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2015 (7) TMI 610 - ITAT DELHI

2015 (7) TMI 610 - ITAT DELHI - TMI - Addition on account of inadequate house hold expenses - validity of assessment u/s 153A - Held that:- It is true that no addition can be made in respect of unabated assessments, if no incriminating material is found during the course of search. The recent judgment of the Hon’ble Bombay High Court in the case of Continental Warehousing Corporation (2015 (5) TMI 656 - BOMBAY HIGH COURT ) supports that the argument of the assessee. In this case during the cours .....

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enance would be higher than the personal drawing disclosed. In our view, the valuable found during the course of search, indicate the standard of living the assessee and his other members and these are material based on which an addition can be made for low drawing. Thus this legal argument of the assessee is dismissed on the issue of addition made u/s 153A r.w.s. 143(3) on abated assessments.

Taking into consideration all the facts and circumstances and also the fact that the appella .....

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er p.m. Accordingly, AO is right in making an addition on account of low household withdrawals to the extent of ₹ 2,40,000 in appellant’s hands in the year under consideration, and the addition made by him is therefore upheld.We find no infirmity in these findings of the ld. CIT(A). The argument of the ld. Counsel for the assessee the two HUF have been considered as adult members, do not help his case. The AO in our view is justified in estimating this household expenditure. Further in thi .....

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2012 for the Assessment Years 2003-04, 2004-05, 2005-06, 2006-07, 2007-08 and 2008-09. As the issues arising in all these appeals are common for the sake of convenience they are heard together and disposed of by way of this common order. 2. The facts in brief: The assessee is an individual. A search and seizure operation u/s 132 of the Income Tax Act was carried out at the residential premises of assessee i.e. 4-A, Prithvi Raj Road, New Delhi. A notice u/s 153A of the Act was issued and duly ser .....

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Also very low drawings have been shown by his family members. The assessee has shown his income from salary from the partnership firm M/s Shri Ram Hari Ram, wherein the assessee is also a partner and getting share out of profit. The assessee has also shown income from other sources which include interest income from partnership firm as well as from other parties. As during the year, the assessee has not furnished any statement of affairs, no drawings have been made for house hold expenses, livi .....

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allowance on this account comes to ₹ 2,40,000/- (Rs.20,000/- X 12). (Addition : ₹ 2,40,000/-) 4. Aggrieved the assessee carried the matter in appeal challenging the addition, both on legal grounds, as well as on factual grounds. The assessee challenged the jurisdiction of the AO to making additions u/s 153A of the Act for the assessment years 2003-04 to 2007-08 on the ground that no incriminating material was found during the course of search and as the assessments for these assessme .....

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rawn up on the date of search and this is incriminating material found during the course of search. b) Assessment order u/s 153A is to be mandatory passed, even if there is no incriminating material found during the course of search. 6. The reliance was placed on the judgment of the Hon ble Delhi High Court in the case of Anil Bhatia(Supra). 7. On merits, the first appellate authority considered the fact that the assessee and his family own 7 luxurious vehicles and other valuable assets and also .....

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y to principles of natural justice and provision of law as such the action and findings based thereon stands vitiated and order is bad in law. 2. On the facts and circumstances of the case the notice u/s 153A is misconceived and illegal being without jurisdiction, contrary to facts and provision of law and hence the assessment based thereon must be quashed as erroneous and void. 3. On the facts and circumstances of the case the Ld. Commissioner of Income Tax (Appeal) is not justified in confirmi .....

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urn under section 143(1) of the Income Tax Act, 1961 and intimation u/s 143(1) does not amount to assessment which can abate which is based on surmises and conjectures and contrary to provisions of law, as such the action of Ld. CIT(A) needs to be undone and it is to be held that assessment is concluded on processing of return u/s 143(1) of the Income Tax Act, 1961 if no notice u/s 143(2) of the Income Tax Act 1961 is issued within statutory time period allowed and can abate. 5. On the facts and .....

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be deleted. 6. On the facts and circumstances of the case the Commissioner of Income Tax (Appeal) is not justified in confirming the action of Ld. AO in disturbing the completed assessment u/s 143(1) of the Income Tax Act, 1961 which does not abate in the absence of any seized material pertaining to the assessment year under consideration and making an ad-hoc addition of ₹ 2,40,000 on account of household expenses which is based on surmises and conjectures, contrary to the principles of n .....

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bated. He relied a number of judgment and specifically on the recent judgment of the Hon ble Bombay High Court in the case of Continental Ware Housing Corporation (NHAVA SHEVA) 58 Taxman. Com 78 (Bom) dt. 21.04.2015. He also relied on the following case law. a) MGF Automobiles Limited Vs. ACIT In ITA No. 4212 &4213/Del/2011 dated 28.06.2013. b) Kabul Chawla 151 ITD 55 (Delhi-Tribunal) 2014 c) Parival Properties (P) Ltd. 148 ITD 617 (Delhi-Trib.) 2014 d) Jai Steel (India) Vs. ACIT 259 CTR 281 .....

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an orthodox and conservative family, with no club membership. He submitted that no evidence found during the course of search evidencing huge domestic personal expenses. He prayed that the addition be deleted. 11. Mr. Vivek Wadekar, the ld. CIT DR relied on the orders of the first appellate authority. He drew the attention of the bench to the nature of luxurious cars owned and maintained by the assessee and also the fact that the assessee has not given any details sought by the first appellate a .....

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ppellate authority that the addition is based on the material seized during the course of search, he took this bench through the copy of Panchnama drawn during the course of search. 12. Rival contentions heard. On a careful consideration of the facts and circumstances of the case, a perusal of the papers on record and the orders of the authorities below, we hold as follows; 13. It is true that no addition can be made in respect of unabated assessments, if no incriminating material is found durin .....

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tain material was found during the course of search, based on which assessment can be done, even in the case of the abated assessments. Owning luxurious cars etc. indicate that the monthly expenditure on maintenance would be higher than the personal drawing disclosed. In our view, the valuable found during the course of search, indicate the standard of living the assessee and his other members and these are material based on which an addition can be made for low drawing. Thus this legal argument .....

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CR). From the evidence available during the search it is seen that the appellant and his family members own and drive 7 luxurious vehicles the details of which are as under: (refer S. No. Vehicle number Make 1. DL 1CG 0348 Toyota Land Cruiser 2. DL 7C 9333 Honda Accord 3. DL 3CY 3870 Toyota Carolla 4. DL 3CY 5111 Honda City 5. DL 2F BH 0900 Toyota Innova 6. HR 07 OD 9000 S-350, Mercedes 7. HR 7 OH 5555 Rover 6.1 The details submitted by the appellant further shows that their joint household with .....

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89 11,595 6.2 From the above chart it is quite surprising to note that the appellant who is living with 7 adult family members in a mansion at Prithvi Raj Road, New Delhi and driving best of the vehicles, can meet their household expenses in approx. ₹ 32,000 p.m. during the assessment year 2002-03 and within the range of ₹ 47,000 p.m . in assessment year 2006-07 and within the range of ₹ 80,000 approx in assessment years 2007-08 and 2008-09. 6.3 However to be fair to the appell .....

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information the appellant simply give a general reply vide their letter dated 27.11.2012 stating that they are not living any luxurious life style, rather their s an orthodox and conservative family with no club membership and they are teetotallers . It is pertinent to mention here that the above mentioned details viz. the area of the house, number of rooms would have given an idea whether the appellant and its family were having the luxury of availing domestic help in the form of gardner, serva .....

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the same was verified by the AO but when during the appellate proceeding the appellant was asked to give the details of policies and other details which were provided to the AO at the time of assessment proceedings, the appellant again back tracked and did not produce any of the evidence /information provided to AO during the assessment proceedings. 6.6 In view of the total non compliant attitude from the appellant s side and keeping in view the fact that the appellant and his family consisting .....

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ain themselves on a monthly expenditure ranging from ₹ 32,000 p.m. to ₹ 47,000 p.m. during the assessment year 2002-03 to 2006-07 and around ₹ 80,000 p.m. in the assessment years 2007- 08 and 2008-09. 6.7 Taking into consideration all the above facts and circumstances and also the fact that the appellant is avoiding in giving the requisite details viz. details of insurance policies, electricity expenses, copy of passport and also considering that the appellant is having a luxur .....

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