Dr. Chanderyee Luthra, Kanpur V. ACIT, Kanpur

ITA 595/LKW/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 5351 (ITAT-LUCKNOW)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 26-11-2010
• Assessment Year: 1999-2000
• Appeal Filed On: 17-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANADI VERMA
• Assessee Lawyers: P K MISHRA
• Keywords: Gift; Depreciation; Opportunity of being heard
• Section: 69C; 68; 148; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, B - BENCH, LUCKNOW. BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT AND SHRI N.K.SAINI, ACCOUNTANT MEMBER I.T.A.NOS.595, 596, 597 AND 598(LKW.)/2010 A.YS. : 1999-2000, 2000-01, 2002-03 AND 2003-04 DR.(MRS.) CHANDERYEE LUTHERA, VS. THE ACIT, RANGE- 5, 120/500(24), LAJPAT NAGAR, KANPUR. KANPUR. PAN AAADPL9248A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.K. MISHRA, C.A. RESPONDENT BY : SHRI ANADI VERMA, SR.D.R. O R D E R PER BENCH THESE FOUR APPEALS BY THE ASSESSEE WERE HEARD TOGE THER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE. GROUND NO.1 IN ALL THE APPEALS IS COMMON. 2. VIDE COMMON GROUND NO.1 OF THE APPEAL, THE ASSES SEE HAS STATED THAT THE COST OF CONSTRUCTION SHOULD HAVE BEEN WORKED O UT BY APPLYING THE U.P.P.W.D. RATES INSTEAD OF CENTRAL P.W.D. RATES A S APPLIED BY THE DVO. IN SUPPORT OF THIS CONTENTION, THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE O F CIT VS. RAJ KUMAR (1990) 182 ITR 436(ALL.). 2 3. IN THE ASSESSMENT YEARS UNDER CONSIDERATION, T HE ASSESSEE FILED HER RETURNS OF INCOME WHICH WERE PROCESSED. LATER ON, O N THE BASIS OF DIFFERENCE BETWEEN THE INVESTMENT IN THE HOUSE PROPERTY ENTER ED IN THE BOOKS OF ACCOUNT AND THE COST OF CONSTRUCTION, AS ASCERTAINE D BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2001-02, A NOTICE UNDER SECTION 148 WAS ISSUED. THE ASSESSEE WAS PROV IDED WITH THE TEXT OF THE REASONS RECORDED. THE AO OBSERVED THAT THE ASSE SSEE GOT A RESIDENTIAL HOUSE CONSTRUCTED ALONGWITH HER HUSBAND, THE CONSTR UCTION OF WHICH WAS SPREAD OVER THE PERIOD COMMENCING FROM FINANCIAL YEAR 1998-99 TO FINANCIAL YEAR 2002-03. DURING THE COURSE OF ASSESS MENT PROCEEDINGS FOR ASSESSMENT YEAR 2001-02, THE ASSESSEES CASE WAS SE LECTED FOR SCRUTINY AND THE AO AFTER MAKING ENQUIRIES, DETERMINED THE COST OF CONSTRUCTION AT RS.59,85,541 AS AGAINST THE INVESTMENT MADE BY THE ASSESSEE AND HER HUSBAND AMOUNTING TO RS.48,10,951. THIS RESULTED IN A DIFFERENCE OF RS.11,74,590. ON FIRST APPEAL BEFORE THE LD.CIT(A), THE DIFFERENCE WAS REDUCED FROM RS.11,74,590 TO RS.8,27,499. THE ASSES SEE CAME IN APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL UPON FINDING THAT THE DIFFERENCE BETWEEN THE DISCLOSED COST OF CONSTRUCTION AND THE ASSESSED COST OF CONSTRUCTION (FOR THE RELEVANT ASSESSMENT YEAR I. E. 2001-02) WAS IN THE VICINITY OF 10% (AFTER REDUCING THE COST OF CONSTRU CTION AT THE RATE OF 7.5% AS AGAINST 5%,WHICH WAS ADOPTED BY THE DVO ON ACCOUNT OF SELF-SUPERVISION), DIRECTED THE AO TO ADOPT COST OF CONSTRUCTION AS DI SCLOSED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR THE ASSESSMENT YEAR 200 1-02. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE ABOVE YEARS, THE AO ALLOWED AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. AFTER O BTAINING THE REPLIES OF THE ASSESSEE, THE AO MADE THE FOLLOWING ADDITIONS UNDE R SECTION 69C OF THE ACT ON ACCOUNT OF DIFFERENCE IN COST OF INVESTMENT : 3 ASSESSMENT YEAR AMOUNT 1999-2000 RS.95,368 2000-01 RS.3,71,589 2002-03 RS.83,819 2003-04 RS.3,72,604 4. ON APPEAL, THE LD.CIT(A) GAVE SIMILAR FINDINGS I N ALL THE YEARS. THE SAME ARE REPRODUCED HEREINBELOW: 5.3 I HAVE CONSIDERED THE FACTS OF THE CASE ALONG WITH THE SUBMISSIONS MADE BY THE APPELLANT. ON PERUSAL, I FI ND THAT THE HON'BLE TRIBUNAL HAD DIRECTED THE AO TO ADOPT THE COST OF CONSTRUCTION AS DISCLOSED BY THE APPELLANT IN HER BOOKS OF ACCOUN TS FOR THE A.Y.2001-02 SINCE THE DIFFERENCE BETWEEN THE ASSE SSED AND DISCLOSED COST OF CONSTRUCTION (AFTER REDUCTION OF THE VICINI TY OF 10%. HOWEVER, DURING THE YEAR UNDER CONSIDERATION, EVEN AFTER GIV ING THE BENEFIT OF EXTRA 2.5% (ON ACCOUNT OF SELF SUPERVISION), THE DI FFERENCE WORKS OUT TO MORE THAN 15%. THE LD.AR HAS ARGUED THAT THE DIF FERENCE BETWEEN THE CPWD RATES AND UPPWD RATES SHOULD ALSO BE KEPT IN MIND. HOWEVER, THE LD.AR HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE TO PROVE THAT THERE IS INDEED DIFFERENCE BETWEEN THE R ATES OF UPPWD & CPWD. IT IS PERTINENT TO MENTION THAT THE CPWD RATE S ARE SUITABLY MODERATED TO SUIT THE LOCAL CONDITIONS OF A DISTRIC T. IN FACT, ONE EXECUTIVE ENGINEER OF CPWD, AGRA RANGE HAD GIVEN A FINDING (AFTER AN EXTENSIVE STUDY) THAT THERE WAS NO DIFFERENCE BE TWEEN THE UPPWD & CPWD RATES FOR A GIVEN PLACE. THUS, THIS ARGUMENT O F THE LD.AR HAS NO SUBSTANCES AND THUS, REJECTED. AFTER CONSIDE RING ALL POSSIBLE EXPLANATIONS, THE DIFFERENCE STILL COMES TO MORE T HAN 15% , WHICH CAN NOT BE IGNORED. TO BE EXTRA JUST AND FAIR TO THE AP PELLANT, I ALLOW A FURTHER BENEFIT @ 2.5% ON COST OF CONSTRUCTION AS E STIMATED BY THE DVO; THIS WOULD FACTOR IN EVERY OTHER CONCEIVABLE ARGUME NT FOR DIFFERENCE IN COST OF CONSTRUCTION DETERMINED BY TH E DVO AND THE COST OF CONSTRUCTION AS PER THE BOOKS. ACCORDINGLY, I DI RECT THE AO TO RECOMPUTE THE DIFFERENCE AS PER MY FINDINGS AND BRI NG THE SAME TO TAX. 5. BEFORE US, THE ONLY PLEA TAKEN BY SHRI P.K. MI SHRA, C.A., LD. COUNSEL FOR THE ASSESSEE IS THAT THE RATES TO BE APPLIED FOR THE ESTIMATE OF COST OF 4 CONSTRUCTION SHOULD BE UPPWD RATES AND NOT THE CEN TRAL PWD RATES. RELIANCE WAS PLACED ON THE DECISION OF HON'BLE ALLA HBAD HIGH COURT IN THE CASE OF CIT VS. RAJ KUMAR (1990) 182 ITR 436(ALL.). WE FIND CONSIDERABLE FORCE IN THE ABOVE SUBMISSIONS OF SHRI P.K.MISHRA, C.A., LD. COUNSEL FOR THE ASSESSEE. ACCORDINGLY, WE RESTORE THE MATER TO THE FILE OF THE AO FOR LIMITED PURPOSE I.E. TO DETERMINE THE COST OF CONSTRUCTION ON THE BASIS OF U.P.P.W.D. RATES AND NOT THE CENTRAL P.W.D. RATES. THE AO SHOU LD WORK OUT THE RELIEF, IF ANY, ADMISSIBLE TO THE ASSESSEE. THE ORDER OF THE L D.CIT(A) STANDS MODIFIED TO THE ABOVE EXTENT. FIRST COMMON GROUND OF APPEALS IS ALLOWED FOR STATISTICAL PURPOSES. 6. GROUND NO.2 IN I.T.A.NO.595(LKW.)/2010 READS AS UNDER : 2. THAT THE HON'BLE CIT APPEAL- II HAS CONFIRMED A DDITION OF RS.44,541 IN THE HEAD TELEPHONE EXP. CAR EXP. DEPRE CIATION ON CAR, INTEREST ON CAR LOAN AND DRIVERS SALARY ON ACCOUNT OF PERSONAL USE. THE AMOUNT OF ADDITIONS ARE TOO HIGH AND THERE; IS NO EVIDENCE EITHER WITH THE LD. AO NOR WITH THE HON'BLE CIT(A) TO S UBSTANTIATE THE DISALLOWANCE OF EXPENSES FOR PERSONAL USE. IN FACT THIS IS A STEREOTYPE ADDITIONS AND HENCE MAY PLEASE BE DELETED. 7. THE ASSESSEE HAS CLAIMED TELEPHONE EXPENSES AT RS.4,878, CAR EXPENSES AMOUNTING TO RS.49,124, DEPRECIATION ON C AR AT RS.1,01,445, CAR INSURANCE EXPENSES AT RS.9,022 AND SALARY PAID TO D RIVER AMOUNTING TO RS.24,000 AND INTEREST EXPENSES AMOUNTING TO RS.34, 233.THE AO DISALLOWED 1/5 TH OF THE ABOVE EXPENSES ON ACCOUNT OF ELEMENT OF PE RSONAL USE. 8. ON APPEAL, THE LD.CIT(A) CONFIRMED THE DISALLOWA NCES MADE BY THE AO. 5 9. WE HAVE HEARD THE RIVAL SUBMISSIONS. IN THIS CAS E, THE AO HAS DISALLOWED 1/5 TH OF THE ABOVE EXPENSES ON ACCOUNT OF ELEMENT OF PE RSONAL USE. THE AO HAS NOT POINTED OUT ANY SINGLE ITEM OF EXPENSES WHICH WAS INCURRED FOR PERSONAL PURPOSES. IT SEEMS THAT THE A O HAS MADE AD HOC DISALLOWANCE WITHOUT SPECIFYING THE BASIS FOR THE S AME. HOWEVER, PERSONAL USE OF TELEPHONE, CAR ETC. CANNOT BE RULED OUT. AT THE SAME TIME, INTEREST ON CAR LOAN AND DRIVERS SALARY CANNOT BE DISALLOWED WITHOUT SPECIFYING ANY PARTICULAR INSTANCE OF NON-BUSINESS PURPOSE. CONSID ERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE VI EW THAT 1/10 TH DISALLOWANCE OF ABOVE EXPENSES WILL MEET THE ENDS O F JUSTICE. ACCORDINGLY, WE DIRECT THE AO TO RECOMPUTE THE INCOME OF THE ASSESSEE. THIS GROUND OF APPEAL IS ALLOWED PARTLY. 10. GROUND NO.3 OF THE APPEAL READS AS UNDER : 3. THAT THE HON'BLE CIT APPEAL-II HAS CONFIRMED AD DITION OF RS.90,000 BEING AMOUNT OF SALE OF OLD CAR. THE APPE LLANT HAS SUBMITTED THAT THE SALE PROCEEDS WERE RECEIVED AND ROUTED BY BANKING CHANNEL AND COULD BE CONFIRMED DIRECTLY. THE ASSES SEE ALSO PROVIDED THAT SHE SOLD CAR NO.UP78L0501 DURING THE YEAR AND PURCHASED A NEW CAR. THE APPELLANT HAS ALSO PROVIDED THE BALAN CE SHEET FOLLOWING THE SALES OF OLD CAR AND PURCHASE OF NEW CAR. THE HON'BLE COMMISSIONER HAS CONFIRMED THE ADDITIONS MADE BY LD . AO U/S 68 OF THE I.TAX ACT 1961. 11. THE AO HAS DISCUSSED THIS ISSUE IN PARA 12 OF T HE ASSESSMENT ORDER. THE ASSESSEE HAS SHOWN IN CASH FLOW STATEMENT A S UM OF RS.90,000 AS RECEIVED AGAINST SALE OF OLD CAR. THE AO REQUIRED T HE ASSESSEE TO FURNISH THE DETAILS OF CAR, SUCH AS, REGISTRATION NUMBER AND CO NFIRMATION OF SALE PROCEEDS OF RS.90,000. IN ABSENCE OF THESE DETAILS, THE AO T OOK THE ADVERSE VIEW AND ADDED A SUM OF RS.90,000 UNDER SECTION 68 OF THE A CT. 6 12. ON APPEAL, THE LD.CIT(A) CONFIRMED THE ADDITION OBSERVING AS UNDER : 7.1. DECISION: IT IS DIFFICULT TO COMPREHEND THE REASONS FOR NOT GIVING DETAILS OF THE CAR SOLD OR OF THE PERSON TO WHOM THE CAR WAS S OLD. IN SALE OF CARS, THE IDENTITY OF THE BUYER SHOULD BE DEFINITELY AVAI LABLE SINCE THE SELLER GIVES NOC FOR REGISTRATION ETC. AS PER THE LAW, THE ONUS IS ON THE ASESSEE TO PROVE THE GENUINENESS OF CREDIT ENTRY AP PEARING IN ITS BOOKS WHICH THE APPELLANT IN THIS CASE, HAS FAILED TO PRO VE. THE BALANCE SHEET ENTRY IS NOT SUFFICIENT PROOF TO PROVE THE GE NUINENESS OF THE IMPUGNED CREDIT OF RS.90,000 IN HER BANK ACCOUNT / BOOKS OF ACCOUNT. UNDER THESE CIRCUMSTANCES SINCE THE APPELLANT HAS F AILED IN TERMS OF SECTION 68 OF THE I.T.ACT TO PROVE THE CREDIT ENTRY , THE ADDITION IS CONFIRMED. 13. AFTER HEARING THE LD. REPRESENTATIVES OF BOTH T HE PARTIES WE ARE OF THE VIEW THAT THE LD.CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDITION OF RS.90,000. THE ASSESSEE COULD NOT FURNISH THE DETAI LS OF THE CAR SOLD OR OF THE PERSON TO WHOM THE CAR WAS SOLD. THE ASSESSEE COULD NOT FURNISH EVEN THE IDENTITY OF THE BUYER. THE ONUS WAS ON THE ASSESSEE TO PROVE THE GENUINENESS OF THE CREDIT APPEARING IN THE BOOKS OF ACCOUNT. IN THE INSTANT CASE, THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF CRE DIT ENTRY AND ACCORDINGLY, THE LD.CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDI TION. AT THIS STAGE ALSO, NO EVIDENCE WAS BROUGHT BEFORE US TO PROVE THE IDENTI TY OF THE ALLEGED BUYER OF THE CAR. CONSIDERING THE ENTIRE FACTS AND CIRCUMST ANCES OF THE PRESENT CASE, WE CONFIRM THE ADDITION OF RS.90,000. 14. GROUND NO.4 OF THE APPEAL READS AS UNDER : 4. THAT THE HON'BLE CIT APPEAL II HAS CONFIRMED ADDITION OF RS.18,000/- BEING AMOUNT OF 3 GIFTS RECEIVED DURING THE SAID A.Y. FROM HER MOTHER. AT THE TIME OF HEARING THE MOTHER OF THE APPELLANT 7 HAS DIED AND HER DEATH CERTIFICATE WAS FILED WITH H ON'BLE CIT. THE GIFT CONFIRMATION COULD NOT BE FILED DUE TO DONORS DEATH AND THE SAME IS BEYOND THE CONTROL OF THE ASSESSEE. LOOKING TO THE STATUS OF THE ASSESSEE, GIFT OF SUCH SMALL AMOUNT RS.2,000/- ON 1 5-4-1998, RS.6,000/- ON 5-8-1998 AND RS.10,000/- ON 9-12-1998 RECEIVED FROM HER MOTHER MS GAURI MUKHERJEE IS ACCEPTABLE. THESE TRANSACTIONS ARE ALSO CONFIRMED FROM THE CASH FLOW AND BOOKS OF THE ASSESSEE. THESE ARE THE CIRCUMSTANCIAL EVIDENCES AND SHOULD BE ACCE PTED SPECIALLY WHEN THE DONOR IS REAL MOTHER OF THE ASSESSEE. 15. THE AO HAS DISCUSSED THIS ISSUE IN PARA 14 OF T HE ORDER. THE ASSESSEE CONTENDED BEFORE THE AO THAT SHE HAD RECEIVED GIFT OF RS.18,000 FROM HER MOTHER SMT.GAURI MUKHARJI AS PER DETAILS GIVEN BELO W: RS.10,000 15.4.1998 RS.6,000 5.9.1998 RS.2,000 9.12.198 RS.18,000 15.1 IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE AO THAT SMT.GAURI MUKHARJI, MOTHER OF THE ASSESSEE,DONOR, WAS NO MORE . SHE WAS THE WIFE OF DR.S.MUKHARJI, RETD. DIRECTOR AND HEAD OF ORGANIC C HEMISTRY, NATIONAL SUGAR INSTITUTE, KANPUR. SHE HAD EXPIRED ON 7.6.200 3. THE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND ADDED TH E SUM OF RS.18,000 HOLDING THAT THE ASSESSEE FAILED TO PROVE THE GENU INENESS OF GIFT OF RS.18,000. 16. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ADDITI ON FOR THE REASONS STATED IN PARA 9.1 OF THE IMPUGNED ORDER. 17. WE HAVE HEARD THE LD.REPRESENTATIVES OF BOTH TH E PARTIES. SHRI P.K.MISHRA, C.A., LD. COUNSEL FOR THE ASSESSEE REI TERATED THE SUBMISSIONS MADE BEFSORE THE LOWER AUTHORITIES. IT IS SEEN THAT DURING THE COURSE OF 8 ASSESSMENT PROCEEDINGS, THE MOTHER OF THE ASSESSEE HAS DIED AND HER DEATH CERTIFICATE WAS FILED. IN THAT VIEW OF THE MATTER, THE ASSESSEE COULD NOT PRODUCE THE DONOR OR HER CONFIRMATION. WE FIND MERI T IN THE SUBMISSION OF SHRI P.K.MISHRA, C.A., LD. COUNSEL FOR THE ASSESSEE . LOOKING TO THE STATUS OF THE ASSESSEE, GIFTS OF SUCH SMALL AMOUNTS OF RS.10, 000 ON 15.4.1998, RS.6,000 ON 5.8.21998 AND RS.2,000 ON 9.12.1998 R ECEIVED FROM HER MOTHER SMT.GAURI MUKHARJI CANNOT BE REJECTED. IN VI EW OF THE ABOVE, WE ALLOW THIS GROUND OF APPEAL. 18. GROUND NO.2 IN I.T.A.NO.597(LKW.)/2010 READS UN DER : 2. THAT THE HON'BLE CIT APPEAL II HAS CONFIRMED ADDITION OF RS.43,503/- IN THE HEAD TELEPHONE EXP, CAR EXP., DE PRECIATION ON CAR, INSURANCE EXPS., DRIVERS SALARY AND INTEREST EXPENSES ON ACCOUNT OF PERSONAL USE. THE AMOUNT OF ADDITIONS AR E TOO HIGH AND THERE IS NO EVIDENCE EITHER WITH THE LD ASSESSING O FFICE NOR WITH THE HON'BLE CIT(A) TO SUBSTANTIATE THE DISALLOWANCE OF EXPENSES FOR PERSONAL USE. IN FACT THIS IS A STEREOTYPE ADDITION S AND HENCE MAY PLEASE BE DELETED. 19. WE HAVE DECIDED A SIMILAR ISSUE (GROUND NO.2) I N I.T.A.NO.595(LKW.)/2010 FOR THE ASSESSMENT YEAR 199 9-2000. FOR THE DETAILED REASONS GIVEN THEREIN, WE DIRECT THE AO T O DISALLOW 1/10 OF THE EXPENSES CLAIMED UNDER THE HEAD TELEPHONE EXPENSES, CAR EXPENSES, DEPRECIATION ON CAR, CAR INSURANCE, INTEREST ON CAR LOAN AND DRIVERS SALARY. THIS GROUND OF APPEAL IS ALLOWED PARTLY. 20. GROUND NO.3 READS AS UNDER : 3. THAT THE HON'BLE CIT APPEAL HAS CONFIRMED AD DITION OF RS.2,000 BEING AMOUNT OF GIFT RECEIVED DURING THE SAID A. Y. FROM HER SISTER IN LAW. LOOKING TO THE STATUS OF THE ASSESS, GIFT OF SUCH SMALL AMOUNT R.2,000 RECEIVED FROM HER SISTER IN LAW IS A CCEPTABLE. THESE TRANSACTION ARE ALSO CONFIRMED FROM THE CASH FLOW A ND BOOKS OF THE 9 ASSESSEE. THESE ARE THE CIRCUMSTANCIAL EVIDENCES AN D SHOULD BE ACCEPTED SPECIALLY WHEN THE DONOR IS REAL MOTHER OF THE ASSESSEE. 21. AT THE TIME OF HEARING OF THE APPEAL, SHRI P.K. MISHRA, C.A.,LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS FOR THIS GRO UND OF APPEAL KEEPING VIEW THE SMALLNESS OF THE AMOUNT INVOLVED. ACCORDINGLY W E DISMISS GROUND NO.3 OF THE APPEAL. 22. GROUND NO.2 IN I.T.A.NO.598(LKW)/2010 READS AS UNDER ; 2. THAT THE HON'BLE CIT(APPEAL)-II HAS CONFIRMED A DDITION OF RS.58,867 IN THE HEAD TELEPHONE EXP., CAR EXP. DEPR ECIATION ON CAR ON ACCOUNT OF PERSONAL USE. THE AMOUNTS OF ADDITION S ARE TOO HIGH AND THERE IS NO EVIDENCE EITHER WITH THE LD. AO NOR WI TH THE HON'BLE CIT(A) TO SUTSTANTIATE THE DISALLOWANCE OF EXPENSE S FOR PERSONAL USE. IN FACT THIS IS A STEREOTYPE ADDITION, AND HENCE MA Y PLEASE BE DELETED. 23. WE HAVE DECIDED A SIMILAR ISSUE (GROUND NO.2) I N I.T.A.NO.595(LKW.)/2010 FOR THE ASSESSMENT YEAR 199 9-2000. FOR THE DETAILED REASONS GIVEN THEREIN, WE DIRECT THE AO T O DISALLOW 1/10 OF THE EXPENSES CLAIMED UNDER THE HEAD TELEPHONE EXPENSES, CAR EXPENSES AND DEPRECIATION. THIS GROUND OF APPEAL IS ALLOWED PART LY. 24. GROUND NO.3 READ AS UNDER : 3. THAT THE HON'BLE CIT APPEAL-II HAS CONFIRMED AD DITION OF RS.90,000 BEING AMOUNT OF SALE OF OLD CAR. THE APPE LLANT HAS SUBMITTED THAT THE SALE PROCEEDS WERE RECEIVED AND ROUTED BY BANKING CHANNEL AND COULD BE CONFIRMED DIRECTLY. THE ASSES SEE ALSO PROVIDED THAT SHE SOLD CAR NO.UP78L0501 DURING THE YEAR AND PURCHASED A NEW CAR. THE APPELLANT HAS ALSO PROVIDED THE BALAN CE SHEET FOLLOWING THE SALES OF OLD CAR AND PURCHASE OF NEW CAR. THE HON'BLE COMMISSIONER HAS CONFIRMED THE ADDITIONS MADE BY LD . AO U/S 68 OF 10 THE I.TAX ACT 1961. 25. THIS GROUND DOES NOT ARISE OUT OF THE ORDERS O F THE LOWER AUTHORITIES. ACCORDINGLY, WE DISMISS GROUND NO.3 OF THE APPEAL. 26. GROUND NO.4 OF THE APPEAL READS AS UNDER : 4 . THAT THE HON'BLE CIT APPEAL II HAS CONFIRMED ADDITION OF RS.65,000/- BEING AMOUNT OF GIFS RECEIVED DURING TH E SAID A.Y. FROM HER MOTHER. AT THE TIME OF HEARING THE MOTHER OF TH E APPELLANT HAS DIED AND HER DEATH CERTIFICATE WAS FILED WITH HON'BLE C IT. THE GIFT CONFIRMATION COULD NOT BE FILED DUE TO DONORS DEATH AND THE SAME IS BEYOND THE CONTROL OF THE ASSESSEE. THE GIFT OF RS. 65,000/- WAS MADE BY ACCOUNT PAYEE CHEQUE NO 557409 OF STANDARD CHART ERED BANK ON 10-01-2002. THE COPY OF BANK ACCOUNT WAS PROVIDED T O LD ASSESSING OFFICER AT THE TIME OF HEARING. THE AMOUNT WAS RECE IVED BY DONOR FROM DR RAJAN LUTHRA, WHO IS HER SON IN LAW, AS REF UND OF LOAN GIVEN TO HIM EARLIER AND ALSO REFLECTED IN THE BOOKS OF A CCOUNTS DR RAJAN LUTHRA. MRS GAURI MUKHERJI WAS HAVING PENSION INCOM E AND INCOME FROM INTEREST. THESE TRANSACTIONS ARE ALSO CONFIRME D FROM THE CASH FLOW AND BOOKS OF THE ASSESSEE. IN OTHER WORDS THE IDENTITY, GENUINENESS, SOURCE AND CAPACITY OF THE DONOR IS PR OVED HENCE THE GIFT AMOUNT OF RS.65,000/- CANNOT BE ADDED U/S 68 OF THE INCOME TAX ACT 1961. THE APPELLANT CAN AGAIN PRODUCE THE SAME BEFO RE THE HON'BLE ITAT. 27. THE AO HAS DISCUSSED THIS ISSUE IN PARA 9 OF TH E ASSESSMENT ORDER, WHICH READS AS UNDER : 9. AS PER CASH FLOW STATEMENT AS FILED BY ASSESSE E SHE HAS RECEIVED GIFT OF RS.65,000 FROM LATE SMT. GAURI MUK HARJEE. ASSESSEE HAS FILED REPLY DATE 14.02.2006 AND HAS MENTIONED T HAT GIFT HAS BEEN RECEIVED VIDE CHEQUE NO. 557409 OF STANDARD CHARTED BANK RELATED TO S. B. A/C 623-1-002665-2 DATED 10.10.2002. COPY OF BANK STATEMENT HAS BEEN FILED. ASSESSEE HAS EXPLAINED THE SOURCE T HAT REFUND OF RS.65,000 WAS RECEIVED BY DONOR SMT. GAURI MUKHARJE E FROM DR. 11 RAJAN LUTHRA AND SAME AMOUNT HAS BEEN GIFTED BY SMT . GAURI MUKHARJEE. SMT. GAURI MUKHARAJEE WAS THE PENSIONER AND THE RECEIVING THE PENSION OF RS.7,000- P. M. THE FACTS MENTIONED BY THE ASSESSEE HAS BEEN VERIFI ED. IT HAS BEEN NOTICED THAT SMT. GAURI MUKHARJEE HAS GIFTED R S.65,000/- ON 10.10.2002 AND SHE HAS BEEN DIED ON 10.06.2003. ALM OST 1 YEAR AFTER GIFT. NO GIFT DEED IN RESPECT OF GIFT MADE BY SMT. GAURI MUKHARJEE HAS BEEN FILED. IT IMPLIES THAT IT WAS NOT A TRANSACTIO NS FOR GIFT. THEREFORE, NATURE OF TRANSACTION AS STATED BY ASSESSEE IS NOT VERIFIABLE FOR THE PURPOSES OF GIFT. IT IS THEREFORE, TREATED AS UNEXP LAINED DEPOSIT U/S 68 AND IT WILL BE ADDED TO THE TOTAL INCOME OF THE ASS ESSEE. PENALTY PROCEEDING U/S 271(1)(C) IS BEING INITIATED FOR FIL ING IN ACCURATE PARTICULARS AND FOR CONCEALING INCOME. ADDITION OF RS.65,000 28. ON APPEAL, THE LD.CIT(A) CONFIRMED THE ADDITION FOR THE REASONS STATED IN PARA 7 OF THE IMPUGNED ORDER: 7. GROUND NO.4: THIS IS IN RESPECT OF ADDITION OF RS.65000 AS UNEXP LAINED DEPOSIT U/S 68. THE FACTS OF THE GROUND ARE THAT TH E APPELLANT HAD RECEIVED RS.65000 FROM HER MOTHER ON 10.10.2002 THR OUGH PROPER BANKING CHANNELS. AS THE MOTHER HAD DIED ON 07.06.2 003 NO EVIDENCE IN THE SHAPE OF GIFT DEED OR CONFIRMATION COULD BE FILED ON RECORD. THE APPELLANT HAD FAILED TO PROVE THE CREDITWORTHIN ESS OR THE CAPACITY OF HER LATE MOTHER TO DONATE/GIVE RS.65,00 0/- TO THE APPELLANT. UNDER THE PROVISIONS OF SECTION 68 OF THE I.T.ACT, THE ONUS WAS ON THE ASSESSEE TO PROVE NOT ONLY THE IDENTITY BUT ALSO TH E CAPACITY OF THE LENDER/DONOR AND ALSO THE GENUINENESS OF THE TRANSA CTION. IN THIS CASE THE APPELLANT HAS FAILED TO PROVE THE CAPACITY OF T HE LENDER/DONOR. THUS, THE AO WAS RIGHT IN MAKING THE IMPUGNED ADDIT ION, AND THE SAME STANDS CONFIRMED. 29. WE HAVE DECIDED A SIMILAR ISSUE (GROUND NO.4) I N I.T.A.NO.595(LKW)/2010 FOR THE ASSESSMENT YEAR 1999 -2000. FOR THE 12 DETAILED REASONS GIVEN THEREIN, WE HOLD THAT THERE WAS NO JUSTIFICATION IN MAKING THE ADDITION UNDER SECTION 68 OF THE ACT. W E ALSO ADD HERE THAT THE AMOUNT IN QUESTION WAS TRANSFERRED FROM BANK ACCOU NT OF SMT.GAURI MUKHARJEE (MOTHER OF THE ASSESSEE) TO THE ACCOUNT O F THE ASSESSEE. BOTH THE ACCOUNTS WERE LYING WITH THE SAME BANK. THESE FACT S HAVE NOT BEEN DENIED BY THE REVENUE. THE ASSESSEE HAS EXPLAINED THE SOUR CE THAT REFUND OF RS.65,000 WAS RECEIVED BY SMT.GAURI MUKHARJEE FROM DR.RAJAN LUTHRA AND THE SAME AMOUNT HAS BEEN GIFTED BY SMT.GAURI MUKHAR JEE TO THE ASSESSEE. AS REGARDS THE CAPACITY OF THE DONOR, IT IS STATED THAT SMT.GAURI MUKHARJEE WAS THE PENSIONER AND WAS RECEIVING PENSION OF RS.7 ,000 PER MONTH. THERE IS NO MATERIAL ON RECORD TO CONTROVERT THE ABOVE CO NTENTION OF THE ASSESSEE. IT IS SEEN THAT SMT.GAURI MUKHARJEE GIFTED RS.65,000 O N 10.10.2002 AND SHE DIED ON 10.6.2003, ALMOST ONE YEAR AFTER THE GIFT. THEREFORE, THERE WAS NO QUESTION OF FILING THE GIFT DEED. THUS, THE ASSESSE E HAS PROVED THE IDENTITY OF THE DONOR, CAPACITY OF THE DONOR TO GIFT THE MONEY AND GENUINENESS OF THE TRANSACTION. IN VIEW OF THE ABOVE, THIS GROUND OF APPEAL STANDS ALLOWED. 30. IN THE RESULT, I.T.A.NO.595(LKW.)/2010 IS ALLOW ED PARTLY AND PARTLY FOR STATISTICAL PURPOSES, I.T.A.NO.596(LKW.)/2010 I S ALLOWED FOR STATISTICAL PURPOSES, I.T.A.NO.597(LKW.)/2010 IS ALLOWED PARTLY AND PARTLY FOR STATISTICAL PURPOSES AND I.T.A.NO.598(LKW)/2010 IS ALLOWED PARTLY AND PARTLY FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 26.11.2 010. SD. SD. (N.K.SAINI) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT NOVEMBER 26TH ,2010. 13 COPY TO THE : 1. APPELLANT 2. RESPONDENT 3. CIT(A) (4) CIT 5.DR. A.R.,ITAT, LUCKNOW. SRIVASTAVA.