ASHWIN S. MEHTA, MUMBAI V. DCIT CEN CIR 23, MUMBAI

ITA 6596/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4100 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 11-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR P DANIEL
• Keywords: Rejection of books of accounts; Depreciation; Income from undisclosed sources; Opportunity of being heard; Earning of tax free income; Source of fund
• Section: 69C; 143(3); 14A; 11

Judgement Text

ASHWIN S MEHTA I TA NO. 6596 /MUM/2013 ITA NO. 6597/MUM/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI , , BEFORE SHRI AMIT SHUKLA , JUDICIAL MEMBER AND SHRI RAMIT KOCHAR , ACCOUNTAN T MEMBER ITA NO. : 6 5 96 /MUM/20 1 3 (ASSESSMENT YEAR: 200 6 - 0 7 ) ITA NO. : 6597/MUM/2013 (ASSESSMENT YEAR: 2007 - 08 ) ASHWIN S MEHTA , 32 MADHULI DR. A B ROAD, WORLI, MUMBAI - 400 019 .: PAN: AB APM 2121 M VS DCIT CEN CIR. 23, AAYAKAR BHAVAN, M K ROAD , MUMBAI - 400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DHARMESH SHAH RESPONDENT BY : DR . P DANIEL /DATE OF HEARING : 20 - 0 1 - 201 6 / DATE OF PRONOU NCEMENT : 18 - 0 4 - 201 6 ORDER : . . : PER AMIT SHUKLA , JM : THE AFORESAID APPEAL S HAVE BEEN FILED BY THE ASSESSEE AGAINST SEPARATE IMPUGNED ORDER S DATE D 1 7 . 0 9 .201 3 AND 12.09.2013 , PASSED BY CIT(A) - 37 MUMBAI , FOR THE QUANT UM OF ASSESSMENT PASSED UNDER SECTION 143(3) R.W.S. 147 FOR THE ASSESSMENT YEAR 2006 - 07 AND 2007 - 08 RESPECTIVELY. SINCE ISSUES INVOLVED IN BOTH THE APPEALS ARE COMMON , THEREFORE, SAME WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS CONSOLIDAT ED ORDER. 2. WE WILL FIRST TAKE - UP APPEAL FOR ASSESSMENT YEAR 2006 - 07, VIDE WHICH FOLLOWING GROUNDS HAVE BEEN RAISED: - ASHWIN S MEHTA I TA NO. 6596 /MUM/2013 ITA NO. 6597/MUM/2013 2 FOLLOWING GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER: 1 . THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT AS PER THE DE CISION OF THE HONBLE SPECIAL COURT DATED 30.04.2010 IN MP NO.41 OF 1999, THE ASSETS UNDER CONSIDERATION AND THE CONSEQUENT INCOME BELONGS TO SHRI HARSHAD S MEHTA AND HENCE THE INCOME ASSESSED BY THE ASSESSING OFFICER OUGHT TO HAVE BEEN TAXED IN THE HANDS OF SHRI HARSHAD S MEHTA AND NOT IN THE HANDS OF THE APPELLANT. 2 . THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND FACTS IN NOT APPRECIATING THAT THE REJECTION OF BOOKS OF ACCOUNTS OF THE APPELLANT WAS INCORRECT AND UNJUS TIFIED. 3 . THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW IN CONFIRMING THE DISALLOWANCE OF INTEREST EXPENDITURE AMOUNTING TO RS.3,71,710. 4 . THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE FOLLOWING EXPENSES CLAIMED BY THE APPELLANT: ( A ) DEPRECIATION OF RS.8,470/ - ( B ) APPEAL FILING FEES OF RS.33,270/ - ( C ) PROFESSIONAL FEES OF RS.21,37,853/ - ( D ) REPAIR & MAINTENANCE CHARGES OF RS.52,600/ - ( E ) BANK CHARGES OF RS.3,644/ - . 5 . THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ADDITION ON ACCOUNT OF PERSONAL HOUSEHOLD EXPENSES OF RS.6,00,000/ - . 3. AT THE OUTSET, THE LD. COUNSEL SUBMITTED THAT, GROUND NO.1 IS NOT PRESSED, ACCORDINGLY, GROUND NO.1 IS TREATED AS DISMISSED AS NOT PRE SSED. 4. SO FAR AS THE ISSUE RELATING TO GROUND NO.2 & 3 US CONCERNED , IT HAS BEEN SUBMITTED THAT THE TRIBUNAL IN THE CASE OF PRATIMA MEHTA AND OTHER SIMILAR CASES OF THE ASSESSEES FAMILY/GROUP HAS RESTORED TH IS MATTER BACK TO THE FILE OF THE CIT(A) TO EXAMINE THE BOOKS OF ACCOUNT OF THE ASSESSEE AND DECIDE THE ISSUE AFRESH. EVEN THE LD. CIT(A) HAS FOLLOWED THE APPELLATE ORDER OF PRATIMA MEHTA. 5. T HE LD. SPECIAL , COUNSEL DR. P DANIEL, SUBMITTED THAT, REVENUES CASE HAS BEEN THAT, ASSESSEE HAS NOT BROU GHT ANY ASHWIN S MEHTA I TA NO. 6596 /MUM/2013 ITA NO. 6597/MUM/2013 3 EVIDENCE ON RECORD WITH REGARD TO ANY SANCTITY OF BOOKS OF ACCOUNT IN ABSENCE OF COMMUNICATION WITH THE CUSTODIAN OR ANY ORDER FROM THE HONBLE SPECIAL COURT THAT THE BOOKS OF ACCOUNT ARE GENUINELY MADE. HOWEVER, HE ADMITTED THAT THE TRIBUNAL IN TH E OTHER MATTERS OF THE FAMILY MEMBERS WHEREIN THE SIMILAR ISSUE WAS INVOLVED HAS BEEN SET ASIDE TO THE FILES OF THE CIT(A). 6. WE FIND THAT, SO FAR AS THE ISSUE OF REJECTION OF BOOKS OF ACCOUNT IS CONCERNED, THE TRIBUNAL IN THE CASE OF PRATIMA H MEHTA IN ITA NO.350/MUM/2013 VIDE ORDER DATED 11.05.2005 AND IN ITA NO.1942/MUM/2012 VIDE ORDER DATED 28.08.2013 HAS SET ASIDE THIS EXACT ISSUE OF EXAMINATION OF BOOKS OF ACCOUNT TO THE FILE OF THE CIT(A). SIMILAR VIEW HAS BEEN TAKEN IN SMT RASILA S M EH TA IN ITA NO. 6198/MUM/2011; M/S DEVINE HOLDINGS PVT LTD IN ITAS NO.56 0 & 561/MUM/20 13 ; H ITESH S MEHTA IN ITA NO.7726 & 7727 /MUM/2010 ALSO . IN ALL THESE CASES, THE MATTER HAS BEEN RESTORED BACK TO THE FILE OF THE CIT(A) TO ADJUDICATE AFRESH ON MERIT S AFTER CONSIDERING THE BOOKS OF ACCOUNT PRODUCED BY THE ASSESSEE. THE RELEVANT OBSERVATION OF THE TRIBUNAL IN CASE OF PRATIMA MEHTA IN ITA NO.1942/MUM/2012 IS REPRODUCED HEREUNDER: 4. GROUND NO.2 IS ABOUT REJECTION OF BOOKS OF ACCOUNT. WHILE FINALISING THE ASSESSMENT, AO HAD REJECTED THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE U/S. 145(3) OF THE ACT.AO FOUND THAT ASSESSEE WAS A NOTIFIED PARTY AS PER THE SPECIAL COURT ACT, 1992,THAT THE INCOME FOR THE YEAR UNDER CONSIDERATION WAS BASED ON THE ASSETS S EIZED AND ATTACHED BY THE CUSTODIAN, THAT ASSETS AND DOCUMENT OF THE ASSESSEE WERE WITH THE CUSTODIAN, THAT THE TRUE AND CORRECT PICTURE OF THE INCOME OF THE ASSESSEE FOR THE A.Y UNDER CONSIDERATION COULD NOT BE DETERMINED IN ABSENCE OF EXCESS TO THE ORIGI NAL DOCUMENTS. 4.1 ASSESSEE PREFERRED AN APPEAL BEFORE THE FAA. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, HE HELD THAT REJECTION OF BOOKS OF ACCOUNT WAS TOTALLY JUSTIFIED AND LEGAL, THAT THE ASSESSEE HAD NOT BROUGHT ANY EVIDENCE ON RECORD ON THE SANCTITY OF THE BOOKS OF AC COUNT IN THE FORM OF COMMUNICA TION FROM CUSTODIAN, THAT WAS NOT ABLE TO PROVE THAT THE BOOKS OF ACCOUNT DRAWN WERE BASED ON THE INFORMATION GATHERED FROM THE OFFICE OF THE CUSTODIAN THAT THE VERY BASIS OF PREPARATION OF THE BOOKS OF ACCOUNT LED FOUNDATION. FINALLY, HE ASHWIN S MEHTA I TA NO. 6596 /MUM/2013 ITA NO. 6597/MUM/2013 4 UPHELD THE ORDER OF THE AO. HE ALSO MENTIONED IN THE CASE OF SHRI HITESH MEHTA, HUSBAND OF THE ASSESSEE SIMILAR ISSUE HAD BEEN DISMISSED BY THE CIT (A) - 40 MUMBAI FOR THE A.Y. 2006 - 07.HE ALSO MENTIONED THAT WHILE DECI DING THE GROUNDS OF APPEAL FOR THE REJECTION OF BOOKS OF ACCOUNT, HE HAD KEPT IN MIND THE DECISION OF CIT(A) - 40 MUMBAI DELIVERED IN THE CASE OF SHRI HITESH MEHTA FOR THE AY 2006 - 07. 4.2 BEFORE US, AR SUBMITTED THAT IN THE CASE OF HITESH MEHTA, FOR THE A. Y. 2006 - 07, TRIBUNAL HAS DECIDED THE ISSUE ON 26.04.2013 (ITA NO. 7726/MUM/2010). DR SUPPORTED THE ORDER OF THE FAA. 4.3 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT H BENCH OF MUMBAI TRIBUNAL, VIDE ITS ORDER DATE D 26.04.2013,IN THE CASE OF HITESH MEHTA FOR THE AY 2005 - 06 HAS DEALT THE ISSUE AS UNDER: 3.3.WE HAVE HEARD THE RIVAL SUBMISSIONS ON THIS ISSUE AND PERUSED THE MATERIAL ON RECORD. THE PERUSAL OF PARA 6.9 AT PAGE NO. 8 OF THE ASSESSMENT ORDER REVEALS THA T ONE OF THE REASONS FOR NOT ALLOWING THE PROVISIONS OF INTEREST CLAIMED BY THE ASSESSEE IS THAT THE BOOKS OF ACCOUNTS PRODUCED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS HAS BEEN HELD TO BE UNRELIABLE. SHORN OFF ALL OTHER UNNECESSARY DETAILS, CONSI DERING THE FACTS AND CIRCUMSTANCES IN TOTO, WE ARE OF THE VIEW THAT IT WOULD BE APPROPRIATE THAT THE ISSUE IS SET ASIDE TO THE FILE OF THE LD.CIT(A) TO ADJUDICATE AFRESH ON MERITS IN RESPECT OF THE ISSUE PERTAINING TO THE REJECTION/RELIABILITY OF THE BOOKS OF ACCOUNTS PRODUCED BY THE ASSESSEE AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE FOR DEFENDING HIS CASE. WE ORDER AND DIRECT ACCORDINGLY. THUS, GROUND NO.1 OF THE APPEALS IS ALLOWED FOR STATISTICAL PURPOSES. RESPECTFULLY FOLLOWING THE SA ME, WE SET ASIDE THE ISSUE TO THE FILE OF THE FAA FOR FRESH ADJUDICATION AFTER AFFORDING THE REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE . 7 . THUS, CONSISTENT WITH THE SAME, WE ALSO SET ASIDE THIS ISSUE TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATI ON AFTER AFFORDING DUE AND EFFECTIVE OPPORTUNITY TO THE ASSESSEE. ACCORDINGLY, GROUND NO.2 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 8 . SO FAR AS ISSUE OF CLAIM OF EXPENDITURE IN GROUND NO.3 IS CONCERNED, THIS MATTER HAS ALSO BEEN SET ASIDE IN THE CASE OF PRATIMA MEHTA FOR AY 2009 - 10 BY THE TRIBUNAL ORDER ( SUPRA ) IN THE FOLLOWING MANNER: - ASHWIN S MEHTA I TA NO. 6596 /MUM/2013 ITA NO. 6597/MUM/2013 5 REGARDING PROFESSIONAL FEES IT IS CONTENDED THAT APPLICATION HAS BEEN FILED IN THE PAST BEFORE THE HONBLE SPECIAL COURT FOR RELEASE OF FEES TO THESE PROFESSIONA LS. HOWEVER HE HAS NOT FILED ANY DETAILS/DOCUMENTS IN THIS REGARD. IN THE ABSENCE OF ANY SUBMISSIONS FROM ASSESSEES SIDE ON THIS ISSUE, IT IS CONSTRUED THAT HE HAS NOT EXPLANATION TO OFFER ABOUT SOURCES TO MEET THESE EXPENSES. THE ASSESSEE IS ONE OF THE E NTITIES OF HARSHAD MEHTA GROUP. THERE ARE VARIOUS LITIGATION MATTERS PENDING AGAINST THE ASSESSEE BEFORE VARIOUS COURTS OF LAW AND GOVT. / LOCAL AUTHORITIES. ASSESSEE IS REQUIRED TO INCUR SIZEABLE EXPENSES ON ADVOCATE/AUTHORIZED REPRESENTATIVES PROFESSION AL FEE, TRAVELLING EXPENSES FOR ATTENDING BEFORE VARIOUS COURTS/AUTHORITIES, DOCUMENTATION CHARGES, COURT FEE, ETC. HE IS STAYING AT WORLI WHICH IS ONE OF THE POSH LOCALITIES OF MUMBAI CITY. HIS FAMILY CONSISTS OF HIMSELF, WIFE DEEPIKA MEHTA AND ONE CHILD. CONSIDERING THE SIZE OF FAMILY AND THEIR MODERN STANDARD OF LIVING, THERE OUGHT TO BE SIZEABLE EXPENSES INCURRED BY THE ASSESSEE. SUCH EXPENSES IN THE NATURE OF HOUSEHOLD AND PERSONAL EXPENSES MAY COMPRISE OF KITCHEN/FOOD EXPENSES, EXPENSES FOR MAINTENANC E OF RESIDENCE, EXPENDITURE ON EDUCATION OF CHILDREN, EXPENSES ON RELIGIOUS OCCASIONS, EXPENDITURE ON TOUR AND TRAVELS, EXPENSES FOR SPECIAL OCCASION OF CELEBRATION ON ANNIVERSARIES / BIRTHDAYS, MEDICAL EXPENSES, ETC. THE ASSESSEE HAS NOT FURNISHED ANY DET AILS TO EXPLAIN AS TO HOW ALL THESE ESSENTIAL EXPENSES TO PULL ON THE DAY TO DAY LIFE HAVE BEEN INCURRED. I THEREFORE, CONCLUDE THAT THESE EXPENSES HAVE BEEN MET FROM THE UNDISCLOSED SOURCES OF INCOME OF THE ASSESSEE. I THEREFORE ESTIMATE AN AMOUNT OF RS.1 ,00,000/ - P.M. AS HIS PERSONAL EXPENSES. ACCORDINGLY AN AMOUNT OF RS.12,00,000/ - IS ADDED AS ASSESSEES TOTAL TAXABLE INCOME UNDER SECTION 69C OF THE I.T. ACT, 1961 ON THIS ACCOUNT. 9 . HERE ALSO, SIMILAR ISSUE IS INVOLVED AS WAS THERE IN GROUND NO.3 BEF ORE THE TRIBUNAL IN THE AFORESAID CASE AND ACCORDINGLY, CONSISTENT WITH THE SAME ORDER, WE SET ASIDE THE GROUND TO THE FILE OF THE CIT(A), THUS GROUND NO.3 IS ALLOWED FOR STATISTICAL PURPOSES. 10 . IN GROUND NO.4, THE ASSESSEE HAS CHALLENGED THE CONFIRMING OF DISALLOWANCE OF VARIOUS EXPENSES CLAIM ED BY THE ASSESSEE UNDER SECTION 14A. 11 . THE AO NOTED THAT, ASSESSEE HAS CLAIMED DEMAT CHARGES OF RS.42,398/ - AND THESE EXPENSES ARE EXCLUSIVELY INCURRED IN RESPECT OF SHARES HELD BY HIM. THE EARNING OF THE ASSES SEE IS NON - TAXABLE INCOME WHICH IS ARISING FROM SHARE INVESTMENTS IN THE FORM OF ASHWIN S MEHTA I TA NO. 6596 /MUM/2013 ITA NO. 6597/MUM/2013 6 DIVIDEND AND LONG TERM CAPITAL GAIN. ACCORDINGLY, HE DISALLOWED THE CLAIM OF EXPENSES ON DEMAT CHARGES OF RS.42,398/ - UNDER RULE 14A. APART FROM THAT, HE DISALLOWED VARIOUS OT HER EXPENSES OF RS.22,35,837/ - IN THE FOLLOWING MANNER: - IN RESPECT OF REST OF THE OTHER EXPENSES OF RS.22,35,837/ - , THE DISALLOWANCE OF EXPENSES WORKED OUT UNDER SECTION 14A OF I.T. ACT R.W.R.8D(2)(III) OF I.T. RULE IS RS.24,89,807/ - . HENCE THE DISALLOW ANCE U/S 14A OF I.T. ACT R.W.R.8D(2)(III) OF I.T. RULES IS RESTRICTED TO ENTIRE OTHER EXPENSES CLAIMED AT RS.22,35,837/ - . THE TOTAL DISALLOWANCE U/S 14A OF I.T. ACT IS WORKED OUT AT RS.75,97,255/ - . 1 2 . THE LD. CIT(A) FOLLOWING THE APPELLATE ORDER OF D EEPIKA MEHTA IN AY 2006 - 07 DECIDED THIS ISSUE AGAINST THE ASSESSEE. 1 3 . BEFORE US, THE LD. COUNSEL SUBMITTED THAT ALL THE INVESTMENTS ARE MANAGED BY GOVERNMENT APPOINTED CUSTODIAN AND ASSESSEE DOES NOT RECEIVED ANY DIVIDEND OR ANY LONG TERM CAPITAL GAIN. IF ONE GOES BY THE BREAK - UP OF EXPENSES, IT CAN B E S EE N THAT NONE OF THE EXPENSES RELATES TO THE EARNING OF THE EXEMPT INCOME. THE PROFESSIONAL FEE HAS BEEN INCURRED MOSTLY FOR REPRESENTING THE TAX MATTERS AND THE COURT CASES. OTHER EXPENSES RELATES TO FIL ING OF APPEAL ; DEPRECIATION , ETC. THUS, NO DISALLOWANCE CAN BE MADE UNDER SECTION 14A. OTHERWISE ALSO, THE DISALLOWANCE HAS BEEN MADE BY THE AO AFTER APPLYING 14A, WHICH ADMITTEDLY IS NOT APPLICABLE IN THIS YEAR. 1 4 . ON THE OTHER HAND, LD. SPECIAL COUNSEL SUBMITTED THAT, THERE IS NO OTHER INCOME TO THE ASSESSEE, EXCEPT FOR DIVIDEND INCOME IN THIS YEAR . THEREFORE, DISALLOWANCE UNDER SECTION 14A IS REQUIRED TO BE MADE IN SUCH A CASE. IN REJOINDER, THE LD. COUNSEL SUBMITTED THAT, THERE HAS BEEN BUSINESS LOSS ASSESSED BY THE AO AND HAS TREATED THE ASSESSEE AS A TRADER OF SHARES, THEREFORE, IT CANNOT BE HELD THAT ASSESSEES EXPENDITURE DEBITED IN THE PROFIT AND LOSS ACCOUNT PERTAINS TO ANY EARNING OF EXEMPT INCOME. 1 5 . AFTER CONSIDERING THE RELEVANT SUBMISSION S AND ON PERUSAL OF THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDERS, WE FIND THAT, IT ASHWIN S MEHTA I TA NO. 6596 /MUM/2013 ITA NO. 6597/MUM/2013 7 IS SEEN THAT ASSESSEE HAS INCURRED FOLLOWING EXPENDITURE S IN AY 2006 - 07 AND 2007 - 08 AND ALSO THE NATURE OF EXPENDITURE HAS BEEN EXPLAINED IN FOLLOWING MANNE R: - SR. NO. PARTICULARS A.Y. 2006 - 07 A.Y. 2007 - 08 REMARKS AMOUNT (RS.) AMOUNT(RS.) 1 APPEAL FILING FEES 33,270 44,270 EXPENSES INCURRED FOR FILING APPEALS BEFORE JUDICIAL AUTHORITIES. 2 PROFESSIONAL FEES AS PER GOVT. ORDER FO R TAX RESPONDENT 21,37,853 57,494* AMOUNT PAID FOR PROFESSIONAL /LEGAL SERVICES RENDERED TO APPELLANT WITH RESPECT TO TAX REPRESENTATION. 3 BANK CHARGES 3,644 12,709 CHARGES DEBITED BY THE BANK 4 REPAIR AN D MAINTENANCE 52,600 - SOCIETY MAINTENANCE CHARGES INCURRED IN RESPECT OF OFFICE PREMISES. 5 DEPRECIATION 8,470 - DEPRECIATION IN RESPECT OF FIXED ASSETS OWNED BY THE APPELLANT. THE ASSESSEE HAS EARNED DIVID END INCOME OF RS.14,94,755/ - AND LTCG OF RS.65,00,000/ - AGAINST WHICH, NO EXPENSES HAVE BEEN SAID TO BE ATTRIBUTABLE. THE LD. AO HAS MECHANICALLY APPLIED RULE 8D WHICH ADMITTEDLY IS NOT APPLICABLE IN AY 2006 - 07. ONCE THAT IS SO, THEN THE ENTIRE BASIS OF CO MPUTATION OF DISALLOWANCE IS INCORRECT. LOOKING TO THE NATURE OF EXPENDITURE AND CLAIM OF THE ASSESSEE THAT IT HAS BUSINESS LOSS WHICH HAS BEEN ASSESSED BY AO ALSO, WE ARE OF THE OPINION THAT THIS MATTER SHOULD BE SET ASIDE TO THE FILE OF THE AO TO WORK OU T SOME REASONABLE BASIS FOR DISALLOWANCE AFTER EXAMINING THE NATURE OF ACCOUNTS AND THE NATURE OF EXPENSES DEBITED BY THE ASSESSEE. ACCORDINGLY, GROUND NO.4 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 1 6 . IN GROUND NO. 5, THE ASSESSEE HAS RAISED THE I SSUE CONFIRMING OF ADDITION ON ACCOUNT OF PERSONAL HOUSEHOLD EXPENSES OF RS.6 LAKHS. 1 7 . THE LD. AO AFTER DETAILED DISCUSSION HAS ESTIMATED THE HOUSEHOLD EXPENDITURE OF RS.1 LAKH PER MONTH AS PERSONAL EXPENSES AFTER OBSERVING AND HOLDING AS UNDER: - ASHWIN S MEHTA I TA NO. 6596 /MUM/2013 ITA NO. 6597/MUM/2013 8 REGA RDING PROFESSIONAL FEES IT IS CONTENDED THAT APPLICATION HAS BEEN FILED IN THE PAST BEFORE THE HONBLE SPECIAL COURT FOR RELEASE OF FEES TO THESE PROFESSIONALS. HOWEVER HE HAS NOT FILED ANY DETAILS/DOCUMENTS IN THIS REGARD. IN THE ABSENCE OF ANY SUBMISSION S FROM ASSESSEES SIDE ON THIS ISSUE, IT IS CONSTRUED THAT HE HAS NOT EXPLANATION TO OFFER ABOUT SOURCES TO MEET THESE EXPENSES. THE ASSESSEE IS ONE OF THE ENTITIES OF HARSHAD MEHTA GROUP. THERE ARE VARIOUS LITIGATION MATTERS PENDING AGAINST THE ASSESSEE B EFORE VARIOUS COURTS OF LAW AND GOVT. / LOCAL AUTHORITIES. ASSESSEE IS REQUIRED TO INCUR SIZEABLE EXPENSES ON ADVOCATE/AUTHORIZED REPRESENTATIVES PROFESSIONAL FEE, TRAVELLING EXPENSES FOR ATTENDING BEFORE VARIOUS COURTS/AUTHORITIES, DOCUMENTATION CHARGES, COURT FEE, ETC. HE IS STAYING AT WORLI WHICH IS ONE OF THE POSH LOCALITIES OF MUMBAI CITY. HIS FAMILY CONSISTS OF HIMSELF, WIFE DEEPIKA MEHTA AND ONE CHILD. CONSIDERING THE SIZE OF FAMILY AND THEIR MODERN STANDARD OF LIVING, THERE OUGHT TO BE SIZEABLE EXP ENSES INCURRED BY THE ASSESSEE. SUCH EXPENSES IN THE NATURE OF HOUSEHOLD AND PERSONAL EXPENSES MAY COMPRISE OF KITCHEN/FOOD EXPENSES, EXPENSES FOR MAINTENANCE OF RESIDENCE, EXPENDITURE ON EDUCATION OF CHILDREN, EXPENSES ON RELIGIOUS OCCASIONS, EXPENDITURE ON TOUR AND TRAVELS, EXPENSES FOR SPECIAL OCCASION OF CELEBRATION ON ANNIVERSARIES / BIRTHDAYS, MEDICAL EXPENSES, ETC. THE ASSESSEE HAS NOT FURNISHED ANY DETAILS TO EXPLAIN AS TO HOW ALL THESE ESSENTIAL EXPENSES TO PULL ON THE DAY TO DAY LIFE HAVE BEEN INC URRED. I THEREFORE, CONCLUDE THAT THESE EXPENSES HAVE BEEN MET FROM THE UNDISCLOSED SOURCES OF INCOME OF THE ASSESSEE. I THEREFORE ESTIMATE AN AMOUNT OF RS.1,00,000/ - P.M. AS HIS PERSONAL EXPENSES. ACCORDINGLY AN AMOUNT OF RS.12,00,000/ - IS ADDED AS ASSESS EES TOTAL TAXABLE INCOME UNDER SECTION 69C OF THE I.T. ACT, 1961 ON THIS ACCOUNT. ASHWIN S MEHTA I TA NO. 6596 /MUM/2013 ITA NO. 6597/MUM/2013 9 1 8 . THE LD. CIT(A) GAVE PART RELIEF AND REDUCE D THE ADDITION TO RS.6 LAKHS. 1 9 . BEFORE US, THE LD. COUNSEL SUBMITTED THAT, ASSESSEE IS LIVING IN JOINT FAMILY SET - UP AND MOST OF THE EXPENSES HAVE BEEN INCURRED BY OTHER FAMILY MEMBERS. HE SUBMITTED THAT, PROFESSIONAL FEES TO THE CONSULTANTS AND OTHER EXPENDITURES HAVE BEEN MAINLY INCURRED BY DR. HITESH S. MEHTA. LOOKING TO THE OVERALL WITHDRAWALS BY THE FAMILY MEMBERS, THE ADDITION MADE AND SUSTAINED IS FAR TOO HIGH AND EXCESSIVE. H E FURTHER REFERRED TO THE DETAILS OF EXPENDITURE ON ACCOUNT OF PERSONAL AND HOUSEHOLD EXPENSES INCURRED AND ADDED IN THE HANDS OF THE FOLLOWING MEMBERS OF THE FAMILY , WHICH ARE AS UNDER : - SR. NO. NAME A.Y. 2006 - 07 A.Y. 2007 - 08 ADDITIONS BY AO (RS.) CONFIRMED BY CIT(A) (RS.) ADDITIONS BY AO (RS) CONFIRMED BY CIT(A) (RS.) 1 ASHWIN S MEHTA (APPELLANT) 12,00,000 6,00,000 12,00,000 6,00,000 2 JYOTI H MEHTA 18,00,000 9,00,000 18,00,000 9,00,000 3 RASILA S MEHTA 6,00,000 3,00,000 6,00,000 3,00,000 4 DEEPIKA A MEHTA 6,00,000 3,00,000 6,00,000 3,00,000 5 SUDIR S MEHTA - - 12,00,000 12,0 0,000 6 SMT . RINA S MEHTA - - 6,00,000 6,00,000* TOTAL 42,00,000 21,00,000 60,00,000 39,00,000 20 . ON THE OTHER HAND, LD. SPECIAL COUNSEL SUBMITTED THAT THE ASSESSEE IS MAINTAINING MOTOR CAR AND L IV E IN POSH AREA OF MUMBAI, AND NO DETAILS OF HOUSEHOLD EXPENSES HAS BEEN GIVEN BY THE ASSESSEE. I N SUCH A CASE, ADDITION SUSTAINED BY THE CIT(A) APPEARS TO BE FAR MORE REASONABLE . 2 1 . AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ON PERUSAL OF THE RELEVANT FINDI NG IN THE IMPUGNED ORDER, WE FIND THAT THE ADDITION MADE BY THE AO AS WELL AS SUSTAINED BY THE CIT(A) ARE THOUGH ON AD - HOC BASIS, BUT SAME WAS DONE BECAUSE NO DETAILS OF EXPENDITURES WAS FILED BY THE ASSESSEE. BEFORE US, THE LD. COUNSEL HAS SUBMITTED THAT, MOST OF THE EXPENSES HAVE BEEN INCURRED BY DR. HITESH S MEHTA AND OT H ER FAMILY MEMBERS LIVING IN A JOINT FAMILY SET - UP . F URTHER OTHER MEMBERS HAV E CONTRIBUT ED FOR HOUSEHOLD EXPENSES AND THAT SOME OF THE ADDITIONS HAVE BEEN ASHWIN S MEHTA I TA NO. 6596 /MUM/2013 ITA NO. 6597/MUM/2013 10 CONFIRMED ON ACCOUNT OF PERSONAL HOUSEHOLD EXPENSES BY THE DEPARTMENT. ON THESE FACTS AND CIRCUMSTANCES, WE INCLINED TO SCALE DOWN THE ADDITIONS TO RS.3 LAKHS. ACCORDINGLY, ADDITION SUSTAINED ON ACCOUNT OF PERSONAL HOUSEHOLD EXPENSES WOULD BE RS.3 LAKHS. ACCORDINGLY, THE GROUND NO.5 OF T HE ASSESSEE IS PARTLY ALLOWED. 2 2 . NOW, WILL FIRST TAKE - UP APPEAL FOR ASSESSMENT YEAR 2007 - 08, VIDE WHICH FOLLOWING GROUNDS HAVE BEEN RAISED: - FOLLOWING GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER: 1 . THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) O UGHT TO HAVE APPRECIATED THAT AS PER THE DECISION OF THE HONBLE SPECIAL COURT DATED 30.04.2010 IN MP NO.41 OF 1999, THE ASSETS UNDER CONSIDERATION AND THE CONSEQUENT INCOME BELONGS TO SHRI HARSHAD S MEHTA AND HENCE THE INCOME ASSESSED BY THE ASSESSING OFF ICER OUGHT TO HAVE BEEN TAXED IN THE HANDS OF SHRI HARSHAD S MEHTA AND NOT IN THE HANDS OF THE APPELLANT. 2 . THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND FACTS IN NOT APPRECIATING THAT THE REJECTION OF BOOKS OF ACCOUNTS OF THE APPELLANT WAS INCORRECT AND UNJUSTIFIED. 3 . THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE DISALLOWANCE OF INTEREST EXPENDITURE AMOUNTING TO RS. 4,07,193/ - . 4 . THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AN D IN FACTS IN CONFIRMING THE ADDITION ON ACCOUNT OF PERSONAL HOUSEHOLD EXPENSES OF RS.6,00,000/ - . 5 . THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE DISALLOWANCE OF PROFESSIONAL FEES OF RS.57,494/ - (RS.59,494/ - ), APPEAL FEES OF RS.44,270/ - AND BANK CHARGES OF RS.12,709/ - . 2 3 . AT THE OUTSET, IN THIS APPEAL ALSO, THE LD. COUNSEL SUBMITTED THAT, GROUND NO.1 IS NOT PRESSED, ACCORDINGLY, GROUND NO.1 IS TREATED AS DISMISSED AS NOT PRESSED. 2 4 . SO FAR AS ISSUE R ELATING TO GROUND NO.2 & 3 SAME ARE IDENTICAL ON THE FACTS AND CIRCUMSTANCES OF THE APPEAL FOR AY 2006 - ASHWIN S MEHTA I TA NO. 6596 /MUM/2013 ITA NO. 6597/MUM/2013 11 07, HENCE WE DO NOT FIND ANY REASON TO DEVIATE FROM THE STAND TAKEN BY EARLIER IN VARIOUS TRIBUNAL DECISIONS IN THE CASE OF OTHER FAMILY MEMBERS, GROUP A ND ACCORDINGLY WE RESTORE THE MATTER TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION AFTER AFFORDING DUE AND EFFECTIVE OPPORTUNITY TO THE ASSESSEE . ACCORDINGLY, GROUND NO.2 AS WELL AS GROUND NO.3 ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 2 5 . SO FA R AS OTHER ISSUE INVOLVED IN GROUND NO.4 OF THE ASSESEES APPEAL IS ADDITION ON ACCOUNT OF PERSONAL HOUSEHOLD EXPENSES OF RS.6 LAKHS. 2 6 . IN THIS YEAR AGAIN ON SIMILAR FACTS AO HAD MADE ADDITION OF RS.12 LAKHS. AT THE FIRST APPELLATE STAGE, THE LD. CIT(A) GAVE PART RELIEF AND REDUCE THE ADDITION TO RS.6 LAKHS. 2 7 . THUS, IN LINE OF THE VIEW TAKEN IN THE AFORESAID APPEAL, WE ARE SCALING DOWN THE ADDITION TO RS.3 LAKHS. 2 8 . AS REGARD I SSUE INVOLVED IN GROUND NO.5 , THE SAME IS AGAIN IDENTICAL TO THE ISSUE IN GROUND NO.4 FOR AY 2006 - 07, WHICH IS IDENTICAL TO IMPUGNED ISSUE, WHICH WE HAVE DEALT AND DECIDED HEREINABOVE. IN VIEW OF OUR FINDING IN THIS YEAR ALSO WE SET ASIDE THIS ISSUE TO THE FILE OF THE AO TO WORK OUT SOME REASONABLE BASIS FOR DISALLOWANCE AFTE R EXAMINING THE NATURE OF ACCOUNTS AND THE EXPENSES DEBITED BY THE ASSESSEE. ACCORDINGLY, GROUND NO. 5 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 2 9 . IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE TREATED A S PARTLY ALLOWED FOR STATISTICAL PURPOSE S. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH A PRIL , 2016 . SD/ - SD/ - ( ) ( ) ( RAMIT KOCHAR ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 18 TH APRIL , 2016. ASHWIN S MEHTA I TA NO. 6596 /MUM/2013 ITA NO. 6597/MUM/2013 12 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT (A) - 3 7 , MUMBAI . 4 ) THE COMMISSIONER OF INCOME TAX , CENTRAL - 37 , MUMBAI . 5 ) , , / THE D.R. A BENCH, MUMBAI. 6 ) \ COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS