Addition for inadequate drawings deleted as assessee was vegetarian, residing at small town

Addition for inadequate drawings deleted as the assessee was vegetarians and non alcohol, residing at small town with no luxurious life such as Health Clubs, star hotels etc.

ABCAUS Case Law Citation:
ABCAUS 2816 (2019) (03) ITAT

The Revenue had filed the instant appeal against the order of Commissioner of Income Tax (Appeals) in deleting the addition made on account of inadequate drawings.

In the assessment made u/s 153 A r.w.s 143(3) of the Income Tax Act, 1961 (the Act) the Assessing Officer had made addition towards inadequate drawings at Rs. 52,000/- for the reason that the drawings shown for the members of the appellant group was too low compared to the size of the family and style of living.

The CIT(A) accepted the contentions of the after considering the following reasons:  

1. The assessee and his family members had agricultural lands to the extent of more than 50 acres from which rice, vegetables, milk, ghee etc. were obtained.
2. Residential house was their own and there were no rental payments.

iii. The place where assessee was residing was a small town where there was no luxurious life such as Health Clubs, star hotels etc.

iv There was no extra ordinary entertainment or any other outlet for any affluent expenses.

v. Being Jains, the assessee and his family members were vegetarians and shun alcohol.

vi The search did not yield any material to show that there was any extravagant expenditure to support the Assessing Officer’s contention of a high life style.

Accordingly the CIT(A) deleted the additions.

Finding no reason to interfere, the Tribunal dismissed the appeal of the Revenue.

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