ANIL KUMAR BOTHRA, MUMBAI V. DCIT CEN CIR 36, MUMBAI

ITA 8678/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7868 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2003-2004
• Appeal Filed On: 13-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SATBIR SINGH
• Assessee Lawyers: UTTAM CHAND BOTHRA
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI SMC BENCH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER I.T.A.NOS.8678, 8679, 8680 & 8682/MUM/2010 A.YRS.200304, 2004-05, 2005-06 & 2007-08 SHRI ANIL KUMAR BOTHRA, 24, DAMJI SHYAMJI INDUSTRIAL ESTATE, L.B.S.MARG, VIKHROLI (W), MUMBAI 400 083. PAN: AABP 1046 J VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 36, MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI UTTAMCHAND BOTHRA. RESPONDENT BY : SHRI SATBIR SINGH. O R D E R IN ALL THESE APPEALS COMMON ISSUES HAVE BEEN RAISED . THE FIRST COMMON ISSUE IS REGARDING LOW WITHDRAWALS. 2. AFTER HEARING BOTH THE PARTIES, I FIND THAT A SE ARCH HAS BEEN CONDUCTED IN THE GROUP KNOWN AS PBA GROUP OF CASES AND SINCE A SSESSEE IS A DIRECTOR IN ONE OF THE PBA GROUP COMPANY ASSESSEES CASE GOT CENTRA LIZED. IT WAS NOTICED DURING ASSESSMENT PROCEEDINGS THAT ASSESSEE HAS SHOWN LOW WITHDRAWALS OF ` `` ` .36,000/- IN A.Y 2003-04 AND ACCORDING TO THE AO, KEEPING IN VIEW THE STATUS OF THE ASSESSEE, THESE WITHDRAWALS WERE VERY LOW EVEN AFTE R CONSIDERING THE FACT THAT ASSESSEE WAS STAYING IN A JOINT FAMILY. ACCORDINGLY , ADDITIONS OF ` `` ` .36,000/-, ` `` ` .48,000/-, ` `` ` .60,000/- AND ` `` ` .52,010/- AFTER ESTIMATING THE ASSESSEES HOUSE-HOL D EXPENSES AT ` `` ` .72,000/-, ` `` ` .84,000/- ` `` ` .96,000/- AND ` `` ` .1,08,000/- FOR A.YRS. 2003- 2 04, 2004-05, 2005-06 AND 2007-08 RESPECTIVELY, WERE MADE. ON APPEAL, THESE ADDITIONS HAVE BEEN CONFIRMED BY THE LD. CIT[A]. 3. BEFORE ME IT WAS ARGUED THAT ASSESSEE WAS STAYIN G IN A JOINT FAMILY ALONG WITH HIS FATHER AND BROTHER AND THIS FACT WAS KNOWN TO THE AO ALSO. HE REFERRED TO PAGE 6 OF THE PAPER BOOK WHICH GIVE DETAILS OF T HE WITHDRAWALS MADE BY VARIOUS FAMILY MEMBERS I.E. I.E. SHRI SURESH KUMAR BOTHRA FATHER OF THE ASSESSEE, SMT.PUSHPA DEVI BOTHRA MOTHER OF THE ASSESSEE, SHRI SUNIL KUMAR BOTHRA BROTHER OF THE ASSESSEE, SMT. RACHNA DEVI BOTHRA WIFE OF TH E BROTHER OF THE ASSESSEE SHRI ANIL KUMAR BOTHRA I.E. THE ASSESSEE AND SMT. S UMAN DEVI BOTHRA WIFE OF THE ASSESSEE. HE POINTED OUT THOSE TOTAL WITHDRAWALS OF THE FAMILY RANGES BETWEEN RS.2,40,000/- TO RS.5,15,000/- FOR A.YRS. 2003-04 TO 2005-06 AND 2007-08. THEREFORE THE WITHDRAWALS ARE VERY REASONABLE. 4. ON THE OTHER HAND, LD.DR SUBMITTED THAT THOUGH A SSESSEE HAS GIVEN A CHART SHOWING THE WITHDRAWAL OF THE FAMILY MEMBERS BUT NO DETAILS OF THE CHILDREN LIVING WITH THE FAMILY HAVE BEEN GIVEN AND IN SUCH A CITY LIKE MUMBAI EVEN THE EDUCATION EXPENSES OF THE CHILDREN WOULD B E RS.3000/- TO RS.4000/- P.M. AND KEEPING IN VIEW STATUS OF THE ASSESSEE AND THIS FACT, THE ADDITION WAS JUSTIFIED. 5. IN THE REJOINDER, LD.COUNSEL OF THE ASSESSEE ADM ITTED THAT THERE WERE FOUR MINOR CHILDREN WHO WERE ATTENDING THE SCHOOL, BUT H E POINTED OUT THAT EDUCATION EXPENSES ARE NOT AS HIGH AS RS.3,000/- PER CHILD. 3 6. I HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULL Y. I FIND SOME FORCE IN THE SUBMISSION THAT WHEN PEOPLE ARE STAYING IN A JOINT FAMILY, EXPENSES WILL NOT BE SO HIGH. HOWEVER, CONSIDERING THE FACT THAT SCHOOL FEES ARE VERY HIGH IN A CITY LIKE MUMBAI THEN WITHDRAWAL OF RS.20,000/- BY THE WHOLE FAMILY INCLUDING THE FOURCHILDREN MAY NOT BE SUFFICIENT. I FIND THAT WIT HDRAWALS HAVE BEEN ESTIMATED BY THE AO AS WELL AS THE CIT(A) AND THERE CANNOT BE ANY SCIENTIFIC BASIS FOR THAT EXCEPT TO ESTIMATE THE SAME. HOWEVER, CONSIDERING T HE OVER ALL FACTS, I AM OF THE VIEW THAT THE ADDITION HAS BEEN MADE ON THE HIGHER SIDE AND, THEREFORE, I HOLD THAT ADDITION ON ACCOUNT OF WITHDRAWALS SHOULD BE R EDUCED BY 50% AND ACCORDINGLY, I SET ASIDE THE ORDER OF THE LD. CIT(A ) AND DIRECT THE AO TO MAKE THE ADDITION OF RS.15,000/-, RS.24,000/-, RS.30,000/- A ND RS.27,500/- FOR A.YRS. 2003-04, 2004-05, 2005-06 AND 2007-08 ON ACCOUNT OF LOWER WITHDRAWALS. ACCORDINGLY, THE FIRST ISSUE IS PARTLY ALLOWED. 7. THE SECOND COMMON ISSUE IS REGARDING ESTIMATION OF INCOME ON ACCOUNT OF TEMPO HIRE CHARGES IN A.YRS. 2003-04, 2004-05 AN D 2005-06. AFTER HEARING BOTH THE PARTIES, I FIND THAT ASSESSEE HAS PURCHASE D ONE SMALL TEMPO WHICH WAS GIVEN ON HIRE. THE ASSESSEE HAD SHOWN INCOME AT RS. 24,000/-. HOWEVER, THE SAME HAS BEEN ESTIMATED AT RS.3500/- P.M. BY THE AO . AT THE SAME TIME AO HAS DENIED DEPRECIATION ON ACCOUNT OF TEMPO. ON APPEAL, LD. CIT(A) CONFIRMED THE ADDITION. HOWEVER, HE ALLOWED THE DEPRECIATION CLAI MED BY THE ASSESSEE. 8. BEFORE ME IT WAS POINTED OUT THAT TEMPO WAS PURC HASED ON 30-8-2000 AND IN THIS REGARD A COPY OF THE PURCHASE BILL WAS ALSO FILED. THE TEMPO WAS 4 PURCHASED FOR A SUM OF RS.1,11,325/-. THIS CLEARLY SHOWS THAT THIS IS NOT A TEMPO BUT ONLY A THREE WHEELER. HE FURTHER SUBMITTED THAT , IN FACT, ASSESSEE HAS GIVEN IT ON HIRE TO M/S RAJKAMAL NAMKIN PVT. LTD. AT RS.4,00 0/- P.M. AND HE FILED A CERTIFICATE FROM M/S RAJKAMAL NAMKIN PVT. LTD. WHIC H SHOWED THAT THREE WHEELER WAS GIVEN ON HIRE @ RS.4,000/- P.M. AND THAT IS WHY INCOME OFFERED WAS AT RS.24,000/- BECAUSE THE TEMPO WAS USED ONLY FOR SIX MONTHS A.YRS. 2003-04, AS THE SAME WAS PURCHASED ON 30-8-2000 AND REGISTRATIO N AND OTHER FORMALITIES TOOK TIME OF ONE MONTH. HE POINTED OUT THAT AO HAS WRONGLY ESTIMATED THE INCOME FOR THE WHOLE YEAR. HE ALSO POINTED OUT THAT INCOME PRESCRIBED U/S.44AE @ RS.3,500/- IS MEANT FOR HEAVY GOODS VEHICLE, WHER EAS ASSESSEE HAS PURCHASED ONLY A SMALL THREE WHEELER AND THE RATE OF RS.3,500 /- P.M. COULD NOT HAVE BEEN APPLIED. IN ANY CASE SEC.44AE WAS NOT APPLICABLE BE CAUSE ASSESSEE WAS NOT IN THE BUSINESS OF RUNNING OF THE VEHICLE. 9. ON THE OTHER HAND, LD.DR SUBMITTED THAT COPY OF THE CERTIFICATE FROM M/S RAJKAMAL NAMKIN PVT. LTD. A.YRS. 2003-04 AS WELL AS INVOICE FOR THE PURCHASE OF TEMPO WAS NEVER FILED BEFORE THE AO. HE ARGUED THAT SINCE LD. CIT(A) HAS ALREADY ALLOWED THE BENEFIT OF DEPRECIATION AND IN THAT CASE THE HIRE CHARGES EXCESSIVELY RECEIVED BY THE ASSESSEE A.YRS. 2003-04 AS PER ASSESSEES OWN VERSION AT RS.4,000/- P.M. SHOULD BE ACCEPTED OR AL TERNATIVELY THE PROFIT SHOULD BE CALCULATED A.YRS. 2003-04, 2004-05, 2005-06 AND 2007-08 PER SEC.44AE. 5 10. IN THE REJOINDER, LD.COUNSEL OF THE ASSESSEE SU BMITTED THAT IF HIRE CHARGES ARE ESTIMATED AT A LOWER RATE HE WOULD HAVE NO OBJE CTION EVEN FOR ESTIMATION OF THE PROFIT U/S.44AE. 11. I HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY. SINCE DEPRECIATION HAS ALREADY BEEN ALLOWED BY THE LD. CIT(A) AND REVENUE HAS NOT FILED ANY APPEAL AGAINST THE SAME, THE TRIBUNAL HAS NO POWER TO MAKE ENHANCEMENT, THEREFORE, IT MAY NOT BE PROPER TO DETERMINE THE INCOME U/S.44AE. SINCE THE ASSESSEE HAS HIMSELF STATED THAT TEMPO HAS BEEN GIVEN ON HIRE CH ARGES @ RS.4,000/- P.M. THEREFORE INCOME OF RS.4,000/- P.M. HAS TO BE RECKO NED AND ACCEPTED. HOWEVER, I FIND FORCE IN THE SUBMISSIONS THAT IF TEMPO IS PU RCHASED ONLY ON 30-8-2000 THEN POSSIBLY INCOME FOR THE WHOLE YEAR CANNOT BE ESTIMA TED. THEREFORE, I SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO AC CEPT THE INCOME AT RS.4,000/- P.M. FOR A PERIOD OF SIX MONTHS IN A.Y 2003-04 AND THE ESTIMATE MADE BY HIM IN OTHER YEARS IS CONFIRMED. 12. THE THIRD COMMON ISSUE IS REGARDING ADDITION MA DE U/S.14A IN RESPECT OF DISALLOWANCE AGAINST THE EXPENSES INCURRED FOR EARN ING DIVIDEND INCOME OF RS.62,655/-, RS.68,498/- AND RS.76,597/- IN A.YRS.2 004-05, 2005-06 AND 2007- 08. THE ADDITION HAS BEEN MADE BY THE AO BECAUSE AS SESSEE HAD RECEIVED SOME DIVIDEND INCOME AND HAD ALSO CLAIMED INTEREST EXPEN SES. THIS ADDITION HAS BEEN CONFIRMED BY THE LD. CIT(A). 13. BEFORE ME LD.COUNSEL OF THE ASSESSEE FILED A CH ART AND SUBMITTED THAT ONLY DIVIDEND RECEIPTS OF RS.10,318/-, RS.8720/- AN D RS.8216/- FOR A.YRS. 2004- 6 05, 2005-06 AND 2007-08. HE SUBMITTED THAT THOUGH A SSESSEE HAD BORROWED SOME FUNDS BUT WHOLE OF THE FUNDS WERE NOT INVESTED IN PURCHASE OF SHARES AND SOME OF THE FUNDS WERE GIVEN AS LOANS ON WHICH INTE REST WAS RECEIVED AND SOME MONEY WAS INVESTED IN PURCHASE OF A FLAT AND SOME O THER CURRENT ASSETS. HE SUBMITTED THAT ONLY A SUM OF RS.3,73,000/- AND RS.2 ,93,000/- WAS USED OUT OF THE BORROWED FUNDS FOR PURCHASE OF SHARES IN A.YRS. 2004-05 AND 2005-06. NO BORROWED FUNDS WERE USED FOR PURCHASE OF SHARES IN A.Y 2007-08. HE SUBMITTED THAT HONBLE BOMBAY HIGH COURT IN THE CASE OF GODR EJ & BOYCE MFG. CO.LTD. VS. DCIT [43 DTR 171] HAS ALREADY HELD THAT RULE 8D IS NOT OF RETROSPECTIVE NATURE AND ONLY A REASONABLE DISALLOWANCE CAN BE MADE. SIN CE DIVIDEND INCOME IS VERY LOW AT BEST THE ADDITION ON ACCOUNT OF SEC.14A SHOU LD BE RESTRICTED TO THIS DIVIDEND INCOME. HE ALSO SUBMITTED THAT SINCE IT IS A CASE OF SMALL ASSESSEE MATTER MAY NOT BE REMANDED, BUT A REASONABLE DISALL OWANCE CAN BE MADE BY THE TRIBUNAL ITSELF. 14. ON THE OTHER HAND, LD.DR STRONGLY SUPPORTED THE ORDER OF THE AO. HE SUBMITTED THAT HE WOULD HAVE NO OBJECTION OF REASON ABLE AMOUNT IS DISALLOWED BY THE TRIBUNAL. 15. I HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY. I FIND MERIT IN THE CONTENTION THAT THIS BEING THE CASE OF THE SMALL AS SESSEE NO PURPOSE WOULD BE SERVED IF THE MATTER IS REMANDED FOR FURTHER INVEST IGATION. THE HONBLE HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO.LTD. VS . DCIT [SUPRA] HAS ALREADY HELD THAT RULE 8D IS NOT OF RETROSPECTIVE NATURE WH ICH MEANS THAT PROPORTIONATE 7 INTEREST CANNOT BE DISALLOWED. THE HONBLE HIGH COU RT HAS HELD THAT ONLY A REASONABLE DISALLOWANCE CAN BE MADE. CONSIDERING TH E AMOUNT INVESTED IN SHARES, DIVIDEND INCOME AND THE AMOUNT OF BORROWED FUNDS USED FOR PURCHASE OF SHARES AS ADMITTED BY THE LD. COUNSEL FOR THE A.YRS . 2004-05 AND 2005-06, I ESTIMATE THE DISALLOWANCE OF RS.40,000/-, RS.35,000 /- AND RS.10,000/- WOULD BE REASONABLE FOR A.YRS. 2004-05, 2005-06 AND 2007-08. THE DISALLOWANCE HAS BEEN RESTRICTED TO RS.10,000/- IN A.Y 2007-08 BECAUSE IT WAS STATED THAT NO BORROWED FUNDS WERE USED FOR PURCHASE OF SHARES. ACCORDINGLY , I SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO MAKE ADDITION ON AC COUNT OF DISALLOWANCE U/S.14A AT RS.40,000/-, RS.35,000/- AND RS.10,000/- FOR A.YRS. 2004-05, 2005-06 AND 2007-08. 16. IN THE RESULT, ASSESSEES APPEALS ARE PARTLY AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 18/3/2011. S D/- (T.R.SOOD) ACCOUNTANT MEMBER MUMBAI: 18/3/2011. P/-*