ABHAY A VAKIL, MUMBAI V. ACIT 10(3), MUMBAI

ITA 127/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3724 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 06-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BE NCH, MUMBAI .. , !,#$ # % BEFORE SHRI B. R. MITTAL, JM AND SHRI SANJAY ARORA , AM ./ I.T.A. NO.127/MUM/2011 ( ' ( )( ' ( )( ' ( )( ' ( )( / / / / ASSESSMENT YEAR: 2008-09) ABHAY A. VAKIL GEETANJALI, 9 N GAMADIA ROAD, OFF. PEDDAR ROAD, MUMBAI-400 026 ' ' ' ' / VS. ASST. CIT, 10(3), AAYAKAR BHAVAN, MUMBAI-400 020 * #$ ./ + ./ PAN/GIR NO. AAAPV 3613 Q ( *, / APPELLANT ) : ( -.*, / RESPONDENT ) *, / # / APPELLANT BY : SHRI DALPAT SHAH -.*, 0 / # / RESPONDENT BY : SHRI MANOJ KUMAR ' 0 12$ / // / DATE OF HEARING : 25.02.2013 3 ) 0 12$ / DATE OF PRONOUNCEMENT : 08.05.2013 #4 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-22, MUMBAI (CIT(A) FOR SH ORT) DATED 15.11.2010, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSES SMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMEN T YEAR (A.Y.) 2008-09 VIDE ORDER DATED 26.08.2010. 2 ITA NO.127/MUM/2011 (A.Y. 2008-09) ABHAY A. VAKIL VS. ASST. CIT 2. THE SHORT QUESTION ARISING IN THIS APPEAL IS THE VALIDITY IN LAW OF THE ADDITION IN THE SUM OF RS.4.68 LAKHS MADE IN ASSESSMENT FOR THE REL EVANT YEAR ON ACCOUNT OF EXPENDITURE ON REMUNERATION OF EMPLOYEES (I.E., FOUR SERVANTS A ND TWO DRIVERS), SINCE CONFIRMED BY THE FIRST APPELLATE AUTHORITY. 3.1 BEFORE US, IT WAS SUBMITTED BY THE AR, THE ASSE SSEES COUNSEL, THAT THE ASSESSEES CASE IS COVERED BY THE ORDERS BY THE TRIBUNAL IN HI S OWN CASE FOR THE PRECEDING TWO YEARS, I.E., A.Y. 2006-07 AND 2007-08, COPIES OF WHICH STA ND PLACED ON RECORD. THE ASSESSEE HAS MADE TOTAL CASH WITHDRAWALS AT RS.11.41 LAKHS, AND THE SAME, THEREFORE, OUGHT TO BE CONSIDERED AS REASONABLE AND SUFFICIENT TO MEET ALL THE HOUSE-HOLD EXPENSES, INCLUDING ON THE PERSONAL STAFF. IN FACT, THE TOTAL CASH WITHDRA WALS FOR THE IMMEDIATELY PRECEDING YEAR (I.E., A.Y. 2007-08) WERE AT RS.8.40 LAKHS, AND IN LIGHT OF WHICH NO SEPARATE ADDITION, MADE BY THE REVENUE AT RS.2.54 LAKHS, WAS DEEMED AS PROPER AND, THUS, SUSTAINABLE BY THE TRIBUNAL. 3.2 THE LD. DR, ON THE OTHER HAND, WOULD RELY ON TH E ORDERS OF THE AUTHORITIES BELOW; STATING THAT THE ASSESSEE DID NOT FURNISH THE REQUI SITE DETAILS BEFORE THE ASSESSING OFFICER (A.O.), CONSTRAINING HIM TO MAKE AN ESTIMATE OF THE RELEVANT EXPENDITURE. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 4.1 THE ISSUE, WE OBSERVE, IS CONTINUOUSLY ARISING IN THE ASSESSEES CASE, I.E., BEGINNING A.Y. 2005-06, TRAVELLING UP TO THE STAGE OF THE TRIBUNAL. THIS IS SURPRISING INASMUCH AS THE FACTS ARE NOT COMPLEX, SO AS TO ENG AGE THE MIND OF A SECOND APPELLATE AUTHORITY TIME OVER. THE MATTER IS FACTUAL, TO BE D ECIDED ON THE BASIS OF THE MATERIAL ON RECORD, THE PRIMARY ONUS TO LEAD WHICH IS ON THE AS SESSEE. IN ANY CASE, IT HAVING COME UP BEFORE US, IT IS INCUMBENT ON US TO DECIDE THE SAME ON THE BASIS OF THE FACTS ON RECORD. THE ASSESSEE HAS PLACED RELIANCE ON THE ORDERS BY THE T RIBUNAL FOR THE PRECEDING TWO YEARS. THE A.O., AS WELL AS THE LD. CIT(A), ON THE OTHER H AND, HAVE RELIED ON THE ORDER BY THE TRIBUNAL FOR A.Y. 2005-06 (IN ITA NO.4750/MUM/2008 DATED 06.08.2009), WHEREAT THE 3 ITA NO.127/MUM/2011 (A.Y. 2008-09) ABHAY A. VAKIL VS. ASST. CIT ISSUE AROSE FOR THE FIRST TIME. THE IMPUGNED ORDER BEARS REPRODUCTION OF ITS RELEVANT PART AT PARA 3 THEREOF. 4.2 WE HAVE CLARIFIED THAT THE MATTER IS PRIMARILY FACTUAL. SECONDLY, THE PRINCIPLE OF RES JUDICATA IS NOT APPLICABLE TO THE PROCEEDINGS OF THE ACT, S O THAT THE MATTER HAS TO BE NECESSARILY DECIDED ON THE FACTS AS FOUND. THE ASSE SSEE HAS, HOWEVER, EVEN AS POINTED OUT BY THE LD. DR, FAILED TO FURNISH THE RELEVANT DETAI LS FOR THE CURRENT YEAR. THERE APPEARS, HOWEVER, TO BE NO DISPUTE WITH REGARD TO THE STAFF STRENGTH, I.E., FOUR SERVANTS AND TWO DRIVERS. IN FACT, THE QUESTION, THUS, IS OF THE EXP ENDITURE THAT CAN BE ASCRIBED TO THEIR SALARIES, AND THE EXTENT TO WHICH THE ASSESSEE CAN BE SAID TO HAVE MET THE SAME OUT OF HIS CASH WITHDRAWALS FOR THE YEAR, WHICH ARE AT RS.5.40 LAKHS (REFER PARA 4.1 OF THE ASSESSMENT ORDER/PB PG. 11). THE ONLY ORDER BY THE TRIBUNAL WHEREIN WE FIND SOME ELABORATION ON FACTS AND POSITIVE FINDINGS IN THE M ATTER IS FOR A.Y. 2005-06, WHEREAT THE REASONABLENESS OF WITHDRAWAL FOR THE PURPOSE WAS IN QUESTION. THE TRIBUNAL OBSERVING THE AVERAGE MONTHLY SALARY AS WORKING TO RS.2,084/-, WA S OF THE VIEW THAT THOUGH THE SAME (I.E., RS. 2100/- P.M.) MAY BE CONSIDERED AS REASON ABLE FOR A SERVANT, IT WOULD NOT BE SO FOR A DRIVER IN MUMBAI DURING THE FINANCIAL YEAR 20 04-05. THE ASSESSEE CLAIMING THE TOTAL EXPENDITURE ON PERSONAL STAFF AT RS.1.75 LAKHS FOR THE RELEVANT YEAR, IT CONFIRMED THE ADDITION FOR RS.0.75 LAKHS, AS AGAINST RS.2.45 LAKH S BY THE FIRST APPELLATE AUTHORITY. THE TRIBUNAL PER ITS ORDERS FOR THE SUCCEEDING TWO YEAR S, PASSED SUBSEQUENTLY, HAS DELETED THE ADDITION WITHOUT MAKING ANY ENDEAVOR TO ASSESS THE SAME, ON THE BASIS THAT THE REVENUE HAS NOT PLACED ANY COGENT MATERIAL ON RECORD, BUT O NLY MADE AN AD HOC ADDITION. IN OUR VIEW, THE TRIBUNAL HAVING FOUND AS A FACT THAT THE ASSESSEE WOULD HAVE SPENT NOT LESS THAN RS.2.50 LAKHS ON THE SALARY OF THE PERSONAL STAFF F OR A.Y. 2005-06, IT WAS INCUMBENT ON IT TO EXAMINE THE ASSESSEE CASE WITH REGARD TO THE SUF FICIENCY OF HIS WITHDRAWALS WITH REFERENCE TO THE RELEVANT EXPENDITURE, ALLOWING IN FACT FOR THE NORMAL INCREASE THEREIN. THE ORDERS FOR THESE YEARS, AS IT APPEARS, HAVE BEE N PASSED BY THE TRIBUNAL WITHOUT NOTICING ITS ORDER FOR AY 2005-06, INASMUCH THE SAM E BEAR NO REFERENCE THERETO. BESIDES, WE CANNOT PRESUME A DELIBERATE DISREGARD. 4 ITA NO.127/MUM/2011 (A.Y. 2008-09) ABHAY A. VAKIL VS. ASST. CIT CONTINUING FURTHER, THE ORDER BY THE TRIBUNAL FOR A .Y. 2005-06, HOWEVER, DOES NOT CONTAIN REFERENCE TO THE TOTAL WITHDRAWALS; IT LIMI TING ITSELF TO THE QUESTION OF THE ESTIMATION OF THE REASONABLENESS OF THE SALARY AS C LAIMED BY THE ASSESSEE ON THE PERSONAL STAFF. THE BACKGROUND FACTS CONTINUE FOR THE CURREN T YEAR AS WELL; THE ASSESSEE, DRAWING ANNUAL SALARY TO THE TUNE OF RS.1.40 CRORES, IS CON FIRMED TO BE MAINTAINING A GOOD LIVING STANDARD IN A POSH AREA IN SOUTH-MUMBAI. THE ASSESS EE, THOUGH NOT DENYING THE BASIC FACTS, INCLUDING WITH REGARD TO THE EMPLOYMENT OF T HE STAFF, WITH IN FACT HIS RETURN FOR THE PRECEDING YEAR CONTAINING A NOTE IN THIS RESPECT, H AS NOT FURNISHED ANY DETAILS IN THE MATTER, DESPITE BEING CALLED UPON BY THE A.O. DURIN G THE ASSESSMENT PROCEEDINGS. ALL HE CLAIMS IS THE SUFFICIENCY OF THE WITHDRAWALS FOR TH E PURPOSE WITH REFERENCE TO HIS TOTAL HOUSE-HOLD WITHDRAWALS. IN FACT, HIS CLAIM OF THE T OTAL FAMILY CASH WITHDRAWALS BEING AT RS.11.41 LAKHS HAS ALSO BEEN MADE FOR THE FIRST TIM E BEFORE THE LD. CIT(A). IT IS ONLY WHEN THE FULL DETAILS ARE BEFORE THE A.O. THAT HE COULD VERIFY THE CORRECTNESS OF THE CLAIMS, AS WELL AS APPLY HIMSELF THERETO QUA THE ISSUE AT HAND, I.E., THE SUFFICIENCY OF THE SA ID WITHDRAWALS. SO FAR AS WE ARE CONCERNED, OUR PERSPE CTIVE WOULD ONLY BE LIMITED TO THE ESTIMATION OF THE EXPENSES ON PERSONAL STAFF, AND T HE EXTENT TO WHICH THE ASSESSEES WITHDRAWALS CAN BE SAID TO BE SUFFICIENT FOR THE SA ME. AS AFORE-NOTED, THE SAME HAVE BEEN FOUND REASONABLE BY THE TRIBUNAL AT RS.2.50 LAKHS F OR A.Y. 2005-06. FOR THE CURRENT YEAR, THE SAME CAN THEREFORE REASONABLY BE CONSIDERED AS SO AT AN INCREASE OF 30%, I.E., AT A MINIMUM OF RS.3.25 LAKHS . THE ASSESSEE HAVING NOT FURNISHED ANY DETAILS OF HI S CASH WITHDRAWALS FOR RS.5.40 LAKHS, IT IS NOT POSSIBLE TO STATE AS TO HOW MUCH T HEREOF CAN BE APPLIED TO MEET THE OTHER HOUSE-HOLD EXPENSES AND PERSONAL CASH EXPENSES. THE MATTER, WE HAVE ALREADY OBSERVED, IS HARDLY ONE WHICH MERITS BEING LITIGATED, MUCH LE SS TIME AND AGAIN. IT IS NEITHER A FIT CASE FOR BEING RESTORED TO THE FILE OF THE ASSESSIN G AUTHORITY, NOR DO WE THINK WOULD IT BE PROPER NOT TO ALLOW ANY CREDIT TO THE ASSESSEE FOR HIS CASH WITHDRAWALS TOWARD THE RELEVANT EXPENDITURE, AS DONE BY THE REVENUE. IT HAS ALSO, W ITHOUT BRINGING ANY CONTRARY MATERIAL ON RECORD, ADOPTED THE SALARY FIGURE FOR SERVANTS I N DISREGARD TO THE TRIBUNALS FINDING THEREON PER ITS ORDER FOR A.Y. 2005-06. WE, THEREFO RE, SO AS TO GIVE A QUIETUS TO THE 5 ITA NO.127/MUM/2011 (A.Y. 2008-09) ABHAY A. VAKIL VS. ASST. CIT MATTER, AS WELL AS MEET THE ENDS OF JUSTICE, CONFIR M THE ADDITION AT RS.1.50 LAKHS AS AGAINST AT RS.4.68 LAKHS BY THE LD. CIT(A). WE DECI DE ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. 5 16 ' (51 0 4 71 0 1 89 ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH MAY, 2013 #4 0 3 ) $# :'6 0 ; SD/- SD/- ( B. R. MITTAL ) ( SANJAY ARORA ) / JUDICIAL MEMBER #$ / ACCOUNTANT MEMBER MUMBAI; :' DATED : 08.05.2013 .'../ ROSHANI , SR. PS #4 0 -1< =#<)1 #4 0 -1< =#<)1 #4 0 -1< =#<)1 #4 0 -1< =#<)1/ COPY OF THE ORDER FORWARDED TO : 1. *, / THE APPELLANT 2. -.*, / THE RESPONDENT . 3. > ( ) / THE CIT(A) 4. > / CIT - CONCERNED 5.