Kulwant Singh,, Amritsar. vs Assessee

Sh.Kulwant Singh, vs. Income Tax Officer, Gurdwara Nanaksar, Gurdaspur. Khurmania, Amritsar. (Appellant) (Respondent)

Appellant by:Sh.P.N.Arora, DR Respondent by:Sh.Tarsem Lal, DR

Date of hearing:09/02/2015 Date of pronouncement:19/02/2015

ORDER

PER B.P.JAIN,AM:

This appeal of the assessee arises from the order of the CIT(A),

Amritsar, dated 02.07.2014 for the assessment year 2008-09. The assessee

has raised the following grounds of appeal:

"1. That the assessment order as well as the order of the Ld. CIT(A) are both the facts of the case and untenable in law.

2. That the Ld. CIT(A) has grossly erred in sustaining addition of Rs.7,05,671/- out of the addition made by the AO at Rs.15,96,000/-. That the Ld. CIT(A) did not appreciate that no 2 ITA No.519(Asr)/2014

addition whatsoever is called for an the addition made is purely based on conjectures, surmises & supposition and the same deserves to be deleted.

3. That the addition made is un-justified, un-called for and un- warranted under the circumstances of the case and the same may be deleted. The Ld. CIT(A) was not justified in sustaining the addition of Rs.7,05,671/- and the same may be deleted. Alternatively, the addition sustained by the Ld. CIT(A) at Rs.7,05,671/- is very high & excessive.

4. Any other ground of appeal that may be urged at the time of hearing of the appeal."

2. The brief facts of the case are the assessee is a preacher at Gurdwara

Nanaksar, Khurmania, Distt. Amritsar and derives income from performing

of Akhand Paths and Kirtan. He is also President of the Managing

Committee of Gurdwara Nanaksar, Khurmania, which is registered as a

Society under the Societies Registration Act (XXI of 1860) as amended by

the Punjab Amendment Act, 1957. The assessee filed return of income of

07.08.2008 showing income of Rs.120000/- in his individual capacity. The

return was processed u/s 143(1) on 03.03.2010. Later on the case was

selected for scrutiny under CASS as assessee had deposited cash of

Rs.1596000/- in his bank account No.006601502623 with ICICI Bank,

Amritsar. Accordingly, the AO issued notice u/s 143(2) of the Act. With

regard to the cash deposits in the bank, the assessee claimed before the AO

that it represented Golak income of the Gurdwara, which was deposited in 3 ITA No.519(Asr)/2014

the bank account maintained by the assessee and expenses for Gurdwara

were also made by the assessee out of this bank account. The AO examined

the bank account of the assessee and found that the assessee had made

payments amounting to Rs.93683/- to LIC for policies of himself and his

family members. The AO, therefore, rejected the plea of the assessee that

the bank account belonged to the Gurdwara and was only being operated by

the assessee by observing that had this been Gurdwara account, no money

could have been withdrawn to cover personal policies of the assessee and his

family members. The AO, therefore, held that the amount of Rs.1596000/-

deposited in the said bank account was the earning of the assessee as a

kirtanian and preacher and assessed the same as income from undisclosed

sources.

3. The Ld. CIT(A) worked out the peak and out of the same reduced the

opening balance of Rs.10783/- and sustained the addition of Rs.7,05,671/-.

4. The Ld. counsel for the assessee relied upon the submissions made

before the ld. CIT(A) and further argued that the assessee had declared the

income regularly for the assessment years 2004-05 to 2008-09 and in the

impugned year, as under:

Assessment year Deduction

2004-05 Rs. 83,450/- 2005-06 Rs.1,21,070/- 4 ITA No.519(Asr)/2014

2006-07 Rs.1,02,000/- 2007-08 Rs.1,10,000/- 2008-09 Rs.1,20,000/- Total: Rs.5,36,520/-

Therefore, the credit of the same be allowed to the assessee out of the peak

so worked out. He relied upon the decision in the case of Sukhdev Singh in

Appeal ITA No.166(Asr)/2011, relating to assessment year 2008-09 dated

17.01.2014 of Ld. CIT(A), Amritsar.

5. The Ld. DR, on the other hand, relied upon the order of the CIT(A).

6. We have heard the rival contentions and perused the facts of the case.

We find no infirmity in the order of the Ld. CIT(A) that the assessee did not

have any right over the funds of the society nor he could use such funds for

personal needs. As against this, the impugned bank account was in the name

of the assessee and he has right over the said account which could be used

by the assessee for his personal needs and other purposes and there were

Auto sweep facility in the impugned bank account and the FDRs also found

in the name of the assessee. Therefore, for all intents and purposes, the said

Bank Account belonged to the assessee and thus, the ld. CIT(A) has rightly

rejected the pleadings of the assessee that cash deposits in the said bank

account represented receipts of Golak of Gurdwara and cash withdrawals

were utilized for the expenditure of Gurdwara. Therefore, Ld. CIT(A) has

rightly upheld the findings of the AO that there are unexplained deposits in 5 ITA No.519(Asr)/2014

the bank account but at the same time accepted the alternative pleadings

taken by the assessee that unexplained cash deposits in the bank account

cannot exceed the peak of the deposit made in the bank account, since there

are frequent cash deposits and cash withdrawals. There is nothing on record

that cash withdrawals have been used elsewhere. Accordingly, the ld.

CIT(A) has rightly worked out the peak at Rs.7,16,454/- and has rightly

allowed further credit of Rs.10,783/-, resulting into the addition of

Rs.7,05,671/-.

7. As regards the income declared during the impugned year and in the

preceding four years amounting to Rs.5,36,520/- (total for 5 years), we

accept the finding of the ld. CIT(A) that the assessee must have met

household expenditure but reject the finding of the ld. CIT(A) to the

expenditure that there are no savings of such income since it is humanly not

possible that the assessee may not have saved even a single penny at the

close of 31st March of every year. In a country like ours, the people are in a

habit of savings and therefore, assessee certainly must have saved some

money and accordingly the benefit of such savings in the preceding years

and in the impugned year has to be given to the assessee out of peak amount

mentioned hereinabove. We direct the AO to give a further deduction of 6 ITA No.519(Asr)/2014

Rs.1,25,000/- on account account out of the addition sustained at

Rs.7,05,671/-. Accordingly, this ground of the assessee is partly allowed.

8. In the result, the appeal of the assessee in ITA No.519(Asr)/2014 is

partly allowed.

Order pronounced in the open court on 19th February, 2015.

Sd/- Sd/- (A.D.JAIN) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 19th February, 2015 /SKR/ Copy of the order forwarded to:

1. The Assessee:Sh. Kulwant Singh, Amritsar.

2. The ITO,Gurdaspur.

3. The CIT(A), Amritsar.

4. The CIT, Amritsar.

5. The SR DR, ITAT, Amritsar.

True copy By order

(Assistant Registrar) Income Tax Appellate Tribunal, Amritsar Bench: Amritsar.