Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

SHANKERLAL NEBHUMAL (HUF) & ORS. Versus DEPUTY COMMISSIONER OF INCOME TAX.

2001 (3) TMI 233 - ITAT AHMEDABAD-C

IT APPEAL NOS. 4500, 4501, 4504 TO 4506, 4508 & 4510 TO 4513 (AHD.) OF 1991 - Dated:- 27-3-2001 - Member(s) : R. K. BALI., S. K. YADAV. JUDGMENT: These ten appeals relating to the assessees of Shankerlal Nebhumal Uttamchandani group of Surat and their family members involve common issues and are, therefore, disposed of by a common order for the sake of convenience. 2. One of the main issues involved in ITA Nos. 4512, 4501, 4506, 4508, 4510, 4505 and 4513/Ahd/1991 is with regard to the additions .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, 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 assessment to have earned large unaccounted income by charging "on money" in respect of various shops constructed in the JJ Air-Conditioned Market at lower ground floor, upper ground floor and basement, etc. The AO, accordingly, held that in respect of the assessees mentioned in ITA Nos. 4512, 4508 and 4510/Ahd/1991, the assessees had paid "on money&q .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nd accordingly he held that the assessee must have paid a sum of ₹ 2,75,000 (Rs. 4,50,000-Rs. 1,75,000) out of his undisclosed income for which an addition was made in the case of this assessee. 5. In respect of the assessee in ITA No. 4506/Ahd/1991 the assessee has claimed to have purchased two shops Nos. 30 and 31 at the basement for which the assessee has paid ₹ 2,00,000. However, the AO on the basis of the report of the Valuation Officer held that the market price of the two shop .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 ₹ 4,50,00 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

h 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 acc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ttedly the members of the assessees group were holding 50 per cent share in M/s JJ Corporation and there was absolutely no point in assessees having paid "on money" to a firm M/s JJ Corporation, 50 per cent share of which was controlled by their family members. Thus, it was pleaded that the whole additions on account of alleged unexplained investments by these assessees in the shops have been made on the basis of presumptions and surmises which is not at all justified. 10. In ITA Nos. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

prove that any "on money" has in fact been paid by these assessees to M/s JJ Corporation and the valuation done by the DVO only gives the market value on the valuation date but this does not necessarily mean that the assessees in these appeals have actually paid the amounts as estimated by the Departmental Valuer, particularly when the group of the assessees were having 50 per cent share in M/s JJ Corporation who is the seller of these shops. 11. The learned Departmental Representativ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sees 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 inv .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oss 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 selling the shops in the JJ Air-Conditioned Market and for that it made a disclosure during the course of search proceedings before the authorised officer and also subsequently while .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the assessees have in fact paid any "on money" over and above the money which has been recorded in the books of account for making investments in the purchase of shops. Since no evidence has been brought on record by the AO in this regard, the additions made on account of alleged unexplained investments in the purchase of shops by alleged understatement of consideration cannot be sustained. 14. As regards ITA Nos. 4501, 4506, 4505 and 4513/Ahd/1991 the matter with regard to the additio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in the purchase of shops in the cases of all these assessees are directed to be deleted. 15. The other major issue involved in the appeals in ITA Nos. 4505, 4513, 4500, 4509 and 4511/Ahd/1991 is with regard to the addition made by the AO on account of low 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f 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 unde .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rs. 21,600 (3) Electricity Bill - There are 25 members and 7 bedrooms. Therefore, monthly electric bill can safely expected to be ₹ 2,000 per month which comes to ₹ 24,000 24,000 (4) Taking school fees of children, rickshaw fees, tuition fees, etc. will be ₹ 3,000 per month for 11 school-going children and annual expenses will be ₹ 36,000 36,000 (5) Approximately medical expenses for 25 members is equal to ₹ 50 per person per month : 50 × 25 × 12 15,000 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

able since 25 family members cannot be travelling by ordinary modes of travel when their otherwise standard of living is so high. I estimate such expenses to be at least ₹ 100 per person per month. Such expenses on annual basis will be 30,000 (8) Expenses on religious festivals, social functions, attending marriages, etc. are also estimated to be. 25,000 (9) Clothing - To estimate the least a family which is leading a high living style is expected to spend at least ₹ 2,000 per person .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 than ₹ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he 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: Age Standard School (i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tiben-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 only for cleaning of utensils and house. It was pleaded that the household expenses of the entire family were met out of total withdrawals of ₹ 1,88,000 made by various members of the group from their books of accounts. These withdr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d that there was no basis for estimating the expenditure on servants at ₹ 72,000 when in fact the assessee family has employed one maid servant to whom they were paying only ₹ 300 per month along with one meal every day. Similarly, it was submitted that there was no basis for estimating the expenditure on colouring and painting of the house at ₹ 25,000 when in fact no such colouring and painting was done in the assessment year under consideration. It was further submitted that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ix 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 a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

es have in fact incurred any unexplained expenditure in the assessment year under consideration. It was pleaded that all the 25 members of six families are regularly assessed to tax and as such there was no basis for making additions only in the hands of six adult members heading each of the families who were all living jointly. It was submitted that the only basis adopted by the AO was one milk bill found during the course of search over which there was no specific mention of the name of the fa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s found in the house including TV set, refrigerator, etc. were separately accounted for by debiting in the books and as such the estimate of household expenses made by the CIT(A) at ₹ 8,000 per month for each of the families was at a much higher side. It was pleaded that out of 25 members, 12 were school-going children; out of which two girls were studying in 7th and 8th standard and that there was no school fee as the education of girls is free in the State of Gujarat. Five studying child .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ilk 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 t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

le 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) but on the basis of whose order (which is a s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ether there was any social or religious function in the families of assessees in those two months. However, the assessees during the course of hearing before the AO, the CIT(A) or even before us has hesitatingly admitted that the assessee-family might be consuming about 10 litres of milk per day. However, as far as the estimate of household expenses under the other heads made by the AO are concerned, we are of the opinion that those estimate are not supported by any evidence/material brought on .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

refore, 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 as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cision 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 grou .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in circumstances. By implication, these rules require that an opportunity must be given to the assessee to show-cause why interest should not be levied or to satisfy the AO that there is a case for waiver or reduction of interest. Admittedly in these cases no such opportunity was given by the AO to the assessees. Accordingly, the orders levying interest under s. 139(8)/215 are not justified. However, in such a situation can the levy of interest be quashed or the matter is required to be restored .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version