5, Noida.

       (d)    Photocopy of receipt dated 29.03.2006 for deposit of Rs. 2,969/- in original
              Bank of Commerce on 17.03.2006.

       (e)    Receipt No. 801813 dated 28.12.2005 whereby the amount of Rs. 4,867/- in
              respect of electricity charges has been paid to Paschimanchal vidyut
              Vitran Ltd. Noida.

       (f)    Receipt No. 45 according to which an amount of Rs. 6,609/- has been paid
              to Paschimanchal Vidyut Vitran Ltd. Noida on 11.07.2005.

20.    A questionnaire was issued to the assessee to explain the entries relating to the
A.Y. under consideration. The assessee replied that the said expenditure was out of her
withdrawal. However the AO was not satisfied by the explanation of the assessee and
added the amount i.e. Rs. 344 & Rs. 15,800/- +Rs. 1,400/- +Rs. 2969/- + Rs. 4,867/- + Rs.
6,609/=Rs. 31,989/- as unexplained expenditure u/s 69C of the Act. Aggrieved by the
said order of the AO, the assessee preferred an appeal before the ld CIT(A) who was
pleased to dismiss the same. Being aggrieved by the said order of the ld CIT(A), the
assessee is before us.

21.    The ld AR, pointed out that the appellant earned in the Assessment Year a sum of
Rs. 3,45,000/- in cash out of tuition income and Vide para 5 of the assessment order, the
ld Assessing Officer had considered this cash income of Rs. 3,45,000/- and the AO
accepted withdrawal of Rs. 63,966/-. However, according to the ld AR, the AO did not
care to take into consideration the payment of Rs. 3,90,000/- made to M/s Shah
Construction by cheque for the purpose of carrying out construction on plot at D-310,
Sector 47, Noida and has made the impugned addition on the basis of suspicion and
therefore impugned addition of Rs. 31,989/- made u/s 69C of the Act is totally wrong,
unjustified and illegal. On the other hand the ld DR relied on the AOs and ld CIT(A) order
and does not want us to disturb the same.
                                           Page No. 10

22.    We have heard both the parties and have gone through the records, we find that
the assessee has made an expenditure of Rs. 3.1,989/- for the AY under consideration.
The tuition income of the assessee in regular return is Rs. 3,45,000/-. The amount incurred
for construction has been paid by the appellant by cheque for Rs. 3,90,000/- to Ms. Shah
Construction and it has been confirmed by the receipt.

23.    However, we find that the AO did not take into consideration, the fact of
payment of Rs. 3,90,000/- to M/s. Shah Construction vide cheque No. 400185 dated 21st
December, 2005 (PB 53) for the construction at Noida and though              the AO has
accepted that an amount of Rs. 63,966/- was withdrawn by the assessee from the bank
for the relevant Assessment Year. The AO has erred in making a finding that "even if the
receipt of cash from tuition income is considered for the purpose of cash in hand with
assessee, the amount of withdrawal and also the amount invested in construction of
house at Plot No. D-310, Sector-47, Noida is sufficient to meet out the above expenditure
in cash. I therefore reject the claim of the assessee." and therefore has erred in working
out cash in hand/ withdrawal for house construction/ withdrawal in complete disregard
of the facts and is based on conjectures and surmises. The ld AR took our attention to
page 55 of the PB, where cash flow statement prepared by the appellant for the
Financial Year 2005-06 is filed and we were shown that the cash withdrawal for various
payment connected with Plot No. D-310, Noida was Rs. 54,495/-. We find that the AO
has erroneously stated that Rs. 3,90,000/- was invested in the construction of house at
Noida from cash in hand, whereas the assessee has made the said transaction through
cheque bearing no. 400185 dated 21st December 2005 (P.B. 23). Accordingly, the AO
erred in working out the cash position of the assessee and made an erroneous addition
u/s 69B of the Act and ld CIT(A) has erred in confirming the same, therefore we need to
be set aside the same and we order the impugned addition to be deleted.

24.    Apropos addition of Rs. 11,012/- as interest income.

25.    Brief Facts of the case is as follows:-     The appellant in her regular income tax
return has shown income from other source was at at Rs. 4,22,112/- which comprises of
following:-

       A.     Tuition                                     =Rs. 3,45,000/-
       B.     Misc income (BOB interest)           =Rs. 10,200/-
       C.     Saving bank interest/                       =Rs. 66,912/-
              Interest of bank ITR

26.    According to the AO the total interest at work out to be Rs. 77,924.43 and held as
under:-
                                         Page No. 11

         "accordingly the correct amount interest is Rs. 77,924/- which shall be replaced
         against the interest shown by this assessee on FDR and Saving Bank."
27.      The ld AR further submitted the appellant filed balance sheet as on 31st March,
2006 and the capital account for the year ended 31.03.2006. In the capital account, the
appellant showed the followings:-

                  FDR Interest                         =     39,221.83

                  Saving Bank Interest                 =     27,690,60

                  Misc. Income (BOB Interest)          =     10,200

                  Total                                =     77,112.53

28.      According to the ld AR, the AO did not take into consideration a sum of Rs.
10,200/- as interest from BOB shown in the capital account and included in the
computation sheet of income as miscellaneous income. Therefore the ld AR submitted
that the ld Assessing Officer has therefore wrongly treated the miscellaneous income of
Rs. 10,200/- as shown in the return and did not consider the same as interest income.
Therefore, the addition has been wrongly confirmed by the ld CIT(A) and to the extent
of Rs. 10,2000/- is wrongly made and need to be deleted.

29.      And once Rs. 10,200/- is deleted, the difference is only of Rs. 812 (Rs. 77,924-
77,112) between the interest income computed from bank statement by the AO and by
the appellant. It was submitted by the ld AR that this sum of Rs. 812 is on account of the
fact that at the time of finalizing the return the appellant was not having full bank
account of certain non operational banks. Therefore, the appellant on her on worked
out interest at Rs. 77,112/- whereas, now the AO as worked out the interest at Rs. 77,924/-
from the full bank statement therefore, there is discrepancies of Rs. 812/- which may be
added to the income of the appellant.

30.      On the other hand the ld DR relies on the decision of the ld CIT(A) and AO.

31.      We have heard both the sides and perused the records. We find that in the
computation of income, the assessee has shown income from other sources which
includes interest of Rs. 39,221.83 on FDR and Rs. 27,690.60 as interest on saving bank.
Thus, the total of interest income shown by assessee is Rs. 66,912.43 (Rs. 39,221.83 + Rs.
27,690.60). All these amounts of interest are credited in the bank account of assessee.
Perusal of copies of bank statement and also the details of debit and credit given by
assessee reveals credit of following interest in her bank account.

S. No.    Name of Bank                Date of Credit       Particular    Amount of interest
1.        Bank of Baroda              09.07.2005              Interest   4.457.00
2         Bank of Baroda              09.01.2006           Interest      6.358.00
                                           Page No. 12

3.           HDFC Bank Ltd.            01.07.2005        Interest      18.222.88
4.           HDFC Bank Ltd.            30.09.2005        Interest      7.587.97
5.           HDFC Bank Ltd.            01.01.2006        Interest      1.694.26
6            HDFC Bank Ltd.            03.01.2006        Interest      39.221.83
7            HDFC Bank Ltd.            31.03.2006        Interest      185.49
8            Dena Bank                 09.09.2005        Interest      95.00
9            Dena Bank                 08.03.2006        Interest      99.00
Total                                                                  77,924.43


32.     That the total interest income as per the computation and also as per the capital
account of the appellant is shown at Rs. 77,112.53/-. However, the ld Assessing Officer
has worked out the interest income at Rs. 77,924/- as such there is a difference of Rs.
812/-. Therefore we direct the deletion of addition of Rs. 10,200/- and add only Rs. 812/-
to the income of the assessee.

33.     In respect of assessment 2007-08 the ground of appeal are as follows:-

        "1.      Because on facts & in law confirming the addition of Rs. 225,000/- is totally
                 wrong, unjustified and illegal. Assessee has earned income from tuition,
                 rental income and the cash generated through tuition income/ rent has
                 been deposited in bank account. Tuition income was duly offered for
                 taxation. But ld Assessing Officer taxed the cash deposited in bank
                 account and the same was confirmed by CIT(A) on the basis that cash
                 deposited in bank account are varying.
                 Therefore, on the basis taken and method adopted and on the legal
                 principle that the income can't be taxed twice (once when received by
                 the assessee and again when deposited in bank account), the addition of
                 Rs. 2,25,000/- is totally wrong, unjustified and unwarranted and the addition
                 of Rs. 2,25,000/- deserves to be deleted full.
        2.       Because the addition has been made u/s 69 of the Act without taking into
                 consideration the explanation of the assessee that the cash deposit is out
                 of tuition income and rental income which has already been offered for
                 taxation in the IT return and the assessee has paid full tax on the same.
        3.       Because the ld Assessing Officer in the assessment order itself has re-
                 produced the explanation to bank entries wherein cash deposit is
                 explained out of the tuition income/ rental income. The ld Assessing Officer
                 has taxed the tuition income and also taxed the cash deposit in bank
                 separately. Hence the assessment order is perverse. The impugned order
                 which confirms the addition is also perverse and is not maintainable.
        4.       Because on facts & in law the addition of Rs. 16,549/- ( being difference of
                 interest on FDR & SB A/c taken by the ld Assessing Officer at Rs. 19,430/-
                 and interest income offered by assessee at Rs. 2881/-) is totally wrong,
                 unjustified & illegal. Ld Assessing Officer ignored the facts of the case and
                 made addition of Rs. 16,549/- without any basis. Therefore, the basis taken
                 for making addition of Rs. 16,549/- without any basis. Therefore, the basis
                 taken for making addition of Rs. 16,549/- is totally wrong, unjustified and
                 illegal and the same deserves to be deleted in full."
34.     Ground Nos. 1, 2 and 3 is in respect to addition of Rs. 2,25,000/-, which the
assessee has reflected as her tuition income as undisclosed income u/s 69 of the Act. We
                                           Page No. 13

have already adjudicated the issue in respect to the said addition made in respect to
the tuition income of the assessee. Therefore we direct the Assessing Officer to delete
the said addition made on account of her tuition income.

35.      In respect of ground No. 4 that apropos addition of Rs. 16,549/- as interest
income. In respect to addition of Rs. 16,549/- being difference of interest on FDR & SB
Account, the appellant has not been able to show before us how the calculation of the
Assessing Officer was not correct. Therefore we uphold the said addition made by the
Assessing Officer and the same is confirmed by the ld CIT(A). This ground of appeal is
ruled against the appellant.

36.      In the result the appeal filed by the assessee is partly allowed.
         Order pronounced in the open court on 20.06.2014.

             -Sd/-                                                              -Sd/-
       (S. V. MEHROTRA)                                                 (A. T. VARKEY)
       ACCOUNTANT MEMBER                                               JUDICIAL MEMBER

 Dated: 20/06/2014
A K Keot

Copy forwarded to
      1. Applicant

      2. Respondent

      3. CIT

      4. CIT (A)

      5. DR:ITAT

                                                                     ASSISTANT REGISTRAR
                                                                       ITAT, New Delhi

 
 
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