GULRAJ,HYDERABAD vs. ASST.COMMISSIONER OF INCOME TAX, CIRCLE-5(1), HYDERABAD

Brief facts of the case are that the assessee, an individual, having derived income from business, capital gains and income from other sources during the relevant year, filed his return of income for the A.Y 2007-08 on 31.12.2007 by declaring a net income of Rs.16,86,220/-. The case was selected for scrutiny and the order u/s 143(3), dated 29.12.2009 was passed by making additions towards loans taken of Rs.93,000/- and towards deposits made in the Bank as ‘on money’ received with regard to immovable property sold of Rs.12,00,000/- and addition towards low house hold expenses of Rs.1,00,000/-. On appeal, the CIT (A) confirmed all the additions and thereafter, the assessee filed an appeal before the ITAT. ITAT set aside all the issues to the file of the AO with a direction to pass fresh orders.

During the set aside proceedings, the assessee was directed to produce creditors who have advanced loans of Rs.93,000/-. The assessee could not submit any details and therefore, agreed for addition of Rs.93,000/-. Further, with regard to the addition of Rs.12.00 lakhs on account of ‘on money’ received on the sale of immovable property, the assessee’s explanation was called for and the AO found the explanation to be in order. He accordingly did not repeat the addition. As regards low withdrawal towards personal expenditure, the AO reduced it to Rs.50,000/- from Rs.1,00,000/- additions made earlier for which the assessee agreed.

However, subsequently the assessee preferred an appeal before the CIT (A) against the additions made by the AO. The CIT (A) confirmed all the additions and the assessee is in second appeal before us by raising the following grounds of appeal: “1) The order of the learned Commissioner of Income-tax (Appeals) is erroneous both on facts and in law. 2) The learned Commissioner of Income-tax (Appeals) erred in deciding the appeal ex-parte. 3) The learned Commissioner of Income-tax (Appeals) erred in confirming addition of Rs.3,46,594/- representing disallowance of expenses made by the Assessing Officer.

At the time of hearing, the learned Counsel for the assessee submitted that the assessee does not wish to press Ground No.2 and therefore, it is rejected as not pressed. As regards the other grounds, he reiterated the submissions made before the authorities below, while the learned DR supported the orders of the authorities below.

Having regard to the rival contentions and the material on record, we find that, in so far as the addition of Rs.3,46,594/- is concerned, the said addition was confirmed by the CIT (A) in the earlier proceedings and the AO in the set aside proceedings, had not dealt with the same. Therefore, it does not arise out of the assessment order before us. It is, therefore, rejected as not arising out of the assessment order.

As regards Ground No.4, it is an agreed addition before the AO and even before us the assessee has not furnished any details/evidence with regards to the creditors. Therefore, Ground of appeal No.4 is also rejected.

As regards the addition of Rs.50,000/- is concerned, the learned Counsel for the assessee submitted that the assessee was staying along with his family in a joint family and therefore, he does not have to incur any expenditure and therefore, the addition of Rs.50,000/- was also unwarranted. The learned DR was also heard.

Having regard to the rival contentions and the material on record, we find that the assessment order before is 2007-08 and the assessee is allegedly staying with his joint family and therefore, he may not have incurred expenditure even to the extent of Rs.50,000/- during the said period. Therefore, we restrict the disallowance to Rs.30,000/- and delete the additions to the extent of Rs.20,000/-. Ground of appeal No.5 is thus partly allowed. 10. In the result, assessee’s appeal is partly allowed.