2015 (6) TMI 495 - AT - Income Tax

Addition made by the AO on account of expenses relating to marriage of the daughter of the assessee - CIT(A)sustained addition of ₹ 1 lac on estimate basis - Held that - In the present case, it is noticed that the assessee was having five daughters and had given good education to all of them. He claimed to have spent an amount of ₹ 50 to 75,000/- and jewellery between 8 to 10 tolas on the marriage of her eldest daughter in 1989 which is not doubted by the department, for the 2nd daughter, he claimed to have spent about ₹ 1,00,000/- and given jewellery of 8 to 10 tolas in the year 2000, the said spent amount was also not doubted. For the third daughter the assessee claimed that expenses of ₹ 50 to 75,000/- were incurred on account of marriage in 2004. Those were also not doubted and accepted while framing the assessment u/s 143(3) of the Act. The 4th daughter was married in November, 2005 but some dispute arose with the in-laws and the assessee filed a complaint to the Women Cell of Police, on the basis of the said complaint, the AO presumed that the assessee might have incurred an expenses of ₹ 50,62,370/-. However nothing was brought on record to substantiate that the said expenditure was in fact incurred by the assessee. The assessee later on clarified to the AO that actual expenses for cloth accessories and Barat Kharcha were at ₹ 50,000/- and ₹ 80,000/- respectively and jewellery worth ₹ 1,40,000/- purchased in earlier years was given. The said explanation appears to be plausible considering the expenses incurred by the assessee on the occasion of the marriages of his other daughters in the earlier years. Therefore, we are of the view that the AO was not justified in making the addition of ₹ 39 lacs and the Ld. CIT(A) also sustained the addition of ₹ 1,00,000/- on estimate basis without bringing any material on record. In our opinion when the ld. C.I.T.(A) had accepted that the assessee had some past saving and jewellery & utensils, personal effects etc., the addition of ₹ 1 lac on estimate basis was not justified. Thus we deem it appropriate to delete the addition sustained by the Ld. CIT(A). - Decided in favour of assessee.

Summary

Issues Involved:
1. Deletion of the addition of Rs. 39,00,000/- by the CIT(A).
2. Sustenance of the addition of Rs. 1,00,000/- by the CIT(A).

Issue-wise Detailed Analysis:

1. Deletion of the addition of Rs. 39,00,000/- by the CIT(A):

The primary issue in this case revolves around the expenditure incurred by the assessee on the marriage of his daughter. The AO reopened the assessment based on a Tax Evasion Petition (TEP) and a statement given by the assessee and his daughter before the Women Cell, Delhi Police, which indicated an expenditure of Rs. 50,62,370/-. The AO added Rs. 40,00,000/- to the income of the assessee under Section 69C of the Income Tax Act, considering Rs. 10,62,370/- as explained sources and the remaining Rs. 40,00,000/- as unexplained.

The assessee argued that the statement given before the Women Cell was manipulated and inflated under the guidance of lawyers due to the distressing circumstances of his daughter's marital dispute. The actual expenditure was significantly lower, with Rs. 60,000 to Rs. 70,000 spent on the function, and jewellery worth 20 to 22 tolas purchased earlier from savings. The assessee further clarified that the exaggerated figures were intended to exert pressure on the in-laws during the dispute.

The CIT(A) accepted the assessee's explanation, noting the appellant's financial and social status, and the expenses incurred on the marriages of his other daughters, which were modest. The CIT(A) concluded that the actual expenditure on the fourth daughter's marriage could not exceed Rs. 2.5 lakhs, considering past savings and personal effects. Consequently, the CIT(A) deleted Rs. 39,00,000/- of the addition made by the AO.

2. Sustenance of the addition of Rs. 1,00,000/- by the CIT(A):

Despite deleting Rs. 39,00,000/- of the addition, the CIT(A) sustained an addition of Rs. 1,00,000/- on an estimated basis towards the marriage expenses of the assessee's fourth daughter under Section 69C of the Income Tax Act. The CIT(A) reasoned that considering the appellant's financial condition and the modest expenses on previous marriages, an estimated addition of Rs. 1,00,000/- was justified.

However, upon further appeal, it was argued that the CIT(A) had accepted that the assessee had past savings, jewellery, and personal effects, making the addition of Rs. 1,00,000/- on an estimate basis unjustified. The tribunal noted that the expenses claimed by the assessee for the marriages of his other daughters were modest and accepted by the department in earlier assessments. Therefore, the tribunal found the CIT(A)'s sustenance of Rs. 1,00,000/- addition to be unwarranted without any material evidence.

Conclusion:

The tribunal concluded that the AO's addition of Rs. 39,00,000/- was not justified, and the CIT(A)'s sustenance of Rs. 1,00,000/- on an estimate basis was also unwarranted. Therefore, the tribunal deleted the entire addition, resulting in the dismissal of the department's appeal and allowing the assessee's appeal.

Final Order:

In the result, the appeal of the department is dismissed, and the appeal of the assessee is allowed. The order was pronounced in the open court on 05th June, 2015.