2017 (8) TMI 924 - AT - Income Tax

Addition on account of marriage expenses of daughter of the assessee - new jewellery purchase - Held that - A.O. has not brought any material on record to show if the assessee has purchased new jewellery at the time of marriage, therefore, there was no justification for the Ld. CIT(A) to give benefit to assessee only for ₹ 15 lakhs out of old jewellery accumulated by the assessee. The Ld. CIT(A) merely in presumption has held that the assessee might have given some new jewellery in the marriage besides the jewellery cleaned from M/s Ram Jewellery Place. CIT(A) also followed the CBDT Instruction no.1916-1994, dated 11th May, 1994 for giving part relief to the assessee. However the facts above clearly prove that the assessee and her family members possessed old jewellery within the limits prescribed as per the CBDT Circular. The explanation of the assessee was supported by certificate of jeweller and statement made by jeweller before the A.O. in the remand proceedings. Therefore the authorities below should have allowed the entire benefit for possessing old jewellery for a sum of ₹ 22 lakhs. Thus considering the above discussion there was no justification for the authorities below to make above addition of ₹ 15,36,500/- out of marriage expenses spent by the assessee. It may be noted that the Ld. CIT(A) has already deleted the addition on account of roka ceremony because it was performed in the preceding A.Y. Considering the totality of the facts and circumstances, set aside the orders of the authorities below and delete the entire addition of ₹ 15,36,500/-. In the result the remaining grounds of appeal of the assessee on merit are allowed.

Summary

Issues:
Challenge to addition of marriage expenses in assessment for A.Y. 2004-05.

Analysis:
1. The assessment was reopened based on information regarding marriage expenses incurred by the assessee, leading to an addition of ?32,36,500 by the Assessing Officer (A.O.).
2. The assessee explained the sources of expenses, providing details of marriage expenses and sources of funds, but the A.O. was not satisfied with the explanation.
3. The A.O. added ?32,36,500 to the taxable income as the sources of expenses were not fully proved, despite accepting some explanations and withdrawals made by the assessee and her daughter.
4. The CIT(A) confirmed the A.O.'s findings on the estimate of marriage expenses at ?55,00,000 mentioned in the FIR, reducing the expenditure on roka ceremony to ?2,00,000 for the preceding year.
5. Regarding jewellery expenses of ?22,00,000, the CIT(A) estimated the value of old jewellery at ?15,00,000, deleting the addition to that extent but confirming the remaining additions.
6. The remaining addition of ?15,36,500 was challenged by the assessee before the ITAT, arguing that the FIR lodged by the daughter should not be relied upon, and the total expenses incurred were ?46,05,000, not ?55,00,000.
7. The ITAT held that the FIR contents were not binding on the assessee, and there was no evidence to prove the ?55,00,000 expenses. The ITAT directed the A.O. to accept the explanation for expenses of ?46,05,000 and withdrawals made.
8. The ITAT found the explanation regarding jewellery to be supported by evidence, and the A.O. had not proven if new jewellery was purchased, directing the deletion of the entire addition of ?15,36,500.
9. Considering the facts and circumstances, the ITAT allowed the appeal, deleting the remaining addition and partially allowing the appeal of the assessee.

This judgment highlights the importance of providing detailed explanations and supporting evidence in tax assessments, emphasizing the burden of proof on the taxpayer and the tax authorities. The ITAT's decision focused on the credibility of the explanations provided by the assessee and the lack of concrete evidence to support the additions made by the A.O. and CIT(A).