SHRI RAJINDER DHIR, JALANDHAR V. INCOME TAX OFFICER WARD-III(3), JALANDHAR

ITA 518/ASR/2017

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 7640 (ITAT-AMRITSAR)
• Duration Of Justice: 4 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 06-08-2017
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: MANPREET SINGH DUGGAL
• Keywords: Gift; Depreciation; Reasonable cause; Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (SMC) BEFORE SH. KUL BHARAT, JUDICIAL MEMBER I.T.A. No. 518/Asr/2017 Assessment Year: 2009-10 Rajinder Dhir, EM-106, Rasta Mohalla, Jalandhar [PAN: AAUPD 8949H] Vs. Income Tax Officer Ward- III(3), Jalandhar (Appellant) (Respondent) Appellant by : Sh. Nirmal Mahajan, CA Respondent by: Sh. Manpreet Singh Duggal, Sr, DR Date of Hearing: 13.06.2022 Date of Pronouncement: 14.06.2022 ORDER Per Kul Bharat, JM: This appeal by the assessee is directed against the order dated 02.05.2017, passed by the Ld. Commissioner of Income Tax (Appeals)-2, Jalandhar, pertaining to the Assessment Year 2009-10. 2. The assessee has raised the following grounds of appeal: “1. Learned CIT(Appeals)-2, Jalandhar is not justified & has erred in law in confirming an addition of Rs 240000/- on account of alleged unexplained expenditure on account of household expenses on irrelevant grounds & has failed to appreciate the facts and circumstances of the case. ITA No. 518/Asr/2017 Rajinder Dhir v. ITO 2 2. Learned CIT(Appeals)-2, Jalandhar is not justified in law in confirming the Gifts of Rs 5,50,000/- from relatives as undisclosed/unexplained income on irrelevant grounds and has failed to appreciate the facts and circumstances of the case. 3. Learned CIT(Appeals)-2, Jalandhar is now justified in law in confirming an addition of Rs 59775/-(l/5 th out of total of Advertisement Expenses, Travelling Expenses, Telephone Expenses, Petrol Expenses, Vehicle Repairs & Maintenance Expenses, Insurance Expenses Depreciation on Car & Depreciation on Scooter taken together) which is totally arbitrary & has failed to appreciate the facts and circumstances of the case.” 3. The present appeal is barred by 3 days, the assessee has filed an application seeking condonation of delay. Ld. counsel for the assessee reiterated the submission as made in the application. For the sake of clarity, the contents of the applications are reproduced as under: “1. That the order of CIT(A) in this case was served on the assessee on 05.06.2017. 2. That the appellant gave all the papers to his counsel CA Ravi D. Sharma (Since deceased) for filing the appeal. 3. The counsel sent the appeal through speed post on 02.08.2017 (Copy of forwarding letter and receipt enclosed. 4. That the documents got delayed during postal transit and appeal was delivered in the Office of Asstt. Registrar on 07.08.2017. 5 th of August and 6 th of August were Saturday and Sunday. 5. The appeal got late by one day. 4. The Ld. DR opposed the submission and submitted that no reasonable cause for condoning the delay has been stated, therefore, the appeal deserves to be rejected on this ground. 5. I have heard the rival submissions. For the reasons stated in the application. I am of the considered view that there was reasonable cause for delay hence, same is hereby condoned and the appeal is admitted for adjudication. ITA No. 518/Asr/2017 Rajinder Dhir v. ITO 3 6. The facts giving rise to the present appeal are that in this case, the assessee filed its return of Income tax on 30.09.2009 declaring total income at Rs.3,24,400/. The case was taken up for scrutiny and the assessment u/s 143(3) of the Income Tax Act, 1961 ‘herein after referred to as the Act’ was framed vide order dated 25.08.2011. By framing the assessment, the AO made addition regarding low household withdrawals of Rs. 2,40,000/- disallowance of gift of Rs.5,50,000/- and disallowance of expenditure on estimate basis of Rs.59,7775/-, thereby the Assessing Officer assessed total income at Rs.11,74,175/- against the declared an income of Rs. 3,24,400/-. 7. Aggrieved, against this the assessee carried the matter in appeal before the Ld. CIT(A) who after considering the submission dismissed the appeal. Now the assessee is in before this Tribunal. Ground no. 1 is against the addition made on account of low household withdrawals. Ld. counsel for the assessee submitted that the authorities below were not justified in making the addition. He contended that the Ld. CIT(A) and the Assessing Officer failed to appreciate the facts that the wife of the assessee was also making withdrawals and the amount so withdrawn jointly, was sufficient for meeting the monthly expenses of the family. He submitted that the authorities below made an addition on the basis of the whims and fancies without bringing any credible evidence on record that expenditure was incurred in addition to what was claimed by the assessee. The Ld. Departmental Representative opposed the submission and supported the order of the authorities below, he contended that the looking to the life style and the undisputed fact that the assessee was maintaining the car and held high status ITA No. 518/Asr/2017 Rajinder Dhir v. ITO 4 in society the amount as claimed by the assessee was not sufficient to meet the expenses. 8. Heard the rival contention and perused the material available on record. It is seen from the material placed on record that the family of the assessee as described in the chart constituted of self, wife and two sons who are studying in class 10 and 7 th respectively. It is also brought on record that the wife of assessee also self employed who is also assessed to income tax. The counsel for the assessee has drawn my attention to the certain expenses for running the family and a total expenditure is claimed at Rs.1,20,000/- for this purpose. 9. Looking to the fact that the wife of assessee who was also gainfully employed, therefore, the disallowance on account of low household withdrawals appears to be excessive and the same time the expenditure claimed by the assessee regarding withdrawal of Rs.1,20,000/- is also not in consonance with the life style being enjoyed by the assessee, therefore, the disallowance to extent of Rs.1,00,000/- is sustained and rest of the addition is deleted. This ground of assessee’s appeal is partly allowed. 10. Ground no. 2 is against confirming the addition regarding gifts from details. Ld. counsel for the assessee reiterated the submissions as made before the Ld. CIT(A) further submitted that the authorities below failed to appreciate the facts in the right perspective. It is submitted that the assessee has received gifts of Rs. 4,00,000/- and 1,50,000/- respectively from his relatives and he further submitted that the authorities below have failed to consider the evidences placed before him. The authorities have rejected the claim purely on the basis of that the confirmation given by the donors was a photocopy, however the assessee has also provided the other documentary evidences but without appreciating the evidences and giving ITA No. 518/Asr/2017 Rajinder Dhir v. ITO 5 adequate opportunity to explain, the authorities have rejected the claim of the assessee. 11. Per contra, the Ld. Departmental Representative strongly opposed the submissions and supported the orders of the authorities below. He contended that the assessee was required to prove the capacity of the donors to give gift and also genuineness of the transaction, he submitted that the assessee could not prove the creditworthiness of the donors. 12. I have heard the rival contentions and perused the material available on record. I find that the Assessing Officer has made addition on the basis that the explanation offered by the assessee did not inspire any confidence moreover, the assessee failed to prove the identity, creditworthiness and genuineness of the transaction. It is seen from the records that the assessee had given certain documents which proved the identity of the donors and also the relationship with the assessee. One of the reasons for not accepting the explanation was that the assessee provided photocopy of confirmation of gifts which did not disclosed names and addresses of the witnesses. Looking to the totality of the facts and submissions made at bar that the assessee was not given adequate opportunity to rebut the finding of the Assessing Officer. I am of the considered view that the tax- payer should be given adequate opportunity for explaining his case. The assessment proceedings cannot be concluded merely on the basis of suspicion and conjectures. Therefore, I set aside the impugned order and restore this issue to the file of the Assessing Officer to decide it afresh, considering the evidences supplied by the assessee and making the requisite inquiries from the donors of the gifts. The ground of the assessee’s appeal is allowed for statistical purposes. ITA No. 518/Asr/2017 Rajinder Dhir v. ITO 6 13. Ground no. 3.1 is against confirming an addition of Rs.59,775/- also an ad- hoc disallowance out of advertisement, Travelling, Telephone, Petrol, Vehicle Repairs & Maintenance, Insurance and Depreciation on Car expenses. Ld counsel for the assessee submitted that the Assessing Officer has made the addition on the basis of pure ad-hoc disallowances without pointing out any specific defect in the accounts supplied by the assessee. He submitted that all evidences were given to the Assessing Officer, the books of account were also produced for his examination. The Assessing Officer has not pointed out as which expenditure was not supported by the vouchers. He submitted even otherwise law is clear that no ad-hoc disallowance should be made. In support of this, the Ld. counsel for the assessee has placed the reliance on the decisions of the Tribunal in the case of ACIT v. M/s Modi Rubber Limited in ITA No. 1952/Del/2014. On the contrary, the Ld. Departmental Representative opposed the submissions and supported the orders of the authorities below. 14. I have heard the rival contentions that the Revenue has not pointed out any specific defects relating to the expenditure sought to be disallowed. Under the identical facts the Division Bench of this Tribunal in the case of ACIT v. M/s Modi Rubber Limited (supra) of para 3.6 is as under: “3.6 It is evident that in the instance case, disallowance has been made on ad-hoc basis without pointing out any defects in the books of accounts or vouchers maintained for these expenses, thus, respectfully following the finding of the Tribunal (supra), we uphold the finding of Ld. CIT(A) in deleting the disallowance of Rs.21,90,000/-. The ground of the appeal is accordingly dismissed.” Therefore, respectfully following the binding precedent I hereby direct the Assessing Officer to delete the disallowance, this ground of appeal is allowed. ITA No. 518/Asr/2017 Rajinder Dhir v. ITO 7 15. In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 14.06.2022 Sd/- (Kul Bharat) Judicial Member Date: 14.06.2022 *GP/Sr. PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(A), (4) The CIT concerned (5) The Sr. DR, I.T.A.T (6) The Guard File True Copy By Order