TaxTMI 
TaxTMI 
2001 (3) TMI 233
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....ntained by the assessees are given at p. 15 of the paper book filed by the assessee as under: Shop No. Name of owner and source of payment Cheque No. Rupees Lower ground No. 135 Jivanlal Nebhumal (HUF) M/s Jivanlal Nebhumal 423532 2,00,000 Lower ground No. 136 Shankerlal Nebhumal (HUF) M/s Jivanlal Nebhumal 423533 2,00,000 Lower ground No. 137 Sureshkumar Nebhumal (HUF) M/s Jivanlal Nebhumal 423534 2,00,000 Upper ground No. 535 Maheshkumar Nebhumal (HUF) M/s Jivanlal Nebhumal 423535 1,75,000 Upper ground No. 536 Gopichand Nebhumal (HUF) M/s Jivanlal Nebhumal 423536 1,75,000 Basement No. 30 Arjunlal Nebhumal (HUF) M/s Jivanlal Nebhumal 423530 1,00,000 Basement No. 31 Arjunlal Nebhumal (HUF) M/s Jivanlal Nebhumal 423531 1,00,000 Basement No. 32 Arjunlal Nebhumal (Indl) M/s Arjunlal Nebhumal 634138 1,00,000 3. In ITA Nos. 4512, 4508 and 4510/Ahd/1991 the assessees have claimed to have purchased shop Nos. 136, 135 and 137, respectively at lower ground floor of JJ Air Conditioned Market for a sum of Rs. 2,00,000. The AO was, however, of the ....
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..... He, therefore, made an addition of Rs. 2,75,000. 8. On appeal, the learned CIT(A) confirmed the additions of Rs. 5,50,000 made by the AO in respect of the assessees in ITA Nos. 4512, 4508 and 4510/Ahd.1991. However, in respect of assessees in ITA Nos. 4501, 4506, 4505 and 4513/Ahd/1991 the learned CIT(A) restored the issue with regard to the addition on account of alleged unexplained investment in the form of "on money" paid by these assessees to M/s JJ Corporation, for fresh adjudication in accordance with law to the file of the AO by passing orders in 1991. 9. Aggrieved with the orders of the CIT(A), the assessee have come in appeals before us. Shri K.H. Shah, the learned authorised representative of the assessees, pleaded that the AO has not brought any material on record to prove that the assessees involved in these appeals have in fact paid any "on money" over and above the price debited by these assessees in their respective books of accounts on account of purchase of these shops from M/s JJ Corporation. It ws submitted that no doubt M/s JJ Corporation has charged "on money" in respect of certain shops belonging to it in the JJ Air-Conditioned Market to various other ....
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....es. 12. With regard to the other assessees where the matter was restored to the file of the AO, the learned Departmental Representative strongly relied on the orders of the CIT(A). 13. We have considered the rival submissions and have also gone through the orders passed by the AO as well as the CIT(A). The assessees involved in these appeals belonged to Uttamchandani family/group whose main business activity was dealing in cloth. Uttamchandani family/group joined with Tekrawala family to start the construction activity and both these families formed three partnership firms viz., M/s JJ Corporation, M/s Jashu Builders and M/s City Construction Co. wherein various members of both the families joined as partners but the interest of both the group in these firms was equal and accordingly the shares in profit and loss of the firms were decided. Thus Uttamchandani family has 50 per cent share in M/s JJ Corporation who constructed JJ Air-Conditioned Market and then earned income by selling shops in that market to various customers. It is undisputed that M/s JJ Corporation did charge "on money" from the customers while selling the shops in the JJ Air-Conditioned Market and for that i....
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....ere was a search in the residential premises of the assessee in the month of October, 1987, and a loose paper was found which indicated that the assessee has consumed 250 litres of milk in the months of February and March, 1983." On the basis of the above seized paper the AO came to the conclusion that the assessee must be consuming at least 10 litres of milk per day and taking the cost of milk at Rs. 6 per litre of milk per day, he estimated the annual consumption of milk at Rs. 21,600. Taking this as the base the AO came to the conclusion that the annual expenses of all the family members of Shri Nebhumal who claimed to have been living jointly in a house at Nanpura are as under: Rs. (1) Expenses for grains, pulses, veg. oil, panner, vegetables, etc. - For a family of 25 members, the monthly food expenses at the least will be Rs. 1,000 per person and total will be Rs. 1,000 x 25 x 12 3,00,000 (2) Milk expenses - For a family of 25 members having 11 children who at least require equal to 11 x 1/2 = 5.5 + 14 x 1/3 = 4.5 = 10 litres x Rs. 6 = 60 x 30 days x 12 months. This working is in accordance with the seized papers. 21,600 (3) E....
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....ts, Majuri rates, etc. this expenses for painting 7 bedrooms mansion cannot be less than Rs. 25,000 and the same is considered to have met from unaccounted source of the assessee. The same is added to the total. 25,000 Total 6,58,600 16. As against this, the assessee has debited only a sum of Rs. 1,88,000 in his books of account for household purposes which was considered to be very low. The AO accordingly made an addition of Rs. 6,58,600 on account of alleged unaccounted household expenses which were considered equally in the hands of six brothers who were living jointly and the AO made an addition of Rs. 1,09, 766 in the hands of each brother. 17. The assessee appealed and pleaded before the CIT(A) that the estimate made by the AO was wholly unjustified and is made on surmises and conjectures which has no relation to the actual realities. It was pleaded that all the family members numbering 25 were living jointly in a house at Nanpura and the details of the family members along with their ages and the number of minor children are as under: Age Standard School (i) Shri Jivanlal-Se....
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....Rs. 25,000 when in fact no such colouring and painting was done in the assessment year under consideration. It was further submitted that the expenditure estimated on clothing at Rs. 50,000 was also at a much higher scale because normally costly clothings are purchased only when there is a marriage or social function in the family and the AO has not brought on record any material to indicate that there was some marriage or important social function in the family of the assessee in the assessment year under consideration. Similarly, it was pleaded that the expenditure on account of entertainment, electricity, medical expenses, travelling and socialising expenses on religious festivals, etc. was estimated without any basis whatsoever. It was pleaded that even the estimate of expenditure on grains, pulses, vegetables, etc. at Rs. 1,000 per person per month was grossly exaggerated. It was further submitted that even after estimating the expenditure at a much higher and exaggerated figure at Rs. 6,58,600, the AO has chosen not to give credit of Rs. 1,88,000 which has been debited by the assessee in the books of accounts and has chosen to treat the entire estimated expenditure as having ....
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....in the house including TV set, refrigerator, etc. were separately accounted for by debiting in the books and as such the estimate of household expenses made by the CIT(A) at Rs. 8,000 per month for each of the families was at a much higher side. It was pleaded that out of 25 members, 12 were school-going children; out of which two girls were studying in 7th and 8th standard and that there was no school fee as the education of girls is free in the State of Gujarat. Five studying children in the 5th standard were going to school on bicycle and the other two studying in KG were being dropped to the school by lady members of the family as the schools were adjoining to the residence. Only two children were going to school by Rickshaw who used to charge Rs. 40 per child per month. Accordingly, it was submitted that the estimate on school fees, etc. at Rs. 36,000 by the AO was at a much higher scale. Accordingly, it was submitted that since there was no material except a milk bill found during the search, the AO was not justified in making any addition on account of alleged low household expenses and even the CIT(A) was in error in estimating the household expenses of each of the six fami....
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...., the fact remains that the total expenditure debited in the accounts of all the 25 members (including minors) who are claimed to be living jointly is only Rs. 1,88,000 which in our considered opinion is rather low and not quite adequate to meet day-to-day household expenses on food, clothing any other daily needs of a family of the status of the assessee. Therefore, taking into consideration the totality of the facts and circumstances of the case, we are of the opinion that it will be fair and reasonable to sustain an addition of Rs. 20,000 as against Rs. 71,000 sustained by the CIT(A) in respect of all the five assessees who are in appeals before us. 22. There is one more additional ground of appeal in all the appeals with regard to charging of interest under s. 139(8)/215. It was submitted by the learned authorised representative of the assessees that such charging of interest is void ab initio and bad in law as the AO has not granted any opportunity to the assessees before charging such interest in view of the decision of the Hon'ble Kerala High Court in the case of S. Govindaraju vs. CIT (1981) 25 CTR (Kar) 340 : (1982) 138 ITR 495 (Kar) and the decision of the Hon'....