TMI Blog1994 (5) TMI 234X X X X Extracts X X X X X X X X Extracts X X X X ..... atus of individual and for his household needs in respect of the first year under appeal withdrawals totalled up to ₹ 20,500 and for the latter year amounts withdrawn for the said purpose were of the order of ₹ 21,000. For the assessee, Shri S. K. Garg, the learned Chartered Accountant, submitted a copy of the order dated February 5, 1992, which was passed in cross-appeals filed by the assessee and the Revenue in Income-tax Appeal No. 2135/(All) of 1989 and Income-tax Appeal No. 140/(All) of 1990 in respect of the assessment year 1986-87 in the case of Shri Desh Raj Jain, a brother of the assessee in the present case, and submitted that on similar facts as prevailing in the present appeal, the Allahabad Bench of the Tribunal dismissed the Revenue's appeal against relief of ₹ 48,500, but accepted the assessee's contention that there was no justification for retaining addition of ₹ 40,000. In the case of Shri Desh Raj Jain in respect of the assessment year 1986-87, the Assessing Officer had made an addition of ₹ 85,000, after noticing various facts such as, that for the assessment year 1985-86, the assessee had withdrawn ₹ 12,000 for his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Smt. Gyatri Devi, ₹ 11,000, his son, Ravi Jain, ₹ 15,500, another son, Rajiv Jain, ₹ 40,000, another son, Vikash Jain, ₹ 13,900, his daughter, Bitu Jain, ₹ 14,000 and his Hindu undivided family ₹ 10,000. His son, Vikas, has also received gifts of ₹ 15,000. These amounts are besides a gift of ₹ 21,100 received by his son, Vikas Jain, ₹ 5,100 from Smt. Rukmni Devi and ₹ 15,000 from Shri Anil Kanodia. Besides these two gifts, all the other gifts have been shown as petty gifts for which there is no evidence. If the gifts are genuine then it speaks of the standard of living enjoyed by Shri Jain because there could not be one-way traffic for gifts and if not then it is Shri Jain's income which has been deposited in the garb of petty gifts. While estimating the expenses the totality of the circumstances has to be seen. A reference in this connection is invited to the Hon'ble Punjab and Haryana High Court's decision in the case of Vidya Sagar Oswal v. CIT [1977] 108 ITR 861 and to the case of K. C. Trunk and Bucket Factory v. CIT [1975] 99 ITR 67 (Gauhati) [FB]. While estimating the expenses, the income of the entire f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be totally overlooked and does give indication that the appellant or his family members have also given some gifts, since giving and taking of gifts cannot be a one-sided affair. The appellant has three dependent sons out of which two are adults and are doing business and one son and one daughter are studying in school and considering this fact, the withdrawals shown are inadequate in view of the standard of living, size of the family and inflationary trend in the economy. The estimate of the Assistant Commissioner, however, appears to be on the higher side and is not supported by any material. Considering the facts and circumstances of the case, the addition is reduced to ₹ 50,000, allowing a relief of ₹ 89,500. '' At this stage, it may be stated as a fact that in respect of the assessment year 1985-86 disbelieving the assessee's version of withdrawal of ₹ 17,000, addition of ₹ 13,000 was made in the assessment raising the estimated household expenses to ₹ 30,000, but the first appellate authority deleted the addition and his order dated August 29, 1991, a copy of which has been submitted at pages 6 and 7 of the paper book has com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hindu undivided family 10,000 4. The said gifts were taken as a norm for estimating the standard of living enjoyed by the assessee and the estimate was made for domestic expenses. 5. Aggrieved by the said order, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals), Kanpur. After recording a finding to the effect that : 'The estimate of the Assistant Commissioner, however, appears to be on the higher side and is not supported by any materials.' he reduced the addition of ₹ 40,000 allowing a relief of ₹ 48,500. 6. Besides the assessee received a sum of ₹ 6,000 as entertainment expenses from Messrs. Quality Steel Tubes (P.) Ltd. As the evidence of the said expenses having been actually incurred were not furnished, the said receipt was treated as income and was subjected to tax under the head 'Salary income'. 7. The Revenue is aggrieved by the relief given by the learned Commissioner of Income-tax (Appeals). The learned Departmental Representative filed before us copies of the assessment orders of the family members of the assessee to demonstrate that the members received gifts aggregating to ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1986-87. The said Hindu undivided family has shown share income from Messrs. Quality Steel Products at ₹ 15,663 as against which the assessment has been made at a huge figure of ₹ 2,71,724. It was further emphasised that in the absence of any incidence of any unexplained expenditure having been incurred by the assessee in particular, the addition cannot be made by invoking the deeming provision, as such deeming provisions have the effect of creating artificial income and they should, therefore, be construed strictly. Our attention was also drawn to a decision made by our learned brothers in Income-tax Appeals Nos. 1614 and 1612 in the case of D. K. Kanodia, Hindu undivided family. There also the assessee belonged to a prominent industrial group. With reference to the said decision, it was submitted that, in the instant case, the gross income of the assessee was only ₹ 80,018 which was subjected to further outgoings like payment of insurance premium and tax, etc. In such a case, no prudent person can be expected to spend more than his own income. On the other hand, by virtue of his association with an industrial group (as has been stated by the Assessing Officer) h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undivided family which was having substantial income by virtue of its partnership in Messrs. Quality Steel Products, as mentioned above. The reliance placed by the assessee on the decision of the Delhi High Court in the case of Yadu Hari Dalmia v. CIT [1980] 126 ITR 48 is also well-founded. Looking to the entirety of the facts and circumstances of the case and particularly the fact that in the immediately preceding year the withdrawals of ₹ 12,000 for domestic expenses were considered as reasonable and over and above the withdrawals made by him for meeting domestic expenses, a sum of ₹ 6,000 was also available to the assessee in the form of receipt from Messrs. Quality Steel Tubes Ltd., which has been treated as income in his hands, we hold that the estimate of domestic expenses as made by the authorities below had no basis whatsoever and there was no occasion to make any addition on this score. In the result, the appeal filed by the Department is dismissed. 12. In the assessee's appeal, objection has been taken to the addition of ₹ 40,000 as has been sustained by the learned Commissioner of Incometax (Appeals) on account of low withdrawals. The issue has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be a valid cause for such thinking it could at best be taken to its logical conclusion by making investigation and bringing legally admissible evidence on record. Therefore, we dismiss the Revenue's appeals in respect of relief given by the Commissioner of Income-tax (Appeals) and those of the assessee's appeals are allowed by lifting the addition sustained for the reason that there was no supporting evidence brought on record to justify the additions in the assessments. Coming back to the assessee's appeal in respect of the assessment year 1987-88, the other contentions are against confirmation of additions of ₹ 6,000 and ₹ 8,000. The first of such additions represented a claim as reimbursement of expenses incurred on behalf of Messrs. Quality Steel Tubes Ltd. The second addition related to investment in a scooter. As far as the first addition is concerned, a similar addition made in the case of Shri Desh Raj Jain in respect of the assessment year 1986-87 has come to be upheld by the Tribunal vide paragraph 13 of the order dated February 5, 1992, and since we have relied on the said order for deciding the appeals on the main issue, we see no reason to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee were not different but similar to the case of Shri Desh Raj Jain which is factually incorrect because the family of Shri Desh Raj Jain consisted of self, wife and one son, Vivek Jain (who was minor at the relevant time as recorded in paragraph 11 (see page 31) of the order of the Tribunal in the case of Shri Desh Raj Jain, whereas in the case of the assessee, his family consists of self, wife and four children as recorded in paragraph 3 of the assessment order. Therefore, the withdrawals in both the cases cannot be held to be comparable. Another point of distinction is that in the case of the assessee all the members of the family have stated before the Assessing Officer in their individual assessments that none of these family members has withdrawn any money for household expenses and they have categorically stated that the question of withdrawals should be considered in the case of the assessee whereas in the case of Shri Deshi Raj Jain. Messrs. Desh Raj Jain, Hindu undivided family, was having interest as partners in several firms which had substantial income and has gone to the Settlement Commission for settlement of their cases and the Tribunal in this connection has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eful to refer to the observations of the Madras High Court in the case of CIT v. Indian Express (Madurai) Pvt. Ltd. [1983] 140 ITR 705 wherein the High Court has observed that there is no lis between the taxpayer and the Income-tax Department and both are engaged in an administrative act of adjusting the taxpayer's liability. The primary purpose of the Income-tax Act, 1961, is to levy and collect income-tax and as the purpose of the statutory provisions especially those relating to the administration and management of income-tax is to ascertain the tax liability correctly, the various provisions relating to appeal and reference, etc., cannot be equated to a lis or dispute arising between two parties as in a civil litigation. Although the income-tax statute makes the Department and its officers figure as parties in appeal proceedings, they are not in the strict sense what are called by American writers parties to adversary proceedings because the very object of the appeal is not to decide a point raised as a dispute but any point which goes into the adjustment of the taxpayer's liability and hence the authorities sitting in appeal in a tax case cannot be regarded as decidi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer has failed in his duty to make enquiries/investigations properly in the case. In such a situation, the Supreme Court in the case of Kapurchand Shrimal v. CIT [1981] 131 ITR 451 has held that (headnote) : It is well known that an appellate authority has the jurisdiction as well as the duty to correct all errors in the proceedings under appeal and to issue, if necessary, appropriate directions to the authority against whose decision the appeal is preferred to dispose of the whole or any part of the matter afresh, unless forbidden from doing so by statute. Respectfully following the decision of the Supreme Court referred to supra, I will direct that the question of addition on account of low household withdrawals in both the assessment years 1986-87 and 198788 should be restored to the file of the Assessing Officer to make proper enquiries/investigations to bring on record the material to justify the amount which the assessee must have spent on account of his household expenditure including the education of his children and then make the additions after giving due and proper opportunity to the assessee to rebut the evidence collected after enquiry and investigations. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;s version of household expenses amounting to ₹ 20,500 and ₹ 21,000 in respect of assessment years 1986-87 and 1987-88, respectively, could not be discarded and accordingly vacating the related additions sustained by the Commissioner of Income-tax (Appeals) or the Accountant Member is justified in his approach that the question of additions made on account of low household withdrawals in both the assessment years should be restored to the file of the Assessing Officer to make proper enquiries/investigation to bring on record the material justifying the amounts which the assessee must have spent on account of his household expenditure including education of his children and accordingly, setting aside the assessments ? The sum and substance of the difference of opinion is as to whether the assessee had disclosed the withdrawals of household expenses in a manner as to justify his status, standard of living and size of the family or whether any further enquiries or investigations are necessary as ordered by the Tribunal. After hearing the parties and after going through the record, I did not find much difficulty in agreeing with the view that the expenses disclos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were surrendered as income. From that the Assessing Officer imagined that the gifts of such a magnitude (here in this case, it amounts to more than ₹ 1 lakh) must not be a onesided affair and the assessee or his family members were receiving gifts, they must also be giving gifts and, therefore, the assessee's status must be so high as to receive such huge amounts of gifts every year, which suggests incurring of expenditure on arranging ceremonies and parties and, therefore, the expenditure shown at ₹ 20,500 for household expenses was wholly inadequate. In other words, the Assessing Officer justified his conclusion that the withdrawals were inadequate by linking them with the imagined expenditure that the assessee must be incurring in arranging parties and ceremonies to receive the gifts. Thereafter, he mentioned the details of the gifts received by the family members and as I said earlier, concluded that the standard of living enjoyed by the assessee must be very high. Another fact that the Assessing Officer has mentioned was that none of the family members withdrew any money for household expenses and every one had stated that it should be considered in the hands o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s enjoyed by the assessee was very high and at least whether it reflected in the income shown and assessed. Is it not a wild allegation made by the Department and much fetish made about the status without having regard to the actual income assessed. When the actual income assessed was as low as ₹ 35,630, the household drawings were shown at ₹ 19,000, which was accepted by the Department. For the assessment year 1984-85, when the income assessed was ₹ 42,410, the household drawings were ₹ 15,500 and they were accepted. For the assessment year 1985-86, the income assessed was ₹ 47,189 and household drawings were ₹ 17,000 and they were accepted. For these two years under appeal, the incomes assessed were ₹ 48,182 and ₹ 65,624, i.e., after excluding the additions made on account of alleged low withdrawals and the household drawings shown were ₹ 20,500 and ₹ 21,000. These withdrawals shown are in no way inconsistent with either the household drawings shown by the assessee in the earlier years and accepted by the Department or the income assessed. When a person's income is ₹ 48,182 and ₹ 65,624 would he be expect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Assessing Officer and whether the appellate order appealed against were according to law and properly framed on facts and whether there was sufficient material to support it. When there is no material to support it and when as observed by the learned Accountant Member the additions made by the Assessing Officer could not be sustained, it is not for the Tribunal to start investigations suo motu and supply the evidence for the Department. If the additions are not supported by evidence, the only course open to the Tribunal is to delete the additions pointing out how the additions made could not be sustained for want of adequate supporting material. It is for the Department to gather the material and make proper assessments and the Tribunal is not in that fashion an income-tax authority. Under the income-tax authorities stipulated under the Income-tax Act, the Income-tax Appellate Tribunal is not one of them. It is purely an appellate authority. Therefore, the subject of the appeal before the Tribunal is whether the addition or disallowance sustained was in accordance with law and supported by material. If there is no sufficient material, the addition must be deleted. The Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese gifts as income, it follows that the existence of the fund was also accepted. Such being the case, how can it be assumed that these gifts were again returned to the donors in some form or the other by arranging functions, ceremonies or parties by incurring further expenditure. This supposition that the assessee was incurring expenditure by way of returning the gifts and also by way of arranging parties, is therefore, an illusion myth. If the gifts were returned as suggested by the Department, then there must have been entries in the books showing the return and no reference was made to such entries. I am therefore of the opinion that the conclusion drawn by the Department from the presence of these gifts that the assessee's standard of living must be very high does not seem to be correct at all. This is on the assumption that the gifts received were credited in the books of account. But if the gifts received were not credited in the books of account and yet offered as income, does it not mean that the income received by way of gifts was available with the assessee for being spent. When that was so where is the need to further estimate the expenditure. Therefore, the infere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mental Representative had tried to justify the order of the learned Accountant Member by making references to various judgments passed by the High Courts and the Supreme Court. I am not referring to them for the reason that I did not find any imperative necessity to refer to them and to discuss them because the principles settled therein are well-settled and they are not applicable to the facts of this case. Here it is a simple case as to whether the Department has brought enough material on record to throw overboard the assessee's explanation that the withdrawals shown in the books of account were adequate and whether it has brought sufficient material to justify their estimate and whether a further investigation should be made at the level of the Tribunal to cover up the inefficiency of the Department. These matters are pure questions of fact which have to be decided with reference to the material available on record and the solutions to them are not to be gathered from the various High Court s decisions, which turn on their peculiar facts. Nor a principle of law involved in these appeals. It is only a matter of appreciation of the evidence and material on record. Having s ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
