SHRI DAMODAR KOTHARI, Jaipur v. ACIT, Ajmer

ITA 1236/JPR/2010 | 2005-2006
Pronouncement Date: 22-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 123623114 RSA 2010
Assessee PAN AHMPK1269N
Bench Jaipur
Appeal Number ITA 1236/JPR/2010
Duration Of Justice 9 month(s) 2 day(s)
Appellant SHRI DAMODAR KOTHARI, Jaipur
Respondent ACIT, Ajmer
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted SMC
Tribunal Order Date 22-07-2011
Assessment Year 2005-2006
Appeal Filed On 20-10-2010
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.1236 1237 & 1238/ JP/2010 ASSESSMENT YEAR: 2005-06 2006-07 & 2007-08 PAN: AHMPK 1269 N SHRI DAMODAR KOTHARI VS. THE DCIT BEHIND HIGHER SECONDRY SCHOOL CENTRAL CIRCLE NEAR BUS STAND GANGAPUR BHILWARA AJMER (APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI MAHENDRA GARGIEYA DEPARTMENT BY : SHRI SUNIL MATHUR ORDER PER N.L. KALRA AM:- THE ASSESSEE HAS FILED THE APPEALS AGAINST RESPEC TIVE ORDERS OF THE LD. CIT(A) CENTRAL JAIPUR DATED 11-08-2010 FOR THE ASSESSMENT YEARS 2005-06 TO 2007-08. 2. FIRST OF ALL WE WILL TAKE UP THE APPEAL FOR THE ASSESSMENT YEAR 2005- 06. 2.1 THE FIRST GROUND OF APPEAL IS GENERAL AND THERE FORE THE SAME WILL STAND DISPOSED OFF IN VIEW OF THE FINDINGS TO BE RE CODED AGAINST OTHER GROUNDS OF APPEAL. 3.1 THE SECOND GROUND OF APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN PARTLY SUSTAINING THE ADDITION ON ACCOUNT OF HOUSE HOLD WITHDRAWALS 2 UPTO RS. 30 000/- BY ESTIMATING SUCH WITHDRAWALS AT RS. 90 000/- AS AGAINST RS. 60 000/- DECLARED BY THE ASSESSEE. 3.2 A SEARCH WAS CONDUCTED BY THE INCOME TAX DEPART MENT AT THE PREMISES OF SHRI CHETAN PRAKASH AGARWAL AND M/S. BH ARTIYA SPINNERS LTD. GROUP GANGAPUR DISTT. BHILWARA ON 22-03-2007. THE ASSESSEE WAS AN EMPLOYEE OF M/S. BHARTIYA SPINNERS LTD. AND A SEARC H WAS ALSO CONDUCTED AT THE RESIDENTIAL PREMISES OF THE ASSESSEE. STATEMENT S OF SHRI DAMODAR KOTHARI (ASSESSEE) AND SMT. LEELA KOTHARI WIFE OF THE ASSESSEE WERE RECORDED ON 22-03-07. FROM SUCH STATEMENTS THE AO INFERRED THAT HOUSE HOLD EXPENSES WITHDRAWALS ARE INADEQUATE LOOKING TO THE STATUS AND SIZE OF THE FAMILY. THE AO REQUIRED THE ASSESSEE TO FURNISH CERTAIN INFORMATION ABOUT THE FAMILY AND DETAILS SO ASKED ARE AVAILABLE AT PAGE 2 AND 3 OF THE ASSESSMENT ORDER. THE ASSESSEE FILED THE REPLY VIDE LETTER DATED 21-01-2008 IN WHICH IT WAS STATED THAT THE ASSESSEE FAMILY CON SISTS OF 06 MEMBERS INCLUDING HIMSELF HIS WIFE AND FOUR SCHOOL GOING C HILDREN. THE AO FURTHER NOTICED THAT THE STANDARD OF LIVING OF THE ASSESSEE IS HIGH MIDDLE CLASS. THE ASSESSEE IS ALSO OWNING A CAR. THE AO ESTIMATED THE HOUSE HOLD EXPENSES FOR THE THREE ASSESSMENT YEARS UNDER APPEAL I.E. 2005-0 6 2006-07 AND 2007-08 AT RS. 1.08 LACS RS. 1.20 LACS AND RS. 1.32 LACS R ESPECTIVELY. AFTER CONSIDERING THE WITHDRAWALS SHOWN BY THE ASSESSEE THE AO MADE THE 3 ADDITIONS ON ACCOUNT OF INADEQUATE WITHDRAWALS TO THE EXTENT OF RS. 48 000/- 55 000- AND 62 000/- FOR THE ASSESSMENT YEAR 2005 -06 2006-07 AND 2007- 08. 3.3 BEFORE THE LD. CIT(A) IT WAS SUBMITTED THAT TH E ASSESSEE IS A SALARIED EMPLOYEE AND IS LIVING IN A SMALL VILLAGE. THE STAN DARD OF LIVING OF THE ASSESSEE AND HIS FAMILY IS VERY ORDINARY AND SIMPLE . THE ASSESSEE OWNS TV REFRIGERATOR CAR AND WASHING MACHINE ONLY. THE ASS ESSEE HAS NOT INCURRED ANY MAJOR EXPENSES IN RESPECT OF ANY CELEBRATION O F FUNCTIONS. IT WAS THEREFORE SUBMITTED BEFORE THE LD. CIT(A) THAT HOU SE HOLD WITHDRAWALS SHOWN BY THE ASSESSEE ARE ADEQUATE. THE LD. CIT(A) DIRECTED THE AO TO FURNISH THE REMAND REPORT ON THE ISSUE OF INADEQUAC Y OF WITHDRAWAL FOR HOUSE HOLD EXPENSES. FROM SUCH REMAND REPORT THE L D. CIT(A) NOTICED THAT THERE WAS DOCUMENT SHOWING SCHOOL BUS CHARGES OF RS . 555/- FOR THREE MONTHS I.E. MARCH APRIL AND MAY 2006. THERE ARE B US CHARGES RECEIPTS FOR DEC. 2006 AND JAN. 207 OF RS. 400/- EACH FOR TWO OT HER CHILDREN. CAUTION MONEY AND DONATIONS HAVE ALSO BEEN PAID FOR TWO CHI LDREN. AFTER CONSIDERING THESE DOCUMENTS WHICH HAVE BEEN FOUND D URING THE COURSE OF SEARCH THE LD. CIT(A) ESTIMATED THE HOUSE HOLD EXP ENSES FOR THE THREE ASSESSMENT YEARS AT RS. 90 000/- 1.20 LACS AND 1.1 4 LACS RESPECTIVELY AND 4 THEREBY CONFIRMED THE ADDITION TO THE EXTENT OF RS. 30 000/- 37 000/- AND 44 000/- FOR THE THREE ASSESSMENT YEARS I.E. 2005-0 6 2006-07 AND 2007-08. 3.4 WE HAVE HEARD BOTH THE PARTIES. IT IS AN UNDISP UTED FACT THAT THE ASSESSEE FAMILY CONSISTS OF 06 MEMBERS. THE CHILDRE N OF THE ASSESSEE WERE STUDYING IN SCHOOL AND THE CHILDREN WERE GOING TO S CHOOL BY BUS. THERE WERE DONATIONS RECEIPTS WHICH MEANS THAT THE ASSESSEE CH ILDREN WEE STUDYING IN SOME PUBLIC SCHOOL. THE ASSESSEE WAS MAINTAINING A CAR. IF ONE CONSIDERS MESSING EXPENSES PER MEMBER CLOTH EXPENSES EDUCAT ION EXPENSES ELECTRICITY EXPENSES ETC. WE FEEL THAT THE LD. CIT( A) HAS BEEN FAIR ENOUGH TO ESTIMATE THE MONTHLY EXPENSES OF THE ASSESSEE FOR T HE ASSESSMENT YEAR 2005- 06 2006-07 AND 2007-08 AT RS. 7500/- RS. 8500/- A ND RS. 9500/- PER MONTH. 3.5 WE HAVE ALSO NOTICED THAT AT THE TIME OF SEARCH CASH OF RS.6 74 890/- WAS FOUND OUT OF WHICH RS. 6 52 651/- WAS SEIZED. T HE ASSESSEE CLAIMED THAT CASH OF RS. 1.25 LACS BELONGS TO HIM. THE JEWELLER Y TO THE EXTENT OF RS. 6 18 543/- WAS ALSO FOUND DURING THE COURSE OF SEAR CH AT THE RESIDENTIAL PREMISES OF THE ASSESSEE. THE QUANTUM OF CASH AND J EWELLERY FOUND DURING THE COURSE OF SEARCH DO INDICATE THAT THE ASSESSEE BELONGS TO A MIDDLE UPPER CLASS FAMILY AND THE LD. CIT(A)S ESTIMATION OF HOU SE HOLD EXPENSES IS 5 REASONABLE. THEREFORE ADDITION ON ACCOUNT OF HOUSE HOLD EXPENSES CONFIRMED BY THE LD. CIT(A) IS UPHELD. 4.1 THE THIRD GROUND OF THE ASSESSEE IS REGARDING C HARGING OF INTEREST U/S 234B AND 234C OF THE ACT. 4.2 THE INTEREST IS MANDATORY AND THE ASSESSEE WILL GET THE CONSEQUENTIAL RELIEF IF ANY. (ITA NO. 1237JP/10- ASSESSMENT YEAR 2006-07) 5.1 THE FIRST GROUND OF APPEAL IS GENERAL AND THERE FORE THE SAME WILL STAND DISPOSED OFF IN VIEW OF THE FINDINGS TO BE RE CODED AGAINST OTHER GROUNDS OF APPEAL. 6.1 THE SECOND GROUND OF APPEAL IS AGAINST CONFIRMA TION OF ADDITION OF RS. 37 000/- ON ACCOUNT OF INADEQUATE WITHDRAWALS FOR HOUSE HOLD EXPENSES. 6.2 FOLLOWING OUR ORDER FOR THE ASSESSMENT YEAR 200 5-06 WE CONFIRM THE ADDITION AS UPHELD BY THE LD. CIT(A). 7.1 THE THIRD GROUND OF APPEAL OF THE ASSESSEE IS T HAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION ON ACCOUNT OF GAI N ON CAR. 7.2 WE HAVE HEARD BOTH THE PARTIES. THE ASSESSEE IS A SALARIED EMPLOYEE AND HAS NOT CLAIMED DEPRECIATION ON CAR. THE CAR IS TO BE CONSIDERED AS A PERSONAL ASSET AND THEREFORE PROFIT ON SALE OF CAR CANNOT BE TAXED UNDER THE HEAD CAPITAL GAIN. THUS THE ADDITION OF RS. 20 000/ - IS DELETED. 6 8.1 THE FOURTH GROUND OF THE ASSESSEE IS REGARDING CHARGING OF INTEREST U/S 234B AND 234C OF THE ACT. 8.2 THE INTEREST IS MANDATORY AND THE ASSESSEE WILL GET THE CONSEQUENTIAL RELIEF IF ANY. (ITA NO. 1238JP/10- ASSESSMENT YEAR 2007-08) 9.1 THE FIRST GROUND OF THE ASSESSEE IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. 10.1 THE SECOND GROUND OF APPEAL IS IN RESPECT OF ADDITION ON ACCOUNT OF INADEQUATE WITHDRAWALS FOR MEETING HOUSE HOLD EXPEN SES. 10.2 FOLLOWING OUR ORDER FOR THE ASSESSMENT YEAR 2 005-06 WE HOLD THAT THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDI TION TO THE EXTENT OF RS. 44 000/-. 11.1 THE THIRD GROUND OF APPEAL IS THAT THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 1.25 LACS REPRESENTI NG THE CASH FOUND AT THE TIME OF SEARCH. 11.2 THE AO IN HIS ORDER MENTIONED THAT THE ASSESSE E IN HIS PRELIMINARY STATEMENT STATED THAT THERE WAS CASH OF RS. 20 000/ - TO 25 000/- IN HIS HOUSE AND RS. 3.00 LACS TO RS. 3.25 LACS CASH STANDS DEPO SITED IN SAVING BANK ACCOUNT IN SBBJ GANGAPUR. AFTER THE PRELIMINARY ST ATEMENT SEARCH WAS CONDUCTED AND CASH OF RS. 6 74 879/- WAS FOUND. CAS H OF RS. 6 52 651/- WAS 7 SEIZED. THE ASSESSEE WAS REQUIRED TO EXPLAIN THE SO URCE OF THE CASH FOUND AT HIS RESIDENCE. THE ASSESSEE STATED THAT THE CASH OF RS. 5.45 LACS BELONGS TO M/S. SHRIRAM BALA BUX. FOR THE REMAINING CASH FOUND THE ASSESSEE STATED THAT THE SAME WAS OUT OF THE PAST SAVING. THE ASSES SEE FILED THE CASH FLOW STATEMENT. ACCORDING TO THE AO THE CASH FLOW STATE MENT IS NOTHING BUT AN EYEWASH AND WAS PREPARED BY THE ASSESSEE FOR SELF S ERVING PURPOSES WITHOUT ANY EVIDENCE. THE ASSESSEE SHOWED THE OPENING CASH BALANCE OF RS. 2.00 LACS AS ON 01-04-1997. IN ASSESSMENT YEAR 1998-99 THE ASSESSEE HAS SHOWN SALARY OF RS. 30 000/-. IN THE ASSESSMENT YEAR 1999 -2000 THE SALARY HAS BEEN SHOWN AT RS. 1.45 LACS AND IN ASSESSMENT YEAR 2000- 01 THE SALARY WAS REDUCED TO RS. 18 000/. THE ABSTRACT OF THE CASH FL OW STATEMENT HAS BEEN REPRODUCED BY THE AO AT PAGE 3 IN THE ASSESSMENT OR DER. THE ASSESSEE HAS NOT MAINTAINED ANY PERSONAL SET OF BOOKS OF ACCOUNT S. THE AO ACCORDINGLY TREATED THE CASH OF RS. 1.25 LACS AS UNDISCLOSED IN COME AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 11.3 THE LD. CIT(A) HAS CONFIRMED THE ADDITION AFTE R OBSERVING AS UNDER:- 3.2. I HAVE CONSIDERED THE ARGUMENTS OF THE APPELLANT AND PERUSED THE ASSESSMENT ORDER AND WRIT TEN SUBMISSION. IT IS ADMITTED FACT THAT RECORDED HOUSE HOLD WITHDRAWALS SHOWN BY THE APPELLANT ARE INADEQUATE. THUS STATEMENT OF APPELLANT TAKEN DURING THE COURSE OF S EARCH THAT REMAINING CASH FOUND OF RS. 1 29 879/- IS OUT OF PAST 8 SAVING IS DEVOID OF ANY MERITS. NOW COMING TO THE C ASH FLOW STATEMENT BY WHICH THE APPELLANT HAS TRIED TO EXPLAIN THE AVAILABILITY OF CASH FOUND DURING THE COURSE OF SEARCH IT IS QUITE CLEAR THAT THE CASH FLOW STATEMENT WAS PREPARED AFTER THE SEARCH AND OBVIOUSLY WAS NOT PREPARED IN THE REGULAR COURSE OF TIME. MOREOVER IT IS ALSO CLEAR THAT THE APPELLANT HAS MADE INVESTMENT IN PURCHASE OF PLOTS WHICH WAS UNACCOUNTED AND LATER ON WHILE FILING RETURN OF INCOME U/S 153A THE APPELLANT HAS DECLARED THE UNACCOUNTED INCOME. EVEN OTHERWISE THE AO HAS RIGHT LY POINTED OUT VAST VARIATION IN THE SALARY INCOME INC LUDED IN THE CASH FLOW STATEMENT VIZ IN THE PERIOD RELEVA NT TO ASSESSMENT YEAR 98-99 THE SALARY OF RS. 30 000/- HA S BEEN SHOWN WHEREAS THE SAME HAS INCREASED TO RS. 1 45 0 00/- IN ASSESSMENT YEAR 1999-2000 WHICH IS AGAIN DECREA SED TO RS. 18 000/- IN ASSESSMENT YEAR 2000-01. THIS VA ST VARIATION IS TOTALLY IS NOT UNDERSTANDABLE AND ALSO MAKES THE STATED CASH FLOW STATEMENT BASED ON THESE FIGUR ES AS UN-AUTHENTICATED. CONSIDERING THESE FACTS AND CIRCUMSTANCES THE AO IS JUSTIFIED IN TREATING THE AMOUNT OF RS. 1 25 000/- AS UNEXPLAINED AND ADDING THE SAM E TO THE TOTAL INCOME OF THE APPELLANT IN ASSESSMENT YEA R 2007-08. ACCORDINGLY THE ADDITION MADE BY AO IS CONFIRMED. 11.4 WE HAVE HEARD BOTH THE PARTIES. BEFORE US THE LD. AR HAS STATED THAT THE LD. CIT(A) HAS NOT CONSIDERED THE WRITTEN SUBMI SSION JUDICIOUSLY. THE 9 ASSESSEE HAS BEEN IN SERVICE FOR A LARGE PERIOD OF 22 YEARS AND THEREFORE IT IS NATURAL THAT A PERSON OF THE AGE OF 42 YEARS COULD NOT HAVE SAVED HARDLY RS. 1.25 LACS. PERHAPS THE LD. AR HAS NOT TAKE INTO AC COUNT THE CASH AVAILABLE IN THE BANK ACCOUNT OF THE ASSESSEE. THE ASSESSEE BEFO RE START OF THE SEARCH WAS REQUIRED TO INDICATE AS TO HOW MUCH CASH IS AVAILAB LE AT HIS RESIDENCE. IT WAS STATED BY HIM THAT CASH AVAILABLE AT HIS RESIDENCE IS ONLY TO THE EXTENT OF RS. 20 000/- TO 25 000/-. IN THE STATEMENT THE ASSESSE E HAS ADMITTED THAT HE IS HAVING INTEREST INCOME ON THE LOANS GIVEN TO CERTAI N PARTIES. HE IS ALSO HAVING RENTAL INCOME. THE ASSESSEE ALSO PURCHASED A PLOT IN JAN. 2007 IN PANCHWATI SCHEME OF BHILWARA AND IS ALSO HAVING TWO PLOTS IN THE NAME OF HIS WIFE. THERE IS ALSO A SHED PURCHASED FROM RFC I N THE NAME OF HIS WIFE. CONSIDERING THE ASSETS ACQUIRED BY THE ASSESSEE AND LOOKING TO THE SOURCE OF INCOME IT IS CLEAR THAT THE CASH FOUND AT HIS RESI DENCE WAS NOT A DISCLOSED CASH. IN THE PRELIMINARY STATEMENT THE ASSESSEE AD MITTED THE CASH OF RS. 20 000/- TO RS. 25 000/- AND LOOKING TO THE PRELIMI NARY STATEMENT WE FEEL THAT IT WILL BE FAIR AND REASONABLE TO UPHOLD THE A DDITION ON ACCOUNT OF CASH FOUND AT THE TIME OF SEARCH. THE ORDER OF THE LD. C IT(A) ON THIS ISSUE IS UPHELD. 12.1 THE FOURTH GROUND OF THE ASSESSEE IS REGARDING CHARGING OF INTEREST U/S 234B AND 234C OF THE ACT. 10 12.2 THE INTEREST IS MANDATORY AND THE ASSESSEE WIL L GET THE CONSEQUENTIAL RELIEF IF ANY. 13. IN THE RESULT THE APPEALS OF THE ASSESSEE BEAR ING ITA NOS.1236 AND 1238/JP/2010 ARE DISMISSED AND APPEAL BEARING ITA N O. 1237/JP/2010 IS PARTLY ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 22-07 -2011. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 22/07/2011 *MISHRA COPY FORWARDED TO :- 1. SHRI DAMODAR KOTHARI BHILWARA 2. THE DCIT CENTRAL CIRCLE AJMER 3. THE LD. CIT (A) JAIPUR 4. THE LD. CIT BY ORDER 5. THE LD.DR 6. THE GUARD FILE (ITA NO.1236/JP /10) A.R ITAT JAIPUR 11 12