JAYANTILAL CHUNILAL JAIN, MUMBAI V. ITO 112(2)(3), MUMBAI

ITA 399/MUM/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3554 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 29-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 16-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHANWAR SINGH RATNOODR
• Assessee Lawyers: SUDHIR KHARWAR R K MALPANI
• Section: 143(3); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH J, MUMBAI BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO.399/MUM/2014 ASSESSMENT YEAR: 2009-10 JAYANTILAL CHUNILAL JAIN, C/O JAWAI SECURITIES, 46, GREAT WESTERN BUILDING, 1 ST FLOOR, 131-132, SAHID BHAGAT SINGH ROAD, MUMBAI-400023 PAN:AEJPJ5159A VS. ITO, 12(2)(3), AAYAKAR BHAVAN, M.K. MARG, MUMBAI-400020 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUDHIR KHARWAR R.K.MALPANI REVENUE BY : SHRI BHANWAR SINGH RATNOO(DR) DATE OF HEARING : 06.10.2015 DATE OF PRONOUNCEMENT : 13.01.2016 O R D E R PER SANDEEP GOSAIN, JM: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER DATED 21.10.2013 PASSED BY CIT(A)-23, MUMBAI THEREB Y DISMISSING THE APPEAL FILED BY ASSESSEE AGAINST THE ORDER OF ASSES SMENT PASSED BY 2 ITA NO.399/M/2014 JAYANTILAL CHUNILAL JAIN ASSESSING OFFICER (AO) U/S 143(3) OF THE INCOME-TAX ACT (FOR SHORT THE ACT) 1961 VIDE HIS ORDER DATED 28.12.2011 ON THE FOLLOWING GROUNDS OF APPEAL: THE LEARNED COMMISSIONER OF INCOME TAX (A) XXIII, MUMBAI IS GROSSLY ERRED IN LAW IN UPHOLDING THE ADDITION OF RS 274950 /- ON ACCOUNT OF LOW CASH WITHDRAWAL FOR HOUSEHOLD EXPENSES, ON THE BASI S OF FINDING GIVEN BY THE INCOME TAX OFFICER THAT THE ASSESSEE IS SHOWING THE MONTHLY HOUSEHOLD EXPENSES AMOUNTING TO RS 7087/- INCLUSIVE OF MOBILE & TELEPHONE CHARGES, AND FURTHER STATED THAT THE ASSE SSEE IS STAYING IN THE LARGE & POSH RESIDENTIAL PREMISES WHOSE MONTHLY MAI NTENANCE CHARGES IS RS. 9480/-.BESIDES ABOVE A.O. FINDINGS THE LEARNED COMMISSIONER ALSO STATE THAT ASSESSEE HAS SPENT ONLY RS. 257/- ON ACC OUNT OF GAS CYLINDER. THEREFORE AS PER THE LEARNED COMMISSIONER THE CLAIM S MADE BY THE ASSESSEE REGARDING THE MONTHLY HOUSEHOLD EXPENSES I NCLUSIVE OF TELEPHONE & MOBILE AMOUNTING TO RS 7087/- & FOR ANN UAL EXPENSES OF GAS CYLINDER AMOUNTING TO RS 257/- IS NOT ACCEPTABLE. O N THE BASIS OF THE ABOVE FINDINGS THE LEARNED COMMISSIONER ALLEGED AND UPHELD THE ADDITION MADE BY THE A.O. AND STATED THAT APPELLANT HAS UNDE RSTATED THE HOUSEHOLD EXPENSES AS WITHDRAWAL OF RS.7087/- P.M. (1) THEREFORE THE ASSESSEE HAS MADE THE FOLLOWING C ONTENTIONS FOR NON JUSTIFICATION OF THE ABOVE ADDITION IN INCOME MADE BY THE ASSESSING OFFICER AND UPHELD BY THE CIT DUE TO FOLLOWING REASONS: (A) SOCIETY CHARGES AND ELECTRICITY CHARGES ARE PAI D BY THE ASSESSEE BY CHEQUES SEPARATELY. (B) GAS CYLINDER PAYMENTS ARE ALSO MADE BY CHEQUES PAYMENT. DURING THE YEAR GAS CYLINDER PAYMENT ARE SHOWN AS RS.257/- ONLY BEING IN LAST YEAR ASSESSEE HAS PAID A LUM SUM PAYMENT OF RS .50001-(RS. FIVE THOUSAND ONLY) WHICH IS ADJUSTED BY THE GAS AUTHORI TY ON MONTHLY BASIS. (C) ASSESSSEE S CONVEYANCE, TELEPHONE AND MOBILE EX PENSES OF HIS OWN AND HIS WIFE ARE REIMBURSED BY THE COMPANY AS B OTH ARE FULL TIME DIRECTOR IN M/S JAWAI SECURITIES LTD. (D) DURING THE OFFICE HOUR TEA, SNACKS ETC ARE PROV IDED BY THE COMPANY IN WHICH ASSESSEE AND HIS WIFE ARE HOLDING DIRECTORSHIP. (E) THE ASSESSEE'S SON IS ALSO WORKING ON FULL TIME BASIS. HENCE HIS EXPENSES OF CONVEYANCE, TEA ETC ARE PROVIDED BY EMP LOYER DURING THE OFFICE HOURS. 3 ITA NO.399/M/2014 JAYANTILAL CHUNILAL JAIN (F) THE TOTAL INCOME OF THE ASSESSEE DURING THE YEA R IS RS. 348154/- AGAINST WHICH HE HAS SPENT RS 225019/- AS TOTAL HOU SEHOLD EXPENSES INCLUDING SOCIETYCHARGES & ELECTRICITY CHARGES. THE REFORE FURTHER ADDITION OF RS 274950/- ARE QUITE UNJUSTIFIABLE. HO W CAN A PERSON SPEND MORE THAN HIS TOTAL INCOME EARNED DURING THE YEAR. (G) THE MONTHLY EXPENSES OF RS.7000/- SHOWN BY ASSE SSEE ARE ONLY RELATED TO GROCERY, MILK AND VEGETABLE ETC AND THER EFORE ASSESSEE STATES THAT RS.7000/- P.M. (APPROXIMATELY) WITHDRAW ALS SHOWN ARE AS PER ACTUAL EXPENDITURE AND NOTHING IS SUPERSEDE BY HIM. (2)THE ASSESSEE FURTHER CLAIMS THAT WITHOUT GIVING ANY FINDING BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS SUPPRESS HE NCE ADDITION MADE ARE NOT JUSTIFIABLE ARID ON THE SAME GROUND LEARNED COM MISSIONER HAS' ALSO CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R IS BAD IN LAW AND SHOULD BE DELETED. (3)IN ADDITION TO A.O.'S CONTENTION, THE LEARNED CO MMISSIONER HAS ALSO ALLEGED ON THE ASSESSEE FOR GAS CYLINDER EXPENSE SH OWN IN THE WITHDRAWALS ARE NOT JUSTIFIABLE WITHOUT ASKING THE DETAILS OF TOTAL EXPENDITURE SPENT BY THE ASSESSEE. HENCE UPHOLDING THE ADDITION MADE BY THE CIT ON THE BASIS OF ABOVE CONTENTION ARE BAD IN LAW. (4)THE ASSESSEE FURTHER CLAIMS THAT CIT (A) HAS NOT CONSIDERED THE SUBMISSION GIVEN BY THE ASSESSEE UNDER SECTION 69 A ND CITED CASE LAW ON THE ABOVE ISSUE. HENCE THE ADDITION MADE BY THE ASS ESSING OFFICER AND CONFIRMED BY THE CIT(A) ARE BAD IN LAW AND SHOULD B E DELETED. THE APPELLANT CRAVES TO ADD, ALTER, MODIFY & DELETE ANY OF THE ABOVE GROUNDS AT THE TIME OR BEFORE THE TIME OF HEARING. 2. LATERON THE ASSESSEE REQUESTED TO FILE CONCISE G ROUNDS OF APPEAL AND THE REQUEST OF THE ASSESSEE WAS ACCORDINGLY ALL OWED. THE ASSESSEE FILED THE CONCISE GROUNDS WHICH ARE AS UNDER: 1. THAT THE CIT(A) HAS ERRED IN LAW, ON FACT AND IN THE CIRCUMSTANCES OF THE CASE, IN SUSTAINING THE ADDITION OF RS. 2,74 ,950/- ON ESTIMATION BASIS FOR LOW HOUSE HOLD EXPENSES. 2. THE APPELLANT CARVES LEAVE TO ADD, AMEND, ALTER VARY AND OR WITHDRAW ANY OR ALL THE ABOVE GROUNDS OF APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A MANAGING DIRECTOR OF M/S JAWAI SECURITIES LTD. AND HE GETS DIRECTOR R EMUNERATION OF RS. 4 ITA NO.399/M/2014 JAYANTILAL CHUNILAL JAIN 47,500/- PER MONTH. SECONDLY, THE ASSESSEE IS ALSO DOING TRADING IN HIS PERSONAL NAME IN F & O FOR WHICH HE IS KEEPING SEPA RATE ACCOUNT AND ALSO GETTING THE BOOKS AUDITED U/S.44-AB. IN ADDITI ON TO THE ABOVE, THE ASSESSEE ALSO INVESTS IN LONG TERM BASIS IN SHARES AND SECURITIES FOR WHICH HE IS KEEPING THE SEPARATE RECORD AND WHATEVE R EARNING COMES ARE SHOWN AS LONG TERM AND SHORT TERM CAPITAL GAINS . THE ASSESSEE IS ALSO PARTNER IN M/S. SELECTOR SECURITIES AND M/S JA WAI SECURITIES. 4. THE ASSESSEE HAS FAMILY OF FOUR I.E. HIMSELF, HI S WIFE AND TWO CHILDREN. THE ASSESSEE STAYS IN A LARGE AND POSH RESIDENTIAL HOUSE SITUATED AT 53- B, KALPATARU RESIDENCY, OPP. CINE PLANET, SION (EAS T), MUMBAI 400 022 WHOSE ANNUAL SOCIETY CHARGES ARE RS.1,13,770/- I.E. RS.9,480/- PER MONTH. 4.1 THE ASSESSEE VIDE LETTERS DATED 13.07.2011 AND 18.02.2011, HAS SUBMITTED DETAILS OF DRAWINGS OF ALL FAMILY MEMBERS WHICH ARE AS UNDER:- NAME OF ASSESSE AND HIS FAMILY MEMBERS SOC. CHARGES ELECTRICITY CHARGES GAS & CYLINDER OTHER CASH EXPENSES TOTAL JAYANTILAL JAIN 1,13,770 - - 9,550 1,23,320 BHARATI JAIN - 25,942 257 72,550 98,699 DISHANT JAIN - - - 3,000 3,000 KAJAL JAIN - - - - - TOTAL 1,13',770 25,942 257 85,050 2,25,019 4.2 FROM THE ABOVE DETAILS, IT IS CLEAR THAT THE A SSESSEE HAS CLAIMED TO HAVE INCURRED ANNUAL CASH HOUSEHOLD EXPENSES ONLY O F RS.85,050/- I.E. 5 ITA NO.399/M/2014 JAYANTILAL CHUNILAL JAIN RS.7,087/- P.M. THAT TOO INCLUSIVE OF TELEPHONE AND MOBILE EXPENSES THOUGH HE IS STAYING IN A PREMISES WHOSE MONTHLY MA INTENANCE CHARGES IS RS.9,480/-. THIS CLAIM OF THE ASSESSEE WAS NOT A CCEPTED AND CONSIDERING THE ABOVE FACTS, HOUSEHOLD EXPENSES, EX CLUDING SOCIETY CHARGES AND ELECTRICITY EXPENSES, AO ESTIMATED THE EXPENSES AT RS.30,000/- PER MONTH I.E. RS.3,60,000/- PER ANNUM. SINCE THE ASSESSEE HAS ALREADY DECLARED CASH WITHDRAWAL OF RS.85,050/- , THE BALANCE OF RS.2,74,950/- WAS ADDED TO THE TOTAL INCOME ON ACCO UNT OF VERY LOW CASH WITHDRAWAL FOR HOUSEHOLD EXPENSES. ULTIMATELY THE AFOREMENTIONED ORDER OF ASSESSMENT W AS PASSED BY THE AO. 5. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE FILED THE APPEAL BEFORE THE CIT(A). HOWEVER, THE CIT(A) DISMISSED THE APPEA L FILED BY THE ASSESSEE AND UPHOLD THE ADDITIONS MADE BY THE AO. 6. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE F ILED THE PRESENT APPEAL ON THE GROUNDS REPRODUCED HERE IN ABOVE. 7. BEFORE US, THE LD. AUTHORISED REPRESENTATIVE (AR ) REPRESENTING THE ASSESSEE HAS SUBMITTED THAT ASSESSEE IS A MANAGING DIRECTOR OF M/S JAWAI SECURITIES LTD. AND HE GET DIRECTORS REMUNER ATION OF RS. 47,500/- P.M. SECONDLY, THE ASSESSEE IS ALSO DOING TRADING I N HIS PERSONAL NAME IN 6 ITA NO.399/M/2014 JAYANTILAL CHUNILAL JAIN F & O FOR WHICH HE IS KEEPING SEPARATE ACCOUNT AND ALSO KEEPING HIS BOOKS OF ACCOUNT AUDITED. 8. THE AR ALSO RELIED UPON THE WRITTEN LETTERS SUBM ITTED BY ASSESSEE DATED 13.07.2011 AND 18.02.2011. IT IS ALSO SUBMITT ED BY THE AR THAT THE AO AS WELL AS CIT(A) HAS WRONGLY CONSIDERED THE HOUSEHOLD EXPENSES AND WRONGLY ESTIMATED THE EXPENSES AT RS. 30,000/- P.M. I.E. 3,60,000/- P.A.. IT WAS SUBMITTED THAT ASSESSEE BEL ONGS TO JAIN FAMILY AND LEADS A VERY SIMPLE LIFE AND MADE SUBMISSION WH ICH ARE AS UNDER: (A) SOCIETY CHARGES AND ELECTRICITY CHARGES ARE PAI D BY THE ASSESSEE BY CHEQUES SEPARATELY. (B) GAS CYLINDER PAYMENTS ARE ALSO MADE BY CHEQUES PAYMENT. DURING THE YEAR GAS CYLINDER PAYMENT ARE SHOWN AS RS.257/- ONLY BEING IN LAST YEAR ASSESSEE HAS PAID A LUM SUM PAYMENT OF RS .50001-(RS. FIVE THOUSAND ONLY) WHICH IS ADJUSTED BY THE GAS AUTHORI TY ON MONTHLY BASIS. (C) ASSESSSEE S CONVEYANCE, TELEPHONE AND MOBILE EX PENSES OF HIS OWN AND HIS WIFE ARE REIMBURSED BY THE COMPANY AS B OTH ARE FULL TIME DIRECTOR IN M/S JAWAI SECURITIES LTD. (D) DURING THE OFFICE HOUR TEA, SNACKS ETC ARE PROV IDED BY THE COMPANY IN WHICH ASSESSEE AND HIS WIFE ARE HOLDING DIRECTORSHIP. (E) THE ASSESSEE'S SON IS ALSO WORKING ON FULL TIME BASIS. HENCE HIS EXPENSES OF CONVEYANCE, TEA ETC ARE PROVIDED BY EMP LOYER DURING THE OFFICE HOURS. (F) THE TOTAL INCOME OF THE ASSESSEE DURING THE YEA R IS RS. 348154/- AGAINST WHICH HE HAS SPENT RS 225019/- AS TOTAL HOU SEHOLD EXPENSES INCLUDING SOCIETY CHARGES & ELECTRICITY CHARGES. TH EREFORE FURTHER ADDITION OF RS 274950/- ARE QUITE UNJUSTIFIABLE. HO W CAN A PERSON SPEND MORE THAN HIS TOTAL INCOME EARNED DURING THE YEAR. (G) THE MONTHLY EXPENSES OF RS.7000/- SHOWN BY ASSE SSEE ARE ONLY RELATED TO GROCERY, MILK AND VEGETABLE ETC AND THER EFORE ASSESSEE STATES THAT RS.7000/- P.M. (APPROXIMATELY) WITHDRAW ALS SHOWN ARE AS PER ACTUAL EXPENDITURE AND NOTHING IS SUPERSEDE BY HIM. 7 ITA NO.399/M/2014 JAYANTILAL CHUNILAL JAIN 9. LASTLY THE AR PRAYED FOR DELETION OF ADDITIONS M ADE BY AO ON THE OTHER HAND DR REPRESENTING THE REVENUE SUPPORTED TH E ORDERS PASSED BY THE AO AS WELL AS CIT(A). 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 11. WE ARE OF THE VIEW THAT THE ASSESSEE BELONGS TO JAIN FAMILY AND AS PER THE SUBMISSIONS OF THE AR, ASSESSEE IS LEADING SIMPLE LIFE. WE HAVE ALSO CONSIDERED THAT THE ASSESSEE HAS BEEN PAYING S OCIETY AND ELECTRICITY CHARGES SEPARATELY BY CHEQUES AND HAVE ALSO NOTED T HAT THE GAS CYLINDER PAYMENTS WERE ALSO BEING MADE BY CHEQUES. AFTER CON SIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT THE ESTIMATION OF RS. 30,000/- P.M. TAKEN BY AO IS A BI T EXCESSIVE CONSIDERING THE FACTS OF THE PRESENT CASE, THEREFOR E, WE HOLD THAT THE MONTHLY EXPENSES OF THE ASSESSEE IS RS. 20,000/- P. M. I.E. 2,40,000/- P.A. AND SINCE THE ASSESSEE HAS ALREADY DECLARED CA SH WITHDRAWAL 85,050/-, THEREFORE, THE BALANCE OF RS. 1,54,950/- IS DIRECTED TO BE ADDED TO THE TOTAL INCOME. 12. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ACCEPTED AND AO IS DIRECTED TO TAKE THE MONTHLY EXPENSES OF THE ASSESS EE AT RS. 20,000/- P.M. 8 ITA NO.399/M/2014 JAYANTILAL CHUNILAL JAIN ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF JANUARY, 2016. SD/- SD/- ( D.KARUNAKARA RAO) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED:13.01.2016 SHARWAN P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR J BENCH BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.