SHAKTI S. SINGH, Jaipur V. DCIT, Sawai Madhopur

ITA 615/JPR/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5188 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 15-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G R PAREEK JCIT DHK
• Keywords: Unexplained investment; Depreciation; Salary income; Opportunity of being heard; Principle of natural justice

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA-@ ITA NO.615/JP/15 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 SHAKTI S. SINGH, 23/175 MOKHA PARA, KAITHOONI POLE, KOTA CUKE VS. DCIT, CIRCLE, SAWAI MADHOPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AUOPS 4774P VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VINOD KUMAR GUPTA (C.A.) JKTLO DH VKSJ LS@ REVENUE BY : SHRI G.R. PAREEK (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 25.05.2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 29/06/2016. VKNS'K @ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A), AJMER DATED 31.03.2015 WHEREIN THE ASSESSEE HAS TAK EN FOLLOWING EFFECTIVE GROUNDS OF APPEAL: ITA NO. 615/JP/15 SHAKTI S. SINGH, KOTA VS. DCIT, CIRCLE SAWAI MAD HPUR 2 (I) UNDER THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) H AS ERRED BY SUSTAINING DISALLOWANCE OF RS. 5,28,250/- BEING 40% OF THE TOT AL EXPENSES CLAIMED. THE ADDITION MADE IS UNJUSTIFIED , ILLEGAL OR EXCES SIVE. (II) UNDER THE FACTS AND CIRCUMSTANCES THE LD. CIT( A) HAS ERRED BY MAKING ADDITION OF RS. 7,05,500/- BY TREATING CASH INTRODU CED IN BUSINESS AS UNDISCLOSED INCOME, FURTHER CIT(A) ERRED BY CONFIRM ING THE SAME. (III) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. AO HAS ERRED BY NOT ALLOWING TELESCOPING FOR EXPENSES DISALLOWED AG AINST ADDITION FOR ALLEGED UNEXPLAINED INVESTMENT IN BUSINESS. 2. REGARDING GROUND NO. 1, BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSEE HAS CLAIMED VARIOUS EXPENSES OF RS. 10,70,610/- AGA INST THE RECEIPTS OF RS. 21,42,500/-. THE AO HAS DISALLOWED THE WHOLE OF THE EXPENSES HOWEVER THE LD CIT(A) HAS RESTRICTED THE DISALLOWANCE OF EXPENSES TO RS. 4,28,250/- I.E. 40% OF THE TOTAL EXPENSES CLAIMED AND BALANCE AMOUNT WAS A LLOWED. 2.1 THE LD. AR SUBMITTED THAT THE APPELLANT WAS RE NDERING HIS SERVICES AS CONSULTANT TO THE ONE OF THE MOST PRESTIGIOUS INSTI TUTE AT KOTA M/S. RESONANCE. THE APPELLANT DECLARED HIS INCOME UNDER THE HEAD I NCOME FROM BUSINESS & PROFESSION, WHEREAS, LD. A.O. WHILE MAKING THE ASS ESSMENT, ASSESSED HIS TOTAL RECEIPTS AS SALARY INCOME AND CONSEQUENTLY, DISALLO WED THE ENTIRE EXPENSES CLAIMED AGAINST THE RECEIPTS FROM M/S. RESONANCE. F URTHER, BY GIVING FINDING ALSO DISALLOWED THE ENTIRE EXPENDITURE SAYING WITHO UT PREJUDICE TO HIS ACTION OF CONSIDERING THE ENTIRE RECEIPT AS SALARY. UNDER THE FACTS, ONCE, IF A RECEIPT HAS BEEN TAXED AS SALARY INCOME THEN THERE IS NO SCOPE OF ALLOWING ANY DEDUCTION OUT OF SALARY, THEREFORE, DISALLOWANCE OF EXPENSES SEPARATELY DOES NOT HAVE ANY MEANING AS FAR AS ACTION OF THE A.O. IS CONCERN ED, AND, HENCE, FINDING GIVEN ITA NO. 615/JP/15 SHAKTI S. SINGH, KOTA VS. DCIT, CIRCLE SAWAI MAD HPUR 3 IN THIS RESPECT IS ALSO NOT VERY MUCH RELEVANT SINC E EVEN IF, ALL IS PROPER IN VIEW OF THE A.O., NO SUCH EXPENDITURE CAN BE ALLOWED UND ER THE HEAD SALARY. LR AR FURTHER SUBMITTED THAT THE LD. CIT(A) HAS ALR EADY CONFIRMED THE INCOME DECLARED BY THE ASSESSEE AS INCOME FROM BUS INESS AND PROFESSION, RATHER THAN SALARY AS ASSESSED BY THE LD. A.O. FU RTHER, DEPARTMENT HAS ALSO ACCEPTED SAID VERSION OF CIT(A). AFTER CONSIDERING THE RECEIPT UNDER CONSIDERATION AS INCOME FROM BUSINESS AND PROFESSIO N, LD. CIT(A) MADE ADHOC DISALLOWANCE OF 40%,OUT OF TOTAL EXPENDITURE CLAIME D ON WHOLE SALE BASIS. LD AR FURTHER SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS, BOOKS OF ACCOUNTS WERE PRODUCED, COPIES OF THE BILLS AND VOUCHERS WERE FILED, HOWEVER, IT IS ALLEGED THAT THE EMPLOYEES AND ORIGI NAL BILLS WERE NOT PRODUCED. IN THIS REGARD, IT IS IMPORTANT TO BRING INTO THE A LL NOTICES WERE DULY COMPLIED EXCEPT NOTICE DATED 29.12.2010 AND AO PASSED THE OR DER ON 30.12.2010. THEREFORE, UNDER THE FACTS AND CIRCUMSTANCES, IT IS CLEAR THAT NO EFFECTIVE OPPORTUNITY WAS GIVEN TO PRODUCE THE EMPLOYEES OR O RIGINAL BILLS, MOREOVER, THE DISALLOWANCES WERE ALSO NOT RELEVANT ONCE THE E NTIRE RECEIPT HAS BEEN ASSESSED AS SALARY, THEREFORE, SUCH FINDINGS MADE I N HASTE. LD. CIT(A) HAS ERRED BY CONSIDERING THE FINDING OF THE A.O. WITHOUT TAKI NG INTO ACCOUNT THE FACT THAT NO SUCH EFFECTIVE OPPORTUNITY WAS GIVEN TO THE APPE LLANT. IN THIS REGARD, WE PLACE OUR RELIANCE ON THE JUDGMENTS OF THE (I) HON BLE CALCUTTA HIGH COURT GIVEN IN THE CASE OF CIT VS. PANNA DEVI SARAOGI (19 70) 78 ITR 728, WHEREIN, IT IS OBSERVED BY THE HONBLE COURT THAT IT IS THE OPPORTUNITY OF BEING HEARD WHICH INTRODUCES THE PRINCIPLE OF NATURAL JUSTICE. THE OP PORTUNITY, NO DOUBT, MUST BE REASONABLE AND EFFECTIVE OPPORTUNITY. IT SHOULD NOT BE A MERE PAPER OPPORTUNITY OR ANY ILLUSORY OPPORTUNITY. (II) IN OLGA TELLIS V. BOMBAY MUNICIPAL ITA NO. 615/JP/15 SHAKTI S. SINGH, KOTA VS. DCIT, CIRCLE SAWAI MAD HPUR 4 CORPORATION (1985) 3 SCC 545, THE CONSTITUTION BENC H SAYS ANY ACTION TAKEN BY A PUBLIC AUTHORITY WHICH IS INVESTED WITH STATUT ORY POWERS HAS, THEREFORE, TO BE TESTED BY THE APPLICATION OF TWO STANDARDS; THE ACTION MUST BE WITHIN THE SCOPE OF AUTHORITY CONFERRED BY LAW AND SECONDLY, I T MUST BE REASONABLE. IF ANY ACTION, WITHIN THE SCOPE OF THE AUTHORITY CONFERRED BY LAW, IS FOUND TO BE UNREASONABLE, IT MUST MEAN THAT THE PROCEDURE ESTAB LISHED BY LAW UNDER WHICH THAT ACTION IS TAKEN IS ITSELF UNREASONABLE. LD AR FURTHER SUBMITTED THAT THE LD. CIT(A) WHILE A LLOWING 60% OF THE EXPENDITURE HAS ADMITTED THAT IT CANNOT BE SAID TH AT THIS INCOME WAS EARNED WITHOUT INCURRING ANY EXPENSES AS HELD BY THE AO M EANS REQUIREMENT AND INCURRENCE OF EXPENDITURE IS NOT UNDER DOUBT AND HA VE ACCEPTED BY THE DEPARTMENT. AS FAR AS ADHOC DISALLOWANCE OF 40% IS CONCERNED ON WHOLE SALE BASIS, IT WAS SUBMITTED THAT DISALLOWANCE ON WHOLE SALE BASIS AT THE RATE OF 40% ON ALL THE EXPENDITURE ARE GROSSLY WRONG, SINCE THE LIST OF TOTAL EXPENDITURES CONTAINS VARIOUS SUCH EXPENDITURES WHICH CANNOT BE TREATED AS INFLATED OR WRONG OR BOGUS SUCH AS DEPRECIATION RS. 1,37,175/-, INTEREST ON CAR LOAN RS. 19,613/-, TELEPHONE EXPENSES RS. 59,667/-, AUDIT FE ES RS. 12,500/- AND INSURANCE RS. 7,485/-. PERUSAL OF THE ABOVE SHOWS THAT ONCE THE PURCHASES OF THE FIXED ASSETS ARE NOT UNDER DOUBT, SUCH ADHOC WH OLE SALE DISALLOWANCE CANNOT BE MADE FOR DEPRECIATION. SIMILARLY, ONCE TH E LOAN HAS BEEN ACCEPTED TO BE TAKEN AND BANK BALANCE HAVE BEEN ACCEPTED THE N NO SUCH DISALLOWANCE CAN BE MADE FOR INTEREST. SIMILARLY, FOR TELEPHONE EXPENSES WHICH HAVE BEEN PAID TO THE TELEPHONE COMPANY AND AUDIT FEES TO THE AUDITORS, WHO HIMSELF HAVE CERTIFIED THE FINANCIAL STATEMENTS AND INSURAN CE PREMIUM HAVE BEEN MADE TO THE INSURANCE COMPANY. UNDER THE FACTS AND CIRCUMSTANCES, AT THE OUTSET, NO SUCH DISALLOWANCE CAN BE MADE WHICH AMOU NTS TO RS. 94,576/-. ITA NO. 615/JP/15 SHAKTI S. SINGH, KOTA VS. DCIT, CIRCLE SAWAI MAD HPUR 5 LR AR FURTHER SUBMITTED THAT FOR REMAINING DISALLOW ANCE OF (RS.4,28,250 - RS. 94,576) RS. 3,33,674/-,IT IS MAINLY TOWARDS SALARY, RENT, TRAVELLING, CONVEYANCE, VEHICLE EXPENSES, PERIODICALS ETC. IT IS IMPORTANT TO SEE THE DUTY OF THE APPELLANT TO BE PERFORMED UNDER THE CONTRACT, WHICH HAS BEEN REPRODUCED BY THE CIT(A) IN PARA 4.3 OF HIS ORDER. A PERUSAL OF T HE DUTY TO BE PERFORMED UNDER THE CONTRACT SHOWS THAT A WIDE SPECTRUM OF ACTIVITI ES HAS TO BE CARRIED OUT BY THE APPELLANT. APPELLANT IS ENGAGED AS LECTURER TO IIT ASPIRANTS WITH ONE OF THE MOST PRESTIGIOUS INSTITUTE OF THE COUNTRY NAMELY M/ S. RESONANCE. AS WE ALL AWARE, THE EXAMINATION OF IIT IS VERY TOUGH AND DEM ANDING TO KEEP HIMSELF UPDATED ON VARIOUS FRONTS OF TEACHING. FURTHER, THE PRESTIGIOUS INSTITUTES LIKE RESONANCE HAVE THEIR OWN METHODOLOGY OF TEACHING AN D DEMANDING FROM TEACHERS AS WELL TO KEEP THE INSTITUTE FRONT RUNNER AMONG THE SUCCESSFUL STUDENTS. IT IS ALSO WELL KNOWN FACT THAT THE MOST OF ASPIRANT STUDENTS ARE VERY TALENTED, LABORIOUS AND DEEPLY CONCERN WITH THEIR C AREER, HENCE, TEACHERS HAVE TO BE KEEP HIMSELF UPDATED WITH THE SUBJECT, TRENDS , LATEST DEVELOPMENT OF THE SUBJECT ETC. TO MEET ALL THE CHALLENGES, APPELLANT HAVE TO BE CARRIED OUT VARIOUS ACTIVITIES WHICH REQUIRES ASSISTANCE FROM O THERS ALSO. IT IS IMPORTANT TO BRING IN NOTICE THAT CLAUSE (J) OF THE DUTY ASSIGNE D TO THE CONSULTANT UNDER THE AGREEMENT AS REPRODUCED IN PARA 2.5 HEREINBEFORE. A PPELLANT HAVE TO DESIGN, PREPARE AND MAKE AVAILABLE TO THE INSTITUTE GUIDANC E NOTE FOR THE TOPICS WHICH ARE TO BE COVERED BY THE CONSULTANT AT HIS OWN COST . THAT AGREED CONDITION ITSELF SHOWS THAT APPELLANT IS REQUIRED HIS OWN OFF ICE AND STAFF TO PREPARE SUCH GUIDANCE NOTE APART FROM THE REQUIREMENT OF THE OFF ICE AND STAFF TO CARRIED OUT OTHER ACTIVITIES. UNDER THE FACTS AND CIRCUMSTANCE S, THE FINDING OF THE A.O. IS GROSSLY MISPLACED THAT OFFICE AND STAFF IS ONLY REQ UIRED, WHEN FEES ARE BEING RECEIVED FROM STUDENTS. ITA NO. 615/JP/15 SHAKTI S. SINGH, KOTA VS. DCIT, CIRCLE SAWAI MAD HPUR 6 LR AR FURTHER SUBMITTED THAT THE DUTIES REQUIRE LOT OF RESEARCH, ANALYSIS AND TIME BOUND DELIVERY OF MATERIAL FOR CARRYING OU T WEEKLY TEST, SOLVING THE PROBLEM OF STUDENTS AND FOR ALL THESE WORKS, ASSIST ING STAFF AND SPACE IS REQUIRED. THE EXPENSES INCURRED ON SPACE ARE RS. 7, 000/- P.M. AND ON STAFF RS. 30,000/- P.M. IS VERY REASONABLE, LOOKING TO THE TE CHNICALLY INVOLVED IN THE WORK OF THE APPELLANT. THE OTHER EXPENDITURE CLAIME D, ARE ALSO VERY REASONABLE, LOOKING TO THE NATURE OF EXPENDITURE AN D REQUIREMENT IN REFERENCE TO THE CONTRACT FOR SERVICE. LR AR FURTHER SUBMITTED THAT IT IS A FACT THAT BOOK S OF ACCOUNTS OF THE APPELLANT ARE AUDITED U/S 44AB OF THE INCOME TAX AC T, FURTHER, DURING THE ASSESSMENT PROCEEDINGS BOOKS AND ACCOUNTS WERE PROD UCED ALONG WITH SUPPORTING, THEREFORE, IT IS AN UNDISPUTED FACT THA T EXPENDITURE HAVE INCURRED AND AFTER EXAMINING THE SAME IT IS NOT THE CASE OF LD AO THAT EXPENDITURE UNDER CONSIDERATION IS BOGUS. FURTHER, EXPENDITURE UNDER CONSIDERATION IS NOT CAPITAL IN NATURE. THESE EXPENDITURES HAVE BEEN INC URRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF CARRYING OUT BUSINES S ACTIVITY. UNDER SUCH CIRCUMSTANCES, THESE EXPENDITURES ARE QUALIFY FOR D EDUCTION IN FULL. LR AR FURTHER SUBMITTED THAT LD AO HAS NOT COME OUT WITH ANY SINGLE SPECIFIC INSTANCE WHICH SHOWS THAT EXPENDITURE ARE NOT DEDUCTIBLE. IT IS APPARENT FROM THE FINDINGS OF THE LD. AO IN MOST OF THESE DISALLOWANCES THAT EXPENDITURES ARE INCURRED IN CASH. IT IS IMPORTANT TO NOTE THAT PAYMENT IN CASH WITHIN PRESCRIBED LIMITED IS NOT DEBARRED, THEREFOR E, ON THE BASIS OF SUCH APPREHENSION THE DISALLOWANCES ARE NOT MORE THAN BA SED ON SUSPICION. THEREFORE, IN ABSENCE OF ANY SPECIFIC INSTANCE, THE AD-HOC DISALLOWANCE IS NOT MORE THAN SURMISES OR SUSPICION AND DOES NOT DESERV ES TO BE HOLD GOOD. ITA NO. 615/JP/15 SHAKTI S. SINGH, KOTA VS. DCIT, CIRCLE SAWAI MAD HPUR 7 2.2 THE LD DR IS HEARD WHO HAS RELIED UPON THE ORDE R OF THE LOWER AUTHORITIES. 2.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE NATURE OF RECEIPTS IN THE HANDS OF THE APPELLANT HAVE BEEN ACCEPTED AS PROFESSIONAL RECEIPTS. THE LD. CIT(A) H AS GIVEN A CATEGORICAL FINDING THAT THE ASSESSEE WAS REQUIRED TO INCUR VARIOUS EX PENSES AGAINST HIS PROFESSIONAL RECEIPTS AND IT CANNOT BE SAID THAT I NCOME WAS EARNED WITHOUT INCURRING ANY EXPENSES. THUS, THE NECESSITY OF INC URRENCE OF THE EXPENDITURE AS WELL AS THE FACT THAT THE EXPENDITURE HAS BEEN I NCURRED BY THE APPELLANT HAS BEEN ACCEPTED AND IS THUS NOT UNDER DISPUTE. AT TH E SAME TIME, LD CIT(A) HAS HELD THAT SINCE THE ASSESSEE HAS NOT MAINTAINED EXT ERNAL EVIDENCE IN SUPPORT OF ITS CLAIM OF EXPENSES, IT WOULD BE REASONABLE TO RESTRICT THE DISALLOWANCE TO 40% OF THE EXPENSES CLAIMED. THE LIMITED ISSUE UND ER CONSIDERATION THEREFORE RELATES TO QUANTUM OF ALLOWABILITY OF VARIOUS EXPEN SES WHICH HAVE BEEN CLAIMED BY THE APPELLANT AGAINST THE PROFESSIONAL R ECEIPTS FROM M/S RESONANCE. THE LD CIT(A) HAS NOT GIVEN ANY BASIS O R JUSTIFICATION AS TO HOW HE HAS ARRIVED AT THE FIGURE OF 40% OF THE EXPENDITURE WHICH CANNOT BE ALLOWED TO THE APPELLANT. WE FIND MERIT IN THE CONTENTIONS OF THE LD. AR THAT GIVEN NATURE OF THE EXPENSES SUCH AS DEPRECIATION, INTEREST ON CAR LOAN, AUDIT FEE ETC. ONCE PURCHASE OF ASSETS IN THE NATURE OF COMPUTER, CAR, BOOKS ETC. AND THE UTILIZATION THEREOF FOR THE PURPOSES OF EARNING PROFESSIONAL I NCOME HAS BEEN ACCEPTED, WHERE IS THE QUESTION OF DISALLOWING 40% OF THE DEP RECIATION CLAIM OR INTEREST ON CAR LOAN. SIMILARLY, ONCE THE BOOKS OF ACCOUNTS HAVE BEEN AUDITED AND AUDIT FEE IS PAYABLE, THERE IS NO BASIS FOR DISALLOWING 4 0% OF THE AUDIT FEES. SIMILARLY ITA NO. 615/JP/15 SHAKTI S. SINGH, KOTA VS. DCIT, CIRCLE SAWAI MAD HPUR 8 THE DUTY OF THE APPELLANT REQUIRE LOT OF RESEARCH A ND ANALYSIS OF TIME BOUND DELIVERY ON STUDY MATERIAL AND GUIDANCE NOTE AND A LL THESE WORKS REQUIRES INVOLVEMENT OF STAFF AND RELATED OFFICE SPACE. EVEN THOUGH THE APPELLANT HAS ACCESS TO THE INFRASTRUCTURE AND OFFICE SPACE AT TH E INSTITUTE, THE APPELLANT HAS SUBMITTED THAT HE HAS MAINTAINED OFFICE AND HIRED S TAFF AT HIS OWN COST TO ASSIST HIM IN DISCHARGE OF HIS CONSULTING ENGAGEMEN T WHICH CANNOT BE REFUTED IN ABSENCE OF ANY CONTRARY EVIDENCE ON RECORD. IN OUR VIEW, THE EXPENSES INCURRED ON SPACE FOR RS. 7000/- PER MONTH AND ON S TAFF RS. 30,000/- PER MONTH AND OTHER RELATED TRAVEL AND OTHER EXPENSES A PPEARS TO BE REASONABLE. FURTHER, THE LD. CIT(A) HAS NOT SPECIFIED ANY SPEC IFIC TRANSACTIONS OR THE EXPENSES WHICH THE APPELLANT HAS CLAIMED AND THE SA ME HAS NOT FOUND FAVOUR WITH THE LD. CIT(A). IN OUR VIEW, IT IS CLEAR CASE OF ADHOC DISALLOWANCE OF EXPENSES WHICH CANNOT BE SUSTAINED IN THE EYE OF LA W. WE ACCORDINGLY DELETE THE DISALLOWANCE OF 40% OF THE EXPENSES OF RS. 5,28 ,250/- CLAIMED BY THE APPELLANT HENCE GROUND OF THE ASSESSEES APPEAL IS ALLOWED. 3. REGARDING NEXT GROUND OF APPEAL, BRIEFLY THE FAC TS OF THE CASE ARE THAT THE AO REQUIRED THE ASSESSEE TO EXPLAIN THE SOURCE OF CASH INTRODUCED BY THE ASSESSEE OF RS. 7,05,500/- ON DIFFERENT DATES IN TH E CASH BOOK. THE ASSESSEE WAS SPECIFICALLY REQUIRED TO EXPLAIN THE SOURCE OF DEPOSITS IN THE CASH BOOK ON DIFFERENT DATES AS THE ONUS LIES ON THE ASSESSEE TO EXPLAIN THE INDIVIDUAL DEPOSITS ALONGWITH THE SOURCE THEREOF WHICH HAS NOT BEEN DISCHARGED. AS PER THE AO, NO SUCH EXPLANATION WAS FILED BY THE ASSESS EE EXPLAINING THE SOURCE OF RS. 7,05,500/- EXCEPT CLAIMING THAT NET INVESTMENT MADE WAS ONLY RS. 2,52,609/-. IN VIEW OF THE ABOVE, THE ADDITION OF RS 7,05,500 WAS MADE IN THE HANDS OF THE APPELLANT WHICH WAS SUBSEQUENTLY CONFI RMED BY THE LD CIT(A). ITA NO. 615/JP/15 SHAKTI S. SINGH, KOTA VS. DCIT, CIRCLE SAWAI MAD HPUR 9 3.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FIRSTLY, IT IS NOTED THAT THE APPELLANT IS MAINTAINING SEPARATE SET OF FINANCIAL STATEMENTS IN RESPECT OF HIS CONSULTANCY ACTIVITIES. AND IN RESPECT OF HIS PERSONAL AFFAIRS, THERE IS NO REQUIREMENT TO MA INTAIN ANY BOOKS OF ACCOUNTS AND THE APPELLANT HAS SUBMITTED ESTIMATED PERSONAL STATEMENT OF AFFAIRS FOR THE PERIOD 1.4.2004 TO 31.3.2008. ON PERUSAL OF TH E CAPITAL ACCOUNT WHICH IS AVAILABLE ON RECORD, IT IS NOTED THAT THE APPELLANT HAS AN OPENING BALANCE OF 11,34,013 AND INTRODUCED FRESH CAPITAL OF RS. 2,52, 609/- DURING THE YEAR UNDER CONSIDERATION IN HIS PROFESSIONAL CONSULTANCY BUSIN ESS. THE APPELLANT INTRODUCED A SUM OF RS. 7,05,500/- IN HIS PROFESSI ON ON VARIOUS DATES AND HE HAS WITHDRAWN A SUM OF RS.4,52,891 FROM HIS CAPITAL ACCOUNT ON VARIOUS DATES. THUS THE NET CAPITAL AMOUNTING TO RS. 2,52,609/- WA S INTRODUCED IN THE PROFESSION CONSULTANCY ACTIVITIES. IN OUR VIEW, TH E ADDITION, IF AT ALL, IS REQUIRED TO BE MADE SHOULD THEREFORE BE RESTRICTED TO RS 2,5 2,609 AS THE APPELLANT HAS DEMONSTRATED THE CLEAR LINKAGE BETWEEN THE DEPOSITS AND THE WITHDRAWALS OF THE SAME AMOUNT IN HIS CAPITAL ACCOUNT. FURTHER, R EGARDING THE SOURCE OF RS. 252,609/- INTRODUCED IN THE PROFESSION, A PERUSAL O F ESTIMATED PERSONAL STATE OF AFFAIRS SHOWS THE APPELLANT HAD CASH IN HAND OF RS 6,30,581 AT THE BEGINNING OF THE YEAR WHICH IS SUFFICIENT TO DEMONSTRATE THE DEPOSIT OF RS 252,609 AS FRESH CAPITAL IN HIS CONSULTANCY ACTIVITIES. IN LIG HT OF ABOVE AND GIVEN THE PAST PROFESSIONAL EARNINGS AND HOUSEHOLD WITHDRAWALS AND AVAILABILITY OF CASH STANDARD OF LIVING. IN THE LIGHT OF ABOVE, WE ARE OF THE VIEW THAT THE APPELLANT HAS ADEQUATELY DEMONSTRATED THE SOURCE OF CASH DEPO SITS AND THE EXPLANATIONS ARE FOUND TO BE REASONABLE AND SUPPORTED BY THE PRO FESSIONAL AND PERSONAL STATEMENT OF ACCOUNTS AND WE HEREBY DELETE THE AMOU NT OF RS. 7,05,500/- TREATED BY THE AO AS UNDISCLOSED INCOME OF THE APPE LLANT. HENCE THE GROUND OF THE APPELLANT IS ALLOWED. ITA NO. 615/JP/15 SHAKTI S. SINGH, KOTA VS. DCIT, CIRCLE SAWAI MAD HPUR 10 4. REGARDING GROUND NO.4, IN THE LIGHT OF OUR DECI SION IN GROUND NO .3, WE DONOT DEEM IT NECESSARY TO BE EXAMINED. HENCE, THE SAME IS DISMISSED IN VIEW OF OUR DECISION IN GROUND NO. 3. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 / 06/2016. SD/- SD- ( R.P. TOLANI ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 29/ 06/2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI SHAKTI S. SINGH, KOTA 2. IZR;FKHZ @ THE RESPONDENT- DCIT, CIRCLE, SAWAI MADHOPUR 3. VK;DJ VK;QDR@ CIT KOTA 4. VK;DJ VK;QDRVIHY@ THE CIT(A)-AJMER 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 615/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR