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Shri Dinesh Kumar Kaushal Versus ACIT, CC - 11, New Delhi

2016 (3) TMI 234 - ITAT DELHI

Addition on low household expenses - Withdrawals for meeting the household expenses - Held that:- Details of withdrawals for meeting the household expenses were submitted before the lower authorities by the assessee, however, the same were just brushed aside and ad-hoc addition of ₹ 4 lakhs was ordered by the AO. We take note that the AO has made the addition on account of low household expenses without any material before him and the impugned addition is a product of pure guesswork and ca .....

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o. 6053/Del/2013 - Dated:- 21-10-2015 - A. T. Varkey, JM And Prashant Maharishi, AM For the Appellant : Shri A K Babbar, Adv For the Respondent : Ms Nandita Kanchan, CIT DR ORDER Per A. T. Varkey, Judicial Member This appeal, at the instance of the assessee, is directed against the order of the Commissioner of Income-tax (Appeals)-XXXI, New Delhi dated 16.08.2013 for the assessment year 2010-11. 2. Consequent upon a search & seizure operation on Tulip Group carried out on 24th & 25th Sep .....

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ment year. The AO, after perusal of the reply of the assessee, was of the opinion that the household expenses claimed by him was not sufficient to meet out the day-to-day requirements of the assessee and according to him, the amount claimed by the assessee was considered low. The AO further observed that the assessee had not been able to produce any details in respect of Telephone & electricity Bills and other expenses. The AO observed that being head of the family, the assessee was responsi .....

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ecided the appeal ex-parte and upheld the order of the AO as under :- "3.4 All the grounds relate to the only addition being on account of low withdrawals towards household expenses. The appellant had not explained before the AO the expenses relating to Telephone and electricity. I do not find any demerits in the addition. The statement of facts filed with Form No. 35 also does not give any contrary facts. Hence the addition made by the AO is confirmed. The ground is rejected." 4. The .....

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eedings ex-parte. The order passed by CIT (Appeal) is silent on service of notice. There is difference between issuance of notice and service of notice. No real opportunity of hearing was provided as no notice as alleged in impugned order had been received by assessee. (C) That the Ld. CIT (Appeal) had erred in law in upholding addition of ₹ 4 lacs on a ground of low house hold withdrawal which had been made by AO by purely guess work. No specific reason / documents or enquiry report was b .....

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t Judgment". Judgment is a faculty to decide matters with wisdom, truly and legally. Judgment does not depend upon the arbitrary caprice of a Judge, but on a settled and invariable principle of justice. Though there is an element of a guess-work in a "Best Judgment Assessment" yet it shall not be a wild one but shall have a reasonable nexus to the available material and the circumstances of the case. The assessing Authority should not be vindictive while making "Best Judgment .....

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ure and do not require any adjudication. Ground No.(E), which is regarding initiation of penalty proceedings, is premature, hence requires no adjudication. 6. Grounds No.(B) to (D) are against dismissing the appeal of the assessee ex-parte by Ld. CIT(A) and upholding the addition of ₹ 4 lakhs on account of low household withdrawal by the ld. CIT (A). 7. Ld. AR submitted that the assessee filed a detailed note on household expenses and its sources but the same was not considered by the AO a .....

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or meeting the household expenses consists of ₹ 96,800/- in cash and ₹ 3,88,214/- in cheque for various payment like school fees, electricity, water expenses and telephone expenses. The assessee lives in joint family and leads a simple life with no membership of any club. Considering the size and nature of living the total household drawing of ₹ 4,85,014/ are Justified for the running the household" Ld. AR submitted that the assessee produced the drawing details regarding .....

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ot;The limits of the power are implicit in the expression "Best judgment". Judgment is a faculty to decide matters with wisdom, truly and legally. Judgment does not depend upon the arbitrary caprice of a Judge, but on a settled and invariable principle of justice. Though there is an element of a guess-work in a "Best Judgment Assessment" yet it shall not be a wild one but shall have a reasonable nexus to the available material and the circumstances of the case. The assessing .....

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