Dinesh Kumar Kaushal, Faridabad V. ACIT, New Delhi

ITA 6053/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97574 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-10-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 07-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NANDITA KANCHAN
• Assessee Lawyers: A K BABBAR
• Keywords: Principle of natural justice; Initiation of penalty proceedings
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B : NEW DELHI) BEFORE SHRI A.T. VARKEY, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.6053/DEL./2013 (ASSESSMENT YEAR : 2010-11) SHRI DINESH KUMAR KAUSHAL, VS. ACIT, CC 11, HOUSE NO.34, SECTOR 11-D, NEW DELHI. FARIDABAD (HARYANA) (PAN : AABCD8853C) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI A.K. BABBAR, ADVOCATE REVENUE BY : MS. NANDITA KANCHAN, CIT DR DATE OF HEARING : 14.10.2015 DATE OF PRONOUNCEMENT : 21.10.2015 O R D E R PER A.T. VARKEY, JUDICIAL MEMBER : THIS APPEAL, AT THE INSTANCE OF THE ASSESSEE, IS DI RECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-X XXI, NEW DELHI DATED 16.08.2013 FOR THE ASSESSMENT YEAR 2010-11. 2. CONSEQUENT UPON A SEARCH & SEIZURE OPERATION ON TULIP GROUP CARRIED OUT ON 24TH & 25 TH SEPTEMBER, 2009, A NOTICE UNDER SECTION 142(1) OF THE INCOME-TAX ACT, 1961 WAS ISSUED AND SERVED U PON THE ASSESSEE FIRM ON 11.07.2011. IN COMPLIANCE TO THE ABOVE NOTICE, ASSESSEE SUBMITTED RETURN OF INCOME DECLARING INCOME OF RS.76,39,871/- ON 20.10.2011. THE ITA NO.6053/DEL./2013 2 AO ISSUED A QUESTIONNAIRE CALLING FOR INFORMATION U NDER SECTION 142(1) OF THE ACT ALONG WITH NOTICE UNDER SECTION 143(2) ON 2 0.10.2011. THE AO ASKED THE ASSESSEE TO EXPLAIN THE HOUSEHOLD EXPENSE S INCURRED BY HIM DURING THE RELEVANT ASSESSMENT YEAR. THE AO, AFTER PERUSAL OF THE REPLY OF THE ASSESSEE, WAS OF THE OPINION THAT THE HOUSEHOLD EXPENSES CLAIMED BY HIM WAS NOT SUFFICIENT TO MEET OUT THE DAY-TO-DAY R EQUIREMENTS OF THE ASSESSEE AND ACCORDING TO HIM, THE AMOUNT CLAIMED B Y THE ASSESSEE WAS CONSIDERED LOW. THE AO FURTHER OBSERVED THAT THE AS SESSEE HAD NOT BEEN ABLE TO PRODUCE ANY DETAILS IN RESPECT OF TELEPHONE & ELECTRICITY BILLS AND OTHER EXPENSES. THE AO OBSERVED THAT BEING HEAD OF THE FAMILY, THE ASSESSEE WAS RESPONSIBLE FOR INCURRING HOUSEHOLD EX PENSE AND HAD TO MEET THE REQUIREMENTS OF THE FAMILY. THEREFORE, THE AO H ELD THAT HOUSEHOLD WITHDRAWALS BY THE ASSESSEE WERE ON LOWER SIDE AND AS SUCH, HE MADE AN ADDITION OF RS.4 LACS IN THE INCOME OF THE ASSESSEE ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWALS. ACCORDINGLY, THE AO ASSESSE D THE INCOME AFTER MAKING THE ADDITION OF RS.4 LACS AT RS.80,39,871/-. 3. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE T HE FIRST APPELLATE AUTHORITY AND THE LD. CIT (A) DECIDED THE APPEAL EX -PARTE AND UPHELD THE ORDER OF THE AO AS UNDER :- '3.4 ALL THE GROUNDS RELATE TO THE ONLY ADDITION BE ING ON ACCOUNT OF LOW WITHDRAWALS TOWARDS HOUSEHOLD EXPENS ES. THE APPELLANT HAD NOT EXPLAINED BEFORE THE AO THE E XPENSES RELATING TO TELEPHONE AND ELECTRICITY. I DO NOT FIN D ANY DEMERITS IN THE ADDITION. THE STATEMENT OF FACTS FI LED WITH ITA NO.6053/DEL./2013 3 FORM NO. 35 ALSO DOES NOT GIVE ANY CONTRARY FACTS. HENCE THE ADDITION MADE BY THE AO IS CONFIRMED. THE GROUN D IS REJECTED.' 4. THE ASSESSEE, BEING AGGRIEVED, IS IN APPEAL BEFO RE US AND HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL :- (A) THE IMPUGNED ORDER PASSED BY CIT (APPEAL) CONFIRMING THE ORDER OF AO IS WRONG ON FACTS AND ER RONEOUS ON POINT OF LAW. (B) THE IMPUGNED ORDER DISMISSING THE APPEAL EXPAR TE IS IN VIOLATION OF PRINCIPLE OF NATURAL JUSTICE AS THE ALLEGED NOTICES DATED 10.04.2013 AND 12.07.2013 ARE ONLY IS SUED AND THERE IS NOT AN IOTA OF FACT ABOUT SERVICE OF NOTIC ES. LAW REQUIRES SERVICE OF NOTICE BEFORE PROCEEDINGS EX-PA RTE. THE ORDER PASSED BY CIT (APPEAL) IS SILENT ON SERVICE O F NOTICE. THERE IS DIFFERENCE BETWEEN ISSUANCE OF NOTICE AND SERVICE OF NOTICE. NO REAL OPPORTUNITY OF HEARING WAS PROVIDED AS NO NOTICE AS ALLEGED IN IMPUGNED ORDER HAD BEEN RECEIV ED BY ASSESSEE. (C) THAT THE LD. CIT (APPEAL) HAD ERRED IN LAW IN UPHOLDING ADDITION OF RS.4 LACS ON A GROUND OF LOW HOUSE HOLD WITHDRAWAL WHICH HAD BEEN MADE BY AO BY PURELY GUESS WORK. NO SPECIFIC REASON / DOCUMENTS OR ENQUI RY REPORT WAS BROUGHT ON RECORD BY AO WHILE ENHANCING THE INCOME BY RS.4.00 LAKHS ON GROUND OF LOW HOUSE HOLD WITHDRAWAL. (D) THE LD. CIT (APPEAL) ERRED IN LAW IS NOT APPRE CIATING THE FACT THE ASSESSEE DURING ASSESSMENT PROCEEDINGS HAD PROVIDED A DETAILED NOTE ON HOUSE HOLD EXPENSES AND ITS SOURCES BUT THE SAME WAS NOT CONSIDERED BY AO AS WE LL AS CIT (APPEAL). APEX COURT IN CASE OF C. VELUKUTY CAS E REPORTED AS 17 STC, P-465 HAD HELD: - 'THE LIMITS OF THE POWER ARE IMPLICIT IN THE EXPRES SION 'BEST JUDGMENT'. JUDGMENT IS A FACULTY TO DECIDE MATTERS WITH WISDOM, TRULY AND LEGALLY. JUDGMENT ITA NO.6053/DEL./2013 4 DOES NOT DEPEND UPON THE ARBITRARY CAPRICE OF A JUD GE, BUT ON A SETTLED AND INVARIABLE PRINCIPLE OF JUSTIC E. THOUGH THERE IS AN ELEMENT OF A GUESS-WORK IN A 'BE ST JUDGMENT ASSESSMENT' YET IT SHALL NOT BE A WILD ON E BUT SHALL HAVE A REASONABLE NEXUS TO THE AVAILABLE MATERIAL AND THE CIRCUMSTANCES OF THE CASE. THE ASSESSING AUTHORITY SHOULD NOT BE VINDICTIVE WHILE MAKING 'BEST JUDGMENT ASSESSMENT. THE IMPUGNED ORDER UPHOLDING ORDER OF ASSESSING AUTHORITY IS IN COMPLETE VIOLATION OF ABOVE PRINCIP LES OF LAW AS THERE WAS NO MATERIAL BEFORE AO. TO TREAT THE HO USE HOLD WITHDRAWAL LOW. (E) INITIATION OF PENALTY PROCEEDINGS DULY CONFIRM BY CIT (APPEALS) IN IMPUGNED ORDER IS ALSO ILLEGAL AND WIT HOUT AUTHORITY OF LAW. (F) THE ASSESSEE RESERVES HIS RIGHT TO RAISED ADDIT IONAL GROUND EITHER BEFORE OR AT TIME OF HEARING OF APPEA L. 5. GROUNDS NO.(A) & (F) ARE GENERAL IN NATURE AND D O NOT REQUIRE ANY ADJUDICATION. GROUND NO.(E), WHICH IS REGARDING IN ITIATION OF PENALTY PROCEEDINGS, IS PREMATURE, HENCE REQUIRES NO ADJUDI CATION. 6. GROUNDS NO.(B) TO (D) ARE AGAINST DISMISSING THE APPEAL OF THE ASSESSEE EX-PARTE BY LD. CIT(A) AND UPHOLDING THE ADDITION OF RS.4 LAKHS ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWAL BY THE LD. C IT (A). 7. LD. AR SUBMITTED THAT THE ASSESSEE FILED A DETAI LED NOTE ON HOUSEHOLD EXPENSES AND ITS SOURCES BUT THE SAME WAS NOT CONSIDERED BY THE AO AS WELL AS CIT (A). FOR THE SAKE OF CLARITY, WE REPRODUCE THE NOTE ON ITA NO.6053/DEL./2013 5 HOUSEHOLD DRAWINGS SUBMITTED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES:- DRAWING DETAIL FOR FAMILY EXPENSES DRAWING DETAIL FOR FAMILY MEMBERS SL. PARTICULARS AMOUNT NO. 1. CASH FROM MRS. SUDESH KAUSHAL 71800 2. EXPENSES PAID BY MR. DINESH 388214 KAUSHAL 3. CASH FROM MRS. CHANDRIKA KAUSHAL 25000 TOTAL 485014 THE ASSESSEE FAMILY CONSISTS OF HIS MOTHER, WIFE AN D TWO SMALL KIDS. THE TOTAL WITHDRAWING OF RS.4,85,014/ - FOR MEETING THE HOUSEHOLD EXPENSES CONSISTS OF RS.96,80 0/- IN CASH AND RS.3,88,214/- IN CHEQUE FOR VARIOUS PAYME NT LIKE SCHOOL FEES, ELECTRICITY, WATER EXPENSES AND TELEPH ONE EXPENSES. THE ASSESSEE LIVES IN JOINT FAMILY AND LE ADS A SIMPLE LIFE WITH NO MEMBERSHIP OF ANY CLUB. CONSIDERING TH E SIZE AND NATURE OF LIVING THE TOTAL HOUSEHOLD DRAWING OF RS. 4,85,014/ ARE JUSTIFIED FOR THE RUNNING THE HOUSEHOLD' LD. AR SUBMITTED THAT THE ASSESSEE PRODUCED THE DRA WING DETAILS REGARDING THE EXPENSES MADE ON ACCOUNT OF HOUSEHOLD EXPENSES BEFORE THE LOWER AUTHORITIES. HE SUBMITTED THAT THE AO MADE THE ADD ITION ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWAL PURELY ON GUESS WORK AND NO SP ECIFIC REASON / DOCUMENTS OR ENQUIRY REPORT WAS BROUGHT ON RECORD B Y THE AO WHILE ENHANCING THE INCOME BY RS.4 LAKHS. IN THIS REGAR D, LD. AR RELIED ON THE JUDGMENT OF THE HONBLE APEX COURT IN CASE OF C. VE LUKUTY REPORTED AS 17 STC, P-465, WHEREIN THE HONBLE COURT HAS HAD HELD AS UNDER :- ITA NO.6053/DEL./2013 6 'THE LIMITS OF THE POWER ARE IMPLICIT IN THE EXPRES SION 'BEST JUDGMENT'. JUDGMENT IS A FACULTY TO DECIDE MATTERS WITH WISDOM, TRULY AND LEGALLY. JUDGMENT DOES NOT DEPEND UPON THE ARBITRARY CAPRICE OF A JUDGE, BUT ON A SETTLED AND INVARIABLE PRINCIPLE OF JUSTICE. THOUGH THERE IS AN ELEMENT OF A GUESS-WORK IN A 'BEST JUDGMENT ASSESSMENT' YET I T SHALL NOT BE A WILD ONE BUT SHALL HAVE A REASONABLE NEXUS TO THE AVAILABLE MATERIAL AND THE CIRCUMSTANCES OF THE CAS E. THE ASSESSING AUTHORITY SHOULD NOT BE VINDICTIVE WHILE MAKING 'BEST JUDGMENT ASSESSMENT. LD. AR SUBMITTED THAT THE LD. CIT (A) COMPLETELY IG NORED THE FACT THAT THERE WAS NO MATERIAL BEFORE THE AO TO TREAT THE HO USEHOLD WITHDRAWAL LOW AND SO THE ADDITION CONFIRMED BY THE LD. CIT(A) WIT HOUT HEARING THE ASSESSEE IS BAD IN LAW. IN THIS VIEW OF THE MATTER , HE PRAYED THAT THE ORDERS OF THE LOWERS AUTHORITIES BE SET ASIDE AND THE ADDI TION BE DELETED. 8. ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS O F THE AUTHORITIES BELOW. 9. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD. WE FIND THAT THE DETAILS OF WITHDRAWALS FOR MEETING THE HOUSEHOLD EXPENSES WERE SUBMITTED BEFORE THE LOWER AUTHORITIES BY THE ASSESSEE, HOWEVER, THE SAME WERE JUST BRUSHED ASIDE AND AD-HOC ADDITION OF RS.4 LAKHS WAS ORDERED BY THE AO. WE TAKE NOTE THAT THE AO HAS MA DE THE ADDITION ON ACCOUNT OF LOW HOUSEHOLD EXPENSES WITHOUT ANY MATER IAL BEFORE HIM AND THE IMPUGNED ADDITION IS A PRODUCT OF PURE GUESSWOR K AND CAN BE SAFELY INFERRED THAT THE IMPUGNED ADDITION IS NOT BASED ON ANY SPECIFIC VALID REASON OR DOCUMENTS OR ENQUIRY REPORT BROUGHT ON RE CORD. WE TAKE NOTE ITA NO.6053/DEL./2013 7 THAT IN THE AFORESAID CASE LAW RELIED UPON BY THE L D. AR, THE HONBLE APEX COURT HELD THAT, THOUGH THERE IS AN ELEMENT OF A GUESS-WORK IN A 'B EST JUDGMENT ASSESSMENT' YET IT SHALL NOT BE A WILD ON E BUT SHALL HAVE A REASONABLE NEXUS TO THE AVAILABLE MATERIAL AND THE CIRCUMSTANCES OF THE CASE. THE ASSESSING AUTHORITY SHOULD NOT BE VINDICT IVE WHILE MAKING 'BEST JUDGMENT ASSESSMENT . IN THE AFORESAID FACTS AND CIRCUMSTANCES, WE FIN D THAT THE LD. CIT (A) HAS ERRED TO SUSTAIN THE IMPUG NED ADDITION WITHOUT ANY MATERIAL ON RECORD TO JUSTIFY THE LOW HOUSEHOLD EXP ENSE. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THAT THE LD. CIT (A) E RRED IN UPHOLDING THE ADDITION MADE BY THE AO ON ACCOUNT OF LOW HOUSEHOLD EXPENSES AND ACCORDINGLY, WE DELETE THE ADDITION AND ALLOW THE G ROUNDS NO.(B) TO (D) RAISED BY THE ASSESSEE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 21 ST DAY OF OCTOBER, 2015. SD/- SD/- (PRASHANT MAHARISHI) (A.T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 21 ST DAY OF OCTOBER, 2015 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXXI, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI