GOPAL LAL & SONS, Kota V. ITO,

ITA 755/JPR/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7553 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 23-08-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Assessee Lawyers: C M BIRLA
• Keywords: Business income; Income from undisclosed sources

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.755/ JP/2011 ASSESSMENT YEAR 2004-05 PAN: AADHG 6620 D M/S. GOPAL LAL & SONS VS. THE ITO P.O. KAITHOOD, DISTT.KOTA WARD- 2(1), KOTA (APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI C.M. BIRLA DEPARTMENT BY : SHRI D.K. MEENA DATE OF HEARING: 09-01-2012 DATE OF PRONOUNCEMENT: 25-01-2012 ORDER PER N.L. KALRA, AM:- THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDE R OF THE LD. CIT(A), KOTA DATED 28-07-2011 FOR THE ASSESSMENT YEAR 2004-05. 2.1 THE FIRST GROUND OF APPEAL OF THE ASSESSEE IS AGAINST SELECTION OF THE CASE FOR SCRUTINY ASSESSMENT. THIS GROUND OF APPEAL WAS NOT PRESSED BY THE LD. AR DURING THE COURSE OF HEARING. HENCE, THE SAME IS DISMISSED BEI NG NOT PRESSED. 2.2 THE SECOND GROUND OF APPEAL OF THE APPEAL OF TH E ASSESSEE IS AS UNDER:- (I) THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 36090/- (BEING WHEAT SALE IN LOCAL HAT) IGNORING TH IS FACT THAT SHOP OF KARTA OF HUF IS IN HEART OF TOWN AND SALE OF WHE AT IN SMALL LOTS IN HAT IS COMMON FEATURE THERE. ADDITION OF RS. 360 9-/- THEREFORE, NEEDS DELETION. (II) THE LD. CIT(A) FURTHER ERRED IN CONFIRMING THE ADDITION OF RS. 240-24/- (ON ACCOUNT OF GRAM SALE) AND RS. 435 22/- (ON ACCOUNT OF METHI SALES), THUS TOTALING TO RS. 6754 6/- ON THE 2 SURMISES THAT THIS MIGHT BE A PURCHASE FROM MARKET TO SHOW IT AS AGRICULTURAL INCOME. ADDITION THUS NEEDS DELETION. 2.3 THE ASSESSEE DERIVES INCOME FROM INTEREST AND D IVIDEND. THE ASSESSEE HAS ALSO SHOWN AGRICULTURAL INCOME OF RS. 6,23,975/-. FOR TH E SUCCEEDING YEARS, THE ASSESSEE HAS SHOWN AGRICULTURAL INCOME OF RS. 4,92,187/- AND RS. 4,20,137/- FOR THE ASSESSMENT YEAR 2005-06 AND 2006-07. THE ASSESSEE HAS SHOWN GROSS S ALE PROCEEDS OF RS. 8,38,667/-.THE AO NOTICED THAT THERE ARE NO SALE VOUCHERS IN RESPE CT OF TWO SALES TO THE EXTENT OF RS. 56,090/- AND RS. 17,909/-. BEFORE THE AO, IT WAS SU BMITTED THAT SUCH SALES WERE CASH SALES MADE IN THE LOCAL HAT BAZAAR. IN THE ABSENCE OF ANY EVIDENCE, THE CONTENTION OF THE ASSESSEE WAS REJECTED AND THE AO MADE THE ADDITION OF RS. 73,999/- IN RESPECT OF THESE TWO SALES. 2.4 OUT OF TWO SALES, ONE OF THE SALES WAS OF RS. 56,090/- FOR SALE OF WHEAT. THE LD. CIT(A) WAS OF THE OPINION THE AGRICULTURISTS IS NO T REQUIRED TO SELL HIS ENTIRE PRODUCED IN THE ORGANIZED MARKET. THE LD. CIT(A) ESTIMATED THE SALE OF WHEAT IN THE LOCAL HAT BAZAR TO THE EXTENT OF RS. 20,000/- AND THE BALANCE AMOUNT O F RS. 36,090/- WAS TREATED AS ASSESSEE'S INCOME FROM UNDISCLOSED SOURCES. 2.5 WE HAVE HEARD BOTH THE PARTIES. THE MAIN CONTEN TION OF THE LD. AR BEFORE US WAS THAT THE ASSESSEE IS NOT HAVING BUSINESS INCOME AN D IS ONLY HAVING AGRICULTURAL INCOME. HENCE, IT CANNOT BE ACCEPTED THAT THE ASSESSEE WAS HAVING UNDISCLOSED INCOME. THE ASSESSEE HAS CREDITED THE SUM OF RS. 56,090/- AND T HE AO IN HIS ORDER HAS MENTIONED THAT SALES HAVE BEEN CREDITED ON 18-04-2003. BEFORE US, NO COPY OF CASH BOOK HAS BEEN PRODUCED. IN THE WRITTEN SUBMISSION, IT HAS BEEN ME NTIONED THAT THERE IS WEEKLY HAT BAZAAR AND THE ASSESSEE WAS SELLING THE WHEAT IN THAT WEEK LY HAT BAZAAR. THERE IS NOTHING ON 3 RECORD THAT SUCH SALE PROCEEDS REPRESENT THE SALE D URING DIFFERENT WEEKS. WE THEREFORE, FEEL THAT THE LD. CIT(A) WAS JUSTIFIED IN REDUCING THE ADDITION TO RS. 36,090/-. 2.6 THE AO ALSO NOTICED THAT THE ASSESSEE HAS SHOWN SALE OF GRAM AND METHI. THE AO OBTAINED THE COPY OF KHASRA GIRDAWARI WHICH RELA TED TO SAMMAT YEAR 59 TO 62. THUS THESE KHASRA GIRDAWARI COVERED THE FINANCIAL YEARS 2002-03 TO 2005-06. THE GIRDAWARI DOES NOT SHOW THAT THE ASSESSEE HAS SOWED GRAM AND METHI. THE AO ACCORDINGLY DID NOT CONSIDER SUCH SALE PROCEEDS AS PART OF AGRICULTURAL INCOME. 2.7 BEFORE US, NO MATERIAL HAS BEEN PLACED TO SHOW THAT THE GIRDAWARI WAS NOT CORRECT. THE PARTWARI IS SUPPOSED TO RECORD THE NATURE OF CR OP AND THE AREA IN WHICH SUCH CROP IS BEING PRODUCED. THE EVIDENCE IN THE FORM OF GIRDAWA RI IS FROM THE GOVT. RECORD. THE SARPANCH CANNOT REMEMBER THE CROP BEING PRODUCED BY THE FARMER. THE CERTIFICATE DOES NOT CONTAIN ANY DATE. WE THEREFORE, FEEL THAT THE L D. CIT(A) WAS JUSTIFIED IN CONFIMING THE ADDITION OF RS. 67,546/-. 3.1 THE THIRD GROUND OF APPEAL OF THE ASSESSEE IS T HAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 65,750/- FOR HOUSE H OLD EXPENSES. THE AO MADE THE ADDITION AFTER OBSERVING AS UNDER: - AS PER WRITTEN EXPLANATION DATED 06-05-2006, THE FAMILY CONSISTS OF 5 MEMBERS ONE OF WHOM WAS STUDYING IN MODI COLLE GE OF ENGINEERING FOR WHICH FEE OF RS. 1.00 LAC WAS ADMITTEDLY PAID. THE OTHER TWO CHILDREN ARE STATED TO HAVE BEEN STUDYING IN KAITHOON GOVT. SCHOOLS. WITHDRAWALS FOR HOUSE HOLD EXPENSES ARE DISCLOSED AS UNDER:- 1.ASSESSEE HUF RS. 100150/- 2.SHRI TRILOK CHAND MAHESHWARI INDL RS. 72100 /- KARTA OF HUF SEPARATELY ASSESSED TO INCOME TAX 3. SHRI ASHISH MAHESHWARI ASSESSED TO TAX RS. 12 000/- AS INDIVIDUAL 4 RS. 184250/- IT IS STATED IN THE WRITTEN EXPLANATION DATED 06-05 -2006 AND 28-08- 2006 THAT THE POINT RELATING TO HOUSE HOLD EXPENSES IS THE CONCERN OF INDIVIDUAL AND NOT OF THE HUF. IT IS ALSO STATED TH AT HUF HAS CONTRIBUTED FOR EDUCATION EXPENSES AND THE DISCLOSED EXPENSES A RE IN ADDITION OF LIC, TAXES AND TELEPHONE EXPENSES. THE ASSESSEE'S CONTEN TION IS THAT HIS SON STUDYING IN ENGINEERING COLLEGE AND OTHER MEMBERS A RE RESIDING IN KAITHOON IN THEIR OWN HOUSE. THE ASSESSEE'S CONTENT IONS REGARDING HUF HAVING NO CONCERN WITH HOUSE HOLD EXPENSES CANNOT B E ACCEPTED FOR THE SIMPLE RESON THAT ADMITTEDLY LARGEST CONTRIBUTION H AS BEEN MADE BY THE HUF TOWARDS HOUSE HOLD EXPENSES . SHRI TRILOK CHAND MAHESHWARI INDIVIDUAL AND SHRI ASHISH MAHESHWARI HAVE SHOWN WI THDRAWALS OF RS. 6000/- AND RS. 1000/- PER MONTH RESPECTIVELY WHICH IS DEFINITELY LOW. FURTHER EXPENSES ON EDUCATION DOES NOT MEAN PAYMENT OF FEE ALONE. ENGINEERING EDUCATION REQUIRES MUCH MORE. CONSIDERI NG HIGH COST OF LIVING IN THESE DAYS AND THE ASSESSEE'S SOCIAL AND FINANCIAL STATUS THE DISCLOSED HOUSE HOLD EXPENSES ARE DEFINITELY LOW. S INCE THE ASSESSEE HAS CONTRIBUTED TOWARDS HOUSE HOLD EXPENSES IT CAN BE S AFELY INFERRED THAT FULL AMOUNT OF THE SAME HAS NOT BEEN DISCLOSED. THE ASSE SSEE FETCHES GOOD REPUTATION, HIGH FINANCIAL AND SOCIAL STATUS AS SUC H IT IS HARDLY BELIEVABLE THAT THE HOUSE HOLD EXPENSES AS SHOWN WERE MET OUR BARELY IN RS. 84250/- (RS. 184250- RS. 100000 EDUCATION EXPENSES) FOR A F AMILY OF FIVE MEMBERS. THE ONLY EDUCATION FEE ASSESSEE'S ONE SON IS RS. 100000/- AND HE MIGHT HAVE INCURRED EXPENSES ON PURCHASE OF COST LY ENGINEERING BOOKS, CONVEYANCE AND POCKET EXPENSES WHICH HAVE NOT BEEN DISCLOSED. SIMILARLY OTHER TWO CHILDREN WHO ARE ASSESSMENT ORDER STUDYIN G, THEY MUST HAVE DEMANDED EXPENSES FOR PURCHASE OF THEIR BOOKS AND T HEIR DRESSES ETC. WHICH IS HARDLY POSSIBLE IN BARE RS. 84250/- AS DIS CUSSED ABOVE. THE AGRICULTURAL INCOME OF HUF ALONE AS CLAIMED IS MORE THAN SIX LACS AND THE EXPENSES OF RS. 84250/- WHICH IS NOT EVEN 1/7 O F THE SAME AS SUCH IT APPEARS QUITE LOW. FURTHER PER DAY MEMBER EXPENSES WORKS OUT TO RS. 5 46/- ONLY WHICH DEFINITELY APPEARS QUITE LOW FOR TH E PERSON OF ASSESSEE'S STATUS. IN VIEW OF THE ABOVE POSITION AND THE FACT OF THE CASE, THE HOUSE HOLD EXPENSES ARE ESTIMATE AT RS. 250000/- (RS. 135 000/- (EDUCATION OF THREE CHILDREN) AND RS. 115000/- FOR FOODING CLOTHI NG DISCHARGING SOCIAL OBLIGATIONS ETC. OF THE FAMILY). THEREFORE, AS FAR AS THE ASSESSEE HUF IS CONCERNED, A SUM OF RS. 65750/- (RS250000-184250 DISCLOSED) IS ADDED ON ACCOUNT OF LOW WITHDRAWALS OF HOUSE HOLD EXPENS ES. 3.2 THE LD. CIT(A) CONFIRMED THE ADDITION AFTER OBS ERVING AS UNDER:- THE ESTIMATION OF EDUCATION EXPENSS AT RS. 1,35,0 00/- BY AO IS CONSIDERED REASONABLE ON THE BASIS OF FOLLOWING FAC TS:- (I) THE EXPENSES ARE IN RELATION TO 3 CHILDREN (II) THE EDUCATION FEES OF ONE CHILD ALONE WAS RS. 1,00, 000/- (III) THE FEES OF 2 CHILDREN AND OTHER EXPENSES OF 3 CHIL DREN ESTIMATED AT RS. 35,000/- IS CONSIDERED REASONABLE THE ESTIMATION OF RS. 1,15,000/-FOR FOOD, CLOTHING, AND OTHER EXPENSES OF THE FAMILY OF 5 PERSONS IS ALSO CONSIDE RED REASONABLE. THE ASSESSEE ALSO CONTENDED THAT HOUSE HOLD EXPENSE S ARE CONCERN OF INDIVIDUALS, HOWEVER, THE AO HAS ALREADY CONSIDE RED THE EXPENDITURE INCURRED BY OTHER CONTRIBUTORS. SO THE ASSESSEE SHO ULD HAVE NO GRIEVANCE. IN VIEW OF THE ABOVE ESTIMATION OF HOUSE HOLD EXPEN SES BY AO IS CONCERNED REASONABLE AND ADDITION OF RS. 65,750/- IS UPHELD. 3.3 WE HAVE HEARD BOTH THE PARTIES. IT IS NOTICED T HAT BOTH THE AUTHORITIES BELOW HAVE CONSIDERED THE EXPLANATION OF THE ASSESSEE. THE AO HAS NOTICED THAT ONE OF THE FAMILY MEMBERS WAS STUDYING IN MODI COLLEGE OF ENGINEERING FOR WHICH FEE OF RS. 1.00 LAC WAS PAID. ONE HAS TO INCUR OTHER EXPENSES WHILE STUDYIN G IN ENGINEERING AT A PLACE DIFFERENT 6 FROM HIS HOME TOWN. LOOKING TO THE FACTS NOTICED BY THE AO, WE FEEL THAT THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDITION. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 25-01 -2012. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 25 /01/2012 *MISHRA COPY FORWARDED TO :- 1. M/S. GOPAL LAL & SONS, KOTA 2. THE ITO, WARD- 2 (1), KOTA 3 THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5 THE LD.DR 6 THE GUARD FILE (ITA NO.755/JP /11) A.R, ITAT, JAIPUR