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2014 (9) TMI 1209 - AT - Income TaxUnexplained expenditure of marriage of the daughter of the assessee - HELD THAT - Under the provisions of section 158BC of the Act the un-disclosed income for the block period in the hands of the person searched is to be based on the evidence found during the course of search. In the case of the assessee a diary marked as Annexure A-7 was seized from the premises of the assessee and the said diary contained notings of various expenditure of various shoguns/gifts given to the near relatives of the son-in-law of the assessee. The assessee has totaled the said expenditure at page 4 of Annexure A-7 at ₹ 6,25,700/-. The assessee however, claimed that the same were proposed expenditure. We find no merit in the plea of the assessee in view of the fact that the marriage of the daughter of the assessee was solemnized and entries in the diary noted various shoguns/gifts given by the assessee. However, in all fairness, we restrict the addition to ₹ 3 lacs in the hands of the assessee. Addition on account of marriage expenditure - HELD THAT - AO rejected the claim of the assessee though a confirmation was filed with regard to the said gifts. The CIT (Appeals) had deleted the said addition. We are in conformity with the order of the CIT (Appeals) where confirmation of gifts has been filed by the assessee and it is customary that the gifts are received from the relatives at the time of marriage. Merely because the receipt was found from the possession of the assessee does not establish that the said titan watch was purchased by assessee. Accordingly, we delete the addition Addition made on account of marriage expenses - CIT (Appeals) where the evidence in the form of invoices were found from the possession of the assessee and also in view of the fact that the marriage of the daughter of the assessee had been solemnized at Ahmedabad. The assessee in his statement had admitted that he and his relatives had traveled by air from Delhi to Ahmedabad for solemnizing the marriage of his daughter. Accordingly, we confirm the addition made on the basis of the evidence/invoices found during the course of search. Addition on account of expenses on pre-marriage dinner at Chandigarh - AO in view of the list found estimated the expenditure @ ₹ 250/- per head and made addition of ₹ 75,000 plus estimated addition of ₹ 25,000/- on other arrangements like tent, lighting, etc. Thus an addition of ₹ 1 lac was made by the Assessing Officer, which was deleted by the CIT (Appeals). As pointed out by us in the paras hereinabove, this is the case of block assessment and addition can be made only on the basis of evidence found during the course of search. The present addition has been made on account of material list seized from the premises of the assessee, which in nowhere establish that the assessee had incurred the said expenditure. In the absence of any concrete evidence, we find no merit in the said addition of ₹ 1 lac and the same is deleted. Addition on account of purchase of miscellaneous items for marriage - HELD THAT - Addition as the papers depicted only estimated expenditure and in the absence of any evidence having been found of the expenditure being incurred i.e. in the form of any bills, receipts or payment slips, we find no merit in the said addition and we uphold the order of the CIT (Appeals) in deleting the aid of ₹ 33,025/-. Addition on account of purchase of silver items/utensils - On the basis of Annexure A-12, page 20 seized from the residence of the assessee, which contained slip of purchases of silver items utensils at ₹ 29,800/-. The assessee failed to furnish any explanation and he same was added as the income of the assessee which was deleted by the CIT (Appeals). We do not confirm with the view of the CIT (Appeals) as the bills for purchase of silver items were found from the possession of the assessee and in the absence of any evidence to explain the source of investment, we reverse the order of the CIT (Appeals) and uphold the addition Addition on account of stay at Ahmemdabad - HELD THAT - Once the evidence of having incurred the expenditure has been found from the possession of the assessee and in the absence of any explanation as to the source of expenditure, the same constitute undisclosed income in the hands of the assessee. Accordingly, we confirm the addition of ₹ 21,097/- and reverse the order of the CIT (Appeals) in this regard. Addition of marriage expenses at Ahmedabad and other miscellaneous expenses - The perusal of the order of the Assessing Officer reflects that the marriage expenses at Ahmedabad have been estimated by the Assessing Officer on the basis of the statement of the assessee that 150 persons had attended the function. Further other miscellaneous expenses have been estimated being customs. Undoubtedly the expenditure claimed to be incurred by the assessee are related to the marriage function. The total addition on account of marriage expenses had been made in the hands of the assessee at ₹ 3 lacs. Assessee fairly admitted hat the ends of justice would be met in case the said addition is restricted to ₹ 1 lac. In view thereof, we restrict the addition at ₹ 1 lac and partly allow the ground of appeal raised by the Revenue. Un-explained expenditure under section 69C - In respect of the first addition of ₹ 18,000/-, wherein during the course of search evidence of payment of ₹ 18,000/- to Shri Kimat Rai Garg was found from the possession of the assessee and in the absence of any explanation as to the source, the said sum is to be treated as un-explained expenditure under section 69C of the Act relatable to the block period. However, we uphold the deletion of ₹ 2000/- being petty expenditure Addition on account of unexplained gifts - The assessee before us had failed to bring on record any evidence to prove any evidence of relation with the said persons or the occasion on which the said gifts were given to the assessee. In the absence of the same and as the assessee had failed to prove the identity and creditworthiness of the said persons, we uphold the addition Addition made on account of jewellery found from the possession of the assessee - HELD THAT - As per the instructions issue by the CBDT, the search team is directed not to takek into account the jewellery taking into consideration the total numbers of the family wherein credit of 500 gms of jewellery is to be allowed to a married lady and 100 gms of jewellery is to be allowed on account of the male members and 250 gm of jewellery on account of unmarried female. The said instructions have been applied by various tribunals in determining the value of jewellery in the hands of the assessee. The family of the assessee considered of self, his wife and two sons. The assessee further claimed that his mother s jewellery was also found but it is the finding of the Assessing Officer that the mother of the assessee was not staying in his house and hence, it could not be assumed that any jewellery belonging to her was available with him. We are in conformity with the findings of the Assessing Officer in this regard. We direct the Assessing Officer to allow the benefit of 500 gms of jewellery in the hands of the wife of the assessee and 300 gms of jewellery on account of the assessee and his two sons and thereafter compute the disallowance, if any, on account of jewellery found from the possession of the assessee.
Issues Involved:
1. Deletion of addition on account of unexplained expenditure on the marriage of the assessee's daughter. 2. Deletion of addition on account of unexplained household expenditure. 3. Deletion of miscellaneous additions on account of share payments. 4. Deletion of addition on account of unexplained gifts. 5. Deletion of addition on account of undisclosed interest received. 6. Deletion of addition on account of unexplained investment in jewellery. Detailed Analysis: 1. Unexplained Expenditure on Marriage of Daughter: The Assessing Officer (AO) identified various documents seized during a search operation that detailed the marriage expenses of the assessee's daughter, totaling Rs. 8,29,664/-. The AO treated these as unexplained expenditures, but the CIT (Appeals) deleted the additions. The Tribunal upheld part of the AO's addition, restricting it to Rs. 3 lakhs, finding merit in the AO's assessment of certain expenses as actual rather than proposed. 2. Unexplained Household Expenditure: The AO estimated the household expenses of the assessee for the last 10 years based on telephone and electricity bills found during the search, leading to an addition of Rs. 11,06,285/-. The CIT (Appeals) deleted this addition, and the Tribunal upheld the deletion, agreeing that no concrete evidence supported the AO's estimation. 3. Miscellaneous Additions on Account of Share Payments: The AO added Rs. 21,500/- as unexplained expenditure based on seized documents showing payments to Shri Kimat Rai Garg and Chandigarh Club. The CIT (Appeals) deleted these additions. The Tribunal partly upheld the AO's addition, confirming Rs. 18,000/- as unexplained expenditure but deleting the Rs. 2,000/- addition as petty expenditure. 4. Unexplained Gifts: The AO added Rs. 5,83,156/- as unexplained gifts received by the assessee, citing a lack of evidence to prove the identity and creditworthiness of the donors. The CIT (Appeals) deleted this addition. The Tribunal reversed the CIT (Appeals) decision, upholding the AO's addition due to the assessee's failure to substantiate the gifts. 5. Undisclosed Interest Received: The AO added Rs. 8,77,156/- as undisclosed interest received from M/s Brinsar India Pvt. Ltd. and M/s Brinsar Foods Pvt. Ltd., based on seized documents. The CIT (Appeals) deleted this addition. The Tribunal remitted the issue back to the CIT (Appeals) for re-adjudication, following the reasoning of a similar case (DCIT Vs. H.S. Chadha). 6. Unexplained Investment in Jewellery: The AO added Rs. 1,56,446/- for unexplained jewellery found during the search. The CIT (Appeals) deleted this addition. The Tribunal directed the AO to allow the benefit of 500 gms of jewellery for the wife and 300 gms for the assessee and his two sons, and to recompute the disallowance accordingly. Conclusion: The Tribunal partly allowed the Revenue's appeal, confirming some of the AO's additions while upholding the CIT (Appeals) deletions in other instances. The Tribunal emphasized the need for concrete evidence to substantiate additions in block assessments, aligning with the principles of undisclosed income assessment under section 158BC of the Income Tax Act.
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