MANSUKHLAL P. SHAH,MUMBAI vs. DCIT 14(2), MUMBAI

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ITA 2556/MUM/2014Status: DisposedITAT Mumbai12 September 2018AY 2009-106 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the rent received in April 2009 for March 2009 should be accounted for in the next financial year as the assessee followed the cash system. The Tribunal also deleted the additions made for travelling expenses and ad-hoc personal expenses considering the assessee's age and other circumstances.

What were the facts?

The assessee received rent of Rs. 7,000/- in April 2009, which pertained to March 2009. The Assessing Officer added this amount to the rental income for the assessment year 2009-10. The assessee also claimed travelling expenses and faced an ad-hoc addition for personal expenses.

What were the issues?

Whether rent received in the subsequent month for the previous month should be taxed in the current year, and whether unexplained expenditure and ad-hoc additions are justified.

Which sections of the Income-tax Act were involved?

Section 69C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, ‘B’ MUMBAI

Before: Shri Joginder Singh, & Shri Rajesh Kumar

For Appellant: Shri Kulin V Munim
For Respondent: Shri Suman Kumar-DR
Hearing: 12/09/2018

आदेश / O R D E R Per Joginder Singh (Judicial Member) The assessee is aggrieved by the impugned order dated 11/03/2014 of the Ld. First Appellate Authority, Mumbai.

2.

The first ground raised by the assessee pertains to addition of Rs.7,000/- received as rent in the next year.

1.

During hearing of this appeal, the ld. counsel for the assessee, Shri Kulin V. Munim, contended that the assessee received a rent of Rs. 84,000/- and the amount of Rs.7,000/-, through cheque was received in April, 2009, therefore, the addition was wrongly made. On the other hand, Shri Suman Kumar, Ld. DR, defended the addition.

2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that during assessment proceedings, the Ld. Assessing Officer observed that the assessee showed rental income of Rs.77,000/- from letting out godown, whereas, as per the confirmation letter from the sub-tenant, the rent paid was Rs.7,000/- per month. As per the Revenue, the total rent should have been Rs.84,000/-. It was explained by the assessee that the assessee was following cash system of accounting and the rent of March 2009 was received after 31st March, 2009, thus, could not be included in the rental income of Rs.2009-10. We have perused the finding of the Ld. Commissioner of Income Tax (Appeal) also, wherein, it has been observed that the assessee entered into an agreement dated 01/04/2002 on a rent agreement @ Rs.7,000/- per month. Undisputedly, the cheque of Rs.7,000/- for the month of March, 2009 was received in April and thus was deposited in April, 2009 in the bank.

The remand report dated 10/09/2013 also supports this contention. Since, the amount of Rs.7,000/- was received through cheque and was deposited in the bank, thus, the addition, in our view will not survive. The Ld. Assessing Officer is directed to consider the amount of Rs.7,000/- in the month of April, 2009. This ground of the assessee is allowed.

3.

The next ground pertains to travelling expenses of Rs.1,42,402/- as deduction against any source of income. The Ld. counsel for the assessee explained the same by inviting our attention to pages 32 and 34 of the paper book, wherein these figures have been duly mentioned depicted the same as travelling expenses. The assessee debited the amount of Rs.2, 00,717/- as travelling expenses in its expenditure account. The assessee was asked to give the details of places visited, dates and duration of stay, etc. The assessee also explained that some of the expenses were paid by the family members. The Ld. Assessing Officer treated the remaining amount as unexplained expenditure and added under section 69C of the Act. Considering the totality of circumstances, age of the assessee being above 70 years and other circumstances narrated before us, the addition so made is deleted. Thus, this ground is allowed.

4.

The next ground pertains to Rs.50,000/- made as ad-hoc addition on account of personal expenses. The Ld. counsel explained that the assessee and his wife are of more than 70 years of age, living together and there is no liability upon them. The Ld. DR defended the addition. We have perused the record and considered the arguments from both sides. It is noted that the assessee withdrew Rs.1,34,000/- for house hold expenses. The Ld. Assessing Officer made an ad-hoc addition by estimating the expenses. Considering the totality of facts, age of the assessee, a lenient view is required and thus ad-hoc addition by made by the Ld. Assessing Officer and sustained by the Ld. Commissioner of Income Tax (Appeal) is deleted.

Finally, the appeal of the assessee is allowed.

This order was pronounced in the open court in the presence of the ld. representative from both sides at the conclusion of the hearing on 18/07/2018.

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