JITENDRA NAVNITRAI MEHTA, MUMBAI V. DCIT CEN CIR 44, MUMBAI

ITA 6198/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0955 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2007-2008
• Appeal Filed On: 30-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEV DUTT
• Keywords: Search and seizure
• Section: 153A; 139(1); 132; 6

Judgement Text

1 ITA NOS.6192 TO 6198/MUM/2009 JITNDRA NAVNITRAI METHA IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I MUMBAI BEFORE SHRI R S PADVEKAR, JM & SHRI RAJENDRA SINGH, AM ITA NOS.6192 TO 6198/MUM/2009 (ASST YEARS 2001-02 TO 2007-08 ) JITNDRA NAVNITRAI METHA 2601 SHIVTAPI BLDG HARISHCHANDRA GOREGA.ONKAR MARG MUMBAI 400 007 VS THE DY COMMR OF INCOME TAX CEN.CIR 44 MUMBAI 20 (APPELLANT) (RESPONDENT) PAN AALPM3745P ASSESSEE BY: SHRI VIJAY MEHTA REVENUE BY: SHRI SANJEV DUTT, CIT(DR) O R D E R PER BENCH: IN THIS BUNCH OF APPEALS, WHICH ARE FILED BY THE AS SESSEE, THE IMPUGNED COMMON ORDER OF THE LD CIT(A)-38, MUMBAI F OR THE ASSESSMENT YEARS 2001-02 TO 2007-08 DATED 23.10.2009 IS CHALLE NGED. 2 THE SHORT AND COMMON CONTROVERSY IN ALL THESE APP EALS IS IN RESPECT OF THE ADDITIONS MADE BY THE A.O IN EACH ASSESSMENT YE ARS OF RS. 3 LACS ON THE REASON OF LOW PERSONAL WITHDRAWALS. 3 THE FACTUAL MATRIX, WHICH REVEALS FROM RECORDS IS THAT A SEARCH AND SEIZURE ACTION U/S 132 WAS CARRIED OUT IN THE CASE OF M/S ROHAN DEVELOPERS PVT LTD AND THE DIRECTOR OF THE SAID COMPANY. IN C ONSEQUENCE OF THE SEARCH 2 ITA NOS.6192 TO 6198/MUM/2009 JITNDRA NAVNITRAI METHA ACTION, NOTICES U/S 153A WERE ISSUED TO THE ASSESSE E REQUIRING HIM TO FILE THE RETURNS IN ALL THESE ASSESSMENT YEARS AND IN RE SPONSE TO THE NOTICES ISSUED BY THE A.O, THE ASSESSEE FILED RETURN OF INC OME DECLARING THE INCOME WHICH WAS DECLARED IN THE ORIGINAL RETURNS FILED U/ S 139(1) OF THE ACT. THE TOTAL INCOME DECLARED BY THE ASSESSEE IN THE RETURN S WHICH WERE FILED IN RESPONSE TO NOTICES U/S 153A WAS ACCEPTED, SAVE THE ADDITIONS ON ACCOUNT OF LOW PERSONAL WITHDRAWALS. 3.1 FOR THE SAKE OF CONVENIENCE, THE CHART SHOWING THE INCOME DECLARED BY THE ASSESSEE IN THE RESPECTIVE ASSESSMENT YEARS, THE ADDITION MADE AND THE TOTAL INCOME DETERMINED IS AS UNDER: ASST YEAR INCOME DECLARED BY THE ASSESSEE ADDITION MADE BY THE A.O TOTAL INCOME DETERMINED 2001-02 1,24,801/- RS. 3 LACS 1,24,801/- 2002-03 2,57,262/- RS. 3 LACS 2,57,262/- 2003-04 2,07,322/- RS. 3 LACS 2,07,322/- 2004 - 05 1,76,630/ - RS. 3 LACS 1,76,630/ - 2005-06 3,99,467/- RS. 3 LACS 3,99,467/- 2006-07 11,04,570/- RS. 3 LACS 11,04,570/ - 2007-08 22,44,280/- RS. 3 LACS 22,44,280/ - 3.2 THE ADDITION IS ONLY ON ACCOUNT OF LOW PERSONAL WITHDRAWALS IN ALL THESE ASSESSMENT YEARS. THE A.O HAS NOTED THAT THE ASSESSEE AND HIS FAMILY MEMBERS HAVE NOT SHOWN ANY WITHDRAWALS IN THEIR HOU SE HOLD EXPENSES IN A.YS 2001-02 TO 2004-05 AND IN THE A.YS 2005-06 TO 2007-08, THE WITHDRAWALS SHOWN ARE VERY LOW I.E. RS. 60,000/- TO 1,40,000/- PER ANNUM. 3.3 THE A.O HAS ALSO STATED THAT THE ASSESSEE FAMIL Y OWNS 5 CARS LIKE MERCEDEZ, SKODA OCTAVIA, MITSUBISH LANCER, OPTRA AN D MARUTI SUZUKI ETC. 3 ITA NOS.6192 TO 6198/MUM/2009 JITNDRA NAVNITRAI METHA THE A.O HAS ALSO NOTED THAT THE FAMILY OWN A LARGE NUMBER OF VERY EXPENSIVE RACE HORSES WHICH CONFIRMS THEIR STATUS OF BEING SO CIAL ELITE. IN THE OPINION OF THE A.O CONSIDERING THE STATUS OF THE ASSESSEE A ND HIS FAMILY, MINIMUM RS. 3 LACS PER ANNUM SHOULD BE TREATED AS HIS HOUSE HOLD EXPENSES. 3.4 THE ASSESSEE VOLUNTARILY OFFERED THE FOLLOWING AMOUNTS FOR ACCEPTING THE LOWER WITHDRAWALS: ASST YEAR AMOUNT 2001-02 RS. 90,000/- 2002-03 RS. 1,20,000/- 2003-04 RS. 1,20,000/- 2004-05 RS. 1,50,000/- 3.5 THE A.O FINALLY MADE THE ABOVE ADDITION OF RS. 3 LAC TO THE INCOME OF THE ASSESSEE TOWARDS LOW PERSONAL WITHDRAWALS IN EA CH OF THESE ASSESSMENT YEARS, REJECTING THE AMOUNT OFFERED BY THE ASSESSEE . THE ASSESSEE CHALLENGED THE ADDITIONS BEFORE THE LD CIT(A); BUT WITHOUT SUCCESS AS THE ADDITIONS WERE CONFIRMED. NOW, THE ASSESSEE IS IN A PPEAL BEFORE US. 4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERU SED THE RELEVANT RECORDS. THE LD COUNSEL FOR THE ASSESSEE FILED A C HART SHOWING THE PERSONAL EXPENSES OF THE ASSESSEE AND HIS FAMILY MEMBERS. A S PER THE CHART, IN THE ASSESSMENT YEAR 2001-02, THE TOTAL EXPENDITURE OF T HE FAMILY IS CLAIMED AT RS. 2,94,494/-; FOR THE ASSESSMENT YR 2002-03 IT IS RS.6,18,226/-; FOR THE ASSESSMENT YR 2003-04 IT IS RS.1,60,610/-; FOR THE ASSESSMENT YR 2004-05 IT IS RS.3,54,525/-; FOR THE ASSESSMENT YR 2005-06 IT IS RS.40,91,984/; FOR THE ASSESSMENT YR 2006-07 IT IS RS.25,45,418/- AND FOR THE ASSESSMENT YR 2007-08 IT IS RS.35,72,710/- 4 ITA NOS.6192 TO 6198/MUM/2009 JITNDRA NAVNITRAI METHA 4.1 THE LD COUNSEL FOR THE ASSESSEE ARGUES THAT THE ASSESSEE IS A DIRECTOR IN THE COMPANY AND IT IS NOT CORRECT THAT THE CARS ARE OWN EITHER BY THE ASSESSEE OR HIS FAMILY MEMBERS. IT IS FURTHER ARGU ED THAT ALL THE EXPENSES OF THE CARS ARE INCURRED BY THE COMPANY AND NOT BY THE ASSESSEE. HE FURTHER, EXPLAINED THAT THE RACE HORSES REFERRED TO IN THE A SSESSMENT ORDER IS PART OF ASSESEES BUSINESS AND THE ASSESSEE IS NOT THE OWNE R OF THE SAID HORSES. HE FURTHER ARGUES THAT NOTHING WAS FOUND DURING THE CO URSE OF SEARCH AND EVEN IN THE STATEMENT RECORDED U/S 132(4), NO QUESTION W AS PUT TO THE ASSESSEE AND THE ORIGINAL RETURNS ARE FILED U/S 139(1) OF TH E ACT AND THE A.O HAS NOT DISTURBED THE INCOME DECLARED BY THE ASSESSEE IN TH E RETURNS FILED IN RESPONSE TO THE NOTICES ISSUED U/S 153A EXCEPT THE ADDITION OF RS.3 LACS FOR ALLEGED LOW PERSONAL WITHDRAWALS. HE VEHEMENTLY SU BMITS THAT IT IS WELL SETTLED PRINCIPLE THAT UNLESS SOME EVIDENCE IS FOUN D AGAINST THE ASSESSEE DURING THE COURSE OF SEARCH, NO ADDITION CAN BE MAD E AS THE PURPOSE OF SECTION 153A IS TO ASSESS THE UNDISCLOSED INCOME WH ICH WAS FOUND IN CONSEQUENCE OF THE EVIDENCES GATHERED DURING THE CO URSE OF SEARCH. IT IS ARGUED THAT NO GUESS WORK IS PERMISSIBLE IN SEARCH CASES AND ALL ADDITIONS ARE MADE BY THE A.O ON THE GENERAL OBSERVATION AND GUESS WORK. HE, THEREFORE, PLEADED THAT THE ADDITIONS MADE IN ALL T HESE ASSESSMENT YEARS MAY BE DELETED. 4.2 HE FURTHER ARGUES THAT THOUGH AS PER WELL SETTL ED PRINCIPLES, NO ADDITION CAN BE SUSTAINED ON MERIT BUT JUST TO BUY PEACE, THE ASSESSEE OFFERED REASONABLE AMOUNT AS THERE WAS NO CASH WITH DRAWALS IN THE A.Y 2001-02 TO 2004-05 BUT THE SAME WERE NOT ACCEPTED. HE FURTHER SUBMITS THAT TO BUY PEACE SOME REASONABLE ESTIMATION MAY BE MADE IN THE FIRST FOUR ASSESSMENT YEARS I.E. A.YS 2001-02 TO 2004-05 AND T HE ADDITION MADE IN THE A.YS 2005-06 TO 2007-08 MAY BE DELETED AS THE ASSES SEE AND HIS FAMILY MEMBERS HAVE SHOWN SUBSTANTIAL WITHDRAWALS. 5 ITA NOS.6192 TO 6198/MUM/2009 JITNDRA NAVNITRAI METHA 4.3 PER CONTRA, THE LD DR SUPPORTED THE ORDERS OF T HE AUTHORITIES BELOW. 5 ON PERUSAL OF THE ASSESSMENT ORDERS, IT IS SEEN T HAT THE A.O HAS ACCEPTED THE INCOME DECLARED BY THE ASSESSEE IN THE RETURNS FILED IN RESPONSE TO NOTICES U/S 153A. ONLY THE ADDITION IS ON ACCOUNT OF LOW WITHDRAWALS. ADMITTEDLY, NO INCRIMINATING EVIDENCE S OR MATERIAL WAS FOUND AGAINST THE ASSESSEE. MOREOVER, THE A.O HAS CONSIDE RED THE ENTIRE FAMILY AS SUCH FOR DECIDING QUANTUM OF WITHDRAWALS WHICH CONS IST OF OTHER BROTHERS AND HUF OF THE ASSESSEE. THOUGH GENERAL OBSERVATION S ARE MADE BY THE A.O IN RESPECT OF OWNING OF THE CARS AND HORSES ETC., B UT NO FURTHER DETAILS ARE NARRATED. 5.1 AT THE TIME OF HEARING OF THESE APPEALS, THE LD COUNSEL FOR THE ASSESSEE STATED THAT ALL THE CARS ARE OWNED BY THE ASSESSEE COMPANY AND NOT BY THE ASSESSEE. MOREOVER, REFERENCE TO THE RACE HORSES IS ALSO IN RESPECT OF THE ACTIVITIES OF THE ASSESSEE FAMILY. NOTHING IS THER E ON RECORD TO SHOW THAT WHETHER ANY EXPLANATION WAS SOUGHT FROM THE ASSESSE E IN THE STATEMENT OF THE ASSESSEE RECORDED U/S 132(4). AT THE SAME TIME , IT IS SEEN THAT THE ASSESSEE AND HIS FAMILY MEMBERS HAVE NOT SHOWN ANY CASH WITHDRAWALS IN A.YS 2001-02 TO 2004-05 AND THIS FACT HAS BEEN ACCE PTED BY THE LD COUNSEL. THE ASSESSEE HAS ALREADY OFFERED AMOUNT FOR LOW WIT HDRAWAL WHICH IS MENTIONED HEREIN ABOVE, BUT THE A.O MADE THE LUMP S UM ADDITION OF RS. 3 LACS ON ONLY AD HOC BASIS. THE LD COUNSEL FOR THE A SSESSEE HAS ALSO SUBMITTED THAT FOR BUYING PEACE, SOME REASONABLE ES TIMATION MAY BE MADE. WE, THEREFORE, DIRECT THE A.O TO RESTRICT THE ADDIT ION FOR LOW WITHDRAWALS AS UNDER: ASST YEAR ADDITION SUSTAINED 2001-02 RS. 1.50 LACS 2002 - 03 RS. 1.50 LACS 2003-04 RS. 2.00 LACS 2004-05 RS. 2.00 LACS 6 ITA NOS.6192 TO 6198/MUM/2009 JITNDRA NAVNITRAI METHA 6 SO FAR AS THE ASSESSMENT YEARS 2005-06 TO 2007-08 ARE CONCERNED, THE ASSESSEE AND HIS FAMILY HAVE SHOWN SUBSTANTIAL WITHDRAWALS AS PER THE CHART FILED BEFORE US I.E. RS. 20,24,582/-; RS.25, 45,418/- AND RS. 35,72,710/- RESPECTIVELY. HENCE, IN OUR OPINION, N O ADDITION TOWARDS LOW CASH WITHDRAWALS IS REQUIRED TO BE MADE IN THOSE TH REE YEARS. WE, THEREFORE, DELETE THE ADDITION MADE BY THE A.O FOR LOW CASH WI THDRAWALS IN THE A.YS 2005-06 TO 2007-08. 7 IN THE ABOVE TERMS ALL THE GROUNDS RAISED BY THE ASSESSEE ARE DISPOSED OFF. 8 IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE FOR THE A.YS 2001-02 TO 2004-05 ARE PARTLY ALLOWED AND THE APPEALS FOR A.YS 2005-06 TO 2007-08 ARE ALLOWED. ORDER PRONOUNCED ON THE 30TH DAY OF JULY 2010. SD/- SD/- ( RAJENDRA SINGH ) ACCOUNTANT MEMBER (R S PADVEKAR ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 30 TH JULY 2010 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI