TaxTMI 
TaxTMI 
2003 (9) TMI 293
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....dditions: 13,00,000 Estimated addition on account of alleged low household expenses. 1,00,000 Estimated addition on account of jewellery. 12,161 On account of alleged interest. 20,000 On account of air conditioner. 5,000 On account of repair/sofa set, etc. 4. That the explanations given, evidence produced and material placed on record have been properly considered and judicially interpreted and the same do not justify the additions made. In any case, the additions are based on mere surmises and conjectures. 5. That the machinery for assessment of undisclosed income of the block period is independent as per the provisions of Chapter XIV-B of the IT Act and the assessment has not been made in accordance with the same. All the additions, which are not related to the documents found during the search, are bad in law. In any case, no additions can lawfully be made on account of estimated household expenses and other outgoings, etc. 6. That, in any case, the material relied upon was not confronted to the appellant and the additions on account of alleged undisclosed income were wrongly made and wrongly computed and the tax was wrongly charged and the....
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....7,726 The AO mentioned that for the financial years 1998-99 and 1999-2000, there were cash deposits in various banks amounting to Rs. 27,000 and Rs. 53,670 respectively, and the household withdrawals had been shown at Rs. 1,34,566 and Rs. 28,000 respectively. The explanation of the assessee was that the deposits in the various banks were not out of the household withdrawals made by the family members and the deposits pertained to the transactions of sales and purchases made outside the books and were covered in the statement of peak period. The AO provided the assessee with estimate of household expenses under different heads, which had been discussed in the block assessment order at pp. 23 to 26. One of the items was related to the mobiles. The assessee submitted that his son Shri Jatinder Kumar Khurana did not have any mobile as they had only one mobile No. 9810057128 and the same had been declared. As regards the other three mobiles Nos. 9810115881, 9810113352 and 9810115926, it was stated that those were not related to Shri Jatinder Kumar Khurana, son of the assessee, and the bills were wrongly sent to him by the company. It was also stated that no payment had been....
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....having only one air-conditioner and the house consisted of only one and half storey i.e., total five rooms and the average electricity bill was not more than Rs. 600 per month. 3.9. Regarding telephone expenses, the AO mentioned that telephone No. 547737 was installed at shop No. 31, Mewa Mandi, Amritsar. The assessee has submitted that total bills and the payment for the period 1st June, 1998 to 22nd July, 1999 were as under: Date Amount 22-6-1998 21,320 31-8-1998 11,975 20-10-1998 6,329 22-12-1998 9,081 22-2-1999 12,631 1-4-1999 7,135 11-5-1999 9,703 18-6-1999 2,588 80,762 It was stated that the AO had wrongly stated that the average telephone calls for that period were Rs. 20,000 per month whereas the telephone bills for the period 1st June, 1998 to 22nd July, 1999 were to the tune of Rs. 80,762 which had been debited in the regular books of account. It was also claimed that the telephones at shop and residence were used for business purposes and the expenses were debited in the books of accounts and there was no personal use of telephone and as such the expenses for this purpose out of household ....
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....ervants, educational expenses etc. before making the said addition. It is observed that the AO has made an addition of Rs. 20 lacs for the entire block period of 10 years which gives an average estimated household expense of Rs. 2 lakhs per year. This estimated expense of Rs. 2 lakhs per year divided over the period of 12 months gives average monthly expenditure of about Rs. 16,000. This estimated expenses of Rs. 16,000 per month by any yardstick cannot be said to be excessive particularly considering the fact that the appellant has itself shown undisclosed income for the block period at Rs. 11 lacs and he is maintaining a reasonable standard of life having most of the amenities of life including air-conditioners, cars, telephone, jewellary, servants and business at Delhi and Amritsar. As far as the appellant's contention regarding lack of scope in making any estimate of income in a block assessment made under the provisions of Chapter XIV-B for block period is concerned, it may be mentioned that even in the case laws relied upon by the appellant, the respective Tribunals have not held that any estimated addition cannot be made under the block assessment. What has been held in t....
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....ons, the learned Departmental Representative strongly supported the orders of the authorities below. 7. We have heard both the parties at length and carefully gone through the material available on the record. In the instant case, it is true that the AO estimated the household expenses. However, he has not given the basis for his estimation. It is well settled that the presumption, however strong cannot substitute the evidence. It is also true that in block assessment, the addition can be made (sic) or documents and such other material or evidence which are available with the AO. In the present case, the AO while making the estimation of household expenses for the block period at Rs. 20 lacs has not pointed out any instance where the expenses incurred by the assessee and declared in the books of accounts were on the lower side. In other words, the AO had not brought any material on record in support of his estimation, The learned CIT(A) also while confirming the action of the AO simply stated that the AO had made the estimate of Rs. 20 lacs for the entire block period of 10 years which gave an average estimated expenses of Rs. 2 lacs per year and that estimated expenses of Rs. 2....
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....sessee who was regularly assessed to tax. The AO had not made any comparison of the withdrawals made jointly by the husband and wife. It was also noteworthy that in the regular assessment, no addition had been made on account of low withdrawals. From the fact that no addition was made in the regular assessment, it was to be inferred that the addition on account of low withdrawals could be made only on the basis of any material found during the course of search; no material having been detected during the course of search in regard to inadequacy of household expenses, the addition made by the AO was unsustainable in law. The addition was, accordingly, deleted." In the instant case also, perusal of the block assessment order reveals that no material whatsoever was found during the course of search in regard to the household expenses of the assessee. There is no mention of any facts and circumstances found during the course of search which would be sufficient to draw a legal inference about the inadequacy of the household withdrawals made by the assessee and his family members. It is also evident from the assessment order that there is no evidence on record to establish that the ex....