The Income Tax Appellate Tribunal Delhi Bench: ‘F’ New Delhi
I.T.A. Nos.572 to 577 /Del/2013
Assessment Years: 2003-04 to 2008-09

Shri Rajeev Gupta, Delhi (Appellant) vs. ACIT, Central Circle-II, New Delhi (Respondent)

Coram: Shri J. S. Reddy, Accountant Member and Shri C. M. Garg, Judicial Member

Facts of the case:
The assessee was an individual. A search and seizure operation u/s 132 of the Income Tax Act was carried out at the residential premises of assessee at one of the posh area in New Delhi. A notice u/s 153A of the Act was served on the assessee and in response the assessee filed its return of income. The Assessing Officer made an addition of Rs. 20000/- per month for each assessment year covered on account of inadequate house hold expenses. The additions was also confirmed by the CIT(A).

The Commissioner(Appeals) considered the fact that the assessee and his family owned seven luxurious vehicles and other valuable assets and also the fact that the assessee had not furnished the details sought by the AO such as, area of the house, number of rooms, details of electricity/water expenses, copy of passport and details of insurance and medical policies etc.

CIT(A) noted that it was quite surprising that the appellant who was living with 7 adult family members in a mansion at Prithvi Raj Road, New Delhi and driving best of the vehicles, could meet their household expenses in approx. Rs.32,000 p.m. during the assessment year 2002-03 and within the range of Rs.47,000 p.m . in assessment year 2006-07 and within the range of Rs.80,000 approx in assessment years 2007-08 and 2008-09.

He further noted that during the appellate proceeding, the appellant was asked to provide the following details so as to ascertain their household expenses:
(a)   Area of the house where they are living
(b)   Number of rooms
(c)   Details of electricity/water expenses
(d)   Copy of the passport so as to know the foreign visits
(e)   Details of insurance/medical policies etc.
But instead of providing any of the above information the appellant simply gave a general reply stating that they were not living any luxurious life style, rather their’s an orthodox and conservative family with no club membership and they were teetotalers.

On the other hand, the assessee challenged the jurisdiction of the AO to making additions u/s 153A of the Act for the assessment years 2003-04 to 2007-08 on the ground  that  no incriminating material was found during the course of search and as the assessments for these assessment years have abated and hence the addition is bad in law.

Tribunal upheld the order of the CIT(A) and dismissed the appeal.

Excerpts from the Tribunal Order:
“It is true that no addition can be made in respect of unabated assessments, if no incriminating material is found during the course of search. The recent judgment of the Hon’ble Bombay High Court in the case of Continental Warehousing Corporation (Supra) supports that the argument of the assessee. In this case during the course of search, certain valuables were found. A list of the same is found in the panchnama. There valuable assets include billiards table, piano, expensive paintings, chandlier, centrally air conditioner system etc. Thus in our view the ld. CIT(A) is correct in coming to a conclusion that, certain material was found during the course of search, based on which assessment can be done, even in the case of the abated assessments. Owning luxurious cars etc. indicate that the monthly expenditure on maintenance would be higher than the personal drawing disclosed. In our view, the valuable found during the course of search, indicate the standard of living the assessee and his other members and these are material based on which an addition can be made for low drawing. Thus this legal argument of the assessee is dismissed on the issue of addition made u/s 153A r.w.s. 143(3) on abated assessments.”

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