VISHAL PRAKASH JADHAV, MUMBAI V. ITO WD 26(2)(1), MUMBAI

ITA 4398/MUM/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0839 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 13-05-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 31-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHIDDARAMAPPA KAPPATTANAVAR
• Keywords: Unexplained expenditure; Salary income
• Section: 69C; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI BEFORE MS.SUSHMA CHOWLA, JM & SHRI N K BILLAIYA, AM ITA NO.4398/MUM/2013 : ASST.YEAR 2009-2010 SHRI VISHAL PRAKASH JADHAV, 2/29, GULMOHAR APT., NEW MIG COLONY, BANDRA (E), . APPELLANT MUMBAI- 400 051 PAN : AHKPJ4117C VS. ITO WD 26(2)(1), MUMBAI . RESPONDENT APPELLANT BY : NONE RESPONDENT BY : SHRI SHIDDARAMAPPA KAPPATTANAVAR DATE OF HEARING : 20 .0 7 .201 5 DATE OF PRONOUNCEMENT: 31 .0 7 .2015. O R D E R PER SUSHMA CHOWLA (JM) : THE PRESENT APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS), DATED 28.02.2 013, RELATING TO ASSESSMENT YEAR 2009-2010 AGAINST ORDER PASSED U/S 143(3) OF THE INCOME-TAX ACT, 1961. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL:- 1. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF GENUINE HOUSE RENT OF RS.11,40,000/- AS UNEXPLAINED EXPENDITURE. 2. THE EVIDENCE HAS NOT CONSIDERED IN SUBSTANCE AN D NO JUSTICE WAS GIVEN ON FACTS, 3. THE ASSESSEE HAS CLAIMED HOUSE RENT ALLOWANCE O NLY RS.8,52,000/- WHERE AS ADDITION WAS MADE RS.11,40,0 00/- WHICH IS WRONG. ITA NO.4398/MUM/2013. SHRI VISHAL PRAKASH JADHAV 2 3. DESPITE SERVICE OF NOTICE NONE APPEARED ON BEHAL F OF THE ASSESSEE NOR WAS ANY APPLICATION FILED FOR ADJOURNMENT. EVE N ON EARLIER DATES OF HEARING NONE APPEARED ON BEHALF OF THE ASSESSEE. H ENCE, WE PROCEED TO DISPOSE OF THE APPEAL, AFTER HEARING THE LEARNED DR FOR THE REVENUE. 4. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINS T ADDITION OF RS.11,40,000/- BEING UNEXPLAINED EXPENDITURE INCURR ED BY THE ASSESSEE. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE WAS WORKING WITH THE HONGKONG & SHANGHAI BANKING CORPOR ATION LTD. (HEREINAFTER REFERRED TO AS HSBC). THE ASSESSEE HA D DECLARED SALARY INCOME AND INCOME FROM OTHER SOURCES. FOR THE YEA R UNDER CONSIDERATION, THE ASSESSEE HAD CLAIMED EXEMPTION O F RS.8,52,000/- US/ 10(13A) OF THE ACT OUT OF HOUSE RENT ALLOWANCE OF R S.14,48,000/- RECEIVED FROM THE EMPLOYER. THE SAID EXEMPTION WAS ALLOWED TO THE ASSESSEE BY THE EMPLOYER IN FORM NO.16 ISSUED TO TH E ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE W AS ASKED TO FURNISH THE DETAILS IN RESPECT OF EXEMPTION CLAIMED U/S. 10(13A) OF THE ACT ALONG WITH PROOF OF PAYMENT OF RENT. IN REPLY, THE ASSESSEE FURNISHED THE DETAILS AND WORKING OF THE EXPENDITUR E AND ALSO FILED COPIES OF 12 RENT RECEIPTS, AS PER WHICH THE ASSESS EE HAS PAID RS.95,000/- PER MONTH IN CASH TO MRS. LEELA S NIKAM , WHO WAS MOTHER- IN-LAW OF THE ASSESSEE. THE AO NOTED FROM THE PERU SAL OF THE BANK STATEMENT THAT THE ASSESSEE HAD NOT MADE SUFFICIENT CASH WITHDRAWALS TO MEET THE EXPENDITURE TOWARDS THE SAID RENT. THE ASSESSEE WAS ASKED TO FURNISH THE RETURN OF INCOME FILED BY THE FLAT OWNER AND ALSO THE DETAILS AND SOURCE OF PAYMENT MADE BY HIM TOWAR DS RENT. IN RESPONSE, THE ASSESSEE FURNISHED THE COPY OF RETURN OF INCOME MRS. LEELA S NIKAM, WHICH WAS FILED ON 13.12.2011, WHICH ACCORDING TO THE ITA NO.4398/MUM/2013. SHRI VISHAL PRAKASH JADHAV 3 AO WAS TIME BARRED. IT WAS FURTHER EXPLAINED BY TH E ASSESSEE THAT THE TOTAL WITHDRAWALS FROM THE BANK ACCOUNT WERE RS.12, 06,886/- OUT OF WHICH SUM OF RS.11,40,000/- WAS EXPENSES INCURRED O N BEHALF OF HIS MOTHER-IN-LAW MRS. LEELA S NIKAM, AND ADJUSTED IN RE NT PAID BECAUSE SHE WAS A SENIOR CITIZEN AND WAS NOT ABLE TO OPERAT E HER DAY TO DAY TRANSACTIONS WITH BANK FOR MEETING HER VARIOUS DAY- TO-DAY EXPENSES. IN ADDITION, THE ASSESSEE FURNISHED AN AFFIDAVIT OF MR S. LEELA S NIKAM, WHEREIN SHE CONFIRMED THAT THE RENT RECEIVED OF RS. 95,000/- PER MONTH AND THE ADJUSTMENT OF THE SAID RENT TOWARDS THE EXPE NSES INCURRED BY THE ASSESSEE. THE AO NOTED THAT THE MOTHER-IN-LAW OF THE ASSESSEE HAD NOT FILED THE RETURN OF INCOME ON TIME BUT HAD OFFE RED THE RENTAL INCOME OF RS.11,40,000/- RECEIVED FROM THE ASSESSEE ON A L ATER DATE. FURTHER THE AO NOTED THAT THE TOTAL WITHDRAWALS/DRAWINGS OF THE ASSESSEE WERE RS.3,60,000/- ONLY. A PERUSAL OF THE BANK ACCOUNT MAINTAINED WITH HSBC BANK REFLECTED TOTAL CASH WITHDRAWALS OF RS.2, 38,326/- ONLY IN ADDITION TO OTHER PAYMENTS BEING MADE TOWARDS CREDI T CARD EXPENSES, MISCELLANEOUS EXPENSES ETC. IN THE ABSENCE OF COMP LETE DETAILS BEING FILED BY THE ASSESSEE, THE AO WAS OF THE VIEW THAT THE TOTAL CASH WITHDRAWAL OF RS.2,38,326/- WAS THE PERSONAL WITHDR AWAL MADE BY THE ASSESSEE TO MEET HIS HOUSEHOLD EXPENSES. SINCE THE ASSESSEE HAD FAILED TO PROVE THE SOURCE OF PAYMENT OF RS.11,40,0 00/- TO HIS MOTHER- IN-LAW, THE SAME WAS TREATED AS UNEXPLAINED EXPENDI TURE U/S. 69C OF THE ACT. 5. BEFORE THE CIT(A), THE ASSESSEE REITERATED THE S UBMISSIONS MADE BEFORE THE AO AND AN ALTERNATIVE CLAIM WAS MADE BY THE ASSESSEE THAT THE EXEMPTION OF HRA WAS ONLY TO THE TUNE OF RS.8,5 2,000/- THEREFORE THE ADDITION OF RS.11,40,000/- IN THIS REGARD WAS N OT JUSTIFIED. THE ITA NO.4398/MUM/2013. SHRI VISHAL PRAKASH JADHAV 4 CIT(A) NOTED THE INITIAL CLAIM OF THE ASSESSEE THAT IT HAD WITHDRAWN RS.12,06,886/- FROM HIS BANK ACCOUNT, WAS SCALED DO WN TO RS.3,60,000/- VIDE HIS LETTER DATED 17.10.2011. HO WEVER, ON SCRUTINY OF BANK ACCOUNT, THE AO NOTED THAT THE ASSESSEE HAD WI THDRAWN ONLY RS.2,38,326/- IN CASH, WHICH WAS HELD TO BE FOR MEE TING HOUSEHOLD EXPENSES. IN THE ABSENCE OF AVAILABILITY OF CASH W ITH THE ASSESSEE TO MAKE THE PAYMENT OF RS.11,40,000/-, THE CIT(A) UPHE LD THE ORDER OF THE AO IN THIS REGARD. WITH REGARD TO THE ALTERNAT IVE PLEA, THE CIT(A) OBSERVED THAT THE ASSESSEE REPEATEDLY MENTIONED THA T HE HAD PAID RENT OF RS.11,40,000/- TO HIS MOTHER-IN-LAW, WHO IN TURN ALSO DISCLOSED THE RECEIPT OF RENT IN HER RETURN OF INCOME AND IN THE ABSENCE OF PROOF OF SOURCE OF SUCH PAYMENT, THE ALTERNATIVE PLEA RAISED BY THE ASSESSEE WAS ALSO REJECTED BY THE CIT(A). 6. ON PERUSAL OF RECORD, WE FIND THAT FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD CLAIMED DEDUCTION U/ S. 10(13A) OF THE ACT AGAINST THE HOUSE RENT RECEIVED BY THE ASSESSEE FROM HIS EMPLOYER. THE ASSESSEE WAS WORKING WITH HSBC AND HAD OFFERED INCOME FROM SALARY. THE WORKING OF THE EXEMPTION U/S. 10(13A) WAS AS UNDER:- ANNUAL SALARY (EXCLUDING ALLOWANCE & PERQUISITES) RS.28,80,000/- HOUSE RENT ALLOWANCE RECEIVED RS.14,48,000/- LESS: EXEMPTION U/S. 10(13A) READ WITH RULE 2A (A) HOUSE RENT ALLOWANCE RS.14,48,400/- (B) ACTUAL RENT PAID RS.11,40,000/- LESS :1/10 TH OF SALARY RS. 2,88,000 /- RS. 8,52,000/- (C) ONE HALF OF SALARY RS.14,40,000/- LESS OF (A), (B) AND (C) IS EXEMPT RS. 8,52,000/- 7. AS AGAINST ITS CLAIM THE ASSESSEE HAD CLARIFIED THAT IT MADE CASH PAYMENTS TO HIS MOTHER-IN-LAW MRS. LEELA S NIKAM @ RS.95,000/-PER MONTH TOTALING TO RS.11,40,000/-. THE CLAIM OF THE ASSESSEE BEFORE THE ITA NO.4398/MUM/2013. SHRI VISHAL PRAKASH JADHAV 5 AUTHORITIES BELOW WAS THAT THE SAID CASH PAYMENTS W ERE AGAINST THE EXPENSES INCURRED ON HER BEHALF AND ADJUSTED AGAINST THE RENT PAID, SINCE THE LADY WAS A SENIOR CITIZEN AND WAS NOT ABL E TO LOOK AFTER HER DAY TO DAY TRANSACTION THROUGH BANK. HOWEVER, THE PERUSAL OF THE BANK ACCOUNT OF THE ASSESSEE REFLECTED THAT THE TOTAL CA SH WITHDRAWALS WERE TO THE TUNE OF RS.2,38,326/- ONLY. FURTHER WITHDRA WALS FROM THE BANK ACCOUNT WERE ON ACCOUNT OF HOUSE LOAN REPAYMENTS OF RS.59,441/- PER MONTH, PAYMENT OF OTHER LOANS, PAYMENT TOWARDS CRED IT CARD EXPENSES, MISCELLANEOUS EXPENSES ETC. THE ASSESSEE THOUGH HA D CLAIMED EXEMPTION U/S. 10(13A) OF THE ACT BUT HAD FAILED TO DISCHARGE THE ONUS PLACED ON HIM TO ESTABLISH THE SOURCE OF PAYMENT OF RENT IN CASH. IN THE ABSENCE OF THE SAME, THE ADDITION MADE BY THE A UTHORITIES BELOW U/S. 69C ON ACCOUNT OF UNEXPLAINED EXPENDITURE MERI TS TO BE UPHELD AGAINST THE ASSESSEE. 8. ANOTHER PLEA RAISED BY THE ASSESSEE WAS THAT IT HAD CLAIMED EXEMPTION ONLY TO THE EXTENT OF RS.8.52,000/- AND H ENCE THE ADDITION SHOULD BE RESTRICTED, TO THE SAME. WE FIND NO MERI T IN THE AFORESAID CLAIM OF THE ASSESSEE AS FIRST THE HOUSE RENT ALLOW ANCE PAID BY THE ASSESSEE AGAINST WHICH IT HAD WORKED OUT DEDUCTION U/S. 10(13A) WAS RS.11,40,000/- AND AS PER THE FORMULA, THE ASSESSEE WAS ENTITLED TO CLAIM DEDUCTION U/S. 10(13A) AT RS.8,52,000/-. FURT HER AS NOTED BY BOTH THE AUTHORITIES BELOW, THE EXPENDITURE SHOWN BY THE ASSESSEE WAS RS.11,40,000/- AND EVEN IN THE RECEIPT DECLARED BY HIS MOTHER-IN-LAW THE TOTAL AMOUNT WAS RS.11,40,000/- HENCE, THE ONUS WAS ON THE ASSESSEE TO EXPLAIN THE EXPENDITURE OF RS.11,40,000 /- IN CASH. IN THE ABSENCE OF ANY EXPLANATION FILED BY THE ASSESSEE, W E DISMISS THE ITA NO.4398/MUM/2013. SHRI VISHAL PRAKASH JADHAV 6 ALTERNATIVE PLEA MADE BY THE ASSESSEE. THUS, THE G ROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE DISMISSED. 9. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 31 ST DAY OF JULY, 2015. SD/- SD/- ( N K BILLAIYA ) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED : 31 ST JULY, 2015. SA COPY OF THE ORDER FORWARDED TO : BY ORDER, //TRUE COPY// ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT, MUMBAI. 4. CIT(A) - CONCERNED , MUMBAI 5. DR, ITAT, MUMBAI 6. GUARD FILE.