Sh. Om Parkash, Ludhiana V. ACIT, Ludhiana

ITA 360/CHANDI/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 0537 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2018-2019
• Appeal Filed On: 14-11-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Search and seizure; Assessment record

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ “एस.एम.सी” , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCHES, “SMC” CHANDIGARH (VIRTUAL COURT) ी एन.के .सैनी, उपा य! BEFORE: SHRI. N.K.SAINI, VICE PRESIDENT ITA No. 360 /Chd/2021 Assessment Year : 2018-19 Shri Om Parkash C/o Roop Square Private Limited Ghumar Mandi Chowk, Ludhiana The Asstt. CIT Central Circle-I, Ludhiana PAN NO: ACNPP5689B Appellant Respondent ! " Assessee by : Shri Ashwani Kumar, CA # ! " Revenue by : Dr. Ranjeet Kaur, Sr. DR $ % ! & Date of Hearing : 03/01/2022 '()* ! & Date of Pronouncement : 06/01/2022 आदेश/Order PER N.K. SAINI, VICE PRESIDENT This is an appeal by the assessee against the order dt. 11/10/2021 of the Ld. CIT(A)-5, Ludhiana. 2. The only grievance of the assessee in this appeal relates to the sustenance of addition of Rs. 4,44,000/- made by the A.O. on account of unexplained expenditure. 3. Facts of the case in brief are that the search and seizure operation under section 132(1) of the Income Tax Act, 1961 (hereinafter referred as the Act) was conducted on 01/11/2017 in the case of M/s Roop Square Group to which the assessee belongs. 3.1 During the course of search certain incriminating documents were found and seized from the various business and residential premises of the group. The assessee filed return of income on 31/10/2018 declaring an income of Rs. 19,61,430/-. During the course of assessment proceedings the A.O. noted that one Shri Shiva Sachdeva son of the assessee, during the course of search proceedings deposed as under: 2 “ Sh. Shiva Sachdeva deposed that (i) he is director in M/s Roop Square (P) Ltd., getting monthly salary of Rs. 50,000/- and looking after the purchase of the company and (ii) their family is living in rented house-monthly rent is Rs. 37,000/- per month which is paid in cash.” 3.2 The A.O. observed that the house was taken on rent by the assessee and no withdrawal was made from the capital account as part of drawing for payment of rent in cash. He therefore made the addition of Rs. 4,44,000/-. 4. Being aggrieved the assessee carried the matter to the Ld. CIT(A) and submitted that during the course of assessment proceedings the details of the house hold expenses including monthly electricity expenses and rent payment etc were called for. In response to which the assessee filed details giving size of the family and expenses on various items. As regard to the payment of rent, it was submitted that Rs. 37,000/- per month was paid to Shri Manjinder Singh through an inter-mediatory, the same was paid out of regular cash withdrawals made out of salary account with M/s Roop Square Pvt. Ltd. or capital account of M/s Agya Ram Manohar Lal. It was further submitted that during the assessment proceedings a complete chart showing the family withdrawal in cash and the expenditure met out of those withdrawals was furnished. The Ld. CIT(A) forwarded the submissions of the assesee to the A.O. for comment. In response the A.O. reported that the assessee had only submitted his capital account in the books of M/s Roop Square Pvt. Ltd. showing a withdrawal of Rs. 4,10,000/- during the year. It was stated by the A.O. that the copy of capital account of other family members were not available in the assessment record for the year under consideration and that no capital account of the assessee in the books of M/s Agya Ram Manohar Lal had been submitted during the course of assessment proceedings which could substantiate that the rent was being paid out of the said withdrawals. It was further stated that no documentary evidence was furnished to substantiate as to what amount was being paid on account of rent and what was the mode of payment. In the rejoinder, the assessee submitted that the withdrawals of the family were sufficient to meet the regular household expenses including rent, electricity and other expenses. It was also stated that direct nexus of source of funds could not be established as the entire amount of withdrawal got clubbed in a single pool of funds utilized to meet the regular household expense. The Ld. CIT(A) after considering the submissions of the assessee and the report of the A.O. observed that the assessee was showing withdrawals amounting to Rs. 10,000/- or less on various dates throughout the month and the pattern of 3 withdrawal showed that those were for meeting the day to day expenses. He further observed that there was no withdrawal of cash corresponding to the monthly rent payment of Rs. 37,000/- and that the rent was generally paid after the end of the month in a single consolidated amount for each month. Therefore, the petty withdrawals amounting to Rs. 5,000/- or Rs. 10,000/- that also on different dates with the gap of seven to ten days could not explain the monthly rent payment of Rs. 37,000/-. Accordingly the arguments of the assessee were not found acceptable and the addition of Rs. 4,44,000/- made by the A.O. was sustained. 5. Now the assessee is in appeal. 6. The Ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that there was total withdrawals of Rs. 13,48,960/- and the said amount was not doubted by the A.O. as well as the Ld. CIT(A). It was further submitted that withdrawal of Rs. 13,48,960/- by the assessee and his family members during the year under consideration was sufficient to meet out the payment of rent amounting to Rs. 4,44,000/-, electricity expenses of Rs. 1,18,960/- and other day to day household expenses. 6.1 Ld. Counsel for the assessee drew our attention towards the details of the withdrawals as well as the cash flow account, copy of which are placed at page no. 5 to 15 of the assessee’s compilation. It was submitted that the chart showing the amount of withdrawal by the assessee and the family members (copy of which is placed at page no. 15 of the assessee’s paper book) was available to the A.O. as well as the Ld. CIT(A). Therefore the addition made by the A.O. and sustained by the Ld. CIT(A) was not justified. 7. In her rival submissions the Ld. DR strongly supported the orders passed by the authorities below and reiterated the observations made in the assessment order as well as impugned order. 8. I have considered the submissions of both the parties and perused the material available on the record. In the present case it is noticed that the withdrawal shown by the assessee and his family members amounting to Rs. 13,65,960/- has not been doubted, out of the said withdrawal the assessee claimed the expenses on account of 4 rent amounting to Rs. 4,40,000/-, the remaining withdrawals were at Rs. 9,25,960/-, the said amount appears to be reasonable to meet out the other household expenses, particularly when the withdrawals made by the assessee and his family members in the preceding years i.e; the A.Y. 2017-18, 2016-17 and 2015-16 were at Rs. 6,88,979/-, Rs. 2,33,260/- and Rs. 2,91,760/- respectively. The said figures are reflected in the chart showing the amount of withdrawals of the assessee and family members, copy of which is placed at page no. 15 of the assessee’s paper book. The said chart was also available to the A.O. as well as the Ld. CIT(A). Therefore by considering the totality of the facts, I am of the view that the withdrawals of Rs. 13,65,960/- made by the assessee and his family members were sufficient to meet out the payment of Rs. 4,40,000/- on account of rent and for other day to day household expenses. In that view of the matter the impugned addition made by the A.O. and sustained by the Ld. CIT(A) is deleted. 9. In the result, appeal of the assessee is allowed. (Order pronounced on 06/01/2022 ) Sd/- एन.के .सैनी, ( N.K. SAINI) उपा य! / VICE PRESIDENT AG Date: 06/01/2022 ( + ! , - . - Copy of the order forwarded to : 1. The Appellant 2. The Respondent 3. $ / CIT 4. $ / 0 1 The CIT(A) 5. - 2 ग 4 5 & 4 5 678 ग9 DR, ITAT, CHANDIGARH 6. ग 8 : % Guard File