M/S. ASHOK MALHOTRA,DELHI vs. ACIT, NEW DELHI

PER SHAMIM YAHYA, ACCOUNTANT MEMBER :

taken by the assessee read as under :- “1. That the Ld. CIT(A) has erred on facts and law by upholding the order of Ld. Assessing Officer which is bad in law on facts and circumstances of the case. ./2016

2. That the Ld.CIT (A) has erred on facts and law by upholding that the reopening of completed assessment by the Ld. Assessing Officer is as per law and on facts & circumstances of the case, where as the same is based on flimsy grounds, conjuncture and surmises and is not as per the provisions and intention of law, hence the same is liable to be annulled.

3. That the Ld.CIT(A) has erred on facts and law by upholding the order u/s 263 of Income Tax Act, 1961 which is bad in law and facts and circumstances of case as all the requisite information is available on the initially reopening of the order and not as per the provision and intention of law, hence is liable to be deleted.

4. That the Ld.CIT(A) has erred on facts and law by upholding the addition of income from undisclosed source disclosed in the form of income of Share Rs.6,62,698/- as per the law and facts and circumstances of the case as all details, supportings to the above were duly provided during the course of assessment proceedings and also all third party evidences relied by the Ld. Assessing Officer were never confronted to the assessee and hence is liable to be deleted.

5. That the Ld.CIT(A) has erred on facts and law by upholding the addition of RS.8,23,300/- from the head Undisclosed sources utilized for purchasing the Cars/Income disclosed by various entities in the form of car rental/disallowances against the car/drivers salary is not as per law and facts and circumstances of the case, as all details, supportings to the above were duly provided during the course of assessment proceedings and also all third party evidences relied by the Ld. Assessing Officer were never confronted to the assessee and hence is liable to be deleted.

6. That the Ld.CIT(A) has erred on facts and law by upholding the addition of Rs.13,30,496/- on account of Undisclosed sources deposited in various bank accounts is not as per law and facts and circumstances of the case, as all details, supportings to the above were duly provided during the course of assessment proceedings and also all third party evidences

7. That the Ld.CIT(A) has erred on facts and law by upholding the addition of Rs.18,00,000/- on account of Undisclosed sources utilized for paying house hold expenses is not as per law and facts and circumstances of the case, as all details, supportings to the above were duly provided during the course of assessment proceedings and also all third party evidences relied by the Ld. Assessing Officer were never confronted to the assessee and hence the addition is liable to be deleted.

8. That the Ld.CIT(A) has erred on facts and law by upholding that the Ld. Assessing Officer has completed the assessment on the basis of certain documents which were never found at the premises or in possession of the assessee and the same were also never confronted with the assessee and hence the additions based on such documents is not as per law and are liable to be deleted.

9. That the Ld.CIT(A) has erred on facts and law by upholding the Ld. Assessing Officer has completed the assessment with only one intention to increase the assessed income at maximum level. While completing the assessment, the additions are made of the same items, more than once, by flouting the accounting principles and settled provisions of the law. Further, in case of such type of assessment, the settled method of calculating the undisclosed income have not been taken care of and hence the additions made are liable to be deleted.

10. That the Ld.CIT(A) has erred on facts and law by upholding the addition made on the ground of clubbing the income of family members in the hands of assessee which is bad in law as all members/individuals are assessed independently as all details, supporting to the above were duly provided during the course of assessment proceeding and also third party evidence co-related by the Assessing Officer has never confronted to assessee and hence liable to, be deleted.”

resident of Shri Ashok Malhotra on 27.07.2007 and also simultaneous searches were conducted at the residences of some DDA officials. Later on, the matter was also taken up by the Income-tax Department. Shri Ashok Malhotra has died and legal heir is pursuing the appeal. As informed by ld. Counsel of the assessee, the CBI case has abated upon death of the assessee. The AO in this case has made following additions :-

(i) Income from undisclosed sources disclosed Rs.6,62,698 in the form of share money (ii) Income from undisclosed sources utilized Rs.8,23,300 for purchasing the cars/income disclosed by various entities in the form of care rental/Disallowances against the Car/ Drivers salary not disclosed (iii) Income from undisclosed sources deposited Rs.13,30,496 in various bank accounts (iv) Income from undisclosed sources utilized Rs.18,00,000 house hold expenses

4. Ld. CIT (Appeals) has confirmed these additions.

“A. Addition of Share Income of Rs.6,62,698 received in cash which is deposited in bank accounts 1. AO observed that the assessee and his group entities have deposited cash of Rs.13,30,496/ - in bank accounts which is undisclosed, so an addition an addition of Rs.13,30,496 was made (ref page no page 67 of AO's order para 15.2).

5. Thus the above said addition of Rs. 6,62,698/ - is incorrect being added once again having been offered to tax already in the hands of the above 5 entities.

6. Without prejudice to the above benefit of telescoping ought to be given to the assessee as addition of Rs. 13,30,496 has been made on account of the assessee and his group entities having deposited cash in bank which is undisclosed.

B. Addition on account of disallowance of car expenses of Rs.8,23,300/-

7. Ref Page no. 65 of AO's order that Rs.92,640/- is added as the car income disclosed by various Assessee or entities being income of the Assessee from undisclosed sources. It is submitted as the receipts of car income was in cash which were deposited in various banks so once addition on account of cash deposited to the tune of Rs. 13,30,496/- has been made this addition is not sustainable as benefit of telescoping ought to be given to the assessee.

10. [Ref Page no. 65] Rs.1,80,000/ - as driver salary. First of all it was paid through cash withdrawals and addition is already made for cash deposits/withdrawals of Rs.13,30,496/- whereas it can be seen from the Assessment order at page no.67 out of the cash deposits of Rs.13,30,496/ - an amount of Rs.9,20,000/ - was withdrawn in cash. So Rs.1,80,000/ - which was used to pay for driver salary was out of this cash withdrawal, so benefit of telescoping has to be given to assessee.

C. Addition on account of Lavish Lifestyle of Rs.18,00,000/-

11. It is submitted this addition has been made on surmises as without evidence and bringing anything on record it has been observed that Assessee was having 18 servants which is not possible by any stretch of imagination, there is no evidence which was unearthed during the course of search and moreover such an addition on mere guess and conjectures is highly improbable being about 20% of the total income assessed, whereas in most cases the department makes ad hoc disallowances to the tune of 5-10% only.

D. Addition on account of Rs.13,30,496/- in various bank accounts of Assessee and group entities:-

However, we find that in this regard, ld. Counsel of the assessee’s contention that the benefit of telescoping ought to be given to the assessee as addition of Rs.13,30,496/- has been made for cash deposit in various accounts of the assessee, is acceptable. We direct accordingly. This income of Rs.6,62,698/- may be telescoped against the said amount of addition in bank account.

9. Apropos addition on account of disallowance of car expenses of Rs.8,23,300/- : The details in this regard is as under :-

(i) Car income disclosed by various assessees/ entities Rs.92,640/- being income of the assessee from undisclosed sources shown in their hand (ii) Depreciation of above cars (Because not run for Rs.5,36,208/- commercial business being personnel used) Rs.7360 i.e. Manish + 528848 Ashok Malhotra (iii) Other expenses of above cars other than Rs.1,76,452/- depreciation (Because not run for commercial business being personnel used) Insurance 16097 (Basant G) + 44533 (Ashok Malhotra Intt. On car loan 115822 (iv) Drivers salary paid out of undisclosed sources (3 x Rs.1,80,000/- 60000 p.a.) TOTAL Rs.27,29,292/-