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TMI Blog2001 (3) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... e given at p. 15 of the paper book filed by the assessee as under: Shop No. Name of owner and source of payment Cheque No. Rupees Lower ground No. 135 Jivanlal Nebhumal (HUF) M/s Jivanlal Nebhumal 423532 2,00,000 Lower ground No. 136 Shankerlal Nebhumal (HUF) M/s Jivanlal Nebhumal 423533 2,00,000 Lower ground No. 137 Sureshkumar Nebhumal (HUF) M/s Jivanlal Nebhumal 423534 2,00,000 Upper ground No. 535 Maheshkumar Nebhumal (HUF) M/s Jivanlal Nebhumal 423535 1,75,000 Upper ground No. 536 Gopichand Nebhumal (HUF) M/s Jivanlal Nebhumal 423536 1,75,000 Basement No. 30 Arjunlal Nebhumal (HUF) M/s Jivanlal Nebhumal 423530 1,00,000 Basement No. 31 Arjunlal Nebhumal (HUF) M/s Jivanlal Nebhumal 423531 1,00,000 Basement No. 32 Arjunlal Nebhumal (Indl) M/s Arjunlal Nebhumal 634138 1,00,000 3. In ITA Nos. 4512, 4508 and 4510/Ahd/1991 the assessees have claimed to have purchased shop Nos. 136, 135 and 137, respectively at lower ground floor of JJ Air Conditioned Market for a sum of ₹ 2,00,000. The AO was, however, of the opinion that the market price of these shops was in fact ₹ 7,50,000 because M/s JJ Corporation has admitted in their as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of ₹ 2,75,000. 8. On appeal, the learned CIT(A) confirmed the additions of ₹ 5,50,000 made by the AO in respect of the assessees in ITA Nos. 4512, 4508 and 4510/Ahd.1991. However, in respect of assessees in ITA Nos. 4501, 4506, 4505 and 4513/Ahd/1991 the learned CIT(A) restored the issue with regard to the addition on account of alleged unexplained investment in the form of "on money" paid by these assessees to M/s JJ Corporation, for fresh adjudication in accordance with law to the file of the AO by passing orders in 1991. 9. Aggrieved with the orders of the CIT(A), the assessee have come in appeals before us. Shri K.H. Shah, the learned authorised representative of the assessees, pleaded that the AO has not brought any material on record to prove that the assessees involved in these appeals have in fact paid any "on money" over and above the price debited by these assessees in their respective books of accounts on account of purchase of these shops from M/s JJ Corporation. It ws submitted that no doubt M/s JJ Corporation has charged "on money" in respect of certain shops belonging to it in the JJ Air-Conditioned Market to various o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 5,50,000 in respect of these three assessees. 12. With regard to the other assessees where the matter was restored to the file of the AO, the learned Departmental Representative strongly relied on the orders of the CIT(A). 13. We have considered the rival submissions and have also gone through the orders passed by the AO as well as the CIT(A). The assessees involved in these appeals belonged to Uttamchandani family/group whose main business activity was dealing in cloth. Uttamchandani family/group joined with Tekrawala family to start the construction activity and both these families formed three partnership firms viz., M/s JJ Corporation, M/s Jashu Builders and M/s City Construction Co. wherein various members of both the families joined as partners but the interest of both the group in these firms was equal and accordingly the shares in profit and loss of the firms were decided. Thus Uttamchandani family has 50 per cent share in M/s JJ Corporation who constructed JJ Air-Conditioned Market and then earned income by selling shops in that market to various customers. It is undisputed that M/s JJ Corporation did charge "on money" from the customers while sellin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at all these assessees are living in Nanpura, a posh area of Surat City and there was a search in the residential premises of the assessee in the month of October, 1987, and a loose paper was found which indicated that the assessee has consumed 250 litres of milk in the months of February and March, 1983." On the basis of the above seized paper the AO came to the conclusion that the assessee must be consuming at least 10 litres of milk per day and taking the cost of milk at ₹ 6 per litre of milk per day, he estimated the annual consumption of milk at ₹ 21,600. Taking this as the base the AO came to the conclusion that the annual expenses of all the family members of Shri Nebhumal who claimed to have been living jointly in a house at Nanpura are as under: Rs. (1) Expenses for grains, pulses, veg. oil, panner, vegetables, etc. - For a family of 25 members, the monthly food expenses at the least will be ₹ 1,000 per person and total will be ₹ 1,000 × 25 × 12 3,00,000 (2) Milk expenses - For a family of 25 members having 11 children who at least require equal to 11 × 1/2 = 5.5 + 14 × 1/3 = 4.5 = 10 litres × ₹ 6 = 60 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch standard of living is expected to have done colouring, painting, etc. of their house. Considering the cost of paints, Majuri rates, etc. this expenses for painting 7 bedrooms mansion cannot be less than ₹ 25,000 and the same is considered to have met from unaccounted source of the assessee. The same is added to the total. 25,000 Total 6,58,600 16. As against this, the assessee has debited only a sum of ₹ 1,88,000 in his books of account for household purposes which was considered to be very low. The AO accordingly made an addition of ₹ 6,58,600 on account of alleged unaccounted household expenses which were considered equally in the hands of six brothers who were living jointly and the AO made an addition of ₹ 1,09, 766 in the hands of each brother. 17. The assessee appealed and pleaded before the CIT(A) that the estimate made by the AO was wholly unjustified and is made on surmises and conjectures which has no relation to the actual realities. It was pleaded that all the family members numbering 25 were living jointly in a house at Nanpura and the details of the family members along with their ages and the number of minor children are as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... portant social function in the family of the assessee in the assessment year under consideration. Similarly, it was pleaded that the expenditure on account of entertainment, electricity, medical expenses, travelling and socialising expenses on religious festivals, etc. was estimated without any basis whatsoever. It was pleaded that even the estimate of expenditure on grains, pulses, vegetables, etc. at ₹ 1,000 per person per month was grossly exaggerated. It was further submitted that even after estimating the expenditure at a much higher and exaggerated figure at ₹ 6,58,600, the AO has chosen not to give credit of ₹ 1,88,000 which has been debited by the assessee in the books of accounts and has chosen to treat the entire estimated expenditure as having been incurred by the six brothers out of their income from undisclosed sources which is not at all justified. 18. The learned CIT(A) considered the submissions of the assessees and allowed partial relief to the assessees by holding that the household expenses of each of the six families which were living jointly can be estimated at ₹ 8,000 per month. Thus, according to the CIT(A) the total household expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there was no school fee as the education of girls is free in the State of Gujarat. Five studying children in the 5th standard were going to school on bicycle and the other two studying in KG were being dropped to the school by lady members of the family as the schools were adjoining to the residence. Only two children were going to school by Rickshaw who used to charge ₹ 40 per child per month. Accordingly, it was submitted that the estimate on school fees, etc. at ₹ 36,000 by the AO was at a much higher scale. Accordingly, it was submitted that since there was no material except a milk bill found during the search, the AO was not justified in making any addition on account of alleged low household expenses and even the CIT(A) was in error in estimating the household expenses of each of the six families who were living jointly, at ₹ 8,000 per month for which there was no evidence brought on record by the Departmental authorities. He accordingly submitted that the addition sustained by the CIT(A) at ₹ 71,000 in each of these five assessee's case is required to be deleted. 20. The learned Departmental Representative strongly supported the orders of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. Therefore, taking into consideration the totality of the facts and circumstances of the case, we are of the opinion that it will be fair and reasonable to sustain an addition of ₹ 20,000 as against ₹ 71,000 sustained by the CIT(A) in respect of all the five assessees who are in appeals before us. 22. There is one more additional ground of appeal in all the appeals with regard to charging of interest under s. 139(8)/215. It was submitted by the learned authorised representative of the assessees that such charging of interest is void ab initio and bad in law as the AO has not granted any opportunity to the assessees before charging such interest in view of the decision of the Hon'ble Kerala High Court in the case of S. Govindaraju vs. CIT (1981) 25 CTR (Kar) 340 : (1982) 138 ITR 495 (Kar) and the decision of the Hon'ble Andhra Pradesh High Court in the case of Ambica Chemical Products vs. ITO (1991) 191 ITR 382 (AP). It was pleaded that since there is no contradictory decision of the jurisdictional High Court on this issue, the Tribunal may allow the ground of the assessees and direct the AO to delete the interest charged under s. 139(8)/215. The learned De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortunity was given. We, therefore, quash the orders to the extent of interest only. We give fifteen days' time from today to the petitioners to file representations before the concerned officers. No further notice need be issued by the ITO. The ITO shall consider the representations after giving a personal hearing to the petitioners and pass fresh orders in accordance with law. In all other respects, the impugned orders stand. With this direction, the writ petitions are disposed of. No costs." From the above, it is clear that although in the writ petitions filed by the assessees the levy of interest under s. 139 and 215 was quashed, yet, the Hon'ble High Court gave fifteen days' time to the petitioners to file representations before the concerned officers to be disposed of in accordance with law. In this view of the matter, we restore the question with regard to the levy of interest under s. 139(8)/215 to the file of the AO for fresh adjudication in accordance with law after giving opportunity to the assessee and also taking into consideration the latest decision of the Hon'ble Supreme Court in the case of CIT & Ors. vs. Ranchi Club Ltd. (2000) 164 CTR (SC) 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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