Mrs. Batul Madni Patel, Surat v. The Income tax Officer,Ward-2(1),, Surat

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'SMC' (BEFORE SHRI N S SAINI ACCOUNTANT MEMBER) ITA NO.3097/AHD/2009 (ASSESSMENT YEAR:- 2006-07) MRS. BATUL MADNI PATEL 110 AMAN SOCIETY NEAR JIVAN JYOT CINEMA MAIN ROAD UDHNA SURAT V/S THE INCOME-TAX OFFICER WARD-2(1) SURAT [APPELLANT] [RESPONDENT] APPELLANT BY :- SHRI K N BHATT CA RESPONDENT BY:- SHRI GOVIND SINGHAL SR. DR O R D E R THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) DA TED 23-09- 2009 FOR ASSESSMENT YEAR 2006-07. 2 GROUND NO.1 RAISED BY THE ASSESSEE READS AS UNDER :- IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) OUGHT TO HAVE HELD THAT THE LD. AO HAS ERRED IN LAW AND IN F ACT IN TREATING THE CAPITAL GAIN OF RS.54 822/- AS THE INCOME FROM BUSI NESS AND HENCE YOUR APPELLANT MOST HUMBLY PRAYS THAT THE ACTION OF THE LD. AO TO TREAT THE CAPITAL GAIN AS BUSINESS INCOME BE ANNULLED AND THE CAPITAL GAIN OF RS.54 822/- BE TAXED AS IS RETURNED BY THE APPELLAN T . 3 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE TRADING OF GREY CLOTH AND OF SHARES. FROM A PER USAL OF THE PROFIT AND LOSS ACCOUNT THE AO NOTED THAT THE ASSESSEE HA D CLAIMED SHARE TRADING EXPENSES OF RS.4 604/-. WHEN ASKED TO EXPLA IN AS TO WHY THE STCG AND LTCG CLAIMED SHOULD NOT BE TREATED AS INCO ME FROM BUSINESS THE ASSESSEE SUBMITTED THAT THE CLAIM OF THE SHARE TRADING EXPENSES COULD NOT LEAD TO AN INFERENCE THAT THE PR OFIT EARNED FROM THE PURCHASE AND SALE OF SHARES WAS BUSINESS INCOME AND NOT CAPITAL 2 GAIN. THE SHARES WERE BOUGHT FOR INVESTMENT PURPOSE ON DELIVERY BASIS. SINCE THERE WAS A MARGINAL PROFIT IN THE SHORT TERM THE SHARES WERE SOLD OFF DURING THE YEAR UNDER REVIEW. SOME OF THE SHARES WERE HELD FOR MORE THAN 2 YEARS. 4 THE AO REJECTED THE ASSESSEE'S SUBMISSIONS OBSER VING THAT THE ASSESSEE HAD FAILED TO EXPLAIN THE EXACT NATURE OF THE SHARE TRADING EXPENSES AND EVEN TO PROVE THAT SUCH EXPENSES HAD B EEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AS REQUIRED U/S.37(L) OF THE IT ACT. SUCH EXPENSES HOWEVER SHOW ED THAT THE ASSESSEE WAS ACTIVELY ENGAGED IN THE BUSINESS OF SH ARE TRADING. FROM THE RECORDS THE AO FOUND THAT THE ASSESSEE HAD BEE N REGULARLY TRADING IN 'B' CATEGORY SCRIPTS AND THAT THE HOLDIN G PERIOD WAS VERY LOW. IT WAS AN ORGANIZED ACTIVITY. HE FURTHER OBSER VED THAT ONCE THE SHARE TRADING ACTIVITY WAS CONSIDERED AS A BUSINESS ACTIVITY THE SAME COULD NOT BE PARTLY TREATED AS INVOLVING INVESTMENT S. ON THE BASIS OF SUCH FINDINGS AND OBSERVATIONS THE AO TREATED THE SURPLUS/PROFIT EARNED FROM THE PURCHASE AND SALE OF SHARES OF CERT AIN COMPANIES AS LISTED IN PARA- 8.3 OF THE ASST. ORDER AS BUSINESS INCOME AND ADDED THE SUM OF RS.54 822 TO THE ASSESSEE'S TOTAL INCOME . 5 IN APPEAL BEFORE THE LEARNED COMMISSIONER OF INCO ME-TAX (APPEALS) THE ASSESSEE FILED WRITTEN SUBMISSIONS W HEREIN IT WAS CONTENDED THAT THE SUM OF RS.4 604/- REPRESENTED DE MAT CHARGES WHICH HAD BEEN DEBITED TO THE P & L ACCOUNT THROUGH OVERSIGHT. THE ADVOCATE FORGOT TO ADD BACK THE SAID AMOUNT. IT HAS BEEN CLAIMED THAT THE AO HAD REJECTED THE CLAIM OF STCG AND LTCG AND HAD TREATED THE PROFIT ON SALE OF SHARES IN ORDER TO HA RASS THE ASSESSEE. IT IS THE CONTENTION OF THE AR THAT THE LAW ALLOWED TH E CLAIM OF STCG AND LTCG AND THE ACTION OF THE AO COULD NOT GO AGAI NST THE LAW. THE AO FAILED TO CONSIDER THE DIFFERENCE BETWEEN IN VESTMENT ACTIVITY IN SHARES AND TRADING ACTIVITY IN SHARES. JUST BECA USE THE INVESTMENT 3 MADE BY THE ASSESSEE HAD RESULTED IN CAPITAL GAIN W ITHIN A VERY SHORT PERIOD BECAUSE OF UNPRECEDENTED BULL RUN IN THE MAR KET SUCH INVESTMENT COULD NOT BE REGARDED AS STOCK-IN-TRADE END THE CAPITAL GAIN AS BUSINESS INCOME. RELYING ON THE CIRCULAR NO .4 OF 2007 DATED 15.6 2007 OF THE CBDT IT HAS BEEN ARGUED BY THE AR THAT IF THE CRITERIA LAID DOWN IN THE SAID CIRCULAR WAS APPLIED TO THE ASSESSEE'S CASE IT WOULD BE CLEAR THAT THERE WAS NO BUSINESS ACTIVITY. IN SUPPORT OF HIS CONTENTIONS THE AR HAS PLACED RELIANCE ON S EVERAL CASE-LAWS. IT HAS BEEN FURTHER SUBMITTED THAT THE SHARES WHICH WERE HELD LONG TERM I. E. FOR MORE THAN 12 MONTHS THE GAIN ARISI NG FROM SUCH SHARES COULD NOT BE TREATED AS BUSINESS INCOME. IT HAS THUS BEEN REQUESTED THAT THE ASSESSEE'S CLAIM OF STCG AND L.T CG BE ALLOWED AND THE ADDITION OF RS.54 822/- BE DELETED. 6 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE HE LD AS UNDER: 6. I HAVE CAREFULLY CONSIDERED THE FINDINGS AND CONCLUSION OF THE AO AS ALSO THE WRITTEN SUBMISSION OF THE AR. THE VERY FAC T THAT :HE ASSESSEE HAD DEBITED SHARE TRADING EXPENSES TO THE P & L ACCOUNT SHOWED THAT THE ACTIVITY INVOLVING THE PURCHASE AND SALE OF SHARES WAS IN THE NATURE OF A BUSINESS ACTIVITY. IT HAS BEEN EXPLAINED BY THE AR IN THE WRITTEN SUBMISSION THAT THE SUM OF RS.4 604 WAS INADVERTENTLY DEBITED TO THE ASSESSEE'S. P & L ACCOUNT AND THAT THE ASSESSEE'S AR OUGHT TO HAVE R EVERSED THE ENTRY DR ADDED THE SAME IN THE COMPUTATION OF TOTAL INCOME WHICH AGAIN WAS NOT DONE DUE TO OVERSIGHT. THIS EXPLANATION OF THE AR I S NOT ACCEPTABLE. THE EXPLANATION HAS BEEN FURNISHED AFTER THE CLAIM OF S UCH EXPENSES HAS BEEN REJECTED BY THE LEARNED ASSESSING OFFICER. THE CLAI M OF INADVERTENCE AND OVERSIGHT CANNOT SIMPLY BE USED TO EXPLAIN AWAY THE FACTUM OF SHARE TRADING INDULGED IN BY THE ASSESSEE. 6.1 THE AO HAS ALSO OBSERVED THAT THE HOLDING PERI OD OF THE SHARES WAS VERY LOW THE DEALING WAS VERY FREQUENT AND THE VOL UME OF THE TRANSACTIONS WAS HIGH. EVEN THOUGH THE AR HAS CLAIMED THAT SOME OF THE SHARES WERE HELD LONG TERM NEITHER ANY DETAIL NOR ANY BIFURCAT ION HAS BEEN FURNISHED IN SUPPORT OF SUCH A CLAIM. NOR HAS IT BEEN SHOWN HOW THE BOARD'S CIRCULAR NO 4 OF 2007 DATED 15 06.2007 COULD BE APPLIED TO T HE FACTS OF THE ASSESSEE'S CASE TO ESTABLISH THAT THE SURPLUS OR PR OFIT EARNED FROM THE SALE OF SUCH SHARES AMOUNTED TO CAPITAL GAIN AND NOT BUS INESS INCOME. 4 6.2 GIVEN SUCH FACTS AND CIRCUMSTANCES OF THE ASSE SSEE'S CASE I HAVE COME TO THE CONCLUSION THAT THE AO WAS FULLY JUSTIF IED IN TREATING THE ACTIVITY OF THE ASSESSEE INVOLVING PURCHASE AND SAL E OF SHARES AS TRADING ACTIVITY AND THE SURPLUS EARNED OF RS.54 822 AS BU SINESS INCOME. THE ADDITION OF THE SAID SUM IS THEREFORE CONFIRMED . 7 THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSE SSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) WHICH HAVE BEEN STATED ABOVE I N THIS ORDER AND ARE NOT BEING REPEATED FOR THE SAKE OF BREVITY. 8 THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND VEHEMENTLY ARGUED AND SUPPORTED THE ORDER OF THE LE ARNED COMMISSIONER OF INCOME-TAX (APPEALS). 9 I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. IN THE INSTANT CASE THE ASSESSEE IS ENGAGED IN THE BUSINE SS OF TRADING IN GREY CLOTH. THE ASSESSEE APART FROM THE INCOME FROM THE SAID BUSINESS ALSO DISCLOSED IN THE RETURN OF INCOME FIL ED FOR THE YEAR UNDER CONSIDERATION RS.40 367/- AS LONG TERM CAPITA L GAIN ON SALE OF SHARES AND RS.14 455/- AS SHORT TERM CAPITAL GAI N FROM THE SALE OF SHARES. THE LEARNED ASSESSING OFFICER OBSERVED T HAT THE ASSESSEE IN HIS PROFIT & LOSS ACCOUNT HAS DEBITED RS.4 604/- AS SHARE TRADING EXPENSES. FROM THIS THE LEARNED ASSESSING OFFICER I NFERRED THAT THE ASSESSEE WAS TRADING IN SHARES AND THEREFORE HE HAS NOT ACCEPTED THE CLAIM OF THE ASSESSEE THAT PROFIT ON SALE OF SHARES WERE LONG TERM CAPITAL GAIN OR SHORT TERM CAPITAL GAIN DEPENDING U PON THE PERIOD OF HOLDING OF SHARES AND TREATED THE ENTIRE PROFITS ON SALE OF SHARES AS BUSINESS INCOME OF THE ASSESSEE. ON APPEAL THE LEA RNED COMMISSIONER OF INCOME-TAX (APPEALS) CONFIRMED THE ACTION OF THE LEARNED ASSESSING OFFICER. BEFORE ME THE LEARNED AU THORISED REPRESENTATIVE OF THE ASSESSEE POINTED OUT FROM THE BALANCE SHEET OF THE ASSESSEE THAT THE SHARES WERE DISCLOSED BY THE ASSESSEE AS AN 5 INVESTMENT IN THE BALANCE SHEET AND NOT AS STOCK-IN -TRADE. HE FURTHER CLARIFIED THAT DEMAT CHARGES OF RS.4 604/- WAS DEBI TED IN THE PROFIT & LOSS ACCOUNT AS SHARE EXPENSES WHICH DUE TO INADV ERTENCE COULD NOT BE ADDED BACK BY THE ASSESSEE WHILE COMPUTING H IS BUSINESS INCOME. HE ALSO SUBMITTED THAT THE ASSESSEE WAS ENG AGED IN THE BUSINESS OF TRADING IN GREY CLOTH AND OWN SURPLUS F UNDS ONLY WERE INVESTED IN THE SHARES TO EARN DIVIDEND INCOME. HE ALSO POINTED OUT THAT THE TOTAL NUMBER OF TRANSACTIONS WERE ONLY 8 T RANSACTIONS OF SALE AND OUT OF THESE 8 TRANSACTIONS OF SALE OF SHARES 4 WERE IN RESPECT OF SHARES WHICH WERE HELD BY THE ASSESSEE FOR MORE THA N 12 MONTHS. IN THE ABOVE FACTS IT CANNOT BE CONCLUDED THAT THE ASS ESSEE WAS ENGAGED IN THE SYSTEMATIC AND ORGANIZED ACTIVITY OF PURCHAS E AND SALE OF SHARES ON REGULAR BASIS SO AS TO CLASSIFY THE TRANS ACTIONS AS BUSINESS INCOME. THE FACT THAT THE SHARES WERE HELD AS INVES TMENT AND WERE SHOWN IN THE BALANCE SHEET ALSO AS INVESTMENT BY TH E ASSESSEE COULD NOT BE CONTROVERTED BY THE REVENUE. THE REVENUE ONL Y ON THE BASIS OF DEBITING OF DEMAT CHARGES IN THE PROFIT & LOSS A CCOUNT HAS REJECTED THE CLAIM OF THE ASSESSEE THAT THE SHARES WERE HELD BY HIM AS INVESTMENTS AND NOT AS STOCK-IN-TRADE IN MY CONSID ERED OPINION IS NOT JUSTIFIED ON CONSIDERATION OF FULL FACTS AND CI RCUMSTANCES OF THE CASE. I THEREFORE SET ASIDE THE ORDERS OF THE LOW ER AUTHORITIES AND DIRECT THE LEARNED ASSESSING OFFICER TO TREAT THE P ROFITS ON SALE OF SHARES ON LONG TERM CAPITAL GAIN AND SHORT TERM CAP ITAL GAIN AS SHOWN BY THE ASSESSEE. AS THE ASSESSEE HAS ADMITTED BEFORE US THAT THE DEMAT CHARGES OF RS.4 604/- IS NOT ALLOWABLE TO HIM AS BUSINESS EXPENDITURE THE LEARNED ASSESSING OFFICER IS FURTH ER DIRECTED TO WITHDRAW THE DEDUCTION ALLOWED IN RESPECT OF THE SA ID DEMAT EXPENSES. THUS THIS GROUND OF APPEAL OF THE ASSESS EE IS ALLOWED. 10 GROUND NO.2 RAISED BY THE ASSESSEE READS AS UNDE R: IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) OUGHT TO HAVE DELETED THE ADDITION OF RS.38 800/- ON ACCOUNT OF ALLEGED LOW HOUSEHOLD WITHDRAWALS BE DELETED . 6 11 THE BRIEF FACTS OF THE CASE ARE THAT THE AO NOTE D THAT THE ASSESSEE AND HIS FAMILY OF FOUR MEMBERS HAD SHOWN T OTAL WITHDRAWALS OF RS.69 200 FOR MEETING HOUSEHOLD EXPE NSES CONSIDERING THE LOCATION OF THE ASSESSEE'S RESIDENC E AND HIS STANDARD OF LIVING ETC. THE AO TOOK THE VIEW THAT THE WITHDR AWALS WOULD NOT HAVE BEEN SUFFICIENT FOR MEETING THE HOUSEHOLD EXPE NSES OF THE FAMILY COMPRISING OF THREE ADULTS AND TWO MINORS. M OREOVER THE ASSESSEE HAD ALSO FAILED TO PROVIDE ANY BREAK-UP OF THE EXPENSES INCURRED BY THE FAMILY. IN RESPONSE TO A SHOW-CAUSE NOTICE ISSUED BY THE AO PROPOSING TO ESTIMATE THE HOUSEHOLD EXPENSES AT RS. 1 08 000 THE ASSESSEE SUBMITTED A GENERALIZED REPL Y AND DID NOT SUBMIT ANY PLAUSIBLE EXPLANATION IN THIS REGARD. TH E AO THEREFORE ESTIMATED THE TOTAL ANNUAL HOUSEHOLD EXPENSES OF TH E FAMILY AT RS 1 08 000 AND ADDED THE DIFFERENTIAL SUM OF RS.38 800 TO THE ASSESSEE'S TOTAL INCOME. 12 IN APPEAL BEFORE THE LEARNED COMMISSIONER OF INC OME-TAX (APPEALS) THE ASSESSEE FILED WRITTEN SUBMISSIONS W HEREIN THE ASSESSEE HAS VERY BRIEFLY SUBMITTED THAT THE AO HA D MADE THE ESTIMATION OF HOUSEHOLD EXPENSES ON THE HIGHER SIDE . ON BEING ASKED BY THE AO THE ASSESSEE HAD SUBMITTED A DETAILED RE PLY VIDE LETTER DATED 08 09.2008 IN COURSE ASSESSMENT: PROCEEDINGS BUT THE AO UNFAIRLY CONSIDERED THE SAME TO BE GENERAL IN NATUR E. IT HAS BEEN FURTHER STATED THAT THE ASSESSEE BELONGED TO A MIDD LE-CLASS MUSLIM FAMILY LED A VERY-SIMPLE LIFE AND THERE WAS NO TR AVELLING DURING THE YEAR THE ASSESSEE'S TWO MINOR CHILDREN WENT TO A S CHOOL WHOSE FEES FOR THE WHOLE YEAR WAS ONLY RS.3 000/-. 13 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE HE LD AS UNDER: 7 10. NATIONAL SURVEYS HAVE REVEALED THAT THE HIGHE ST PERCAPITA HOUSEHOLD INCOME IS EARNED BY THE FAMILIES OF SURAT. THE AVER AGE ANNUAL PERCAPITA HOUSEHOLD INCOME IN SURAT HAS BEEN PEGGED AT RS.4.5 LACS APPROXIMATELY. THIS ALSO MEANS THAT WITH HIGHER MONEY SUPPLY AND H IGHER DISPOSABLE INCOME THERE WOULD BE A HIGHER DEMAND LEADING TO H IGHER PRICES AND CONSEQUENTLY A HIGHER COST OF LIVING IF THE AR'S CONTENTION IS TO BE BELIEVED THAT THE ASSESSEE'S FAMILY COMPRISED ONLY OF FOUR MEMBERS AND WITHDRAWALS OF APPROXIMATELY RS 69 200/- WERE SUFFI CIENT IT WOULD MEAN AN EXPENDITURE OF ONLY RS.5 766/- FOR THE WHOLE FAM ILY PER MONTH AND RS.1 441/- PER INDIVIDUAL MEMBER. WHAT MUST NOT BE FORGOTTEN IS THAT THERE ARE CERTAIN UNAVOIDABLE AND INEVITABLE EXPENSES WHI CH A FAMILY HAS TO INCUR. 10.1 I AM OF THE VIEW THAT SUCH -WITHDRAWALS WERE GROSSLY INSUFFICIENT TO MEET AIL THE EXPENSES OF THE FAMILY OF FOUR MEMBERS EVEN IF THE ASSESSEE MAY HAVE BEEN LIVING IN A MODEST LOCALITY AND LEAD ING A SIMPLE LIFE; THE ASSESSEE WOULD NECESSARILY HAVE HAD TO INCUR EXPENS ES ON ACCOUNT OF MUNICIPAL TAXES ON THE RESIDENTIAL PROPERTY ON SER VANTS ON GAS WATER & ELECTRICITY REPAIRS TO THE FLAT DAILY PROVISIONS MEDICAL TREATMENT CLOTHINGS LAUNDRY NEWSPAPERS ON TRANSPORT EDUCA TION OF THE CHILDREN AND MOST IMPORTANTLY ON SOCIAL AND RELIGIOUS OCCASIONS WHEN ARE QUITE NUMEROUS. .THEREFORE TO WHICHEVER COMMUNITY ANY PE RSON MAY BELONG OR WHICHEVER RELIGIOUS TENET HE MAY FOLLOW HE NECESSA RILY HAS TO INCUR THE AFORESAID EXPENSES FOR HIS VERY SURVIVAL AND ALSO T HE SURVIVAL OF HIS FAMILY MEMBERS. 10.2 THE ESTIMATE MADE BY THE AO WAS VERY REASONAB LE. THE POINT THAT EVERY APPELLATE AUTHORITY HAS TO NECESSARILY CONSID ER IS THAT INCOME-TAX PROCEEDINGS ARE NOT COVERED OR INFLUENCED BY THE ST RICT RULE OF EVIDENCE AS UNDER THE EVIDENCE ACT. IT IS FOR THIS REASON THAT THERE ARE A LOT OF DEEMING PROVISIONS IN THE INCOME-TAX ACT AND CONSEQUENTLY SEVERAL FACTORS ARE ASSUMED OR PRESUMED AND ON THE BASIS OF SUCH PRESUM PTIONS AND ASSUMPTIONS CONCLUSIONS ARE ALLOWED TO BE DRAWN RE GARDING THE CORRECT AND TRUE INCOME OF AN ASSESSEE IN THE CASE OF HOUS EHOLD WITHDRAWALS THE ASSUMPTION REGARDING INADEQUACY IS DRAWN ON THE BAS IS OF THE EXPENDITURE T ANY ORDINARY MIDDLE- CLASS FAMILY IS LIKELY TO IN CUR IN COURSE OF THE YEAR. THEREFORE SIMPLY BECAUSE THE AO DID NOT BRING ANY MATERIAL EVIDENCE ON RECORD TO SHOW THAT HOUSEHOLD EXPENSES HAD BEEN INC URRED FROM OUT OF UNACCOUNTED INCOME THE ADDITION CANNOT BE DELETED. THE PRESUMPTION MADE BY THE AO AND ESTIMATION MADE WAS VERY MUCH RE ALISTIC. IN FACT IT IS A VERY CONSERVATIVE ESTIMATE. GIVEN THE STANDARD OF LIVING OF ANY ORDINARY MIDDLE-CLASS FAMILY AND THE COST OF LIVING IN SURA T THE ESTIMATION MADE BY THE AO WAS VERY MUCH ON THE LOWER SIDE I HAVE THER EFORE NO HESITATION IN CONFIRMING THE ADDITION OF THE SUM OF RS 38 800/-. IN THE RESULT THE ASSESSEE'S APPEAL IS DISMISSED. 8 14 THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) WHICH HAVE BEEN STATED ABOVE I N THIS ORDER AND ARE NOT BEING REPEATED FOR THE SAKE OF BREVITY. 15 THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND VEHEMENTLY ARGUED AND SUPPORTED THE ORDER OF THE LE ARNED COMMISSIONER OF INCOME-TAX (APPEALS). 16 I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. IN THE INSTANT CASE THE ASSESSEE HAS DISCLOSED HOUSEHOLD EXPENSES OF RS.69 200/-. THE LEARNED ASSESSING OFFICER CONSIDER ING THE FAMILY SIZE OF THE ASSESSEE ESTIMATED THE HOUSEHOLD EXPENS ES AT RS.1 08 000/- AND THEREFORE ADDED RS.38 800/- TO TH E INCOME OF THE ASSESSEE. THE LEARNED COMMISSIONER OF INCOME-TAX (A PPEALS) ON APPEAL CONFIRMED THE ABOVE ACTION OF THE LEARNED A SSESSING OFFICER. BEFORE ME THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS A MIDDLE-CLASS PERS ON MAINTAINING A VERY SIMPLE LIFE. THE TOTAL SCHOOL FEES FOR HIS TWO MINOR CHILDREN FOR THE ENTIRE YEAR WAS RS.3000/- ONLY. THUS THE LEARN ED ASSESSING OFFICER WAS NOT JUSTIFIED IN ASSUMING THE HOUSEHOLD EXPENSES OF THE ASSESSEE AT RS.1 08 000/- WITHOUT ANY BASIS OR MATE RIAL. I FIND THAT NO MATERIAL COULD BE BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT THE ASSESSEE HAS IN FACT INCURRED MORE THAN RS.69 200/- FOR HOUSEHOLD EXPENSES. FURTHER NO MATERIAL WAS EVEN BROUGHT ON RECORD TO SHOW THAT THE ASSESSEE WAS MAINTAINING SUCH A LIFE STYLE IN WHICH TO MAINTAIN HOUSEHOLD EXPENSES AT RS.69 200/- FOR THE YEAR WAS NOT POSSIBLE. IN MY CONSIDERED OPINION THE REVENUE CAN NOT MAKE AN ADDITION ON THE BASIS OF A WILD GUESS WITHOUT BRING ING ANY MATERIAL ON RECORD IN SUPPORT OF SUCH ESTIMATION OR GUESS. T HE ADDITION BEING BASED ON NO MATERIAL IN MY CONSIDERED OPINION THE SAME IS NOT 9 SUSTAINABLE. I THEREFORE DELETE THE ADDITION OF R S.38 800/- AND ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. 17 IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 22-01-2010 SD/- (N S SAINI) ACCOUNTANT MEMBER DATE : 22-01-2010 COPY OF THE ORDER FORWARDED TO : 1. MRS. BATUL MADNI PATEL 110 AMAN SOCIETY NEAR JIVAN JYOT CINEMA MAIN ROAD UDHNA SURAT 2. THE ITO WARD-2(1) SURAT 3. CIT CONCERNED 4. CIT(A)-II SURAT 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABA