MR. JITENDRA RATILAL SALOT,MUMBAI vs. ITO 11(3)(3), MUMBAI
What did the Tribunal hold?
The Tribunal restored both issues to the file of the AO for fresh consideration. The AO is directed to examine the documents furnished by the assessee and decide the matters afresh after providing a reasonable opportunity of hearing.
What were the facts?
The assessee challenged the disallowance of Rs. 3,93,804/- incurred through credit card for a company and an ad-hoc disallowance of Rs. 4,80,000/- for household expenses. The assessee claimed to have provided supporting documents to the Assessing Officer (AO) and Commissioner of Income Tax (Appeals) (CIT(A)), but these were allegedly not considered.
What were the issues?
Whether the AO and CIT(A) properly considered the documentary evidence provided by the assessee regarding credit card expenses and household expenditure, and whether ad-hoc disallowances were justified without proper appreciation of facts.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI VIKAS AWASTHY
अपीलाथ) -ारा/ Appellant by : Sh. Sandeep Chaturvedi *ितवाद, -ारा/Respondent by : Sh. Sanjay J. Sethi सुनवाई क. ितिथ/ Date of hearing : 31/05/2021 घोषणा क. ितिथ/ Date of pronouncement : 10/06/2021 आदेश/ ORDER PER VIKAS AWASTHY, J.M: This appeal by the assessee is against the order of Commissioner of Income Tax (Appeals)-18, Mumbai [hereinafter referred to as ‘the CIT(A)’] dated 28.02.2019 for the Assessment Year (AY) 2013-14.
The assessee has assailed the order of CIT(A) on two counts i.e.
आअसं. 2862/मुं/2019 (िन.व.2013-14) (A.Y.2013-14)
(1) Disallowance of expenditure under section 69C of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] – Rs. 3,93,804/- (2) Adhoc disallowance of household expenditure under section 69C of the Act. – Rs. 4,80,000/-
Shri Sandeep Chaturvedi appearing on behalf of the assessee submitted that the assessee is a senior citizen. The assessee filed his return of income for AY 2013-14 on 30.04.2014 declaring total income of Rs. 31,60,240/-. The assessee has Income from Salary, House Property & Income from Other Sources. During assessment proceedings, the assessee interalia made disallowance of expenditure Rs. 3,93,804/-. The said expenditure was incurred by the assessee through Credit Card of HDFC Bank. The assessee is a director of M/s Vijay Latex Pvt. Ltd. & Vijay Sabre Safety Pvt. Ltd. The assessee has made payments through Credit Card in respect of expenditure incurred for the aforesaid company. The assessee had furnished the details before the AO on 16.03.2016 and again on 18.03.2016. Along with the details, the assessee furnished statements of Credit Card, however, the same were not considered by the AO in assessment proceeding. The ld. AR pointed that the assessee had furnished the statements before the AO, however, the AO declined to accept the same on the premises that the assessment order has been finalized, whereas the assessment order has passed on 21.03.2016. In First Appellate proceeding, the assessee brought this fact to the notice of CIT(A). The CIT(A) refused to accept the statements and disbelieved that the assessee furnished the details & statements before the Assessing Officer (AO).
आअसं. 2862/मुं/2019 (िन.व.2013-14) (A.Y.2013-14)
In respect of ground no.2, the ld. AR submitted that the AO has made adhoc disallowance of Rs. 4,80,000/- in respect of household expenditure, the assessee had furnished the details, the AO rejected the same and proceeded on to estimate disallowance in respect of household expenditure. The ld. AR pointed that the assessee had furnished the details of the family to the AO, however, without appreciating the facts, the AO made addition. In First Appellate proceedings, the CIT(A) confirmed the disallowance without properly appreciating the submissions of the assessee and documents on record. The assessee has a family of six members. The estimation of monthly expenditure at Rs. 40,000/- per month by no stretch of imagination is reasonable. The ld. AR placed reliance on the decision of Tribunal in the case of Atul D. Pawar in decided on 13.02.2013 to contend that no disallowance on estimation should be made in respect of household expenditure.
Shri Sanjay Sethi representing the Department vehemently defended the impugned order and prayed for dismissing the appeal of assessee. The ld. DR submitted that the assessee had not brought on record any documentary evidences before the AO to substantiate his claim in respect of expenditure made through Credit Card.
Submissions made by both sides heard, orders of authorities below examined. In ground no.1 of appeal, the assessee has assailed disallowance of Rs.3,93,804/- paid through Credit Card in respect of M/s Vijay Sabre Safety Pvt. Ltd. The assessee purportedly furnished Credit Card statements before the आअसं. 2862/मुं/2019 (िन.व.2013-14) (A.Y.2013-14)
AO on 18.03.2016, the forwarding letter and the Credit Card statements are at page 38 to 52 of the Paper Book. The contention of the assessee is that the AO refused to accept the same on the pretext that the assessment order has been finalized, whereas the assessment order was passed on 21.03.2016. A perusal of the forwarding letter at page no.25 reveals that it does not bear the acknowledgement stamp of the office of the AO. Without deliberating and making further observation on whether documents were furnished by the assessee during assessment proceedings or not, I deem it appropriate to restore this issue to the file of AO for considering the statements furnished by the assessee vide letter dated 18.03.2016 and decide the issue afresh, after affording reasonable opportunity of hearing to the assessee, in accordance with law. The ground no.1 of the appeal is thus, allowed for statistical purpose.
In ground no.2 of appeal, the assessee has assailed addition of Rs. 4,80,000/- made in respect of household expenditure. The short contention of the assessee is that the addition has been made without appreciating the fact and without affording proper opportunity of hearing to the assessee. A perusal of the impugned order shows that CIT(A) has confirmed the addition by invoking the principles of ‘preponderance of probability’ in the absence of any cogent evidence. The ld. AR of the assessee contended that the assessee has furnished all the necessary evidences before the AO in support of his contention on this issue, however, the same has not been examined and adhoc disallowance has been made. I deem it appropriate to restore this issue as well to the file of AO for examining the documents furnished by the assessee in आअसं. 2862/मुं/2019 (िन.व.2013-14) (A.Y.2013-14)
support of his contentions. The AO shall grant reasonable opportunity of hearing to the assessee before deciding this issue, in accordance with law.
In the result, appeal of assessee is allowed for statistical purpose, in the terms aforesaid.
Order pronounced in the open court on Thursday, the 10th day of June, 2021. Sd/- (VIKAS AWASTHY) �याियक सद�य / JUDICIAL MEMBER मुंबई/Mumbai, 3दनांक/Dated: 10/06/2021 SK, PS *ितिल�प अ4े�षतCopy of the Order forwarded to : *ितिल�प अ4े�षत *ितिल�प अ4े�षत *ितिल�प अ4े�षत 1. अपीलाथ)/The Appellant , 2. *ितवाद,/ The Respondent. 3. आयकर आयु5(अ)/ The CIT(A)- 4. आयकर आयु5 CIT 5. �वभागीय *ितिनिध, आय.अपी.अिध., मुबंई/DR, ITAT, Mumbai 6. गाड9 फाइल/Guard file.
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