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Income Tax Appellate Tribunal, KOLKATA BENCH ‘C (SMC
Before: Shri P. M. Jagtap, A.M.)
ORDER This appeal filed by the assessee is directed against the order of Ld. CIT(Appeals) – 13, Kolkata and the solitary issue involved therein relates to the addition of Rs. 1,50,000/- made by the AO and confirmed by the Ld. CIT(A) on account of alleged unexplained personal expenditure.
The assessee in the present case is an individual who derives income from salary and interest. The return of income for the year under consideration was filed by him on 20.07.2009 declaring a total income of Rs. 3,69,600/-. During the course of assessment proceeding, it was noticed by the AO that the assessee has not shown any personal withdrawals in the capital account. According to the AO, keeping in view the young age of the assessee and a sound financial 2 background, it was highly improbable, unconvincing and unlikely that he had not incurred any personal expenditure during the year under consideration. He also noted that in the similar facts and circumstances involved in assessee’s own case for A.Y. 2007-08, addition of Rs. 1,44,000/- was made on estimated basis on account of unexplained personal expenditure. He accordingly proceeded to estimate the personal expenditure incurred by the assessee during the year under consideration at Rs. 1,50,000/- and addition to that extent was made by him to the total income of the assessee by treating the same as unexplained in the absence of any withdrawals shown by the assessee.
The disallowance made by the AO on account of unexplained personal expenditure was disputed by the assessee in the appeal filed before the Ld. CIT(A) and since the submissions made by the assessee in support of his case on this issue were not found acceptable by him, the Ld. CIT(A) proceeded to confirm the addition of Rs. 1,50,000/- made by the AO for the following reasons in paragraph no. 6 of his order. “I have gone through the contention of the assessee, the order passed by the AO and the submissions made by the Appellant. The decision of this appeal is given as under: The ground of appeal relates to the addition of Rs. 1,50,000/- on account of estimated personal expenditure. The appellant has submitted that his family consists of himself, his father and his mother. Both the parents are assessed to tax and they have shown an aggregate drawing of Rs. 1,32,464/- and Rs. 60,438/- respectively totalling to Rs. 1,92,902/- for the assessment year under appeal. The perusal of source of income of the appellant would show that he has no such source of income from which from which it can be even remotely be alleged that the appellant had earned any undisclosed income which could have been utilized for meeting personal expenditure. In the absence of any such source, it is not clear on 3 what basis any addition could be made. It appears that the AO without applying his mind to the fact of the case was carried away by the assessment order for the assessment year 2007-08 and has made the addition. The appellant was allowed relief for addition of Rs. 1,44,000/- on account of personal drawings under similar fact and circumstances for the A.Y. 2007-08 by your predecessor vide his order No. 132/CIT(A)-XXX/W- 43(2)/2009-10 dated 23.09.2011. I have perused the order of CIT(A) for the assessment year 207-08. In the aforesaid order it is seen that the parents of the appellant had withdrawn Rs. 3,54,746/- and based on that considering the average withdrawal of each individual at Rs. 1,18,250/- CIT(A) has given findings of sufficient withdrawal and the deletion of addition of Rs. 1,44,000/- was made. In the present appeal which relates to the assessment year 2009-10 it is seen from the submission of the appellants AR that his parents have shown total withdrawing of Rs. 1,92,902/- only as against withdrawal shown in the assessment 2007-08 which is less by Rs. 1,61,844/- in comparison to assessment year 2007-08. In this regard if the argument of appellant is taken that the assessee is staying with his joint family and his parents haves withdrawn on his behalf being a joint HUF and considering the order of CIT(A) for the assessment year 2007-08 where both the parents had withdrawn total amount of Rs. 3,54,746/-, it becomes clear that during the year which is two years after the order of CIT(A), rather than increased expenses, considering the inflation, the same is in reverse process and is less by Rs. 1,61,844/-. If the yard stick of withdrawal for assessment years 2007-08 are taken even then there is deficit of withdrawal to the extent of Rs. 1,61,844/-. Keeping in view of the aforesaid fact and taking into consideration the order of the CIT(A) it is seen that average withdrawal and total withdrawal was very high in assessment year 2007-08 whereas in the year under consideration it is quite low. Therefore the addition made by the AO of Rs. 1,50,000/- is hereby upheld and the ground of appeal
is dismissed. Aggrieved by the order of the Ld. CIT(A), the assessee has preferred this appeal before the house.
4. I have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that similar addition on account of unexplained personal expenditure to the extent of Rs. 1,44,000/-was made by the AO to the total income of the assessee for 4 A.Y. 2007-08 and as pointed out by the learned counsel for the assessee, the same was deleted by the Ld. CIT(A) for following reasons given in paragraph no 3 of his appellant order dated 29.03.2011. “The submissions of the appellant have been considered. It is seen that he is earning gross income from salary, capital gains and other sources of Rs. 66,500/-, Rs. 1,82,942/- and Rs. 2,44,198 respectively. The Assessing Officer has made the addition for “Low Drawings” on estimate basis for Rs. 1,44,000/- i.e. Rs. 12,000/- a month. The A.O. has taken the issue of status of the appellant and fact that he is financially well off but has not shown any personal expenditure to justify this addition. The Appellant’s contention as mentioned in the para above, are that there were sufficient withdrawals by his parents which would cover his expenses and that in traditional Indian family wherein the appellant is a bachelor and his personal expenses were being made by his parents. The submissions of the appellant have merit as sufficient withdrawals of Rs. 3,54,746/- have been shown by his father and mother combined. On the other hand, the sources of income disclosed by the appellant do not have any scope from which it can be alleged that he had earned undisclosed income utilized meeting personal drawings. The A.O. has, therefore, made this addition simply on surmises and without any concrete basis or bringing on record material or facts that these personal expenses were being made from undisclosed income of the appellant. It is not enough to say that personal expenditure to justify the addition, specially when the appellant is a bachelor and living with his appellant who have sufficient withdrawals. Accordingly, it is held that the addition made of Rs. 1,44,000/- is not justified and the same is deleted. (Relief Rs. 1,44,000/-).”
5. Although the above order passed by his learned predecessor on a similar issue for A.Y. 2007-08 was brought to the notice of the Ld. CIT(A), he still confirmed the addition of Rs. 1,50,000/- made by the AO on a similar issue relating to the unexplained personal expenditure on the ground the withdrawals shown by the parents of the assessee during the year under consideration were less than the withdrawals made in assessment year 2007-08. As rightly pointed out by the learned counsel for the assessee, the Ld. CIT(A) however, overlooked the fact the relief was allowed by his predecessor by deleting the similar addition made by