Shri Ramesh Rijhwani, Indore V. The A.C.I.T., Indore

ITSSA 52/IND/2010

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8229 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 13-05-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KESHAV SAXENA
• Assessee Lawyers: SANJAY SODANI
• Keywords: Unexplained investment; Depreciation
• Section: 14A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER IT(SS)A NOS. 51 TO 57/IND/2010 A.YS. 2002-03 TO 2008-09 RAMESH RIJHWANI INDORE PAN ADJPR3389K APPELLANT VS ASSTT. COMMR. OF INCOME TAX 1(2), INDORE RESPONDENT APPELLANT BY SHRI SANJAY SODANI RESPONDENT BY SHRI KESHAV SAXENA O R D E R PER SHRI R.C. SHARMA, ACCOUNTANT MEMBER AGGRIEVED BY THE ORDERS DATED 26.2.2010 OF THE LEA RNED COMMISSIONER OF INCOMETAX (APPEALS) THE ASSESSEE HA S PREFERRED THESE APPEALS. 2. IN IT(SS) A. NOS. 51 TO 55/IND/2010 FOLLOWING C OMMON GROUNDS HAVE BEEN TAKEN :- (1) THAT ADDITION ON ACCOUNT OF WITHDRAWAL FOR HOUS EHOLD EXPENSES IS UNJUSTIFIED, UNREASONABLE AND BAD IN LA W. 2 (2) THAT DISALLOWANCE OF VEHICLE EXPENSES IS UNJUST IFIED, UNREASONABLE AND BAD IN LAW AND ONLY ON ESTIMATION BASIS. (3) THAT DISALLOWANCE OF INTEREST U/S 14A IS UNJUSTIFIED, UNREASONABLE AND BAD IN LAW. IN I.T. (SS) A. NO. 56/IND/2010 FOLLOWING GROUNDS H AVE BEEN TAKEN :- (1) THAT DISALLOWANCE OF VEHICLE EXPENSES IS UNJUST IFIED, UNREASONABLE AND BAD IN LAW AND ONLY ON ESTIMATION BASIS. (2) THAT DISALLOWANCE OF INTEREST U/S 14A IS UNJUSTIFIED, UNREASONABLE AND BAD IN LAW. IN IT(SS) A. NO. 57/IND/2010 FOLLOWING GROUNDS HAVE BEEN TAKEN :- 1 THAT ADDITION ON ACCOUNT OF UNEXPLAINED CASH OF RS.6,56,000/- IS UNJUSTIFIED, UNREASONABLE AND BAD IN LAW. 2. THAT DISALLOWANCE OF VEHICLE EXPENSES IS UNJUSTI FIED, UNREASONABLE AND BAD IN LAW AND ONLY ON ESTIMATION BASIS. (3) THAT DISALLOWANCE OF INTEREST U/S 14A IS UNJUSTIFIED, UNREASONABLE AND BAD IN LAW. (4) THAT ADDITION OF RS.5,41,000/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IS UNJUSTIFIED, UNREASONABLE AND BAD IN LAW. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. THE ASSESSEE IS ENGAGED IN THE RETAIL BUSINESS OF ICE-C REAM AND COLD 3 DRINKS IN THE NAME OF MONICA GALAXY RAJANI. A SEARC H ACTION U/S 132(1) OF THE INCOME TAX ACT, 1961 WAS CARRIED OUT AT THE RESIDENCE AND BUSINESS PREMISES OF THE MEMBERS OF T HIS GROUP. THE ASSESSMENTS WERE FINALIZED AFTER MAKING SOME ADDITIONS/DISALLOWANCES. DURING THE ASSESSMENT PROC EEDINGS THE ASSESSEE HAS PRODUCED BOOKS OF ACCOUNTS WHICH WERE VERIFIED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER FOUND THAT IN THE ASSESSMENT YEAR 2002-03, THE ASSESSEE HAD SHOWN WIT HDRAWALS OF RS.49,500/- IN INDIVIDUAL CAPACITY. AFTER DISCUS SING THE EXPENDITURE HAVING BEEN INCURRED ON THE CHILDRENS EDUCATION, THE ASSESSING OFFICER ESTIMATED THE HOUSEHOLD EXPEN DITURE AT RS. 1,50,000/- AND THE DIFFERENCE WAS ADDED IN THE ASSE SSEES INCOME. BY THE IMPUGNED ORDER, THE LEARNED COMMISSI ONER OF INCOMETAX (APPEALS) GAVE RELIEF WITH RESPECT TO THE WITHDRAWAL SHOWN BY THE WIFE OF THE ASSESSEE. WE FIND THAT THE RE WAS ALSO WITHDRAWAL OF RS. 36,000/- BY THE ASSESSEES HUF WH ICH WAS UTILISED TOWARDS HOUSEHOLD EXPENDITURE. WE FIND TH AT TOTAL WITHDRAWALS SHOWN BY THE ASSESSEE AMOUNT TO RS. 94, 000/- (RS.49,500 + RS. 8500/- + RS. 36000/-) AS AGAINST W HICH THE ASSESSING OFFICER HAS ESTIMATED RS. 1,50,000/-. KEE PING IN VIEW 4 THE STATUS OF THE ASSESSEE, THE ADDITION OF RS. 25, 000/- ON THIS COUNT WILL MEET THE ENDS OF JUSTICE. WE DIRECT ACCO RDINGLY. 4. IN THE ASSESSMENT YEARS 2003-04 TO 2006-07 THE A SSESSING OFFICER HAS REASONABLY ESTIMATED THE HOUSEHOLD EXPE NDITURE KEEPING IN VIEW THE EDUCATIONAL EXPENDITURE INCURRE D ON THREE SCHOOL GOING CHILDREN. DEDUCTION IN RESPECT OF THE IR FEES WAS ALSO CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME. FO LLOWING HOUSEHOLD EXPENDITURE HAS BEEN COMPUTED BY THE ASSE SSING OFFICER :- A.Y. EDUCATION EXP.FOR 5 MEMBERS OTHER EXP. FOR 5 MEMBERS TOTAL TOTAL HOUSEHOLD EXPENSES ESTIMATED BY A.O. TOTAL HOUSEHOLD EXPENSES SHOWN BY ASSESSEE DECLARED DURING ASSESSMENT PROCEEDINGS 2003-04 67000 1650 PER HEAD X 5 99000 166000 60750 72755 2004-05 75000 1800 PER HEAD X5 108000 183000 120000 131172 2005-06 83000 2200 PER HEAD X 5 120000 203000 104000 134000 2006-07 88000 2250 PER HEAD X 5 135000 223000 104959 140959 BY THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) FOUND THAT THE ASSESSING OFFICER HAS VERY REASONABLY ESTIMATED THE HOUSEHOLD EXPENDITURE OF FAMILY OF 5 MEMBERS OUT OF WHICH THREE WERE SCHOOL GOING CHILDREN AND THE A SSESSEE HAS ALSO CLAIMED DEDUCTION ON ACCOUNT OF FEE PAID FOR S UCH CHILDREN. 5 ACCORDINGLY, THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) DIRECTED THE ASSESSING OFFICER TO GIVE BENEFIT OF W ITHDRAWALS DECLARED BY THE ASSESSEE DURING THE ASSESSMENT PROC EEDINGS. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARN ED COMMISSIONER OF INCOMETAX (APPEALS) KEEPING IN VIEW THE STATUS OF THE ASSESSEE FAMILY. 5. IN ALL THE ASSESSMENT YEARS UNDER CONSIDERATION, THE ASSESSING OFFICER HAS DISALLOWED PART OF THE EXPEND ITURE CLAIMED FOR RUNNING AND MAINTENANCE OF CAR AND DEPRECIATION ON THE PLEA OF PERSONAL USE OF CAR BY THE ASSESSEE. BY THE IMPU GNED ORDER, THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS RESTRICTED THE DISALLOWANCE TO THE EXTENT OF 15% OF THE EXPEND ITURE CLAIMED. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORD ER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) INSOFAR AS THE ASSESSEE WAS MAINTAINING ONLY ONE CAR WHICH WAS MOS TLY USED FOR HIS PERSONAL PURPOSES. ACCORDINGLY, GROUND TAK EN BY THE ASSESSEE IN ALL THE YEARS ARE DISMISSED. 6. THE ASSESSING OFFICER HAS ALSO MADE DISALLOWANCE BY INVOKING PROVISIONS OF SECTION 14A OF THE ACT. HOW EVER, THE ASSESSEE HAS DENIED INCURRING OF ANY EXPENDITURE FO R EARNING THE EXEMPTED INCOME. IT WAS CLAIMED THAT NO DIVIDEND I NCOME WAS 6 RECEIVED DURING THE YEAR. BY THE IMPUGNED ORDER, T HE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) CONFIRMED THE D ISALLOWANCE OF INTEREST OF RS.17,894/- U/S14A OF THE ACT AFTER OBSERVING THAT NOTHING WAS BROUGHT TO HIS NOTICE TO SHOW THAT THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE ON INTEREST. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IN CONFIRMING THE DISALLOWANCE U/S 14A OF THE ACT. 7. IN THE ASSESSMENT YEAR 2008-09 THE ASSESSEE IS A GGRIEVED WITH THE ADDITION OF RS. 6,56,000/- ON ACCOUNT OF U NEXPLAINED CASH. THE FACTS IN BRIEF ARE THAT DURING THE COURSE OF SEARCH, CASH OF RS. 6,71,005/- WAS FOUND FROM THE POSSESSION OF THE ASSESSEE WHICH WAS CLAIMED TO BE RELATED WITH MONICA GALAXY PRIVATE LIMITED. IT WAS FOUND THAT MONICA GALAXY PRIVATE L IMITED WAS HAVING CASH IN HAND AT RS. 14,407/- ONLY. THE ASSE SSING OFFICER GAVE CREDIT OF RS.14,407/- AND MADE THE ADDITION OF RS.6,56,000/- ON ACCOUNT OF CASH FOUND. BY THE IMP UGNED ORDER, THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) CON FIRMED THE ACTION OF THE ASSESSING OFFICER. 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFU LLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FIN D FROM RECORD THAT THE CASH OF RS. 6,71,005/- WAS FOUND WITH THE ASSESSEE, SHRI 7 RAMESH RIZWANI, WHO WAS DIRECTOR OF MONICA GALAXY P RIVATE LIMITED. IT WAS EXPLAINED THAT THE ASSESSEE HAS PO SSESSED THE CASH SO FOUND WITH HIM AS DIRECTOR OF THE COMPANY A ND IT DOES NOT BELONG TO THE ASSESSEE. HOWEVER, THE ASSESSEE COULD NOT PRODUCE ANY DOCUMENTARY OR OTHER EVIDENCE TO SUBSTA NTIATE THAT THE CASH SO FOUND IN HIS POSSESSION BELONGED TO MON ICA GALAXY PRIVATE LIMITED. HOWEVER, THE ASSESSING OFFICER HA S ALREADY GIVEN CREDIT OF RS.14,407/- AS CASH IN HAND SHOWN IN THE BOOKS OF MONICA GALAXY PRIVATE LIMITED AND ACCORDINGLY AN AD DITION OF RS.6,56,000/- WAS MADE IN THE HANDS OF THE ASSESSEE WHICH REMAINED UNEXPLAINED. THE FINDINGS OF THE LOWER AU THORITIES COULD NOT BE CONTROVERTED BY THE LEARNED COUNSEL FO R THE ASSESSEE BY BRINGING ANY POSITIVE MATERIAL BEFORE US. WE, T HEREFORE, DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITIES IN SUSTAINING THE ADDITION OF RS.6,56,0 00/-. 9. IN THE ASSESSMENT YEAR 2008-09 AN ADDITION OF RS.5,41,000/- WAS MADE ON ACCOUNT OF UNEXPLAINED IN VESTMENT. THE FACTS, IN BRIEF, ARE THAT DURING THE COURSE OF SEARCH, A PAPER WAS SEIZED MARKED AS LPS-4 FROM THE COMPANYS PREMI SES MENTIONING DETAILS OF INVESTMENT IN HOUSE AND LOAN. THE ASSESSEE WAS ASKED TO EXPLAIN THE INVESTMENT AND LO AN. IN REPLY 8 IT IS STATED THAT IT IS A LOOSE PAPER ON WHICH ONE OF THE STAFF MEMBERS MR. BHAWAN PARMAR HAS ESTIMATED TO PURCHASE A HOUSE PROPERTY. WE ARE NOWHERE CONNECTED TO THIS PAPER A ND NONE OF THE TRANSACTION HAS BEEN MADE FOR ANY HOUSE PROPERT Y OTHER THAN RECORDED INTO BOOKS OF ACCOUNTS OF OUR FAMILY MEMBE RS. THE REPLY OF THE ASSESSEE IS NOT ACCEPTED AS THERE IS WORD US E MAINE DIYE AND BAKI BACHE WHICH IS CLEAR INDICATIVE TH AT THE TRANSACTION HAS TAKEN PLACE. AS THE SOURCE OF INVES TMENT IS NOT EXPLAINED AS SUCH RS. 15,41,000/- ADDED TO THE INCO ME OF THE COMPANY AS THE PAPER WAS FOUND AT THE FACTORY PREMI SES AS SUCH THE INCOME IS ADDED TO SUBSTANTIVE BASIS IN THE HAN D OF COMPANY AND AS THE WORD USED MAINE DIYA INDICATED THE TRANS ACTION HAS BEEN DONE BY ANY PERSON AS SUCH THE SAME IS ADDED I N PROTECTIVE BASIS IN THE HANDS OF SHRI RAMESH RIJHWANI, THE ASS ESSEE WHO IS THE DIRECTOR OF THE COMPANY AND LOOK AFTER THE WORK OF THE COMPANY. BY THE IMPUGNED ORDER, THE LEARNED COMMIS SIONER OF INCOMETAX (APPEALS) RESTRICTED THE ADDITION TO THE EXTENT OF RS. 5,41,000/- AFTER HAVING MADE THE FOLLOWING OBSERVAT IONS :- THE ISSUE IS CONSIDERED. THE FACTS ARE THAT A PAPER SEIZED MARKED AS PAGE 84 OF LPS-4 CONTAINS DETAILS OF INVESTMENT IN HOUSE AND LOAN. THE A.O. 9 HELD THE SAME AS UNEXPLAINED INVESTMENT OF THE APPELLANT AND ADDED THE AMOUNT OF RS.15,41,000/- ON THIS ACCOUNT. IN THE WRITTEN SUBMISSIONS, THE APPELLANT STATED THAT AMOUNT IS RS.5,41,000/- AND NOT RS.15,41,000/- AS HAS BEEN TAKEN BY THE A.O. HE ALSO ENCLOSED A COPY OF THE RELEVANT SEIZED PAPER. THE APPELLANT FURTHER SUBMITTED THAT HE PURCHASED A PROPERTY IN AUCTION FROM THE STATE BANK OF INDORE FOR RS.5,41,000/- AND ENCLOSED A COPY OF THE ALLOTMENT LETTER DT. 16.04.2007 OF THE STATE BANK OF INDORE. THE DETAILS AND SOURCE OF PAYMENT OF THIS AMOUNT HAS HOWEVER NOT BEEN FURNISHED. THE APPELLANT ENCLOSED A COPY OF BANK STATEMENT OF ONE NEERAJ BANSILAL AND SMT. MEENA SONI FOR THE PERIOD 12.04.07 TO 13.01.08. IT IS HOWEVER NOT CLEAR THAT NOW THIS AMOUNT IS RELEVANT TO EXPLAIN THE INVESTMENT OF RS. 5,41,000/- MADE BY THE APPELLANT IN PURCHASE OF THIS HOUSE. IN VIEW OF TH IS FACT, IT IS HELD THAT THE APPELLANT HAS NOT BEEN AB LE TO EXPLAIN THE SOURCE OF INVESTMENT OF 10 RS.5,41,000/- MADE IN PURCHASE OF THIS HOUSE AND HENCE ADDITION MADE BY THE A.O. ON THIS ACCOUNT IS CONFIRMED BUT FOR RS. 5,41,000/- ONLY. 10. THE ASSESSEE IS IN FURTHER APPEAL BEFORE US AGAINST THE SAID ADDITION OF RS. 5,41,000/- AS RETAINED BY THE LEARN ED COMMISSIONER OF INCOMETAX (APPEALS). 11. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FIN D FROM RECORD THAT LPS -4 CONTAINED DETAILS OF INVESTMENT IN THE HOUSE AND LOAN. ON THE BASIS OF ALLOTMENT LETTER OF THE HOUS E ISSUED BY THE STATE BANK OF INDORE WHEREIN PROPERTY WAS AUCTIONED AT RS.5,41,000/-, THE LEARNED COMMISSIONER OF INCOMETA X (APPEALS) RETAINED THE ADDITION TO THE EXTENT OF RS.5,41,000/ -. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED COMM ISSIONER OF INCOMETAX (APPEALS) IN RETAINING THE ADDITION IN RE SPECT OF THE AMOUNT PAID TO STATE BANK OF INDORE FOR ALLOTMENT O F THE HOUSE VIDE LETTER DATED 16.4.2007. NOTHING WAS BROUGHT TO OUR NOTICE BY THE LD. COUNSEL FOR THE ASSESSEE TO PERSUADE US TO DEVIATE FROM THE FINDINGS RECORDED BY THE LEARNED COMMISSIONER O F INCOME TAX (APPEALS). ACCORDINGLY, WE CONFIRM HIS ACTION. 11 12. IN THE RESULT, THE APPEAL FOR THE ASSESSMENT YEAR 2 002- 03 IS ALLOWED IN PART WHEREAS THE APPEALS FOR THE A SSESSMENT YEARS 2003-04 TO 2008-09 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE, 2010. (JOGINDER SINGH) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER INDORE JUNE 30, 2010 COPY TO APPLICANT, RESPONDENT, CIT, CIT(A), DR DN/-