2012 (6) TMI 851 - AT - Income Tax

Successful Challenge to Alleged Household Expenses Addition Under Section 132

The challenge to the impugned orders of Ld. CIT (A) under section 132 of the Act for alleged household expenses addition was successful. The appeals filed ... - Issues involved: Challenge to impugned orders of Ld. CIT (A) u/s.132 of Act for alleged household expenses addition.Controversy in Assessment Years 2007-08 and 2008-09:The appeals were filed challenging the addition of Rs. 1,50,000/- made by the A.O. for alleged household expenses, sustained at 30% by Ld. C.I.T.(A).Facts and Observations:- Search and seizure action u/s.132 of Act on 05.03.2009 in the cases of Jai Corp Group.- A.O. observed the group's substantial land purchase through the assessee.- Assessee's return declared total income of Rs. 1,50,426/- with no undisclosed income.- A.O. made an addition of Rs. 1,50,000/- to total income based on family status.- Ld. CIT (A) sustained 30% addition ad-hoc and deleted 70% addition.Judicial Analysis and Decision:- Ld. Counsel withdrew ground no.1 in both appeals.- Lack of evidence on family size, monthly expenditure, and status led to deletion of 30% addition.- Judicial propriety required justification for any addition, leading to deletion of Ld. CIT (A)'s sustained addition.- Ground no.2 allowed, and Ground no.3 deemed consequential.- Both appeals of the assessee were allowed.Conclusion:The addition of Rs. 1,50,000/- for alleged household expenses was deleted in both assessment years, and the appeals of the assessee were allowed.