2013 (4) TMI 545 - AT - Income Tax

Addition (i.e. 30% of Rs. 1,50,000) on account of alleged low household expenses - Held that - As decided in assessee s own case for AYs. 2007-08 & 2008-09 both the authorities below have not at all brought on record the size of the family, their monthly expenditure, what is the meaning of the status etc.. At least some facts are required to be brought on record when a particular finding is to be given. CIT(A) deleted 70% of the addition but without giving any convincing reasons sustained 30% addition. Thus judicial propriety demands that there should be some justification even to sustain 30% addition - orders to delete addition sustained by the CIT(A) in both the years - against revenue.

Summary

Issues involved:
1. Validity of initiation of proceedings under section 153A of the Income Tax Act.
2. Addition made on account of alleged low household expenses.
3. Charge of interest under section 234B and 234C of the Act.

Issue 1: Validity of initiation of proceedings under section 153A of the Income Tax Act:
The appeal challenged the initiation of proceedings under section 153A of the Income Tax Act, contending it was bad-in-law as no assessment or reassessment proceedings were pending at the time of the search under section 132 of the Act. The appellant argued that the CIT(A) erred in not adjudicating this contention. The search, seizure, and survey action under section 132 of the Act were conducted on a specific date, leading to the issuance of a notice under section 153A to the assessee. The appellant raised concerns regarding the legality of the initiation of proceedings under section 153A without pending assessments or reassessments related to that year.

Issue 2: Addition made on account of alleged low household expenses:
During the assessment proceedings, the Assessing Officer (AO) added Rs. 1.5 Lakhs to the total income of the assessee under the head 'Addition on account of House-hold Expenses.' The appellant appealed this addition before the First Appeal Authority (FAA). The FAA confirmed 30% of the addition made by the AO, considering factors such as the status of the family and the location of the residence. The appellant contested this decision, arguing that the withdrawals made by the members of the family were not adequately considered during the assessment and appeal process. The appellant referred to a previous ITAT order in their favor for other assessment years, highlighting inconsistencies in the decision-making process regarding the addition on account of low household expenses.

Issue 3: Charge of interest under section 234B and 234C of the Act:
The appellant also disputed the charge of interest under sections 234B and 234C of the Act, denying liability for the payment of such interest. This issue was considered consequential, and the appeal filed by the assessee was ultimately allowed based on the resolution of the preceding issues. The decision on this issue was intertwined with the overall outcome of the appeal and the findings on the validity of the initiation of proceedings and the addition on account of low household expenses.

In conclusion, the judgment addressed multiple issues related to the initiation of proceedings under section 153A, the addition of low household expenses, and the charge of interest under sections 234B and 234C of the Income Tax Act. The detailed analysis highlighted the arguments presented by the appellant, the decisions made by the authorities, and the grounds for challenging the various aspects of the assessment and appeal process. The judgment provided insights into the legal complexities surrounding income tax assessments and the importance of considering all relevant factors and evidence in determining tax liabilities.