2016 (3) TMI 79 - AT - Income Tax

Unexplained expenditure U/s 69C on daughter s marriage - loose paper found during the course of search, in which the details of marriage expenses of assessee s daughter Rubi, which was solemnized on 06/7/2007 had been recorded by the assessee - Held that - he assessee has not correlated with evidence that there is source of ₹ 10 lacs and this amount was received for common expenditure. The assessee also claimed ₹ 3,78,000/- from Smt. Rukmani Gattani, mother in law of assessee and certain jewellery as per her Will dated 05/4/2000. These evidences were not found during the source of search at the residence of the assessee. There is a time lapse between the date of Will and date of marriage and assessee did not have any evidence regarding jewellery received from his mother in law. The assessee s daughter Rubi also contributed ₹ 1 lac as claimed by the assessee but during the course of search, no evidence was found. Even at the time of recording statement U/s 132(4) of the Act, the assessee had not made any reference of income of the Rubi. Therefore, we do not find any reason to intervene in the order of the ld CIT(A). - Decided against assessee Addition out of car insurance, conveyance and telephone expenses - Held that - Assessing Officer has not specifically pointed out any personal use but estimated disallowance has been made, which is also appears to be higher side. Accordingly, we restrict this disallowance @ 10%. The Assessing Officer suitably modified the addition. - Decided partly in favour of assessee

Summary

Issues Involved:
1. Addition of Rs. 15,28,384 out of Rs. 19,41,200 as unexplained expenditure under Section 69C on account of daughter's marriage.
2. Disallowance of Rs. 3,633 out of car insurance, conveyance, and telephone expenses.

Issue-wise Detailed Analysis:

1. Addition of Rs. 15,28,384 out of Rs. 19,41,200 as unexplained expenditure under Section 69C on account of daughter's marriage:

The assessee filed an appeal against the addition of Rs. 15,28,384 out of Rs. 19,41,200 made by the Assessing Officer (AO) under Section 69C of the Income Tax Act, 1961, for unexplained expenditure on his daughter's marriage. The AO had scrutinized the case and observed that during a search and seizure operation, various documents detailing marriage expenses were seized. The AO noted that the total expenditure on the marriage was Rs. 21,47,000, as per the seized documents, and the assessee had failed to explain the source of these funds adequately.

The AO rejected the assessee's claims regarding contributions from various family members, including Rs. 10,00,000 from Shri Anand Prakash Agarwal, Rs. 1,63,600 from the father-in-law, and Rs. 3,78,000 from the mother-in-law, citing lack of evidence and contradictions in the statements. The AO concluded that the expenditure of Rs. 19,41,200 was unexplained.

Upon appeal, the CIT(A) partly allowed the appeal, accepting some of the assessee's explanations but confirming the addition of Rs. 15,28,384. The CIT(A) noted that the assessee had given contradictory statements regarding the expenditure and failed to provide sufficient evidence for the claimed contributions. The CIT(A) accepted the availability of funds amounting to Rs. 6,18,616 but rejected the rest of the claims due to lack of credible evidence.

The assessee further appealed, arguing that the total expenditure should be considered at Rs. 16,47,000, not Rs. 21,47,000, and that the contributions from family members should be acknowledged. The Tribunal examined the evidence and found that the assessee failed to provide sufficient proof for the claimed contributions and expenses. The Tribunal upheld the CIT(A)'s decision, confirming the addition of Rs. 15,28,384 as unexplained expenditure under Section 69C.

2. Disallowance of Rs. 3,633 out of car insurance, conveyance, and telephone expenses:

The AO disallowed 20% of the total claimed expenses of Rs. 18,167 under car insurance, conveyance, and telephone expenses, amounting to Rs. 3,633, citing personal use. The CIT(A) upheld this disallowance, stating that the personal element in such expenses was not disputed by the appellant, and the disallowance was fair and reasonable.

The assessee argued that the claimed expenses were reasonable and requested a reduction in the disallowance percentage. The Tribunal considered the argument and decided to restrict the disallowance to 10%, directing the AO to modify the addition accordingly.

Conclusion:

The Tribunal upheld the addition of Rs. 15,28,384 as unexplained expenditure under Section 69C, finding the assessee's explanations and evidence insufficient. However, it partially allowed the appeal regarding the disallowance of car insurance, conveyance, and telephone expenses, reducing the disallowance to 10%. The final decision resulted in the assessee's appeal being partly allowed.