SHRI YOGESH RAOJIBHAI PATEL,,ANAND vs. THE INCOME TAX OFFICER, WARD-1,, ANAND

The assessee has raised following grounds of appeal:- “1. The Learned Commissioner of Income Tax (Appeals)-IV, Baroda has erred in law and on facts of the case by confirming the addition of Rs.91,917/- made by the Assessing Officer on estimation basis in respect of household expenditure. 2. The Learned Commissioner of Income Tax (Appeals)-IV, Baroda has erred in law and on facts of the case by confirming the addition of Rs.85,255/- made by the Assessing Officer in respect of vehicle expenses. 3. The Learned Commissioner of Income Tax (Appeals)-IV, Baroda has erred in law and on facts of the case by confirming the addition of Rs .5,00,000/- by the Assessing Officer u/s 69 in respect of investment in property. 4. The Appellant prays for the following: (1) To delete the disallowance of household expense of Rs 91,917/-. (2) To delete the disallowance of vehicle expenses of Rs 85,255/-. (3) To delete the disallowance of Rs 5,00,000/- made u/s 69 in respect of investment made in property.”

In this case, return of income declaring income of Rs. 3,23,110/- was filed on 30th Sep, 2009. Subsequently, the case was selected under scrutiny by issuing of notice u/s. 143(2) of the act on 20th August, 2010. During the course of assessment proceedings, the assessing officer noticed that assessee has shown household expenditure incurred during the year to the amount of Rs. 1,48,083/-. The assessing officer has called for justification of the reasonableness of the aforesaid expenditure claimed to be incurred by the assessee. The assessee has explained that his family has consisted of four members, self, wife and two children who were studying, therefore, looking to the size of the family, the household expenditure were properly shown. The assessing officer has not agreed with the explanation of the assessee. He was of the view that looking to the social status of the assessee, two school going children, the expenditure @ 1,48,083/- towards household were not proper and reasonable. The assessing officer has also taken into consideration the petrol expenditure, electricity expenses etc. and computed

During the course of assessment, the assessing officer has also noticed that assessee has debited vehicle expenses at Rs. 8,999/-, vehicle insurance expenses Rs. 41,344/-, vehicle loan interest at Rs. 21,524/-, and depreciation of car at Rs. 3,54,353/-. The total of these expenses was Rs. 4,26,220/-. The assessing officer was of the view that the personal use of motor car cannot be ruled out. Therefore, assessing officer has disallowed 20% of these expenses to the amount of Rs. 85,244/- and added to the total income of the assessee.

During the course of assessment, the assessing officer further noticed that assessee has purchased a property to the wroth of Rs. 78,87,000/- during the year under consideration. The assessing officer asked the assessee to explain the source of purchase of this property. The assessee explained that this property was jointly purchased and he was having 25% shares in the property. The assessee has contributed as per his share to the amount of Rs. 22,50,000/-. The assessee explained that the investment was made out of agricultural income earned by his father Shri Raojibhai Nayarbhai Patel who was having more than 30 bighas of agricultural land. The assessing officer has not agreed with the explanation of the assesse. He stated that the assesee has failed to substantiate with the relevant supporting evidences i.e. sale of bills of agriculture produce, bills of expenditure for agriculture activity etc. to establish that the source of cash deposit was from out of the agriculture income earned by his father. Therefore, the assessing officer has disallowed

Aggrieved assessee has filed appeal before the ld. CIT(A). In respect of disallowance of household expenditure, the ld. CIT(A) has dismissed the appeal of the assessee stating that the assessee has not shown withdrawal by any of his family members and assessee has not shown any petrol expenditure in spite of the fact that he has purchased a new vehicle during the year under consideration. The ld. CIT(A) has also sustained the disallowance of vehicle expenses made by the assessing officer on the ground that assessee has not established that the vehicle was used exclusively for his business purpose. The ld. CIT(A) has also sustained the addition of Rs. 5 lacs made by the assessing officer u/s. 69 of the act as unaccounted investment in the property on the ground that assessee could not fully explain with supporting evidences that the entire cash deposits in the bank account was out of agricultural income of his father.

During the course of appellate proceedings before us, we have heard both the sides and perused the material on record carefully. In respect of disallowance of household to the amount of Rs. 91,917/-, we observed that assessee has failed to justify the household expenditure claimed by him and assessee has not given any break-up of the expenditure incurred in respect of electricity, telephone and petrol expenditure etc. The assessee has also purchased a new vehicle during the year under consideration. We have further noticed that no other family member of the assessee has made any withdrawal during the year under consideration. After considering the above

In the result, the appeal of the assessee is partly allowed.