ASHWIN S. DANI, MUMBAI V. ACIT 10(3), MUMBAI

ITA 2482/MUM/2010

• Counselvise Citation: 248219914 RSA 2010
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 13-10-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 30-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K B MENON
• Assessee Lawyers: H N SHAH
• Section: 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 2482/MUM/2010 (ASSESSMENT YEAR: 2007-08) SHRI ASHWIN S. DANI A C I T - 10(3) HOME VILLA, 48 KRISHNA SANGHI PATH AAYAKAR BHAVAN, M.K. ROAD GAMDEVI, MUMBAI 400007 VS. MUMBAI 400020 PAN - AAAPD 5464 H APPELLANT RESPONDENT APPELLANT BY: SHRI H.N. SHAH RESPONDENT BY: SHRI P.K.B. MENON DATE OF HEARING: 17.10.2011 DATE OF PRONOUNCEMENT: 25.10.2011 O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A)- XXII, MUMBAI DATED 22.02.2010. ASSESSEE IN THE GROUND HAS CONTESTED CONFIRMATION OF ` 5,04,000/- ADDED BY THE A.O. ON ACCOUNT OF LOW WITHDRAWALS. 2. THE A.O. NOTED THAT CONSEQUENT TO SEARCH AND SEIZUR E ACTION IN ASIAN PAINTS LTD. IN WHICH ASSESSEE IS MANAGING DIRECTOR, WAS EMPLOYING 4 SERVANTS AND 3 DRIVERS. EVEN THOUGH ASSESSEE HAS SH OWN HOUSE HOLD EXPENDITURE AT ` 5,44,336/- INCLUDING CASH WITHDRAWAL OF ` 1,00,000/- A.O. WAS OF THE OPINION THAT CONSIDERING THE LIFE STYLE AND HOUSEHOLD EXPENSES THE EXPENDITURE ON SERVANTS IN CASH WAS NOT PROPERT Y EXPLAINED. IN A.Y. 2005-06 THE ITO MADE ADDITIONS AT ` 5,000/- PER MONTH ON ACCOUNT OF SALARY PAYMENT TO 3 DRIVERS AND 4 SERVANTS. CONSIDERING 20 % INCREASE IN EXPENDITURE, HE ARRIVED AT THE SALARY PAYMENT PAID TO ALL THE PERSONS AT ` 6,000/- EACH PER MONTH AND MADE AN ADDITION OF ` 5,04,000/- AS UNEXPLAINED AMOUNT ON ACCOUNT OF LOW CASH WITHDRAWA LS. THE CIT(A), AFTER CONSIDERING ASSESSEES EXPLANATION, CONFIRMED THE S AME BY STATING AS UNDER: ITA NO. 2482/MUM/2010 SHRI ASHWIN S. DANI 2 2.4 I HAVE GONE THROUGH THE ASSESSMENT ORDER, PERU SED THE SUBMISSIONS MADE BY THE APPELLANT AND ALSO DISCUSSE D THE CASE WITH THE A/R OF THE APPELLANT. A.O. HAS MADE ADDITION OF RS.5,04,000/- ON ACCOUNT OF LOW WITHDRAWAL RELATING TO EXPENSES FOR SALARY TO DRIVERS AND SERVANTS. THE A.O. NOTED THAT DURING THE COURSE OF SEARCH OPERATION IN ASIAN PAINTS GROUP WHERE THE APPELLANT IS DIRECTOR, IT WAS NOTED THAT ASSESSEE IS HAVING 3 CARS AND ALSO I N OCCUPATION OF 3000 SQ.FT. FLAT IN POSH AREA AND ACCORDINGLY IN A. Y. 2005-2006. A.O. HAS MADE ADDITION ON ACCOUNT OF SALARY PAYMENT TO D RIVERS AND SERVANT AT THE RATE OF 5000/- PER MONTH. A.O. FURTH ER NOTED THAT ASSESSEE FAILED TO GIVE THE NAMES OF NUMBER OF SERV ANTS AND DRIVERS AND SALARY PAID TO THEM. ACCORDINGLY THE A.O. CONSI DERING THE INFLATION 20% ESTIMATED THE SALARY PAYABLE TO 4 SER VANTS AND 3 DRIVERS AT THE RATE OF 6000/- PER MONTH WHICH WAS A DDED BACK TO THE RETURNED INCOME. THE ADDITION MADE IN A.Y. 2005-200 6 WAS SUSTAINED BY LD. CIT(A) VIDE ORDER NO. CIT(A)C.VIII /CC.32/IT- 167/07-08 DATED 02.05.2008. IN VIEW OF THE FACTS AS STATED ABOVE, I AM OF THE OPINION THAT THE A.O. WAS JUSTIFIED IN MA KING ADDITION ON ACCOUNT OF LOW WITHDRAWAL WHICH IS SUSTAINED. 3. THE LEARNED COUNSEL STATED THAT ASSESSEES FAMILY C ONSISTS HIMSELF, MOTHER, WIFE AND THREE SONS AND THE TOTAL CASH WITH DRAWAL OF THE FAMILY MEMBERS WAS ` 22.39 LAKHS WHICH INCLUDED ASSESSEES CASH WITHDRAW AL OF ` 1,00,000/-. IT WAS FURTHER SUBMITTED THAT PERSONAL EXPENDITURE TO AN EXTENT OF ` 4.44 LAKHS WAS PAID BY WAY OF CHEQUES AND THE DETAI LS WERE FILED WITH THE A.O. BY WAY OF A CHART. IT WAS FURTHER SUBMITTED TH AT ASSESSEE WAS PROVIDED WITH CHAUFFER DRIVEN CAR BY HIS EMPLOYER COMPANY AN D, THEREFORE, EMPLOYING PERSONAL DRIVER DOES NOT ARISE AND THE DRIVERS ARE USED FOR THE PURPOSE OF FAMILY ONLY. THEREFORE, CONSIDERING THE TOTAL CASH WITHDRAWAL IN THE FAMILY TO AN EXTENT OF ` 22.39 LAKHS THERE IS NO NECESSITY FOR ADDITION ON A CCOUNT OF LOW CASH WITHDRAWAL. IT WAS FURTHER SUBMITTED THAT THE ITAT, ON THE BASIS OF ORDER OF THE CIT(A) FOR A.Y. 2005-06 HAD CONFIRMED AN AMOUNT OF ` 60,000/- OUT OF ` 1,50,000/- ADDITION MADE BY THE A.O. WHEREAS IN THE OTHER DIRECTORS CASE OF SHRI ABHAY A. WAKIL THE ITAT A BENCH MUMB AI IN ITA NO. 2483/MUM/2010 DELETED THE ADDITION IN HIS CASE. IT WAS FURTHER SUBMITTED THAT THE A.O. IN A.Y. 2006-07 HAS NOT MADE ANY ADDI TION ON IDENTICAL FACTS AND PLACED A COPY OF THE ORDER US 143(3) AND SUBMIT TED THAT THE ADDITION WAS NOT WARRANTED. ITA NO. 2482/MUM/2010 SHRI ASHWIN S. DANI 3 4. THE LEARNED D.R., HOWEVER, SUBMITTED THAT CONSIDERI NG THE STATUS OF THE ASSESSEE AND THE FACTS THE ADDITION MADE BY THE A.O. IS REASONABLE AND RELIED ON THE ORDER OF THE ITAT TO SUBMIT THAT CONS IDERING THE FACTS IN ASSESSEES OWN CASE IN A.Y. 2005-06 HAD CONFIRMED T HE LOW HOUSEHOLD EXPENSES AT ` 60,000/- THE SAME IS ALSO REQUIRED TO BE SUSTAINED. 5. WE HAVE CONSIDERED THE ISSUE. AS SEEN FROM THE ORDE R OF THE CIT(A), THE CIT(A) HAS CONFIRMED THE ADDITION MOSTLY ON THE BASIS OF THE FACTS AVAILABLE FOR A.Y. 2005-06. THERE IS NO DISPUTE THA T ASSESSEE HAS SUBSTANTIAL AMOUNT BY WAY OF CHEQUE PAYMENTS BUT CONSIDERING TH E INDIVIDUAL CASH WITHDRAWAL IN ASSESSEES HANDS IT WAS NOTICED THAT THESE WERE NOT CONSISTENT IN EACH OF THE YEARS. AS SEEN FROM THE ORDER FOR A. Y. 2005-06 ASSESSEE WITHDREW AN AMOUNT OF ` 2,70,000/- IN CASH AND THE A.O. ESTIMATED THE EXPENDITURE AT ` 4,20,000/-, GAVE CREDIT TO THE AMOUNT AND MADE AN A DDITION OF ` 1,50,000/- OUT OF WHICH THE ITAT HAS SUSTAINED AN A MOUNT OF ` 60,000/- CONSIDERING THE EXPENDITURE IN THE CASE OF SHRI ABH AY A WAKIL RELIED UPON BY THE ASSESSEE IN THE COURSE OF ARGUMENTS. IN A.Y. 2006-07, IN WHICH YEAR THE A.O. CHOOSE NOT TO MAKE ANY ADDITION, ASSESSEE WITHDREW AN AMOUNT OF ` 4,45,000/- IN CASH OUT OF THE TOTAL EXPENDITURE OF ` 8,90,449/-. IN THAT YEAR THE TOTAL CASH WITHDRAWAL OF THE FAMILY WAS TO THE TUNE OF ` 20.54 LAKHS. IN THIS YEAR ASSESSEE HAS SPENT ` 5,44,336/- BY WAY OF PERSONAL EXPENDITURE INCLUDING BY WAY OF CHEQUES OUT OF WHICH ` 1,00,000/- WAS SHOWN AS CASH WITHDRAWAL. EVEN THOUGH THE TOTAL FAMILY WITHDRAWAL S WERE SHOWN AT ` 22.39 LAKHS AS CONTENTED, THERE IS NO EXPLANATION FOR RED UCTION IN CASH WITHDRAWAL WHEN COMPARED TO OTHER YEARS. THE A.O. MIGHT NOT HA VE BEEN MADE ANY ADDITION IN THE IMMEDIATELY PRECEDING YEAR AS THERE WAS CASH WITHDRAWAL OF ` 4.45 LAKHS, WHICH MIGHT HAVE BEEN INCURRED ON THE S ERVANTS AND DRIVERS IN CASH. IN THAT YEAR ASSESSEE HAD GIVEN DETAILS OF SA LARIES PAID TO SERVANTS AND DRIVERS AT ` 4,30,000/- AND TOOK CREDIT OUT OF THE TOTAL CASH WI THDRAWALS. HOWEVER, NO SUCH DETAILS WERE FILED IN THIS ASSESSM ENT YEAR BEFORE THE A.O. AS TO HOW MUCH THE ASSESSEE PAID TOWARDS SALARIES. IN THE ABSENCE OF ANY INFORMATION THE ESTIMATION MADE BY THE A.O. TOWARDS EXPENDITURE SEEMS TO BE REASONABLE. CONSIDERING THAT ASSESSEE HAS WITHDR AWN ` 1,00,000/- ONLY TOWARDS CASH EXPENSES BUT KEEPING IN MIND THAT THE ENTIRE FAMILY HAD ITA NO. 2482/MUM/2010 SHRI ASHWIN S. DANI 4 WITHDRAWN AN AMOUNT OF ` 22,39,000/-, WE ARE OF THE OPINION THAT AN AMOUNT OF ` 2,00,000/- TOWARDS LOW HOUSEHOLD WITHDRAWALS WOULD BE JUSTIFIABLE ON THE FACTS AND CIRCUMSTANCES OF THE C ASE. ACCORDINGLY AN AMOUNT OF ` 2,00,000/- IS SUSTAINED OUT OF THE ADDITION OF ` 5,40,000/- MADE BY THE A.O. EVEN THOUGH THE LEARNED COUNSEL RELIED ON THE ORDER IN THE CASE OF SHRI ABHAY A. WAKIL FOR A.Y. 2007-08 THE COMPLET E FACTS ARE NOT ON RECORD. CONSIDERING THAT IN ASSESSEES OWN CASE FOR A.Y. 2005-06 RELYING ON SIMILAR FACTS FOR A.Y. 2005-06 IN ABHAY WAKILS CAS E ITSELF, ITAT SUSTAINED ` 60,000/-, THEREFORE, THE ORDER OF THE ITAT IN AY 07 -08 GIVEN ON A SET OF FACTS CANNOT BE TAKEN AS A PRECEDENT TO GIVE RELIEF WITHOUT EXAMINING THE FACTS THEREIN. CONSIDERING THAT ASSESSEE HAS NOT AP PEALED AGAINST THE ADDITIONS SO SUSTAINED IN A.Y. 2005-06 AND KEEPING IN VIEW THAT THE CASH WITHDRAWAL WAS ONLY ` 1,00,000/- AS AGAINST ` 2,70,000/- IN A.Y. 2005-06 AND ` 4,45,000/- IN 2006-07, THE ADDITION SUSTAINED AT ` 2,00,000 IS JUSTIFIABLE. WE ORDER ACCORDINGLY. 6. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH OCTOBER 2011. SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED: 25 TH OCTOBER 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XXII, MUMBAI 4. THE CIT X, MUMBAI CITY 5. THE DR, A BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.