As additions made to assessee's income by AO had no basis, same were deleted.
As additions made to assessee's income by AO had no basis, same were deleted.
Assessee in return declared income `3,64,480. AO in assessm't u/s 143(3) (of Income Tax Act, 1961) & 153A (of Income Tax Act, 1961), determined it at `5,14,480/- . AO made addit'ns on account of low & insufficient withdrawals towards assessee's household expenses. CIT(A) partialy deleted additions. On appeal, ITAT set aside CIT(A) decision holding, it has not given any convincing justification or reasons for their finding/action and have made the same purely on estimate and without any basis.-500252
Facts in brief:
1. There was a search and seizure action under section 132 (of Income Tax Act, 1961) in the cases of the Jai Corp group, its employees and close associates, one of whom was the assessee in the case on hand.
2. Assessee filed return of income declaring income of `3,64,480/-.
3. Assessing Officer completed the assessment under section 143(3) (of Income Tax Act, 1961) r.w.s. 153A (of Income Tax Act, 1961) wherein the income of the assessee was determined at `5,14,480/-
4. In view of AO making an adhoc addition of `1,50,000/- to the returned income on account of low and insufficient withdrawals towards assessee's household expenses taking into account the size and status of assessee's family.
5. CIT(A) disposed the appeal allowing assessee partial relief, by sustaining the addition on an adhoc basis to the extent of 30% thereof and thereby deleting 70% of the addition of `1,50,000/-.
On appeal ITAT held:
6. In courts opinion, order confirming addition on account of low withdrawals for household expenses to the extent of 30% of `1,50,000/- (viz., `45,000/-) is factually unsustainable and is therefore to be deleted.
7. We find that the authorities below have not brought on record any material evidence to establish that assessee has incurred insufficient withdrawals; especially by ignoring the size and status of assessee and his family members and their respective withdrawals.
8. Both the AO in making the adhoc addition of `1,50,000/- on account of low withdrawals and the learned CIT(A) in upholding the same to the extent of 30% thereof, in our opinion, have not given any convincing justification or reasons for their finding/action and have made the same purely on estimate and without any basis.
9. In these circumstances, we are of the view that the addition made by the AO ITA No. 3180/Mum/2012 Shri Lalit Mohan Dhanda and partly upheld by the learned CIT(A) has no legs to stand and therefore direct the AO to delete the said addition on account of low withdrawals for household expenses. Consequently ground No. 2 of assessee's appeal is allowed.
10. In ground No.3 assessee challenges the action of the authorities below in charging him interest under sections 234B (of Income Tax Act, 1961) and 234C (of Income Tax Act, 1961). The charging of interest is consequential and mandatory and the AO has no discretion in the matter. This proposition has been upheld by the Hon'ble Apex Court in the case of Anjum H. Ghaswala in 252 ITR 1 and we therefore uphold the action of the AO in charging the said interest. The AO is, however, directed to re-compute the interest chargeable under sections 234B (of Income Tax Act, 1961) and 234C (of Income Tax Act, 1961), if any, while giving effect to this order.
11. In the result, assessee's appeal for A.Y. 2007-08 is partly allowed.
Case Reference-Lalit Mohan Dhanda, Mumbai vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH, MUMBAI
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