Addition against Salaried Person towards Loan taken for Foreign Studies of Daughter: ITAT slams Dept for taking a Pedantic Approach [Read Order]

The Income Tax Appellate Tribunal (ITAT), Pune bench, while deleting an addition against an individual, held that the department shall adopt a holistic approach and analyse the facts of the case while making additions.

The assessee has been a salaried employee at the material time and now a retired person. A sum of Rs.15.05 lakh was deposited in his bank account, for which a notice under section 148 was issued.

During the assessment proceedings, the Assessing Officer held that the assessee deposited a sum of Rs.15.05 lakh in his bank account over a period of around four months from November, 2010 to March, 2011. Sources of deposit were shown, inter alia, loan of Rs.4.00 lakh taken from two persons, namely, Shyam Rao Bende and Santosh Vasudevaor Nandurkar.

The contended that the loan was taken by the assessee for further foreign studies of his daughter and furnished confirmations from these two persons.

The first appellate authority rejected this contention by holding that t the assessee did not submit any documentary evidence of having taken loan for his daughter’s further studies.

After considering the facts of the case, the Tribunal Vice President R S Syal found that the ld. CIT(A) did not accept the amount as a source of deposit on the ground that it was withdrawn and subsequently re-deposited.

“Even though such amount was re-deposited, it cannot be held that the assessee was not in a position to manage the remaining amount of Rs.4.89 lakh when he was an agriculturist and also in a service having salary of Rs.3.94 lakh for the year,” the Tribunal said.

While concluding the order, the Tribunal added that “at this juncture, it is germane to accentuate that the facts and circumstances of each transaction are required to be considered in entirety. Here is a case in which a salaried person pooled his lifelong endeavour for the further studies of his daughter. In such a panorama, a holistic approach needs to be adopted. When I consider the facts of the instant case as a whole, there remains no doubt whatsoever that the assesee arranged the money from his known sources for depositing in the bank account which was meant for education of his daughter. The authorities below were not justified in getting too technical and taking a pedantic approach. I, ergo, set-aside the impugned order and delete the entire addition.”

To Read the full text of the Order CLICK HERE

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