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2017 (10) TMI 242 - AT - Income TaxHousehold expenses of assessee being an Ex-MP and Ex-MLA - Held that - The agricultural land has been duly reflected in the Balance Sheet as on 31.03.2008 and drawings of ₹ 1,44,000/- shown by the Assessee in his Balance Sheet as on 31.03.2008 is not reflected in any of the Bank statements and Ld. CIT(A) has not considered the fact that the Assessee had adequate cash in hand of ₹ 3,87,000/- to meet his personal expenses. Even after meeting his personal expenses he has been left with cash of ₹ 3.87 lakhs in his hand during the relevant period. Keeping in view of the facts and circumstances of the case, we are of the considered view that ₹ 1,44,000/- is a meager sum considering the status of the assessee but it was ignored by the lower authorities that by virtue of the status of the Assessee most of his expenses are either free since he is eligible for such privileges and benefits as an Ex MP and Ex MLA or are reimbursed for the same reason. Hence the drawings incurred by him are adequate and the same have been duly shown in the Balance Sheet. We further find that no contrary evidence has been brought on record by the revenue to the averments made by the assessee. In view of the above, the addition in dispute is deleted and ground raised by the Assessee is allowed.
Issues:
1. Disallowance of household expenses by the Ld. CIT(A)-VI. 2. Consideration of reasons and contentions by Ld. CIT(A)-VI. 3. Residency of the Assessee at native place. 4. Dependents and expenses declaration. 5. Non-disclosure of agricultural income in return of income. 6. Discrepancy in drawings shown in Balance Sheet. 7. Adequacy of expenses considering the Assessee's status. 8. Request for alteration of grounds of appeal. Analysis: 1. The appeal was filed against the Order of the Ld. Commissioner of Income Tax (Appeals)- VI, New Delhi regarding the disallowance of household expenses. The Assessee contended that most of his expenses were free due to his status as an Ex-MP and Ex-MLA, and that his household expenses were minimal as he resided in his owned building in a small village. The Ld. CIT(A)-VI had partly disallowed the appeal, but the ITAT held that the expenses were adequately shown in the Balance Sheet and deleted the addition. 2. The Assessee argued that the Ld. CIT(A)-VI did not consider the reasons and contentions presented in the appeal and subsequent submissions. However, the ITAT found merit in the Assessee's submissions regarding his status and the availability of free or reimbursed expenses, leading to the deletion of the disputed addition. 3. The Assessee's residency at his native place was a crucial factor in determining the household expenses. The ITAT acknowledged that residing in a small village with minimal expenses was a valid reason for the Assessee's lower declared expenses, which supported the Assessee's case. 4. The Assessee's declaration of dependents and expenses was a key issue. With only one dependent, the Assessee had declared expenses not exceeding a certain amount. The ITAT accepted this declaration as reasonable and in line with the Assessee's financial situation. 5. Non-disclosure of agricultural income in the return of income was contested by the Assessee. The ITAT noted that agricultural income was duly reflected in the Balance Sheet, even though it was not included in the computation part of the return. As there was no evidence of contrary income, the ITAT accepted the Assessee's explanation. 6. A discrepancy in the drawings shown in the Balance Sheet was raised by the authorities. The Assessee's explanation that the cash in hand was adequate to cover personal expenses was accepted by the ITAT, leading to the deletion of the addition made by the lower authorities. 7. The adequacy of expenses considering the Assessee's status as an Ex-MP and Ex-MLA was a significant point of contention. The ITAT agreed with the Assessee that most of his expenses were either free or reimbursed due to his status, justifying the declared expenses and leading to the deletion of the addition. 8. The Assessee's request for the leave to add, alter, or amend any grounds of appeal was noted. However, as the ITAT found in favor of the Assessee on the existing grounds, no further alterations were necessary. In conclusion, the ITAT allowed the Assessee's appeal, considering various factors such as the Assessee's status, residency, dependents, and the adequacy of expenses, leading to the deletion of the disputed addition.
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