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2016 (2) TMI 78 - AT - Income TaxReopening of assessment - marriage expenses and jewellery gifted at the time of marriage - AO referred to the statement given to the police on 09.12.2009 under section 161 CrPC as well as Will of his mother dated 04.07.2002 - Held that - The re-opening of the assessment only on the basis of verification of the facts is not permissible under the law. The Assessing Officer is not empowered to reopen the assessment nor verify the facts for re-assessment. The sole reliance on the statement recorded by the police under section 161 of CrPC on 09.12.2009 itself was wrong because Section 161 of CrPC deals with examination of witness by police. It requires that the Investigation Officer may examine orally any person supposed to be acquainted with the facts and circumstances of the case. The statement recorded by the Police Officer under section 161 of the CrPC is not signed by the witness. The genuineness of the statement recorded under section 161 of CrPC could be tested only at the time of the statement of witness recorded in the court. The statement recorded by Police Officer during investigation is neither given on oath nor it is tested by Cross Examination. According to the law of evidence, such statement is not evidence of the fact stated therein and therefore, it is not considered as substantive evidence . Thus we are of the view Assessing Officer was not justified in re-opening the assessment under section 148 of the Act. The assessee has given list of persons who have given shagun at the time of marriage of daughter of the assessee. This list contained the complete names and addresses and in some of the cases, their telephone number as well. The Assessing Officer, without making any enquiry from any of these persons who have given shagun to the assessee in the marriage of his daughter, has accepted the claim of assessee of receipt of shaguns in a sum of ₹ 14,13,000/-. The ld. CIT(Appeals), without giving any notice to the assessee for taking any adverse view in this regard, has restricted the benefit of shaguns in a sum of ₹ 6 lacs only. The order of the ld. CIT(Appeals) is, therefore, unjustified and cannot be sustained in law. It may also be noted here that Assessing Officer without bringing any evidence on record estimated the marriage expenses in a sum of ₹ 25 lacs. Similarly, ld. CIT(Appeals) without any basis or justification or without bringing any evidence on record, made the estimate of marriage expenses of assessee in a sum of ₹ 20 lacs. Therefore, both the estimates made by Assessing Officer and ld. CIT(Appeals) cannot be sustained. There is no basis to sustain the orders of authorities below for estimating marriage expenses in a sum of ₹ 20/25 lacs. The ld. CIT(Appeals) gave a benefit of estimated past savings and contributions made by the family members of ₹ 6 lacs for the purpose of restricting part addition. If the same amount is added to shagun received by assessee in a sum of ₹ 14,13,000/-, no addition of ₹ 8 lacs would sustain because Assessing Officer has himself granted relief to the assessee in a sum of ₹ 14.13 lacs which ld. CIT(Appeals) without any reasons did not consider favourably to the assessee. The assessee has produced sufficient evidence and material on record to prove will genuinely executed by his mother and through the will , the gold ornaments and silver utensils were given to Ms. Megha. Therefore, the entire addition against the assessee was wholly unjustified. The assessee also produced sufficient evidence on record about the valuation of the jewellery at the time of marriage of the daughter of assessee. No evidence against the valuation report has been brought on record, therefore, departmental appeal would have no merit and is liable to be dismissed. - Decided in favour of assessee.
Issues Involved:
1. Legality of the initiation of re-assessment proceedings under section 148 of the Income Tax Act. 2. Addition on account of estimation of marriage expenses. 3. Addition on account of jewellery gifted to the daughter of the assessee at the time of her marriage. Detailed Analysis: 1. Legality of the initiation of re-assessment proceedings under section 148 of the Income Tax Act: The assessee challenged the initiation of re-assessment proceedings under section 148, claiming it to be illegal and void ab initio. The reasons recorded for re-opening the assessment were based on the statement given to the police and the 'Will' of the assessee's mother. The Tribunal held that the re-opening of the assessment only on the basis of verification of facts is not permissible under the law. The statement recorded by the police under section 161 of CrPC is not substantive evidence and cannot be used for re-opening the assessment. The Tribunal quashed the re-opening of the assessment under section 148, stating that the Assessing Officer cannot seek to undertake a fishing or rowing inquiry under the guise of re-opening the assessment. 2. Addition on account of estimation of marriage expenses: The Assessing Officer estimated the marriage expenses at Rs. 25 lacs and made an addition of Rs. 10,87,000 after giving the benefit of shaguns received. The CIT(A) reduced the marriage expenses estimate to Rs. 20 lacs and allowed a benefit of Rs. 6 lacs for past savings and Rs. 6 lacs for shaguns, resulting in an addition of Rs. 8 lacs. The Tribunal found that the Assessing Officer and CIT(A) made estimates without any basis or evidence. The Tribunal noted that the assessee provided a list of persons who gave shagun, but no enquiries were made by the Assessing Officer. The Tribunal held that the addition was made on surmises and conjectures and deleted the addition of Rs. 8 lacs on account of marriage expenses. 3. Addition on account of jewellery gifted to the daughter of the assessee at the time of her marriage: The Assessing Officer made an addition of Rs. 55 lacs on account of unexplained jewellery gifted to the daughter of the assessee, which was later reduced to Rs. 24.30 lacs by the CIT(A). The assessee contended that the jewellery was given as per the 'Will' of his mother, who passed away in 2003, and the jewellery was valued at Rs. 29.30 lacs at the time of marriage. The Tribunal held that the 'Will' was genuine and executed in the presence of witnesses and attested by a Notary Public. The Tribunal noted that the jewellery was inherited by the daughter of the assessee as per the 'Will' and would not fall in the assessment year under appeal. The Tribunal deleted the entire addition on account of jewellery, stating that the objections of the authorities below were irrelevant and against the provisions of law. Conclusion: The Tribunal quashed the re-opening of the assessment under section 148 and deleted the additions made on account of marriage expenses and jewellery gifted to the daughter of the assessee. The appeal of the assessee was allowed, and the departmental appeal was dismissed.
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