ROHITASH YADAV v. INCOME TAX OFFICER
[Citation -2007-LL-1231-7]

Citation 2007-LL-1231-7
Appellant Name ROHITASH YADAV
Respondent Name INCOME TAX OFFICER
Court ITAT
Relevant Act Income-tax
Date of Order 31/12/2007
Assessment Year 2002-03
Judgment View Judgment
Keyword Tags estimation of income • agricultural income • trading account • capital account • cash flow chart • cogent evidence • total turnover • house property • meagre amount • cash in hand • advance tax • air force
Bot Summary: There is no substance in the allegation made by AO that when the assessee claims to have substantial amount of cash in hand of Rs. 1,70,000, what was the necessity of it withdrawing a minor amount of Rs. 2,000 of pension on the same very day of deposit. Considering the above submissions under the facts and circumstances of the present case, we find substance in the contention of the learned Authorised Representative that without rebutting the explanation of the assessee supported with evidence, an addition cannot be made merely on the basis of suspicion like there was no necessity to withdraw a meagre amount by the assessee from his bank account when sufficient funds were claimed to have been lying with the assessee. The AO accordingly estimated the sales at Rs. 3,50,000 as against Rs. 2,99,881 disclosed by the assessee and made an addition of Rs. 50,119. The learned CIT(A) while sustaining this addition has observed that the assessee has not given a convincing reply with regard to the apprehension of the AO that when assessee was having substantial amount as cash in hand then why he was making petty withdrawals from bank. The learned Authorised Representative referred answer of the assessee to question No. 22, reproduced at page No. 6 of the assessment order, wherein the assessee had categorically replied that the entire expenditure consisting on feeding of family. Considering the above submissions of the parties in view of orders of the lower authorities, we find substance in the above contention of the assessee that an addition cannot be made merely on the basis of suspicion especially when there was no material on record to suggest that the household expenses claimed to have been incurred and declared by the assessee were not correct and there was no evidence that some big function were organized by the assessee on the occasion of birth ceremony of his grandson. Ground No. 4 In support of this ground the learned Authorised Representative submitted that there was delay in filing of the return due to the non supply of the copies of the statements of the assessee recorded during the course of survey; the assessee has made repeated requests for this purpose, firstly, on 3rd March, 2003 along with filing of a challan of Rs. 100 for the purpose, another on 28th March, 2003 and others on 5th Aug., 2003 and 30th Sept., 2003.


assessee has questioned first appellate order on grounds that learned CIT(A) has erred in: upholding assessment order under s. 143(3), dt. 29th March, 2005 as valid one; partly sustaining addition of Rs. 1,20,000 as against Rs. 1,70,000 made by AO on account of unexplained opening capital; partly sustaining addition of Rs. 18,864 as against Rs. 48,864 made by AO on account of household withdrawals; and charging interest under ss. 234B and 234C of Act. Heard and considered arguments advanced by parties in view of orders of lower authorities, material available on record and decisions relied upon by them. Ground No. 1 It is general in nature hence does not need independent adjudication. Ground No. 2 During course of assessment proceedings, AO noticed that assessee had submitted balance sheet, capital account and cash flow chart along with his letter dt. 23rd Dec., 2004 showing opening capital at Rs. 1,89,286.49 in balance sheet and cash in hand at end of year at Rs. 94,645.79, wherein opening cash was at Rs. 1,85,619.10. AO rejected explanation of assessee that this capital was accumulated savings out of amount received at time of retirement benefits, earnings from agricultural activities carried out by him on his own land and also on nearby land on sharing basis, business income, etc. in past various years. AO rejected above explanation on basis that person could not have kept such huge amount of cash of Rs. 1,85,619 with it, when it was maintaining bank account. AO accordingly estimated availability of opening capital of Rs. 15,619 and added entire remaining balance of Rs. 1,70,000. In first appeal, learned CIT(A) has refused (sic-reduced) to Rs. 1,20,000. learned Authorised Representative at outset of his arguments submitted that admittedly it is case of no books of accounts. Besides, one cannot ignore vital fact and human probabilities, that person who is aged 50 years and has retired as ex-serviceman from Army and earlier in year 1987 could not have earned and saved even meagre amount of Rs. 2 lakhs during whole of his life tenure. law is well-settled where direct evidences are not available, fair estimation has to be made, whether it is estimation of income, of sales or even of opening capital or availability of funds with assessee. And to make fair estimation AO has to rely upon material available on record and such estimation though, shall be guess- work, cannot be capricious or arbitrary. In present case estimation of availability of opening capital at Rs. 15,619 is totally baseless, arbitrary and in any case it cannot be said to be fair estimation. On other hand assessee had admittedly filed copies of capital account in balance sheet starting from period 1st April, 1997 onwards, copies of which have been placed at page Nos. 3 to 3A of paper book. From same it can be seen that in these annual statements of accounts assessee had declared income from agriculture, pension income, income from vehicle etc. Except making some adverse remarks on agricultural income, that too in very vague term, AO has not at all disputed availability of these income generating sources nor fact of earning of income from these sources. Notably assessee was in receipt of substantial amount of Rs. 1,00,000 approx. at time of his retirement from Indian Army in year 1987 from GPF commuted pension and gratuity, etc. With regard to agricultural income it was submitted that assessee owned and was in possession of ancestral land of 8 Bighas situated at Khatan Khera. assessee was carrying on agricultural operations on his own land and in addition thereto he had also taken land in nearby area on sharing basis. Copies of papers shown ownership and possession over land and also copies of Khasra Girdawari proving fact of carrying out agricultural operations have been placed at page Nos. 4 to 9 of paper book. Contents of these documents have been unrebutted by lower authorities. AO alleged that there were no documentary evidences showing agricultural income however learned lower authorities have ignored facts that this assessee was retired person, not having taxable income to file return necessitating keeping all these evidences with him. AO has simply made adverse remarks without bringing any cogent evidence contrary to factual position. very facts of ownership, possession and earning of income from agriculture, not having been denied, only inference could be that assessee was earning agricultural income. Such contention and fact could not have been rejected merely for want of evidences keeping with human probabilities. If exercise is done keeping average annual agricultural income with Rs. 5,000 per annum per Bigha income for 8 Bighas comes around Rs. 40,000 per annum. After retirement since 1987, assessee has been doing agricultural operations on his own land then also total agricultural income would have been around Rs. 5,00,000. land taken on lease from others and earning agricultural income therefrom was in addition thereto. This human probability however totally lost sight of by authorities below. learned Authorised Representative submitted further that other important factor while working out capital is outgoings, which in present case was mainly household expenses. There is no substance in allegation made by AO that when assessee claims to have substantial amount of cash in hand of Rs. 1,70,000, what was necessity of it withdrawing minor amount of Rs. 2,000 of pension on same very day of deposit. Such allegation is nothing more than suspicion without having gone into prevailing facts, submitted learned Authorised Representative. learned Departmental Representative, on other hand has tried to justify first appellate order on issue. Considering above submissions under facts and circumstances of present case, we find substance in contention of learned Authorised Representative that without rebutting explanation of assessee supported with evidence, addition cannot be made merely on basis of suspicion like there was no necessity to withdraw meagre amount by assessee from his bank account when sufficient funds were claimed to have been lying with assessee. Admittedly, assessee had received retiral benefits of around Rs. 1,00,000 on his superannuation from Indian Army in asst. yr. 1987, besides having some agricultural income from his ancestral land of 8 Bighas in support of having some agricultural income from his ancestral land of 8 Bighas in support of which assessee had filed copy of Khasra Girdawari placed at page Nos. 4 to 9 of paper book. assessee had also filed capital account, balance sheet from asst. yr. 1997-98 onwards. (page Nos. 3 and 3A of paper book). After his retirement he was deriving income from pension, rent from house property, plying of goods carriage vehicle and trading of cattle feeds, besides agricultural income. During relevant period assessee has disclosed total turnover of Rs. 3,00,000 on which net profit of Rs. 15,500 under provisions of s. 44AF of Act was shown. Similarly, he also disclosed profit of Rs. 43,200 under provisions of s. 44AE of Act from plying of light goods vehicles. AO noted from trading account that assessee had shown sales as balancing figures to arrive at gross profit for relevant period. AO also noted that assessee had not kept vouchers and bills, etc. relating to his sales and purchases. AO accordingly estimated sales at Rs. 3,50,000 as against Rs. 2,99,881 disclosed by assessee and made addition of Rs. 50,119. learned CIT(A) has deleted this addition on basis of admitted facts that assessee is small trader and filing his return of income under provisions of s. 44AF of Act under which he is not supposed to maintain regular books of accounts. He observed further that AO has not brought on record any evidence to show that assessee was indulging in sales outside books of accounts. learned CIT(A) has however, sustained addition of R s . 1,20,000 out of Rs. 1,70,000 made by AO on account of unexplained opening capital. learned CIT(A) while sustaining this addition has observed that assessee has not given convincing reply with regard to apprehension of AO that when assessee was having substantial amount as cash in hand then why he was making petty withdrawals from bank. In our view when there was no direct evidence to rebut (sic-support) such apprehension of lower authorities, logical inference should have been drawn from surrounding circumstances of present case supported by some evidence of holding of agricultural land, retiral benefits, etc., which in our view were sufficient to accumulate opening capital of Rs. 1,70,000. human probability under facts and circumstances of present case, as discussed above, goes in favour of assessee to accumulate such amount out of his saving from different sources of income at his age of 50 years during period. We thus while setting aside first appellate order on issue direct AO to delete addition of Rs. 1,20,000 sustained by learned CIT(A). Ground No.2 is thus allowed. Ground No. 3 In support of this ground learned Authorised Representative submitted that family of assessee at that time consisted of himself, his wife, son s wife and another son being student. elder son was in service of Air Force and was not residing with family. During year there was birth ceremony of grandson of assessee. AO disbelieving amount of household expenses declared by assessee at Rs. 51,136, estimated same at Rs. 1,00,000. learned CIT(A) has restricted addition to Rs. 70,000, but he has not made separate addition keeping in view confirmation of addition of Rs. 1,20,000 on account of unexplained opening capital made by him. learned Authorised Representative submitted that AO as well as learned CIT(A) have ignored this material fact that assessee, basically farmer was residing with his family in very small village in District Alwar near Behror. assessee was bound to live very simple life in such small place where even basic facilities like electricity etc. are not available. basic day to day needs of life are met with by his own resources. Most of household expenses i.e. food grains, milk etc. are met with without incurring separate expenditure as assessee is having agricultural land on which vegetables are also grown. He is also having animals for milk. assessee is living in his small house and there is no requirement of making payment of rent. There is no vehicle, telephone etc. There was not any big function on occasion of birthday ceremony of his grandson. learned Authorised Representative submitted that no evidence has been brought on record by AO except making very vague remark that some information with survey team. learned Authorised Representative referred answer of assessee to question No. 22, reproduced at page No. 6 of assessment order, wherein assessee had categorically replied that entire expenditure consisting on feeding of family. AO has not brought any material on record to say that there were 200 to 250 persons invited on occasion of birth ceremony of grandson. learned Departmental Representative on other hand tried to justify first appellate order. Considering above submissions of parties in view of orders of lower authorities, we find substance in above contention of assessee that addition cannot be made merely on basis of suspicion especially when there was no material on record to suggest that household expenses claimed to have been incurred and declared by assessee were not correct and there was no evidence that some big function were organized by assessee on occasion of birth ceremony of his grandson. We thus while setting aside orders of lower authorities on issue direct AO to delete addition in question. ground No. 3 is thus allowed. Ground No. 4 In support of this ground learned Authorised Representative submitted that there was delay in filing of return due to non supply of copies of statements of assessee recorded during course of survey; assessee has made repeated requests for this purpose, firstly, on 3rd March, 2003 along with filing of challan of Rs. 100 for purpose, another on 28th March, 2003 and others on 5th Aug., 2003 and 30th Sept., 2003. It is however only on 10th Oct., 2003 copies of those statements were supplied to assessee. Immediately thereafter on 31st Oct, 2003, assessee had filed return of income. Thus, delay was not at all attributable to assessee, and in such circumstances no interest under s. 234A should have been charged. Since, no arguments have been advanced by learned Authorised Representative questioning chargeability of interest under ss. 234B and 2 3 4 C respectively for defaults in payment of advance tax and interest for deferment of advance tax, we are not inclined to interfere with first appellate order in this regard. However, in view of findings hereinabove on issues raised in ground Nos. 2 and 3 of present appeal, charging of interest under ss. 234B and 234C of Act has become consequential in nature. AO is accordingly directed to decide chargeability of interest, if any, under these provisions of ss. 234A, 234B and 234C afresh in view of above submissions of learned Authorised Representative and decisions on ground Nos. 2 and 3 of appeal. In result, appeal is partly allowed. *** ROHITASH YADAV v. INCOME TAX OFFICER
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