Loading judgment…
Facts
The assessee filed appeals against orders confirming additions made by the Assessing Officer for unexplained foreign tour and household expenses. These expenses were claimed to be accounted for in a settlement petition filed by the assessee's father before the ITSC.
Held
The Tribunal found merit in the assessee's contention regarding foreign travel expenditure, noting that the ITSC order was binding and the lower authorities were not justified in making fresh additions. For household expenses, a reasonable estimation was adopted, restricting the disallowance to 75% of the amount added.
Key Issues
Whether additions for foreign tour and household expenses are sustainable when disclosed and accepted in settlement proceedings before ITSC, and whether the estimation of household expenses by the AO was reasonable.
Sections Cited
69C, 153A, 143(3)
AI-generated summary — verify with the full judgment below
Order PER LALIET KUMAR, J.M: Both the above appeals have been filed by the Assessee against the separate orders of the Ld. CIT(A)-3, Gurgaon each dt. 23/08/2024. We are taking the lead appeal.
This appeal by the assessee is directed against the order dated 23.08.2024 passed by the Commissioner of Income Tax (Appeals)-3, Gurgaon [hereinafter "Ld. CIT(A)"] for the Assessment Year 2015-16, confirming the addition of ₹2,67,600/- made by the Assessing Officer under section 69C of the Income Tax Act, 1961.
Grounds of Appeal The assessee has challenged the additions made towards unexplained foreign tour expenses of ₹90,000/- and household expenses of ₹1,77,600/-, both of which were claimed to have been duly accounted for in the settlement petition filed by the assessee’s father before the Hon’ble Income Tax Settlement Commission (ITSC).
Brief Facts of the Case 3.1 The assessment was originally framed under section 153A r.w.s. 143(3) of the Act on 18.12.2017, wherein the above additions were made. These were contested up to the level of the ITAT, which remanded the matter back to the Assessing Officer to consider additional evidence, particularly the order of the Hon’ble ITSC dated 31.03.2019. 3.2 The Hon’ble ITSC, in the case of Shri Umesh Kumar Goel (father of the assessee), accepted a surrender of ₹8,35,000/- towards foreign tour expenses and ₹8,00,000/- towards household expenses of the family for AYs 2010-11 to 2016-17. This included ₹80,000/- and ₹1,25,000/- specifically allocated for the assessee for the relevant year.
3.3 Despite this, the Assessing Officer in the reassessment proceedings again made the same additions, and the Ld. CIT(A) confirmed them.
Submissions of the Assessee The Ld. AR submitted that the foreign tour and household expenses of the assessee were already disclosed by his father and accepted by the ITSC. The ITSC order is binding and conclusive, and the Assessing Officer could not make additions on the same facts. It was also submitted that the same issue was considered and relief was granted by the CIT(A) in the case of Smt. Radhika Goel (sister-in-law of the assessee) under similar circumstances.
Submissions of the Department The Ld. Departmental Representative (DR) supported the orders of the lower authorities and submitted that the issue of foreign travel should be decided in light of the timing of the settlement period and the applicability of the ITSC findings for the specific year in question. It was argued that while some expenses were declared before the ITSC, the actual expenditure by the assessee still needed verification and attribution.
As regards the household expenses, the Ld. DR submitted that the estimation made by the Assessing Officer appeared to be a reasonable exercise of discretion, considering that the assessee had started contributing to household expenses during the relevant period, and complete documentary evidence was not furnished.
Findings and Decision 6.1 We have heard the rival submissions and perused the material on record. It is undisputed that the assessee’s father, Shri Umesh Kumar Goel, had made a voluntary disclosure before the ITSC, which was accepted for the assessment year 2015-16. The Hon’ble ITSC had also directed an ad hoc addition of ₹20,000/- per year over and above the surrendered amounts for foreign travel to cover any estimation deficiencies. The Department has already acted upon the ITSC order in the case of the father. The ITSC proceedings are final and binding under Chapter XIX-A of the Act. 6.2 We, therefore, find merit in the assessee’s contention that once ₹80,000/- were disclosed in the settlement proceedings before the Settlement Commission and against the amount of Rs. 80,000/-, Rs. 20,000/- had been accepted then the lower authorities wee not justified in making fresh additions on the same counts except for the additional ₹20,000/- directed by the ITSC. Hence the addition made in respect of Foreign Travel Expenditure is hereby deleted.
6.3 We have considered the rival submissions and perused the material available on record. The issue pertains to the disallowance of household expenses made by the Assessing Officer, which were added to the income of the assessee on an estimated basis. It is observed that the Tribunal in the earlier round of proceedings had directed the Assessing Officer to decide the issue in accordance with the findings recorded by the Settlement Commission.However, it is pertinent to note that the Authorized Representative has not brought to our notice any material to demonstrate that the household expenditure of the assessee was the subject matter of proceedings before the Settlement Commission. On the contrary, it appears that only the household expenditure of the assessee’s father was considered in the settlement proceedings. 6.4 Considering the above and the fact that the addition made by the Assessing Officer is purely on an estimated basis, we are of the considered opinion that a reasonable estimation needs to be adopted. Accordingly, we restrict the disallowance to 75% of the amount originally added by the Assessing Officer. The assessee is granted a relief of 25% on this account. 6.5 In view of the above, the appeal of the assessee is partly allowed.
1072/Chd/ 2024 6.6 It is noted that the grounds raised in Appeal No. 1072/2024 are identical to those raised in Appeal No. 1071/Chd/2024. the addition made towards foreign travel expenditure is directed to be deleted, as the same is not sustainable in the facts and circumstances of the case.The addition made towards household expenditure is restricted to a maximum of 75% of the total amount estimated by the Assessing Officer. Consequently, the assessee is granted relief to the extent of 25% on this account. Therefore, following our own decision in that appeal, we partly allowe the assessee's appeal in the present year as well.
In the result, both the appeals of the assessee are partly allowed.
Order pronounced in the open Court on 30/06/2025 मनोज कुमार अ"वाल लिलत कुमार (MANOJ KUMAR AGGARWAL) (LALIET KUMAR) लेखा सद"/ ACCOUNTANT MEMBER "ाियक सद" /JUDICIAL MEMBER