Additions on account of lower withdrawals

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yashdeepk (Querist)
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19 June 2013 The assessing officer has made an addition to the returned income of assessee on account of lower withdrawals for household purpose.he has made this addition on the basis of societal status of the assesee and number of dependent family members. Whether addition sustainable in law and whether this can be termed as concealment?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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19 June 2013 Addition on account of lower withdrawals is not generally treated as concealment as the AO makes such additions on estimation basis.
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Unless the assessee can not explain the reasons of lower withdrawal, the addition will sustain.
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yashdeepk

yashdeepk (Querist)
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20 June 2013 Thanks You very much sir.Your opinion is really appreciable.
But since I have to do everything in favour of assessee,I have prepared the following submission for appeal hearing.Kindly comment

: 7.1 The assessing officer has made an addition of Rs./- for low withdrawals of household expenses. During the year under appeal the withdrawals amounted to Rs./- for household expenses.
7.2 This clearly means that the assessing officer intends to tax the income which is not withdrawn by the assessee and which is included in the capital of the assessee.
7.3 It may kindly be noted that such withdrawals including the said addition has already been brought to tax, before including it in the capital of the assessee, in the return of income filed by the assessee under the head ‘Income from business and profession’. The same income cannot be subjected to double taxation under the same provision of law.
7.4Therefore, the said addition is not sustainable in law.
Since this addition is on estimation basis therefore, it cannot be termed as concealment.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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23 June 2013 Para 7.2 7.3 and 7.4 are not required. As the AO really want to say that you have incurred the HHE out of concealed income. Otherwise it would have found place in the capital a/c of the assessee. Please delete these Para.
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You have to press the ground that the family's HHE as shown in the Capital Account is sufficient to run the Family's day to day life.
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Or, the estimation made by the learned AO are highly excessive.
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The submission given during the course of assessment proceedings only will be helpful.
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However, if overall family withdrawals have not been considered by the AO, you may request to consider the same.
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In case, you can not justify your claim in your conscience, it is better to pay the taxes on such issues.

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