Sangita Garg, New Delhi vs Assessee

This appeal by the assessee has been preferred against the order of the

CIT(A)-XXVII, New Delhi dated 4.9.2012 in Appeal No.176/10-11 for AY

2008-09.

The grounds raised by the assessee read as under:-

"1. That the impugned order u/s 250(6) of the Income Tax Act, 1961 dated 04.09.2012 passed by the Ld. Commissioner of Income Tax (Appeals) XXVII, New Delhi is bad in law and against the facts of the case.

1 ITA 5899/Del/2012 AY: 2008-09

2. On the facts & circumstances of the case, the Ld. CIT (Appeals) XXVII New Delhi has erred in upholding the assessment order u/s 143 (3) dated 16/12/2010 for the AY 2008- 09, passed by the Ld. Assessing Officer Ward 36(2) New Delhi for addition of agricultural income to the tune of Rs. 8,16,153/- as undisclosed income of the appellant.

3. On the facts & circumstances of the case, the Ld. CIT (Appeals) XXVII, New Delhi has erred in upholding the assessment order u/s 143(3) dated 16/12/2010 for the AY 2008- 09, passed by the Ld. Assessing Officer Ward 36 (2) New Delhi for disallowance to the extent of Rs.1,03,655/ - as interest paid on loan, taken for purchase of property, against which the rent received and shown as income by the appellant.

5. On the facts & circumstances of the case, the Ld. CIT (Appeals) XXVII New Delhi has erred in upholding the assessment order u/s 143 (3) Dated 16/12/2 10 for the A/Y 2008- 09, passed by the Ld. Assessing Officer Ward 36(2) New Delhi for addition to the extent of Rs. 1,08,000/- on account of low household withdrawals by the appellant."

2. Briefly stated, the facts giving rise to this appeal are that the assessee filed

return of income for the year under consideration at taxable income of Rs.

3,20,480/- on 25.9.2008. The AO completed the assessment u/s 143(3) of the

Act determining total taxable income of the assessee at Rs.21,92,670 after

making various additions such as addition of Rs. 11,51,483/- by treating

agricultural income shown by the assessee as undisclosed income, disallowance

of internet of Rs.78,942/-, disallowance of deduction of interest claimed u/s 24

of the Act of Rs.4,91,761 and addition of Rs.1,50,000 on account of low

household withdrawals during the financial period under consideration.

2 ITA 5899/Del/2012 AY: 2008-09

3. The aggrieved assessee preferred an appeal before the CIT(A) which was

partly allowed on certain grounds but the additions mentioned in the grounds of

the assessee were restricted to Rs.8,16,153 on account of addition of agricultural

income, Rs.1,03,655 disallowance on account of interest paid on loan and

addition on account of low household withdrawals was restricted to

Rs.1,08,000.

4. Now, the assessee is before this Tribunal in the second appeal with the

grounds as reproduced hereinabove.

Ground No. 1 & 2

5. Ld. counsel of the assessee submitted that the CIT(A) has upheld the

assessment order being addition of agricultural income to the tune of

Rs.8,16,153/- as undisclosed income of the assessee by simply comparing the

total actual crop yield of the assessee with the average crop yield from the

information available on the website of the Haryana Government submitted by

the AO along with remand report but there was no reference of the information

from the website of Haryana Government in the assessment order. Ld. counsel

vehemently contended that the CIT(A) has not denied the fact that there was

agricultural land in the hands of the assessee, agricultural activities were carried

on and crops were grown/purchased on the agricultural land, the agricultural

crops were brought to grain market for sale, agricultural crops were sold through

commission agents in the grain market and the sale rates are not excessive than 3 ITA 5899/Del/2012 AY: 2008-09

the prevailing market rates and the trees were grown and sold on agricultural

land by the assessee.

6. Ld. counsel further submitted that the CIT(A) upheld the order of the AO

by observing that the yield of crops of wheat and paddy shown by the assessee

are on higher side in comparison to the average crop yield as a whole available

on the website of the Haryana Government. Ld. counsel further pointed out that

the second ground of confirmation of assessment order by the CIT(A) is that the

purchase vouchers for sale/purchase of timber are neither stamped nor signed

and only the demand drafts were issued in favour of the assessee. Ld. AR

submitted that the CIT(A) ignored some important facts that the

farming/agriculture is absolutely dependent upon the nature and yield/crop

which varies from field to field and geographically area to area. Ld. AR further

pointed out that the sale of wheat husk, by-product (Cattle Feed and sale of

timber) amounting to Rs.40,000 and Rs.45,000 respectively has not been

considered as agriculture income. Ld. AR has further drawn our attention

towards paper book page no. 15 to 22 and 31 and submitted that out of total

expenditure, agriculture expenses of Rs.2,15,000 claimed by the assessee with

regard to agricultural activities include a sum of Rs.45,000 related to the sale of

timber and this fact was ignored by the CIT(A) while calculating the agriculture

income on comparative basis. Ld. AR vehemently contended that the assessee

had actually sold the wheat and paddy between Rs.850/- to Rs.870/- per qtl. and

4 ITA 5899/Del/2012 AY: 2008-09

Rs.1400 to Rs.1950 per qtl. respectively and the CIT(A) had arbitrarily and

hypothetically determined the average sale rate of wheat and paddy at Rs.800/-

and Rs.1500/- per qtl. respectively.

7. Ld. AR has also drawn our attention towards paper book page no. 1 to 6,

13, 23, 24, 30 to 51 and submitted that the assessee actually grew crops on her

land which were sold in the grain market through commission agents and the

crops were sold as per prevailing market rates and there is no excessive claim in

this regard. Ld. AR has also drawn our attention towards paper book page 15 to

22 and 31 and submitted that the trees were grown on agricultural land, the

timber was sold in the open market and the total agricultural expenses shown by

the assessee also include a sum of Rs.45,000 which was received by the assessee

on sale of timber.

8. Ld. counsel lastly pointed out that the average yield stated by the

Government of Haryana on its website includes barren and water deficient land

where yield is negligible and very low and the land of the assessee is very fertile

having sufficient source of irrigation, therefore, yield and quality of crops is

very good which brought high agriculture income for the assessee.

9. Replying to the above, ld. DR pointed out that during the assessment

proceedings, the AO after detailed deliberations, rightly held that the assessee

has inserted her concealed income under the disguise of agriculture income in

her hands and the same is liable to be taxed as undisclosed income of the 5 ITA 5899/Del/2012 AY: 2008-09

assessee. Ld. DR further contended that the CIT(A) took a very balanced

approach and after consideration of average yield of crop and average sale price

of wheat and paddy rightly calculated the agriculture income and reduced the

addition to Rs.8,16,153 which is sustainable. Ld. DR finally prayed that there is

no reliable and cogent evidence regarding sale of timber, therefore, agriculture

income in this regard cannot be accepted.

10. Ld. AR of the assessee submitted that the assessee placed 58 documents

in support of her claim regarding agriculture income, payment of interest and

household withdrawals but the same was rejected at the threshold without any

detailed deliberations which resulted into impugned disallowance. To support

the claim of agriculture income, ld. AR also placed reliance on the decisions of

Punjab & Haryana High Court in the case of CIT vs S.R.M. Cotton & Oil

Mills (2008) 174 Taxman 503 (P&H) and another judgement in the case of

CIT vs Jarnail Singh Karta 174 Taxman 57 (P&H) and submitted that where

the sale consideration was received through account payee cheques which were

deposited in the regular bank account of the assessee, the assessee furnishes bills

vide which the timber of trees were sold and the identity of the purchaser had

been duly disclosed, then the agriculture income cannot be discarded and

dismissed.

11. On careful consideration of above submissions, we are of the view that

the authorities below have not denied and fact that there was agriculture land of

6 ITA 5899/Del/2012 AY: 2008-09

8.32 hectare in the hands of the assessee and agricultural activities were carried

on and crops were grown/produced on the agriculture land which were sold in

the grain market through commission agents. As per the assessee, the wheat and

paddy were sold between Rs.850 to Rs.870 and Rs.1400 to Rs. 1950

respectively and the CIT(A) adopted the rates shown on the website of Haryana

Government and determined the average sale rate as Rs. 800 for wheat and

Rs.1500 per qtl. for paddy. From careful reading of the assessment order and

appellate order, we note that authorities below have not brought out any fact or

allegation on record to dispute or raise any doubt regarding papers available at

page no. 1 to 51 which contain land ownership proof of the assessee, Master

Akhil Garg and Master Aman Garg, confirmation copy of accounts and purchase

vouchers/bills for the sale of timber by Master Akhil Garg, proof of ownership

of agricultural land of both minor sons of the assessee, copy of the auction

(Boli) Registers of the commission agent, clarification/confirmation from

commission agent about continuity/usage of 'J' Form bill book,

bill/confirmation pertaining to agricultural expenses.

12. As per certification mentioned on the paper book of the assessee, said

documents placed before page no. 1 to 51 were filed before the assessing and

appellate authorities below. When we analyse the contents of the said

documents, we note that page no. 1 & 2 shows ownership proof of assessee Smt.

Sangita. (page no. 3 to 7 shows sale of wheat to M/s Praveen Trading Co. ) and

7 ITA 5899/Del/2012 AY: 2008-09

receipt of sale consideration of Rs.1,27,921/- by cheque no. 007558 and receipt

of consideration of Rs.25,380 on 18.3.2008 which was received through cheque

no. 002669. Page no. 8 to 14 show proof of agricultural income of Master Akhil

which shows payment from M/s Praveen Trading Co. to Master Akhil Garg as

consideration of wheat and paddy amounting to Rs.5,23,112 which finally

shows credit balance of Rs.4,71,229 in the books of M/s Des Raj Ram Kumar on

account of Akhil Garg. From paper book page no. 15 to 22, we note that on

page no. 15, there is a confirmation from M/s Radha Krishna Ply & Board

Industries dated 30.1.2012 wherein confirmation has been placed stating that the

timber was purchased from Master Akhil from 2.2.2008 to 28.2.2008 amounting

to Rs.4,50,502 and payment of which was made through demand drafts. This

confirmation also contains PAN No. of purchaser firm M/s Radha Krishna Ply

& Board Industries. From page no. 16 to 22, we observe that page no. 16 is a

copy of statement of accounts for the financial year under consideration and at

page no. 17 to 22, copies of purchase vouchers of timber from Master Akhil

from 2.2.2008 to 28.2.2008 reveal that on 12 occasions, the timber was

purchased from Master Akhil by M/s Radha Krishna Ply & Board Industries,

Yamuna Nagar and payment was also made through demand draft.

13. From copies of the account of Master Aman Garg for AY 2007-08

available at page no. 23 & 24, we note that there was a balance of Rs.5,43,150 at

the end of the year which accrued to Master Aman Garg on account of sale

8 ITA 5899/Del/2012 AY: 2008-09

consideration of wheat, paddy and sunflower to M/s Praveen Trading Co. Page

no. 25 to 29 are the bills issued by commission agent showing the weight and

price of agriculture crop which was credited to the account of Master Aman

Garg. We further note that at page 30 & 31, we see the proof of ownership of

agricultural land in the name of Master Aman and Master Akhil S/o Parveen

which show agriculture land of 53 canal, 16 marla in their names and page 31

also reveals that there were a number of trees and agriculture crop was also

exploited therefrom which brought agriculture income for the assessee. From

page no. 32 to 43, we see the copies of auction register (Boli H Register)

wherein on several occasions, names of assessee Mrs. Sangita and her minor

sons Master Akhil and Master Aman have been mentioned. This register not

only shows the date of sale of agriculture crop but also explains quantity and

rate of the sold agriculture, produce and the name of the purchaser which also

supports this fact that the agriculture crop was grown and carried to grain market

for sale through commission agents. Page no. 44 and 45 shows details of

purchase vouchers ( J Forms) issued by M/s Parveen Trading company. Paper

Book page no. 46, 47 and 48 are the copies of the receipt issued by Shri Chaman

Lal wherein Mr. Chaman Lal states that during FY 2007-08, he conducted work

of sowing of crop and transportation of agricultural crop and timber through his

tractor and receipt, freight and diesel expenses from Master Akhil s/o Parveen

r/o Shabhad. Shri Chaman Lal in receipt available at page no. 48 also states that

he also conducted work of crop sowing and transportation of agriculture crop by 9 ITA 5899/Del/2012 AY: 2008-09

his tractor against which he received sowing ways of paddy at Rs. 12,000 and

Rs.9500 on account of work regarding wheat crop. The assessee has also placed

copies of the electricity bill, payment receipts at page 49 to 51 of the Paper

Book. From the statement of account of assessee with Bank of Baroda, we also

note that the assessee received R.s 2 lakh through cheque and Rs. 1 lakh also

through cheque from M/s Des Raj Ram Kumar.

14. On the basis of critical analysis of documentary proof submitted by the

assessee supporting to proof of ownership of agriculture land, proof of sale of

agriculture credit and timber and receipt of consideration through banking

channel, we observe that the assessee submitted all possible documentary proof

supporting his claim of agriculture income from sale of agriculture crop and

timber. The assessee has also submitted proof of trees which were recorded in

the revenue records on the agricultural land in the name of assessee and his

minor sons.

15. In para 2, at page 2 of the assessment order, we observe that the AO has

mentioned that the assessee did not furnish any iota of documents to affect the

ownership and extent of rent on which said wheat crop was grown, yield of

wheat as claimed to have been sold, expenses incurred on grains, threshing and

transportation etc.; details and bills of expenses on account of agriculture and

fertilizer; and the details of labour engaged for agriculture operations and details

of payments made to labor. We also note that the AO after levelling aforesaid

10 ITA 5899/Del/2012 AY: 2008-09

allegation proceeded to hold that the assessee failed to substantiate her claim in

respect of income shown as agriculture income and also hold that a person who

claimed benefit of exemption as to establish and prove it. The AO made

addition treating the agriculture income as undisclosed income of the assessee

by alleging that the assessee has concealed her income in the disguise of

concealed income in her hands. From vigilant reading of the impugned order,

we note that the CIT(A) after considering remand report of the AO and

additional evidence filed by the assessee accepted the claim of the assessee to

the extent of Rs.3,35,330 and the balance amount of Rs.8,16,153 was treated

assessee's income from undisclosed sources and the addition was sustained to

this extent. From para 18 of the impugned order, we note that the CIT(A) has

considered the yield of wheat and paddy as per Haryana Government website

and also considered rates of wheat and paddy as shown in Haryana Government

website. The CIT(A) calculated the quantity and sale price of wheat and paddy

as per government data which is not a proper and justified approach. On the

basis of foregoing discussion and observation of the AO and the CIT(A), we

note that the revenue authorities have not disputed this fact that the assessee and

her minor sons hold agriculture land as per revenue record. We also observe

that as per revenue records, there were number of trees on the land held by the

assessee and her minor sons, therefore, transaction of sale of timber by the

assessee and her minor sons cannot be doubted. In view of agriculture land

ownership proof, confirmation of purchasers and commission agents, auction 11 ITA 5899/Del/2012 AY: 2008-09

register, J Form Bill book and bill/confirmation pertaining to agriculture

expenses, we hold that the AO wrongly held that the assessee did not furnish

any iota of document to establish ownership of agricultural land and growing

threshing and transportation of agriculture crop and timber as the number of

documents were submitted before him which have not been considered and

appreciated properly during the course of assessment proceedings. The first

appellate authority viz. CIT(A) also did not consider these documents and

merely after considering the data of agriculture department of Haryana

Government the CIT(A) estimated the yield of crop and sale price and restricted

the amount of agriculture income of Rs.35,35,330. The CIT(A) dismissed the

claim of assessee regarding income from sale of timber merely observing that

the cops of the purchase bills filed by the appellant from M/s Radha Krishna Ply

& Board Industries, Yamuna Nagar are neither signed nor stamped but from

certificate and statement of account, we note that these documents have been

properly stamped and signed along with PAN No. of the said firm M/s Radha

Krishna Ply & Board Industries, purchase bills available at page 17 to 22 are

also signed which have been issued from printed stationery in the name of firm.

We may point out that if any doubt comes into the mind of AO or first appellate

authority the same can be verified by way of specific query from the assessee

but the document cannot be held as bogus or unacceptable on the sole basis of

the doubt on which the assessee was not allowed to explain her stand and

contents of the document.

12 ITA 5899/Del/2012 AY: 2008-09

16. On the basis of foregoing discussion, we reach to an original conclusion

that the CIT(A) wrongly adopted average yield and sale price of wheat and

paddy as shown in the website of Government of Haryana. The CIT(A) was not

correct in dismissing the claim of the asessee regarding income from sale of

timber without further verification and examination. We may point out that the

issue of sale of timber was also not properly examined by the AO at his level

and the AO dismissed entire documentary evidence of the assessee without any

deliberation and adjudication. In this situation, we dismiss the observations of

the AO that the assessee did not furnish any iota of document to support her

claim about agriculture income because as we have already noted above that the

assessee submitted all possible documents including revenue records, purchase

bills/vouchers, bank statement and other relevant documents showing

agriculture activities which brought agriculture income to the assessee.

17. As we have already observed that the authorities below did not properly

consider claim of the assessee about agriculture income and AO dismissed the

claim of the assessee at the threshold on the basis of incorrect and wrong

observations. During the first appellate proceedings, the CIT(A) allowed a part

of the claim and restricted the disallowance to Rs.8,16,153/- without any logical

basis and sustainable reasoning and by taking a hyper technical and incorrect

approach and data.

13 ITA 5899/Del/2012 AY: 2008-09

18. In this situation, we are of the considered view that the issue of agriculture

income requires proper examination and verification at the end of the AO and

we restore this issue to the file of AO for de novo fresh adjudication after

affording due opportunity of hearing for the assessee and without being

influenced by the earlier assessment order and the impugned order. The AO

shall adjudicate and address all the issues and points regarding claim of

agriculture income of the assessee and after giving due consideration to the

supporting documents, evidence and explanation of the assessee in this regard.

Accordingly, ground no. 1 and 2 of the assessee are deemed to be allowed for

statistical purposes with the direction to the AO as mentioned hereinabove.

Ground No.3

19. Apropos ground no.3, ld. counsel for the assessee submitted that the

assessee paid interest of Rs.1,03,655 to State Bank of India on the loan taken

for purchase of property at Asaf Ali Road during relevant AY 2008-09. Ld.

counsel of the assessee submitted that the AO wrongly held that the claim of

payment of interest remained unsubstantiated. Ld. counsel has further drawn

our attention towards operative part of impugned order and submitted that the

CIT(A) wrongly held that the assessee paid interest of Rs.1,03,655 to Bank of

Baroda on the cash credit loan account. The credit facility from Bank of Baroda

was utilized for repayment of EMI to HDFC Bank which is not allowable as

interest component in EMI payments to HDFC Bank has already been allowed.

14 ITA 5899/Del/2012 AY: 2008-09

Ld. counsel further elaborated the facts on this issue and submitted that the

assessee has jointly taken a loan of Rs. 35,95,377/- from HDFC Bank Rohini,

Delhi on 30.8.2007 for purchase of property at Rohini which was let out to

ICICI Bank and paid interest of Rs. 2,56,733 on the said loan. Ld. counsel

further pointed out that the appellant has purchased the property by availing loan

from HDFC Bank and paid EMI of Rs.58,117 from her bank account no. 4874

with Bank of Baroda and another account with HDFC Bank. Ld. counsel took

us through copies of the bank account statement available at pages 52-55 of the

paper book and submitted that the loan taken from HDFC Rohini Branch for the

purpose of purchase of property at Rohini were paid through Bank of Baroda

cash credit account. Ld. counsel further pointed out that the assessee has shown

rental income from this property amounting to Rs.3,22,951. Therefore, interest

amount of Rs.1,03,655 cannot be denied as the payment of interest for making

EMI payments from her current account is linked with the property loan taken

from HDFC Bank.

20. Replying to the above, ld. DR pointed out that the impugned interest was

paid in respect of current account in Bank of Baroda and the interest component

in the EMI payments made by the assessee to HDFC Bank through Bank of

Baroda had already been allowed to the assessee, therefore, payment of interest

for making EMI payments from her account with Bank of Baroda cannot be

allowed again. Supporting the impugned order and action of the AO, ld. DR

15 ITA 5899/Del/2012 AY: 2008-09

submitted that the assessee is not allowed to make double claim on interest once

as interest component of EMI and secondly as interest paid on current account

from which EMI was paid.

21. On careful consideration of above submissions, we are of the considered

view that undisputedly, the assessee obtained loan of Rs. 35 lakh from HDFC

Bank Rohini for purchase of 1/3rd share of property at Rohini and it is also not in

dispute that the EMI of said loan was paid by the assessee to HDFC Bank

through her current bank account with Bank of Baroda. Under above noted

facts, we further observe that the interest paid on the capital borrowed from two

HDFC bank accounts was allowed by the CIT(A) which was paid with other co-

borrowers amounting to Rs.1,31,005/- and Rs.2,56,733. The impugned interest

of Rs.1,03,655 was paid in respect of current account with Bank of Baroda from

which the EMIs were paid.

22. This is also a contention of ld. counsel of the assessee that the credit

facility from Bank of Baroda was utilized for repayment of EMI to HDFC Bank

and loan advanced to M/s Des Raj Ram Kumar was provided through current

bank account with Bank of Baroda, therefore, interest paid thereon is allowable.

23. Ld. DR replying to the above, pointed out that when the interest

component in the EMI payment against HDFC loan has already been allowed to

the assessee, then the interest for making EMI payment from her current account

16 ITA 5899/Del/2012 AY: 2008-09

with Bank of Baroda cannot be allowed again, therefore, disallowance to the

extent of impugned amount was correctly confirmed by the CIT(A).

24. On careful consideration of above contentions as we have already noted

that from the copies of the bank statement of the assessee placed in the Paper

Book of the assessee, we observe that the assessee advanced loan of Rs. 2 lakh

and Rs.1 lakh to M/s Des Raj Ram Kumar and from the same account, the

assessee also paid six instalments of HDFC loan to HDFC Rohini Branch. From

para 33 of the impugned order, we observe that the CIT(A) has allowed interest

of Rs.2,56,733 to the assessee which was charged on HDFC loan. In this

situation, when the interest on loan has been allowed to the assessee, then if

interest paid by the assessee to Bank of Baroda on current account from which

instalment has been paid cannot be allowed because if the same is allowed, then

it would amount to double claim. However, at this juncture, we take cognizance

of the conclusion of the CIT(A) on ground no. 3 of the assessee before him,

wherein the addition made by the AO in respect of interest of Rs.78,942 from

M/s Des Raj Ram Kumar has been deleted by observing that the total income

under the head of other sources has been shown at Rs.82,557 and break up of the

same was Rs.3615 as bank interest and Rs.78,942 as interest from M/s Des Raj

Ram Kumar which also gets confirmed from the statement of account available

at page 56 of the Paper Book. The main contention of the assessee is that when

the interest received from M/s Des Raj Ram Kumar has been offered to tax, then

17 ITA 5899/Del/2012 AY: 2008-09

the interest on current account out of which loans were advanced to M/s Des Raj

Ram Kumar cannot be disallowed. The stand of department for rejection of the

claim of the assessee is that the assessee had been allowed interest on loan

account of HDFC Bank and EMI paid includes interest component therefore, the

interest on current account of Bank of Baroda cannot be allowed. If we analyse

the facts, then we clearly observe that the first instalment of HDFC loan was

paid by the assessee on 29.11.2007. Prior to that, there are number of

transactions which are related to the agriculture and other economic activities of

the assessee including amount of loan advanced to M/s Des Raj Ram Kumar and

other firms. In the peculiar facts and circumstances when the interest received

from M/s Des Raj Ram Kumar has been offered to tax by the assesse under the

head of income from other sources, then the amount of entire interest paid on

current account out of which loans were advanced cannot be disallowed at the

threshold merely because instalment of property loan to HDFC bank

approximately Rs.3.5 lakh has been paid by the assessee and the entire interest

paid on current account cannot be disallowed. However, we make it clear that

the AO may disallow the interest amount which is related to the payment of

EMIs on HDFC loans by the assessee between the period 29.11.2007 to

28.3.2008 and remaining amount of interest paid by the assessee on Bank of

Baroda current account deserves to be allowed and we direct the AO to allow

the same accordingly. With these directions, ground no. 3 of the assessee is

18 ITA 5899/Del/2012 AY: 2008-09

deemed to be allowed for statistical purposes with the limited direction to the

AO as mentioned hereinabove.

Ground no.4

25. Apropos ground no.4, ld. counsel of the assessee submitted that the AO

had added a sum of Rs.1,50,000 to the income of the assessee on the ground of

low household withdrawals. Ld. counsel contended that during the assessment

proceedings, the AO has never asked for the family constitution and withdrawals

of the appellant and other family members and in the zeal to make additions

added the amount on account of low household withdrawals. Ld. counsel

further pointed out that the CIT(A) upheld the assessment order on this issue to

the extent of Rs.1,08,000 on the ground that the assessee is not living in joint

family along with her in laws and the hosuehold expenses are on lower side. Ld.

counsel further contended that the CIT(A) has not denied the fact that the

assessee is not having any air-conditioning facility and diesel generator etc. in

her house and has not employed any helper or domestic servant. Ld. counsel

further submitted that the CIT(A) has not disputed this fact that neither the

assessee nor any of her family members has organised any

family/social/religious functions during the period under consideration and

neither the assessee nor any of her family members has incurred any major

amount on medical expenses such as hospitalisation or any other major

treatment.

19 ITA 5899/Del/2012 AY: 2008-09

26. Ld. counsel strenuously contended that the authorities below ignored

some important facts that the assessee lives in a small town of Haryana

(Shahbad Makranda) in her own house and all the family members have their

own independent source of income. Ld. counsel also submitted that the assessee

and her family is using and consuming food grains, cereals, vegetables, fruits,

pulses, edible oils, milk, ghee and curd etc. from her own agriculture land and

cattle maintained by her. In this situation, expenses on grocery and other items

become negligible which further justifies the withdrawals of the assessee during

the period under consideration. Ld. counsel further submitted that the CIT(A)

has not given any basis of working as to how he estimated the household

expenses at Rs.2,40,000 as against the hypothetical figure estimated by the AO

of Rs.2,20,000 and confirming the addition of Rs.1,08,000. Ld. counsel also

pointed out that the authorities below ignored this very fact that the assessee

lives in a small town of Haryana and major part of day to day necessities of

grocery, vegetables and fruits is fulfilled from the agriculture land and cattle

maintained by the assessee and the all the major family members have their own

independent source of income and contributing to the household expenses of

joint family. Ld. counsel also submitted that the copies of the ration card

available at page 57 and 58 of the paper book make it clear that the assessee, her

husband and three minor children along with in laws reside in house no. 967,

sector 17 of Udham Singh Colony. In this situation, household withdrawals

cannot be held as insufficient and addition in this regard is not sustainable. 20 ITA 5899/Del/2012 AY: 2008-09

27. Replying to the above, ld. DR supported the action of the AO and

submitted that the drawings of Rs.70,000 shown by the assessee cannot be held

as sufficient to meet the day-to-day expenses of the assessee and, therefore, the

AO was right in making addition on account of low household withdrawals. Ld.

DR further pointed out that the CIT(A) also took a very balanced and justified

approach by granting part relief to the assessee and confirming the addition to

the extent of Rs.1,08,000. Ld. DR further pointed out that school fee of the

children was Rs.40,000 and electricity expenses were Rs.20,000 and after

exclusion on these two expenditures, withdrawals made by the assessee and her

husband remained only at Rs.1,32,000 which cannot be held as sufficient for

meeting the day-to-day expenses of family of six persons.

28. On careful consideration of above submissions, we note that the AO made

addition of Rs.1.5 lakh which was reduced to Rs.1,08,000 by the CIT(A) with

following determination:-

"36. I have carefully considered the submissions of the appellant, the observations made by the A.O. in the Assessment Order, remand report and facts of the case. The appellant's family comprises of five members out of which three children are school going. On the basis of the copies of ration card filed by the appellant in respect of her family and her in-law's family, it is seen that the two families are not living together. The school fee of the children admittedly was Rs. 40,000/- and electricity expenses were Rs. 20,000/-. After excluding this expenditure, withdrawals made by the appellant and her husband were only at Rs. 1,32,000/- which is not sufficient for meeting the day-to-day household expenses of a family of five persons. The household expenses of the appellant are reasonably estimated at Rs.

21 ITA 5899/Del/2012 AY: 2008-09

20,000/- per month, i.e. Rs. 2,40,000/- and an addition of Rs. 1,08,000/- is confirmed on account of low household withdrawals, i.e., (2,40,000/- - 1,32,000/-). In the result addition on account of low household withdrawals is confirmed to the extent of Rs. 1,08,000/-."

29. In view of above, we note that the CIT(A) upheld the addition on the basis

of facts mentioned in the remand report of the AO that the address mentioned in

the assessee's ration card and assessee's father-in-law's ration card were

different, therefore, it cannot be said that the assessee's father-in-law and

mother-in-law were sharing their withdrawals for meeting the household

expenses. Undisputedly, the father-in-law of the assessee Shri R.K. Garg had

made withdrawal of Rs. 1 lakh and mother-in-law Smt. Santosh Garg had made

the withdrawal of Rs.88,200 and her husband Shri Parveen Garg had made

withdrawal of Rs.1,22,000 and total withdrawals including withdrawal made by

the assessee of Rs.70,000 comes to Rs.3,80,000 out of which school fee of

Rs.40,000 and electricity bill of Rs.20,000 had been paid and remaining balance

available for household expenses was Rs.3,20,000. In view of copies of the

ration card available at page no. 56 & 57, we are of the considered view that the

CIT(A) blindly accepted the contention of the AO that the address mentioned on

the ration card of the assessee and her in laws are different. Per contra, from the

copies of the ration card placed before us, we note that the address of the

assessee and her in laws is the same and any withdrawals made by her in laws

cannot be ignored for the purpose of calculating the total withdrawals by the

joint family and its sufficiency to meet household expenses during the period

22 ITA 5899/Del/2012 AY: 2008-09

under consideration. The lower authorities also ignored this very fact that the

assessee is living in a joint family with her in laws without any air-conditioning,

generator set facility or any domestic help/servant facility. The AO has not

disputed this fact that the assessee holds agriculture land and cattle out of which

maximum needs of household, grocery, vegetables, fruits, milk etc. are fulfilled

and in this situation, total withdrawals of Rs.3,80,200 cannot be held as

insufficient for meeting the household expenses, specially when the assessee is

living a normal life without any expensive luxury and supported by agriculture

produce. In this situation, addition made by the AO and partly upheld by the

CIT(A) on account of low household withdrawals cannot be held as justifiable

and we direct the AO to delete the same. Accordingly, ground no.4 is allowed.

30. In the result, the appeal of the assessee is partly allowed on ground no. 4

and deemed to be allowed for statistical purposes on other grounds.

31. Accordingly, the appeal of assessee is partly allowed.

Order pronounced in the open court on 30/5/2015.

Sd/- Sd/-

(S.V. MEHROTRA) (CHANDRAMOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER

DT. 30th JUNE 2015 'GS'

23 ITA 5899/Del/2012 AY: 2008-09

Copy forwarded to:-

1. Appellant 2. Respondent 3. C.I.T.(A) 4. C.I.T. 5. DR By Order

24