TMI Blog2001 (3) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and as such the assessee must have paid on money of ₹ 1,05,000 over and above the purchase price debited in his account amounting to ₹ 1,00,000 which was paid by cheque by the assessee to M/s JJ Corporation. The AO accordingly made an addition of ₹ 1,05,000. 7. In respect of the assessee in ITA No. 4513/Ahd/1991 the assessee has claimed to have purchased shop No. 535 at upper ground floor for a sum of ₹ 1,75,000. The AO, however, held that the market price of this shop was ₹ 4,50,000. He, therefore, made an addition 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of unaccounted on money running into crores of rupees on the basis of seized material and in fact several shops at the lower ground floor were admittedly sold by M/s JJ Corporation for ₹ 7,50,000. As such the Departmental authorities were justified in holding that M/s JJ Corporation must have charged similar amounts i.e., ₹ 7,50,000 from the assessees in ITA Nos. 4512, 4508 and 4510/Ahd/1991 and as such the AO as well as the CIT(A) were justified in making the additions 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w household expenditure shown in the books of accounts by these assessees which according to the AO were not sufficient to meet the household expenses of these assessees who have claimed before the AO that they were all living jointly along with Shri Shankerlal Nebhumal. The AO has discussed the issue of household expenses in detail in his order, dt. 22nd Feb., 1991, in the case of Shri Jivanlal Nebhumal (Indl) and he has, inter alia, observed as under : That 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ast a family which is leading a high living style is expected to spend at least ₹ 2,000 per person yearly. If taken in concrete terms this is very low since even a good silk saree costs ₹ 500 and figure of ₹ 2,000 is definitely on the lower side. Keeping this in view the annual expenses should not be less than. 50,000 (10) Servants - The assessee vide letter dated 8th Feb., 1991, stated that they are keeping only one maid servant. Looking to the standard of living and status of the family, this cannot be believed and in no case one maid servant can meet the needs of 25 members of a family. Since 6 families (brothers) are living together with their children each family must have kept their own servant and, therefore, taking the salary and other expenses of each servant at ₹ 1,000 per month total expenses on this head comes to 72,000 (11) Assessee having such 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chool Hiren 7 1 School (iv) Shri Arjunlal-Self 33 Wife 31 Son-Ritesh 5 KG School Daughter-Rima 8 3 School (v) Shri Sureshbhai-Self 29 Wife 26 Son-Prashant 4 KG School (vi) Shri Maheshbhai-Self 27 Wife 25 (vii) Smt. Jatiben-My mother 64 17A. It was submitted that all these persons were staying together in their old and ancestral house at Timaliyawad, Nanpura, Surat, and that the house had only seven bedrooms and one hall and one kitchen and they had employed one maid servant onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 expenses of six families who are living jointly were ₹ 8,000 x 12 x 6 = ₹ 5,76,000. The learned CIT(A) further held that since these have withdrawn a sum of ₹ 1,88,000 by debit to the accounts of various members of the family out of which ₹ 1,50,000 could be considered for household purposes, the assessees of this group must have spent at least ₹ 4,26,000 (Rs. 5,76,000 - ₹ 1,50,000) out of their income from undisclosed sources. The learned CIT(A) accordingly sustained an addition of ₹ 71,000 (Rs. 4,26,000 divided by 6 = 71,000) in respect of each of the assessee out of which five are in appeals before us and the 6th one's appeal is stated to be pending before the learned first appellate authority. 19. Before us, the learned authorised representative of the assessees pleaded that the AO as well as the CIT(A) were no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 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 the AO as well as the CIT(A). It was submitted that the assessees group is one of the richest family of Surat and although they were living jointly, yet, taking into consideration the income carried by the group, the household expenses shown in the books of account were grossly inadequate for a family of 25 persons even though they were living together. It was pleaded that the CIT(A) was more than reasonable in allowing partial relief to the assessees by sustaining the addition to ₹ 71,000 in the hands of each of the five assessees involved in these appeals and no further relief is required to be given to these assessees. 21. We have considered the rival submissions and have also gone through the order passed by the AO as well as the CIT(A) in the case of Shri Jivanlal Nebhumal (Indl.) whose appeal is still stated to be pending before the CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hra 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 Departmental Representative, on the other hand, opposed the admission of additional ground and also submitted that the interest charged under s. 139(B)/215 is only compensatory in nature for which no specific order is required. 23. We have considered the rival submissions. As far as admission of additional ground is concerned, this being a purely legal issue, the ground can be admitted in view of the decision of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT (1999) 157 CTR (SC) 249 : (1998) 229 ITR 383 (SC). 24. As far as the question with regard to the charging of interest under s. 139(8)/215 is concerned, rr. 40 and 117A of the IT Rules, 1962, gave discretion to the AO to waive or reduce interest levied under ss. 139, 215 and 217 of the IT Act, 1961, under certain circumstances. By implication, these rule ..... X X X X Extracts X X X X X X X X Extracts X X X X
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