Income Tax Appellate Tribunal - Ahmedabad
Devilal Gherilal Shah vs Deputy Commissioner Of Income Tax. on 10 August, 1994
Equivalent citations: (1995)52TTJ(AHD)618
ORDER
ABDUL RAZACK, J. M. :
In this appeal by the assessee, the following effective grounds have been taken :
"1. The learned CIT(A) has erred in confirming the addition of Rs. 1,34,542 made for alleged low household expenses.
2. The learned CIT(A) has erred in confirming the addition of Rs. 29,535 for alleged unexplained investment in gold ornaments.
3. The learned CIT(A) has erred in confirming the addition of Rs. 11,004 for alleged unexplained investment in gold ornaments.
4. The learned CIT(A) has erred in confirming the addition of Rs. 2,50,000 on account of various articles found at the time of search.
5. The learned CIT(A) has erred in confirming the addition of Rs. 2,766 made for alleged investment in cassettes, etc.
6. The learned CIT(A) has erred in partially confirming the addition of Rs. 56,000 made for alleged education expenses.
7. The learned CIT(A) has erred in confirming the enhancement of interest charged under S. 234A and under S. 234B while making assessment under S. 143(3)."
2. The brief facts of the case are that the appellant is an individual who has filed the return of income for the assessment year under consideration showing total income at Rs. 1,69,860 comprising of income from salaries from Vimla Silk Mills Pvt. Ltd., share from four registered firms and also rent income. Out of the four firms in which the assessee is a partner, two firms, namely, M/s. Jaytex Silk Mills and M/s. Venichand Gulabchand & Co. are being assessed by the Dy. CIT(A), Spl. Rg., Surat at a total income of Rs. 12,45,400 as against returned income of Rs. 1,69,860. The copy of assessment order appealed against is at page Nos. 36 to 40 of the paper book.
3. There had been search and seizure proceedings in the case of the appellant assessee on 12th July, 1988. In the course of the search, ornaments worth Rs. 3,10,994 and cash of Rs. 1,05,000 were seized, which were subsequently released vide order under S. 132(5) passed in the case of the assessee and his family members on 7th Nov., 1988. The order under S. 132(5) passed in the case of the assessee is at page Nos. 82 and 83 of the paper book. The order passed under S. 132(5) r/w S. 132(7) in the case of the assessees wife Smt. Khumanidevi, assessees sons and assessees brother Shri Rakesh are at page Nos. 84 to 88 of the paper book. During the course of search proceedings, one file, viz., Amar File was seized in which certain loose papers are contained on the basis of which the Assessing Officer made the present assessment order making huge additions. It was submitted that all the loose papers were explained during the course of proceeding under S. 132(5) and, hence, no adverse inference was drawn regarding the loose papers in the proceedings under S. 132(5). It was further submitted that no question was asked about the loose papers in the statement recorded under S. 132(4). The addition made and confirmed by the Appellate Commissioner relate to the seized paper Nos. 21, 22, 24 and 25 contained in the Amar File. The photo copies of the relevant papers are at page Nos. 77 to 91 of the paper book.
4. In the light of the surrounding facts, the assessee submitted the following facts and arguments in support of each addition challenged in this appeal.
Household expenses of Rs. 1,34,542 4.1 At assessees residence, the assessee, his wife and three daughters were living. His brother Shri Rakesh and his wife were also living with him. Assessees two sons were staying at hostel for the purpose of education.
4.2 The following details of withdrawal were submitted to the Assessing Officer during the course of assessment proceedings vide letter dt. 2nd March, 1993 (page 47 of the assessees paper book) which is also reflected in the return of income filed by the assessee and his various family members.
Rs.
D.G. Shah :
From Venichand Gulabchand & Co.
55,413 From HUF account 90,000 Smt. Khumanidevi :
From Rajkamal Fabrics 20,000 From Vimla Prints 4,000 Rakesh Gherilal Shah :
From agricultural income 1,20,000 From V-tex Silk Mills 22,195 From Vimla Prints 3,850 As such, total withdrawal of the family comes to Rs. 3,15,458. On average, the above household expenses are of 17 months only because the transitional previous year of firms from where the withdrawal were effected was only of 17 months and not of 21 months. Actually, the withdrawal of the assessee and his family members for the period from 1st July, 1987 to 31st March, 1989 (21 months) comes to only Rs. 3,76,844 (vide page 55 of the paper book). It was further submitted that investments of all partners in movable and/or immovable properties are separately debited in accounts of partners of their family members in the firm. The figures of household expenses of partners, as stated earlier, do not include the items for payment of taxes, but the expenses do include the educational expenses for children. The Assessing Officer estimated Rs. 20,000 per month for household expenses for the period from 1st July, 1987 to 30th Sept., 1988 and Rs. 25,000 for the period from 1st Oct., 1988 to 31st March, 1989 on the basis of the statement of assessees wife made during the course of search. It was further submitted that the Authorised Officer vide question No. 10 of statement recorded before search asked the assessees wife about the cash available in the house and not about household expenses. In reply the assessees wife replied that there would be around Rs. 35,000 in the house. She further stated that every month she got Rs. 20,000 for household expenses from shop at Surat Textile Market and out of this cash, about Rs. 5,000 was saved. The statement of assessees wife is at page Nos. 115 to 118 of the assessees paper book. The English translation of relevant portion of the statement is at page No. 119 of the paper book. The meaning of the reply of the assessees wife is that she stated Rs. 15,000 and not Rs. 20,000 regarding household expenses at Rs. 5,000 is saved out of Rs. 20,000. Moreover, as she stated that Rs. 35,000 can be found from her, it means that she is getting the cash of Rs. 20,000 since last seven months from the date of search. Moreover, actually the cash was only Rs. 21,700 which was found as personal cash from Devilals family. Out of this cash, amount of Rs. 15,800 was seized. The details of total cash found of Rs. 1,10,836 from assessees residence is given as under :
Rs.
Found from assessees brother 13,215 Cash belonging to HUF (relating to agricultural income) 75,985 Personal cash of assessees wife 21,700 Relying on the above submissions, the Assessing Officer released the cash of Rs. 15,800 vide order dt. 7th Nov., 1988. The assessee made the above submission in the course of the assessment proceedings and appellate proceedings. It was urged before the AC that the withdrawals shown by the assessee are sufficient to meet the household expenses and that the Assessing Officers estimate is incorrect and the addition made by the Assessing Officer is unwarranted. The AC confirmed the addition on the plea that the Assessing Officer has estimated the household expenses on the basis of the statement of assessees wife.
5. Before us, the assessees counsel submitted that the preliminary statement of assessees wife was taken at 9.30 a.m. before effective search which is illegal in terms of the case laws on the subject. The Expln. to S. 132(4) was added only w.e.f. 1st April, 1989 which cannot be said to be clarificatory amendment and it is, therefore, considered to come into force prospectively only. Moreover, it is only in reply to question by authorised officer regarding the quantum of cash balance in the house, the assessees wife stated that she got about Rs. 20,000 for household expenses every month from shop at Surat Textile market and she used to save Rs. 5,000 out of the sum of Rs. 20,000. The authorised officer never asked about the household expenses of the family per month nor any evidence in the form of paper or document had been found by search party which indicates that the household expenses was Rs. 20,000 per month. Without prejudice, it is submitted that even otherwise, the household expenses should be estimated at Rs. 15,000 per month as the assessees wife stated in the statement that she used to save Rs. 5,000 out of Rs. 20,000. As the household expenses debited in the accounts of the assessee and other family members are more than Rs. 15,000 per month, the addition is unwarranted on the facts of the case.
5.1 The Assessing Officer also made addition of Rs. 85,000 for educational expenses of the two sons of the assessee. This addition was reduced to Rs. 56,000 by the Appellate Commissioner. It is submitted by the assessees counsel that the addition for alleged educational expenses should be telescoped in one single addition of household expenses as the assessee, during all proceedings, had submitted that the withdrawals for household expenses also cover the educational expenses. The assessees counsel further submitted that the addition under S. 69C can be made only on financial year basis. The financial year consists of period of 12 months immediately preceding assessment year which in the case of the assessee starts from 1st April, 1988 to 31st March, 1989. It was further submitted that the estimate if at all required to be made, it should be made for the period of twelve months only. This argument was also made before the Appellate Commissioner during the course of hearing. The details of withdrawal for household expenses for the period from 1st April, 1988 to 31st March, 1989 are at page No. 55 of the assessees paper book. The withdrawal for these 12 months is of Rs. 2,13,275. It was also submitted that the assessee has given the figures of the household expenses on the basis of the relevant transitional previous year of the partnership firms from whom the assessee or his family members have derived the income. The withdrawal of the assessee and his family members in transitional previous year from 1st July, 1987 to 31st March, 1989 in fact comes to Rs. 3,76,844.
Unexplained investment in ornaments of Rs. 29,535 :
6. Paper number 22 of File X-1 seized in the course of search (vide page No. 78 of the assessees paper book) contains certain figures. There is no reference on this paper of any person. Only, two figures of Rs. 6,133 and Rs. 1,135 has been mentioned in this paper making total of these figures at Rs. 7,268. In the course of assessment proceedings, it was submitted that this paper does not belong to the assessee. However, the Assessing Officer made the addition on the basis of this paper without bringing any material on record. The Assessing Officer has presumed that the assessee has made investment of Rs. 7,268 in ornaments. The Assessing Officer concluded that the assessee has not been able to give satisfactory explanation about the source of the said investment.
6.1 Before the Appellate Commissioner, it was submitted that this paper may be estimate given by any person and this paper might have been left by any visitor. The Appellate Commissioner confirmed the addition on the ground that the burden of giving explanation about the seized paper is on the assessee.
6.2 Before us, it is submitted by the assessees counsel that as there is no reference or particulars in this paper and as the paper contains only figure, there is no burden cast upon the assessee to explain the seized paper. The presumption under S. 134(4A) is limited only for the purposes of proceedings under S. 132 and no more. In this connection, he relied upon a decision of the Allahabad High Court in the case of Pushkar Narain Saraf vs. CIT (1990) 183 ITR 388 (All). This apart, it is submitted that the presumption under S. 132(4A) is a rebuttable presumption. No adverse inference was drawn about this paper in the proceedings under S. 132(5) and the amount had not been added in the summary order made under S. 132(5). No question was asked about this seized paper in the statement under S. 132(4) or by the Asstt. Director of Investigation or Assessing Officer thereafter in the search proceedings.
6.3 Paper number 24 of file at Annexure X seized in the course of search (page No. 79 of the paper book) contains the details about ornaments and weight. Except particulars of ornaments and weight of the ornament, there is no reference of any person. It was explained that the amount contained in the paper may be part of marriage expenses of the brother which took place on 17th Jan., 1987 as the rate of gold which was mentioned as Rs. 2,200 per 10 gram tallies with the rate of the year 1987. However, the learned Assessing Officer made addition of Rs. 22,267 treating the investment being made in the current year without bringing on record any additional evidence on record.
6.4 Before the Appellate Commissioner, it was further submitted that each and every item of gold ornaments found from the residence of the assessee were explained and, therefore, released in the proceedings under S. 132(5). The learned Appellate Commissioner confirmed the addition on the ground that the burden of giving explanation about the seized paper is on the assessee.
6.5 Before us, it was further submitted that as there is no reference of any person in this paper and as the paper contains only figure and description of ornament, there is no burden cast upon the assessee to explain the seized paper. The assessee has, however, prima facie explained the seized paper as stated above. The prescription under S. 134(4A) is limited only for the purposes of proceedings under S. 132 and no more. In this context, attention was invited to the judgment of Allahabad High Court in the case of Pushkar Narain Saraf (supra). This apart, it was submitted that the presumption under S. 132(4A) is a rebuttable presumption. No adverse inference was drawn about this paper in the proceedings under S. 132(5) and the amount has not been added in the summary order made under S. 132(5). No question was asked about this seized paper in the statement under S. 132(4) or by the Asstt. Director Investigation or Assessing Officer thereafter in the search proceedings.
Value of ornaments of daughter Sheela G. Shah of Rs. 11,004
7. In course of assessment proceedings, the assessee was asked to explain the value of ornaments of Rs. 34,354 as per Annexure Y dt. 12th July 1988 (page No. 100 of the assessees paper book) was claimed to be belonging to his daughter Miss Sheela D. Shah. To this the assessee stated that the same belonged to her grandmother Smt. Pepibai G. Shah. In support of this, the assessee produced wealth-tax record of Pepibai Gherilal Shah in which the total jewellery of Rs. 3,88,588, out of which gold ornaments worth Rs. 2,07,208 weighing 1281 grams were shown for last WT return filed for asst. yr. 1985-86. During the course of the search, only ornaments worth Rs. 23,350 was believed to be belonging to deceased Pepibai by the authorised officer. The remaining ornaments of Rs. 11,004 were not believed to be belonging to Pepibai Gherilal Shah. At the time of the search, the relevant records of income-tax and wealth-tax of Pepibai could not be produced as the same were lying in Chartered Accountants office. The relevant IT and WT records of Smt. Pepibai are at page Nos. 68 to 71 of the assessees paper book.
7.1 The Assessing Officer being not satisfied with the above explanation made addition of Rs. 11,004. Before the Appellate Commissioner, it was submitted that the ornaments were not seized by the authorised officer. It was contended that when the relevant records of Smt. Pepibai had been produced before the Assessing Officer, the addition was not justified. It is pointed out that there was also simultaneous search at the residence of assessees another brother, where none of the ornaments were claimed to be belonging to assessees deceased mother Smt. Pepibai. The learned Appellate Commissioner confirmed the addition on the ground that the Assessing Officer has highlighted the fact that at the time of search only ornaments worth Rs. 23,350 were claimed as belonging to the assessees mother.
7.2 Before us, it was further submitted that in the order under S. 132(5) no adverse remark had been made in regard to the ornaments found from Miss Sheela. Considering the fact that assessees mother had shown the gold ornaments of 1710 grams in her WT return and the ornaments being not seized, the addition was unwarranted. The assessee further relies on the decision of the Allahabad High Court in the case of Pushkar Narain Saraf (supra).
Estimated cost of articles found as per Annexure D dt. 12th July, 1988 :
8. During the course of search, the inventory of costly items found were prepared as per Annexure D of panchanama which is at page Nos. 95 to 96 of the paper book. Most of the items relate to furniture and fixture like dressing table, double bed, etc., in addition to TV, VCR, washing machine, camera, etc. Although word used is costly, these are not costly items but ordinary things which can be found at every taxpayers residence. The assessee is being assessed to income-tax since last 30 years.
8.1 In the course of assessment proceedings, it was submitted that washing machine, VCR and camera had been purchased out of Rs. 20,000 withdrawn by the assessee from the firm M/s. Shah Venichand Gulabchand & Co. on 16th Nov., 1983 and TV had been purchased by the assessees brother on 9th Jan., 1984 by withdrawing the sum from M/s. Rajkamal Fabrics. For other items it was explained vide letter dt. 9th March, 1992 that all the articles mentioned in Annexure D are not valuable articles. If they were so, the valuation would have been made by the authorised officer at the time of search. Most of the items relate to furniture and fixture which have been made in the asst. yr. 1978-79 when the bungalow was constructed. The Assessing Officer has made addition of Rs. 2,50,000 treating all items mentioned in the Annexure V as explained without pointing out the basis of the estimate made of Rs. 2,50,000. Before the Appellate Commissioner, the same submissions were put forward. The learned Appellate Commissioner confirmed the addition by holding that the assessee has not been able to satisfactorily explain the source of investment made in the said items.
8.2 Before us, it was submitted that no evidence was collected in the course of the search which could indicate that the items found were purchased by the assessee relevant to asst. yr. 1989-90. The assessee is assessed to tax since last thirty years. His brother Shri Rakesh G. Shah is also living with him who is also assessed to tax since several years. Certain items have been found from his bed room also. Moreover, as per deeming provision of Ss. 69B or 69C, there should be prima facie case that investment or expenditure have been made during the financial year which in the case of the assessee is the period from 1st April, 1988 to 31st March, 1989. Moreover, the search has been conducted on 12th July, 1988, so there should be prima facie case that the assessee has made the investment or expenditure outside the books of account in the period from 1st April, 1988 to 12th July, 1988 only. The assessees and his familys withdrawal is about Rs. 18,000 per month. The details of withdrawal aggregating to Rs. 2,13,275 of assessee and his family for the period from 1st April, 1988 to 31st March, 1989 has been given in the paper book at page No. 55. The details of withdrawal of the assessee and his family for the period from 1st April, 1987 to 31st March, 1988 are given as under :
Rs.
D.G. Shah :
From Venichand Gulabchand & Co.
47,633 From HUF A/c 42,000 Smt. Khumanidevi :
From Rajkamal Fabrics 30,000 From Vimla Prints 12,000 Rakesh Gherilal Shah :
From agricultural income 24,000 From V-tex Silk Mills 2,39,000 From Vimla Prints 6,900 Total 1,86,433 The assessee has, therefore, shown more than sufficient withdrawals for the period from 1st April, 1987 to 31st March, 1988. So it cannot be said that those were unexplained items. The items found from the assessees premises have been purchases from time to time out of savings from withdrawals for household expenses. The presumption under S. 134(4A) is limited only for the purposes of proceedings under S. 132. In this connection, he invited our attention to the judgment of Allahabad High Court in the case of Pushkar Narain Sarraf (supra). This apart, it is submitted that the presumption under S. 132(4A) is a rebuttable presumption. No adverse inference was drawn about those items in the proceedings under S. 132(5) and no question was asked about the seized paper in the statement recorded under S. 132(4) by the Asstt. Director Investigation or Assessing Officer.
Unexplained investment in purchase of Cassette & Tape of Rs. 2,766
9. Paper numbers 25 of file Ann : X-1 seized in the course of the search (page No. 81 of the paper book) contains details of amount paid of Rs. 2,766 for cassettes and tape. During the course of assessment proceedings, it was submitted that this paper does not belong to the assessee. Even otherwise, there is sufficient withdrawal of assessee and his brother Shri Rakesh, who is living with him to explain this small expenses. In fact, this cannot be treated as investment but expenses. The Assessing Officer has erred in making the addition of Rs. 2,766. The Appellate Commissioner has wrongly confirmed this addition. The assessee relies on the decision of Pushkar Narain Saraf (supra).
Educational expenses of Rs. 85,000
10. Regarding educational expenses, the assessee stated vide letter dt. 9th March, 1992 (page No. 41 of the paper book) as under :
"The son of assessee Shri Madan was studying at Pune and Shri Suresh was studying at Panchgini. Their total expenditure is Rs. 1,000 per month (Rs. 500 for each son). This means that about Rs. 500 has been expended per month for each son. This includes the school fees and hostel expenses. No bill/receipt has been kept. Whatever was available were found and seized."
10.1 In the seized paper No. 21 of File Ann : X-1 (page No. 77 of the paper book), the Assessing Officer noticed that the assessee has paid Rs. 5,000 as fees on 2nd May, 1988 for April, 1988 to June, 1988 for his one son. This was the receipt issued by the Billmoria School of Panchgini. The Assessing Officer, therefore, estimated the education expenses of two sons at Rs. 10,000 per quarter. Applying this formula on average basis, the Assessing Officer estimated the educational expenses for 21 months at Rs. 85,000 and made addition of Rs. 85,000.
10.2 Before the Appellate Commissioner, it was submitted that the Assessing Officer has wrongly made the impugned addition of Rs. 85,000. Moreover, it was contended that the Assessing Officer has wrongly presumed that both sons are studying at Panchgini and are incurring expenses at the rate of Rs. 5,000 per quarter even though it was explained that one son was studying at Panchgini and other son was studying at Pune. It was further submitted that educational expenses at Panchgini of the academic year 1988-89 stood at Rs. 9,635 only. The certificate from the school dt. 4th July, 1992 was produced to the Appellate Commissioner which is at page Nos. 75 and 76 of the paper book. It was submitted that the handsome withdrawal covers this expenditure. The learned Appellate Commissioner has confirmed the addition on the plea that it was not explained that why the evidence in the form of receipt of Rs. 5,000 found in the course of the search was not controverted and the assessees contention that educational expenses of the assessees son should be estimated at Rs. 500 per month is not supported by any evidence and, therefore, cannot be accepted. The Appellate Commissioner has, however, restricted the addition to Rs. 56,000 estimating the expenditure incurred for son studying at Pune at Rs. 1,000 p.m. 10.3 It was submitted before us that the addition under S. 69C can be made only on financial year basis. The financial year consists of period of 12 months immediately preceding assessment year which in the assessees case consists of period of twelve months beginning from 1st April, 1988 to 31st March, 1989. The assessees and his family members withdrawal for this period is Rs. 2,13,275 (vide page 55 of the paper book). So, if the household expenses and educational expenses are estimated Rs. 15,000 and Rs. 2,000 (total Rs. 17,000) respectively per month, it is covered by withdrawal. Without prejudice, it was submitted that the assessee has given the figures of the household expenses on the basis of the relevant transitional previous year of the partnership firms from whom the assessee or his family members have derived the income. The withdrawal of the assessee and his family members in the transitional previous year from 1st July, 1987 to 31st March, 1989 in fact comes to Rs. 3,76,844. The details of these figures are given at page No. 55 of the paper book. So, this withdrawal also covers both household expenses and educational expenses.
Charging of interest under S. 234A or 234B
11. The Assessing Officer has charged interest under S. 234A of Rs. 1,82,478 and under S. 234B of Rs. 3,82,947 which cannot be changed when the intimation under S. 143(1) has already been prepared. The interest under S. 234A is chargeable on the assessed tax on total income as determined under S. 143(1) or on regular assessment. Similarly, the interest under S. 234B is chargeable only upto the date of determination of income under S. 143(1) or upto the date of regular assessment. In this case, the income has already been determined under S. 143(1) on 5th July, 1991 and as such, the interest under Ss. 234A and 234B cannot be enhanced. In the intimation, the interest under S. 234A of Rs. 2,618 and under S. 234B of Rs. 3,698 was charged which cannot be increased subsequently on regular assessment made under S. 143(3).
11.1 In view of the aforesaid facts and position of the law, the assessee urged before the Appellate Commissioner for total deletion of interest charged under Ss. 234A and 234B. The Appellate Commissioner has not appreciated the facts and law on the subject in perspective and only granted the consequential relief in regard to the charging of interest under Ss. 234A 234B. He has not given any reasons for only granting the consequential relief in his order when the assessee has prayed for total deletion on the facts and law mentioned under State of Facts (page No. 28 of paper book).
11.2 It was further submitted that a careful reading of the sub-sections of S. 234A and 234B would show that the interest charged in the intimation under S. 143(1)(a) cannot be increased in an assessment under S. 143(3). This is because the word or has been used in sub-s. (1) of both the sections. There is nothing to suggest that the use of the word or in the passage to the date of determination of total income under sub-s. (1) of S. 143 or regular assessment has been used to mean "and". On the contrary the suggestion is to the contrary. This is because the sub-s. (3) of Ss. 234A and 234B provides for the upward revision of the interest charged under S. 234A/234B in the case of reassessment under S. 147. Similarly, sub-s. (4) provides for recomputation of the interest, both upward and onward, in case of change in the assessed tax as a result of the orders under Ss. 154, 155, 250, 260, 262, 264 and 245D. If the intention of the legislature is to provide for an increase upto the date of regular assessment under S. 143(3) or 144, the legislature would have made provision similar to those provided in sub-ss. (3) and (4) of S. 234B.
11.3 The Direct Tax Laws (Amendment) Act, 1989 introduced the amendment wherein the portion to the date of regular assessment was substituted by to the date of determining of total income under sub-s. (1) of S. 143 or regular assessment. The object was to treat intimation under S. 143(1)(a) as an assessment for the purpose of levy of interest for short payment of advance tax. It is, therefore, clear that the absence of suitable provision to increase the interest charged under Ss. 234A/234B by elongating the period upto the date of assessment or on the assessment determined under S. 143(3) after an intimation is sent under S. 143(1)(a) seems to be deliberate, especially when sub-ss. (3) and (4) of S. 234A/234B specifically provide for increase of the interest charged under S. 234A/234B in case of reassessments as well as cases for subsequent rectifications, revisions, etc. At any rate, the provisions as they stand for and from asst. yr. 1989-90 do not provide for increase in the revision of interest upto the date of assessment under S. 143(3) or/and on the enhanced tax assessed under S. 143(3) once the income is determined under S. 143(1). One may find that even in the examples illustrating the calculation of interest under Ss. 234A/234B in para 10.13 vide Boards Circular No. 549, dt. 31st Oct., 1989, there is no illustration of such examples and even notes in para 10.7 do not specifically refer to such increase.
11.4 It was further submitted that the plain reading of the relevant sections completely favours the assessees case. If there is any doubt, the benefit of doubt should be given to the assessee as held by the Supreme Court in the case of CIT v. Vegetable Products Ltd. (1973) 88 ITR 192 (SC). It has been held that, if the provisions of taxing are clear and unambiguous, full effect must be given to them irrespective of any consideration of equity. Where, however, the provisions are couched in language which is not free from ambiguity and admits of two interpretations, a view which is favourable to the subject should be accepted. The fact that such an interpretation is also in consonance with ordinary notions of equity and fairness would further fortify the Court in adopting such a course. It was further held that, if the language is plain, the fact that the consequence of giving effect to may lead to some absurd result is not a factor to be taken into account in interpreting the provision. It is for the legislature to step in and remove the absurdity.
12. The learned Departmental Representative submitted elaborate arguments in reply to the arguments advanced by the assessees counsel in respect of each addition. In order to convince that the impugned order was fair and reasonable in respect of various additions, the Departmental Representative took us through the relevant portions from the orders of the lower authorities. The Departmental Representative, therefore, strongly urged for dismissing the assessees appeal being without merits.
13. We have given our anxious consideration to the submissions made by both the learned representatives of the parties. We have also perused the material placed before us by the assessees counsel in the light of the reasons given by the Appellate Commissioner as well as by the Assessing Officer in their respective orders. Our findings and conclusions are as under in respect of each of the addition.
14. Regarding the addition of Rs. 1,34,542 on account of low household expenses, we find that the total withdrawals of the entire family is to the tune of Rs. 3,15,458 as has been given by the assessee through his letter dt. 2nd March. 1992. The assessees wife has stated that the household expenditure will be Rs. 15,000 per month and that she saves Rs. 5,000 out of the amount given to her for running the household expenditure. The Assessing Officer has estimated the household expenditure from July, 1987 to September, 1988 and from October, 1988 to March, 1989 in a sum of Rs. 4,50,000. Thus, the Assessing Officer has taken the expenditure for 21 months. According to the provisions of S. 69C, the unexplained expenditure in a financial year can be treated as income and subjected to tax. However, considering totality of the facts and circumstances of the case, we are of the view that no addition is called for towards household expenses, as the total withdrawals of Rs. 3,15,458 is sufficient to cover the household expenditure particularly when there are separate debits in the accounts of the assessee and other family members towards life insurance premium and other expenditure. We, therefore, direct the Assessing Officer to delete the addition made by him towards household expenses.
15. Regarding the addition of Rs. 29,535 being unexplained investment in gold ornaments, we are of the view that the addition is unwarranted, because it is evident from the seized paper that the assessee purchased gold ornaments and jewellery and made investment in those items. No date or name is mentioned on the said paper. In such a case, it is very difficult to say that the assessee purchased gold ornaments and, therefore, he should be assessed in respect of the amount mentioned therein as unexplained investment made by him. We are unable to agree with the contention of the assessees counsel that in assessment proceedings no presumption should be drawn nor any question should be asked in respect of the seized paper. However, in the absence of cogent evidence on record, the addition of Rs. 29,535 should not have been sustained by the Appellate Commissioner. We, therefore, direct deletion of the same.
16. The addition of Rs. 11,004 in respect of value of ornaments belonging to the assessees daughter Miss. Sheela D. Shah is concerned, we are of the view that the same deserves to be deleted, as the assessee has satisfactorily explained on the basis of IT and WT records of Smt. Pepibai G. Shah (assessees mother) which can be found from page Nos. 68 to 71 of the paper book. In our view, the ornaments stand fully explained and therefore, there is no warrant for making addition to the extent of Rs. 11,004 and the same is directed to be deleted.
17. Regarding the addition of Rs. 2,50,000 on account of various articles found as per annexure D dt. 12th July, 1988, our views are that it is difficult for any person to maintain and preserve the purchase invoices or bills in respect of the various household articles which are purchased from time to time as is common knowledge. We are not persuaded to agree with the Assessing Officer that all those items like TV, VCR, dressing table, beds, washing machine, etc., were purchased by the assessee during the year under appeal. However, it has been brought to our notice that there are adequate withdrawals by the assessee as well as by Smt. Khumanidevi and Shri Rakesh G. Shah, the assessees wife and brother respectively from 1st April, 1987 to 31st March, 1988 and, moreover, the assessee and his other family members are all IT assessees declaring substantial income every year. In our view, such a huge addition of Rs. 2,50,000 cannot be made on the assumption that all those articles found in the house at the time of search were purchased by the assessee in the financial year or even during the previous year relevant to the year under appeal. However, considering all the facts and circumstances of the case and in order to meet the ends of justice, it will be sufficient if an addition to the extent of Rs. 5,000 is sustained against the addition of Rs. 2,50,000. The assessee thus gets the relief of Rs. 2,00,000.
18. Regarding unexplained investment in tapes and cassettes, we are not inclined to sustain the addition as it is possible that the assessee and his other family members who have made substantial withdrawals, would have purchased cassettes and tapes from such withdrawals. The addition of Rs. 2,766 is, therefore, deleted.
19. Regarding the addition of Rs. 56,000 sustained by the Appellate Commissioner as against the addition of Rs. 85,000 made by the Assessing Officer towards educational expenses of his two sons, we deem it fit and proper to sustain an addition to the extent of Rs. 15,000 as against Rs. 56,000 sustained by the Appellate Commissioner. The addition on this count is restricted as there is every possibility of the assessee meeting the educational expenses of his two sons from out of the huge withdrawals of Rs. 3,15,458. The assessee, thus, gets relief of Rs. 35,000.
20. Regarding charging of interest under Ss. 234A and 234B is concerned, we find from the impugned order of the Appellate Commissioner that the Appellate Commissioner has not given a proper finding on the grounds raised and submissions made before him. After discussion with the representatives of both the sides, we deem it fit and proper to remit the matter to the file of the Appellate Commissioner in this regard and direct him to give his decision whether the assessee is liable for any interest under the provisions of Ss. 234A and 234B. The Appellate Commissioner shall decide this point about charging of interest after giving adequate opportunity of hearing to the assessee. We order and direct accordingly.
21. In the result, the appeal is partly allowed.