TMI Blog1994 (8) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... nt under s. 143(3)." 2. The brief facts of the case are that the appellant is an individual who has filed the return of income for the assessment year under consideration showing total income at Rs. 1,69,860 comprising of income from salaries from Vimla Silk Mills Pvt. Ltd., share from four registered firms and also rent income. Out of the four firms in which the assessee is a partner, two firms, namely, M/s Jaytex Silk Mills and M/s Venichand Gulabchand Co. are being assessed by the Dy. CIT(A), Spl. Rg., Surat at a total income of Rs. 12,45,400 as against returned income of Rs. 1,69,860. The copy of assessment order appealed against is at page Nos. 36 to 40 of the paper book. 3. There had been search and seizure proceedings in the case of the appellant-assessee on 12th July, 1988. In the course of the search, ornaments worth Rs. 3,10,994 and cash of Rs. 1,05,000 were seized, which were subsequently released vide order under s. 132(5) passed in the case of the assessee and his family members on 7th Nov., 1988. The order under s. 132(5) passed in the case of the assessee is at page Nos. 82 and 83 of the paper book. The order passed under s. 132(5) r/w s. 132(7) in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ths) comes to only Rs. 3,76,844. It was further submitted that investments of all partners in movable and/or immovable properties are separately debited in accounts of partners of their family members in the firm. The figures of household expenses of partners, as stated earlier, do not include the items for payment of taxes, but the expenses do include the educational expenses for children. The Assessing Officer estimated Rs. 20,000 per month for household expenses for the period from 1st July, 1987 to 30th Sept., 1988 and Rs. 25,000 for the period from 1st Oct., 1988 to 31st March, 1989 on the basis of the statement of assessee's wife made during the course of search. It was further submitted that the Authorised Officer vide question No. 10 of statement recorded before search asked the assessee's wife about the cash available in the house and not about household expenses. In reply the assessee's wife replied that there would be around Rs. 35,000 in the house. She further stated that every month she got Rs. 20,000 for household expenses from shop at Surat Textile Market and out of this cash, about Rs. 5,000 was saved. The statement of assessee's wife is at page Nos. 115 to 118 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h indicates that the household expenses was Rs. 20,000 per month. Without prejudice, it is submitted that even otherwise, the household expenses should be estimated at Rs. 15,000 per month as the assessee's wife stated in the statement that she used to save Rs. 5,000 out of Rs. 20,000. As the household expenses debited in the accounts of the assessee and other family members are more than Rs. 15,000 per month, the addition is unwarranted on the facts of the case. 5.1 The Assessing Officer also made addition of Rs. 85,000 for educational expenses of the two sons of the assessee. This addition was reduced to Rs. 56,000 by the Appellate Commissioner. It is submitted by the assessee's counsel that the addition for alleged educational expenses should be telescoped in one single addition of household expenses as the assessee, during all proceedings, had submitted that the withdrawals for household expenses also cover the educational expenses. The assessee's counsel further submitted that the addition under s. 69C can be made only on financial year basis. The financial year consists of period of 12 months immediately preceding assessment year which in the case of the assessee starts fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... af vs. CIT (1990) 86 CTR (All) 110 : (1990) 183 ITR 388 (All). This apart, it is submitted that the presumption under s. 132(4A) is a rebuttable presumption. No adverse inference was drawn about this paper in the proceedings under s. 132(5) and the amount had not been added in the summary order made under s. 132(5). No question was asked about this seized paper in the statement under s. 132(4) or by the Asstt. Director of Investigation or Assessing Officer thereafter in the search proceedings. 6.3 Paper number 24 of file at Annexure X seized in the course of search contains the details about ornaments and weight. Except particulars of ornaments and weight of the ornament, there is no reference of any person. It was explained that the amount contained in the paper may be part of marriage expenses of the brother which took place on 17th Jan., 1987 as the rate of gold which was mentioned as Rs. 2,200 per 10 gram tallies with the rate of the year 1987. However, the learned Assessing Officer made addition of Rs. 22,267 treating the investment being made in the current year without bringing on record any additional evidence on record. 6.4 Before the Appellate Commissioner, it was f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 68 to 71 of the assessee's paper book. 7.1 The Assessing Officer being not satisfied with the above explanation made addition of Rs. 11,004. Before the Appellate Commissioner, it was submitted that the ornaments were not seized by the authorised officer. It was contended that when the relevant records of Smt. Pepibai had been produced before the Assessing Officer, the addition was not justified. It is pointed out that there was also simultaneous search at the residence of assessee's another brother, where none of the ornaments were claimed to be belonging to assessee's deceased mother Smt. Pepibai. The learned Appellate Commissioner confirmed the addition on the ground that the Assessing Officer has highlighted the fact that at the time of search only ornaments worth Rs. 23,350 were claimed as belonging to the assessee's mother. 7.2 Before us, it was further submitted that in the order under s. 132(5) no adverse remark had been made in regard to the ornaments found from Miss Sheela. Considering the fact that assessee's mother had shown the gold ornaments of 1710 grams in her WT return and the ornaments being not seized, the addition was unwarranted. The assessee further re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year which in the case of the assessee is the period from 1st April, 1988 to 31st March, 1989. Moreover, the search has been conducted on 12th July, 1988, so there should be prima facie case that the assessee has made the investment or expenditure outside the books of account in the period from 1st April, 1988 to 12th July, 1988 only. The assessee's and his family's withdrawal is about Rs. 18,000 per month. The details of withdrawal aggregating to Rs. 2,13,275 of assessee and his family for the period from 1st April, 1988 to 31st march, 1989 has been given in the paper book at page No. 55. The details of withdrawal of the assessee and his family for the period from 1st April, 1987 to 31st March, 1988 are given as under: . Rs. D.G. Shah: . From Venichand Gulabchand Co. 47,633 From HUF A/c 42,000 Smt. Khumanidevi: . From Rajkamal Fabrics 30,000 From Vimla Prints 12,000 Rakesh Gherilal Shah: . From agricultural income 24,000 From V-tex Silk Mills 23,9000 From Vimla Prints 6,900 Total 1,86,433 The assessee has, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of two sons at Rs. 10,000 per quarter. Applying this formula on average basis, the Assessing Officer estimated the educational expenses for 21 months at Rs. 85,000 and made addition of Rs. 85,000. 10.2 Before the Appellate Commissioner, it was submitted that the Assessing Officer has wrongly made the impugned addition of Rs. 85,000. Moreover, it was contended that the Assessing Officer has wrongly presumed that both sons are studying at Panchgini and are incurring the expenses at the rate of Rs. 5,000 per quarter even though it was explained that one son was studying at Panchgini and other son was studying at Pune. It was further submitted that educational expenses at Panchgini of the academic year 1988-89 stood at Rs. 9,635 only. The certificate from the school dt. 4th July, 1992 was produced to the Appellate Commissioner which is at page Nos. 75 and 76 of the paper book. It was submitted that the handsome withdrawal covers this expenditure. The learned Appellate Commissioner has confirmed the addition on the plea that it was not explained that why the evidence in the form of receipt of Rs. 5,000 found in the course of the search was not controverted and the assessee's conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see urged before the Appellate Commissioner for total deletion of interest charged under ss. 234A and 234B. The Appellate Commissioner has not appreciated the facts and law on the subject in perspective and only granted the consequential relief in regard to the charging of interest under ss. 234A and 234B. He has not given any reasons for only granting the consequential relief in his order when the assessee has prayed for total deletion on the facts and law mentioned under 'State of Facts'. 11.2 It was further submitted that a careful reading of the sub-sections of s. 234A and 234B would show that the interest charged in the intimation under s. 143(1)(a) cannot be increased in an assessment under s. 143(3). This is because the word 'or' has been used in sub-s. (1) of both the sections. There is nothing to suggest that the use of the word 'or' in the passage 'to the date of determination of total income under sub-s. (1) of s. 143 or regular assessment' has been used to mean "and". On the contrary the suggestion is to the contrary. This is because the sub-s. (3) of ss. 234A and 234B provides for the upward revision of the interest charged under s. 234A/234B in the case of reassess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions are couched in language which is not free from ambiguity and admits of two interpretations, a view which is favourable to the subject should be accepted. The fact that such an interpretation is also in consonance with ordinary notions of equity and fairness would further fortify the Court in adopting such a course'. It was further held that, 'if the language is plain, the fact that the consequence of giving effect to may lead to some absurd result is not a factor to be taken into account in interpreting the provision. It is for the legislature to step in and remove the absurdity. 12. The learned Departmental Representative submitted elaborate arguments in reply to the arguments advanced by the assessee's counsel in respect of each addition. In order to convince that the impugned order was fair and reasonable in respect of various additions, the Departmental Representative took us through the relevant portions from the orders of the lower authorities. The Departmental Representative, therefore, strongly urged for dismissing the assessee's appeal being without merits. 13. We have given our anxious consideration to the submissions made by both the learned representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Rs. 29,535 should not have been sustained by the Appellate Commissioner. We, therefore, direct deletion of the same. 16. The addition of Rs. 11,004 in respect of value of ornaments belonging to the assessee's daughter Miss. Sheela D. Shah is concerned, we are of the view that the same deserves to be deleted, as the assessee has satisfactorily explained on the basis of IT and WT records of Smt. Pepibai G. Shah (assessee's mother) which can be found from page Nos. 68 to 71 of the paper book. In our view, the ornaments stand fully explained and, therefore, there is no warrant for making addition to the extent of Rs. 11,004 and the same is directed to be deleted. 17. Regarding the addition of Rs. 2,50,000 on account of various articles found as per annexure D dt. 12th July, 1988, our views are that it is difficult for any person to maintain and preserve the purchase invoices or bills in respect of the various household articles which are purchased from time to time as is common knowledge. We are not persuaded to agree with the Assessing Officer that all those items like TV, VCR, dressing table, beds, washing machine, etc., were purchased by the assessee during the year und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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