SH. JOGESH CHANDER GUPTA,PHAGWARA vs. THE ADDL. COMMISSIONER OF INCOME-TAX, PHAGWARA
Facts
The assessee's household expenses were estimated by the assessing officer at Rs. 40,000 per month, leading to an addition of Rs. 240,000. The assessee argued that the total household expenses were Rs. 288,000, contributed by the assessee and his son, and that previous years' expenses were accepted consistently. The assessing officer's estimation was based on a perceived absurdity of the amount for a family of seven.
Held
The Tribunal held that the assessing officer and CIT(A) erred in estimating household expenses without verifiable facts. Consistency in accepting lower household expenses in earlier years set a benchmark. The estimation of Rs. 40,000 per month lacked basis, and the withdrawals were deemed sufficient, especially considering separate payments for electricity and personal expenses.
Key Issues
Whether the addition made by the Assessing Officer and sustained by the CIT(A) on account of estimated household expenses is justified.
Sections Cited
Sec 69C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DIVISION BENCH, AMRITSAR
Before: SHRI UDAYAN DAS GUPTA & SHRI KRINWANT SAHAY
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, AMRITSAR BEFORE SHRI UDAYAN DAS GUPTA, JUDICIAL MEMBER AND SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 13/Asr/2015 निर्धारण वर्ा / Assessment Year : 2009-10 Sh Jogesh Chander Gupta, बनाम The Addl. CIT, Prop.Sampoorna Feeds, Phagwara Range, G.T. Road, Phagwara Opp.Mauli Gate, Phagwara 144632 स्थधयी लेखध सं./PAN NO: AAPPG4599K अपीलधथी/Appellant प्रत्यथी/Respondent ( Hybrid Hearing ) निर्धाररती की ओर से/Assessee by : Shri Sandeep Vijh, CA रधजस्व की ओर से/ Revenue by : Shri Davinder Pal Singh, Sr. DR सुिवधई की तधरीख/Date of Hearing : 16.12.2024 उदघोर्णध की तधरीख/Date of Pronouncement :10.03.2025 2025 आदेश/Order Per Krinwant Sahay, AM: Appeal in this case has been filed by the Assessee against the order dated 29.10.2014 passed by ld. Commissioner of Income Tax (Appeals), Jalandhar for A.Y. 2009-10.
The only ground of appeal raised by the Assessee is as under:
13-Asr-2015 Shri Jogesh Chander Gupta, Phagwara 2
“That on the facts and in the circumstances of the case the ld. CIT(A) has erred in sustaining the estimated addition of Rs. 2,40,000/- towards household expenses. The submissions made have also not been appreciated.”
During the course of proceedings before us, the ld. Counsel for the Assessee has filed a brief synopsis which is as under: - “The appeal was originally filed by the assessee himself on 6/1/2015. After his death on 5/2/2015 (death certificate enclosed along with letter dated 30/5/2015 filed with ITAT), revised Form 36 dated 30-05-2015 was filed by his son and legal heir, Sh. Ashish Gupta with the ITAT, Amritsar Bench. Unfortunately Sh. Ashish Gupta also passed away on 19-08- 2021 (copy of death certificate of Late Sh. Ashish Gupta is attached with letter dated 13/12/2024). The revised appeal memo through the wife of Late Sh. Jogesh Chander Gupta, the original appellant, is now being filed so as to bring the surviving legal heir on record. This revised appeal memo may kindly be considered while disposing off the appeal.
The first and the only ground of appeal is that on the facts and in the circumstances of the case the Learned Commissioner of Income Tax (Appeals) has erred in sustaining the estimated addition of Rs. 240,000 towards household expenses. The submission made have also not been appreciated.
13-Asr-2015 Shri Jogesh Chander Gupta, Phagwara 3
Facts of the case are that household expense of the family were estimated at Rs. 40,000 per month by the assessing officer and after reducing the withdrawals made by the assessee at Rs. 240,000, addition of Rs. 240,000 was made which was also sustained by the Id. CIT(A).
During the course of the assessment proceedings, the issue of household expenses was taken up and detailed explanation was filed by the assessee. The facts of the case are that household expenses were contributed by the assessee as well as his son Sh. Ashish Gupta and the total of the household expenses work out to Rs.288,000 and not Rs. 240,000 which actually represents the withdrawal made by the assessee alone [point (a) at page no. 9]. The above fact is mentioned in para no. 4.2 at page no. 4 of the assessment order also. It is pertinent to mention that the expenses on electricity are not included in the figure of household withdrawals as stated in the submission dated 1/11/2011 filed with the assessing officer read with the capital account of the assessee. The assessing officer had taken the figure of Rs. 240,000 i.e. the amount that would be available after excluding the educational expenses and opined that this amount is absurd for meeting the expenses of food, grocery, clothes, shoes, entertainment, servants, medical needs and social obligations keeping in view the size of family of 5 adults and two children. The face that the withdrawals made during the assessment years 2005-06 and 2006-07 are in line with that shown during this year has also not been appreciated by the assessing officer. In view of
13-Asr-2015 Shri Jogesh Chander Gupta, Phagwara 4 the accepted history of the case (and the principal of consistency, even after making adjustments for passage of time, the withdrawals made by the assessee for household e^ senses during the year under consideration (excluding electricity expenses etc.) were quite sufficient. The assessing officer still estimated the monthly expenses at Rs. 40,000 and made an addition of Rs. 240,000 after reducing the amount withdrawn at Rs. 240,000. The assessing officer also referred to the decision of the Hon'ble Punjab & Haryana High Court in the case of Vidya Sagar Oswal vs. CIT reported at 108 ITR 861 stating that not only did the Punjab & Haryana High Court uphold the addition but also confirmed the levy of penalty u/s 271(l)(c) [1st para at page no. 6 of 143(3)].
It is submitted that unless the household expenses are ridiculously low, no interference/ addition can be made. Attention is drawn to the decision of the ITAT, Amritsar Bench, Amritsar in the case of Parmod Seghal vs. ACIT wherein while dealing with disallowance out of household expenses it was held that unless the withdrawals were totally absurd, the onus was on the revenue to prove that these were on the higher side than claimed. If a reasonably placed person was to claim that household expenses of a family of 3/4 persons was Rs. 4,000 or 5,000 for the entire year that it could lead to a rebuttable presumption that the version for not correct. Since in the present case, the cash withdrawals were Rs. 240,000, there was nothing absurd with the level of household expenses shown by the assessee particularly in view of the past history
13-Asr-2015 Shri Jogesh Chander Gupta, Phagwara 5 of the case and the revenue was not justified to apply its own estimate of household expenses. The decision of the jurisdictional ITAT which is binding in nature is fully applicable to this case should have been followed by the Id. CIT(A). We also draw your attention to the decision of the ITAT Jaipur 'B' Bench in the case of Rohitash Yadav vs. ITO reported wherein it was held that in the absence of any evidence, no towards household expenses could be made on the basis of suspicion, word "has incurred" as used in section 69C places onus on the revenue which cannot be discharged merely on the basis of presumption. Copy of the decision enclosed at page no. 45 to 49 [please see page no. 46]. Also it has been held by the ITAT, Amritsar Bench in the case of Anil Kumar, Anup Kumar & Soma Devi vs. ACIT reported at 77 TTJ 560 that where the assessing officer had not given any cogent reason estimating the household expenses at a higher figure, the addition could not be sustained. In the present case also there was no basis / logic for treating the monthly household expenses at Rs. 40,000 per month. The case relied upon by the assessing officer in the assessment order i.e. Vidya Sagar Oswal vs. CIT reported at 108 ITR 861 (Punjab & Haryana High Court) relates to penalty proceedings and thus it was incorrect to state that the addition was confirmed by the said authority. In that case the household expenses shown for the entire year were Rs. 2,000 and were debited at the end of the year. These were ridiculously low and could be a subject matter of penalty. This finding is also in consistent with the view expressed by the jurisdictional ITAT in the decision of Parmod Seghal
13-Asr-2015 Shri Jogesh Chander Gupta, Phagwara 6 (supra). The facts of the present case are entirely different as the household expenses are reasonable and cannot be doubted particularly in view of the past accepted history of the case. Reliance thus placed by the assessing officer on the judgment in the case of Vidya Sagar Oswal (supra) was not justified. Also, benefit of disallowance out of car and telephone expenses made at Rs. 26,013 (Rs.13,702 + Rs.8,091 + Rs.4.220) in the computation should have been allowed (enclosed at page no. 31 & 32).
The addition of Rs. 240,000 towards household expenses was totally unjustified. The above submissions were before the Ld. CIT(A) but these were not even fully discussed. This is evident from para no. 5.2, 5.3 & 5.4 at page no. 5 & 6 of the impugned order. The specifics of the case have not beer, considered in the right perspective. The relevant facts that emerge are summarized below; a) Much lower household expenses had been accepted in the earlier assessment years while framing assessment u/s 143(3). These set up a benchmark of household expenses of the assessee and the revenue should have followed the principle of consistency. b) There was no basis of estimation of household expenses at Rs. 40,000 per month. In any case the withdrawals made were sufficient keeping in view the fact that disallowances of certain personal expenses (telephone and car) been made in the computation income and electricity expenses had also been paid separately.
13-Asr-2015 Shri Jogesh Chander Gupta, Phagwara 7 c) Even the decision of the jurisdictional ITAT which was binding was not specifically discussed keeping in view the fact that the withdrawals for household expenses were not absurd and as such the assessing officer did not have the right to substitute the same with his own estimate. d) Every family has its own way/ standard of living and expense incurred by a family towards household expenses cannot be doubted in the absence of evidence. e) At worst the shortfall could be attributed to SI Ashish Gupta, son of the assessee who had withdrawn Rs. 48,000 and was an independent income tax assessee. It is humbly prayed that addition of Rs. 240,000 made by the Assessing Officer and sustained by the Id CIT(A) towards household expenses may kindly be deleted.
The ld. DR relied on the order of the CIT(A).
We have considered the findings given by the Assessing Officer in the assessment order and the ld. CIT(A) in the appellate order. We find that both the authorities below have calculated the household expenses of the Assessee on estimated basis and the addition made by the Assessing Officer is also on estimated basis which has been confirmed by the ld. CIT(A). We are of this considered view that every family have own way / standard of living and the expenses incurred by the Assessee towards household expenses cannot be added purely on estimated
13-Asr-2015 Shri Jogesh Chander Gupta, Phagwara 8 basis without bringing any verifiable fact on record. Therefore, in our considered view the action of the ld. CIT(A) in sustaining the addition made by the Assessing Officer on estimated basis for household expenses cannot be sustained. Accordingly, Assessee’s appeal on this Ground is allowed.
In the result, appeal is allowed.
Order pronounced on 10.03.2025 Sd/- Sd/- ( UDAYAN DAS GUPTA ) ( KRINWANT SAHAY ) Judicial Member Accountant Member “आर.के.” आदेशकीप्रनतनलपपअग्रेपर्त/ Copy of the order forwarded to : 1. अपीलधथी/ The Appellant 2. प्रत्यथी/ The Respondent 3. आयकरआयुक्त/ CIT 4. पवभधगीयप्रनतनिनर्, आयकरअपीलीयआनर्करण, चण्डीगढ़/ DR, ITAT, CHANDIGARH 5. गधडाफधईल/ Guard File आदेशधिुसधर/ By order, सहधयकपंजीकधर/ Assistant Registrar
