Arvind Kumar Singh, Meerut vs Assessee

Appellant by : Shri Vinod Kumar Goel, Advocate. Respondent by : Shri Vikram Sahay, Sr.DR.

Date of hearing : 06.04.2015 Date of pronouncement : 10.06.2015

ORDER

PER G.C. GUPTA, GUPTA, VP :

This appeal by the assessee for the assessment year 2007-08 is directed against the order of learned CIT(A), Muzaffarnagar dated 9th October, 2013.

2. The ground of appeal No.1 of the assessee is as under:-

"That the ld.A.O. is in error in making addition of Rs.60,000/- and ld. CIT(A) is confirmed on account of low house hold expenses is not only excessive but also without any basis or justification. Considering the fact that the assessee's family consists of self, wife and two school going daughters and that the assessee is residing in his parental house."

3. The learned counsel for the assessee submitted that the assessee has declared a sum of `60,000/- for its household expenses, 2 ITA-1155/Del/2014

which were quite reasonable in view of the fact that the family of the assessee consists of self, wife and two children and the children were getting education in the town of Hapur itself. The assessee was residing in his parental house and no rent was being paid. There was no personal vehicle of the assessee. He submitted that the LIC installment had been separately debited by the assessee.

4. Learned DR has submitted that the estimate of household expenses at `1,20,000/- was quite reasonable in the facts of the case of the assessee. He relied on the order of the Assessing Officer and the CIT(A).

5. We have considered the rival submissions and have perused the order of the Assessing Officer and the learned CIT(A). We find that the assessee was admittedly living in his parental house in the town of Hapur (UP) and, for which, no rent was being paid. There was no vehicle in the name of the assessee. The LIC premium was being separately debited by the assessee apart from the household expenses of `60,000/-. The case pertains to the financial year 2006-07. Considering the facts of the case, we are of the view that no case of addition on household expenses could be made out by the Revenue and the addition is accordingly deleted and ground No.1 of the assessee's appeal is allowed.

6. Ground Nos.2 & 3 of the assessee's appeal are as under:-

"2. That the ld. A.O. is in error in making addition of Rs.62,802/- and ld. CIT(A) is confirmed as income from undisclosed sources is very excessive and unjustified, this is a double addition in view of the fact that addition in family expenses has already been made.

3 ITA-1155/Del/2014

3. That the ld.A.O. is in error in making addition of Rs.78,540/- and ld.CIT(A) is confirmed is uncalled for and is very excessive as the repayment of loan was made out of the car running income before depreciation which has not been considered while computing the income from car running."

7. The learned counsel for the assessee submitted that the assessee has filed the cash flow statement with the Assessing Officer as well as the learned CIT(A) and a copy filed at page 16 of the compilation before the Tribunal. It shows that the assessee has earned income of `2,02,731/- from running of car on contract basis before depreciation and, after claiming depreciation, the net income of `27,561/- was declared by the assessee. The learned counsel submitted that the loan repayment to State Bank of India and all other outgoings were fully covered with the cash flow statement of the assessee. He submitted that the Assessing Officer has wrongly taken the net figure of income from running of car, after deducting the notional depreciation on the car. He submitted that the depreciation is a statutory deduction and for the purpose of cash flow statement, it is the gross income declared by the assessee, which is relevant.

8. Learned DR has relied on the order of the Assessing Officer and the learned CIT(A). He referred to the relevant portion of the appellate order passed by the learned CIT(A) in support of the case of the Revenue. He relied upon the order of the Assessing Officer and the CIT(A).

9. We have considered the rival submissions and have perused the order of the Assessing Officer and the learned CIT(A). We find that the assessee has filed a cash flow statement and has declared the income from running of cars on contract basis at `2,02,731/-, before deducting depreciation on the cars. We find that in the cash flow statement, it is 4 ITA-1155/Del/2014

the income from running of cars, before the deduction of depreciation thereon, which is relevant for deciding that whether the outflow in the cash flow statement was covered from the inflow of the statement. We find that the outgoings in the cash flow statement as shown in the copy of cash flow statement filed in the compilation before us, were fully covered with the opening cash and bank balance and income from running of cars, loans etc. and, therefore, no case of addition of `62,802/- and `78,540/- could be made out by the Revenue. The additions so made are deleted and ground Nos.2 & 3 of the assessee's appeal are allowed.

10. In the result, the appeal of the assessee is allowed.

Decision pronounced in the open Court on 10th June, 2015.

Sd/- Sd/- (INTURI RAMA RAO) RAO) (G.C. (G.C. GUPTA) GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT PRESIDENT

VK.

Copy forwarded to: -

1. Appellant : Shri Arvind Kumar Singh, S/o Shri Sita Ram Singh, 339, Mohalla Brahmnan, Hapur.

2. Respondent : Income Tax Officer, Ward- Ward-1, Hapur.

3. CIT 4. CIT(A) 5. DR, ITAT

Assistant Registrar