2023 (3) TMI 981 - AT - Income Tax

Unexplained expenditure u/s 69C - expenses incurred on marriage of daughter of assessee - HELD THAT - Neither the ld. AO nor ld. CIT(A) has doubted the availability of funds in the bank accounts nor doubted the withdrawals made therefrom however, without stating any single reason as why the withdrawals made after the marriage cannot consider as utilised for making payment of due expenses. Thus, the addition so made purely in arbitrary manner without considering the cash withdrawal made between the period from 18.03.2014 to 07.05.2014 for which source is explained. Assessee has cash which was withdrawn on various dates from his bank account mentioned in the capacity of individual as well as jointly with his wife and after incorporating the opening cash available with assessee out of which a sum were utilized for marriage expenses. To support his arguments that the assessee has furnished the documentary evidence of cash book as well as bank statement - the assessee was discharged his burden of explaining the expenditure incurred and the source thereof and we do not have any hesitation to delete the addition - Decided in favour of assessee.

Summary

Issues Involved:

1. Confirmation of Addition under Section 69C of the Income Tax Act.
2. Consideration of Cash Withdrawals for Marriage Expenses.

Summary:

Issue 1: Confirmation of Addition under Section 69C of the Income Tax Act

The assessee, a Grade-A Officer with the Rajasthan State Government, appealed against the addition of Rs. 7,48,900/- made under Section 69C by the Assessing Officer (AO) and confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)]. The addition was related to unexplained expenses incurred for the marriage of the assessee's daughter. The AO had reopened the assessment based on information that the assessee incurred significant expenses on the marriage and engagement of his daughter. The AO accepted that the total expenditure on the marriage was Rs. 27,82,500/- but considered only Rs. 13,51,100/- as explained, leading to the addition of Rs. 7,48,900/- as unexplained expenditure. The CIT(A) confirmed this addition without providing substantial reasons.

Issue 2: Consideration of Cash Withdrawals for Marriage Expenses

The assessee argued that the AO and CIT(A) erred by not considering cash withdrawals made before and after the marriage date, which were used to pay for marriage expenses. The assessee provided evidence of cash withdrawals totaling Rs. 22,84,900/- from various bank accounts and an opening cash balance of Rs. 2,82,896/-, demonstrating sufficient funds to cover the marriage expenses. The AO and CIT(A) ignored these withdrawals and only considered those made up to the date of marriage, thus treating the remaining amount as unexplained.

Judgment:

The Tribunal noted that neither the AO nor the CIT(A) doubted the source of the cash withdrawals. The Tribunal found that the assessee had adequately explained the source of funds and the expenditure incurred on the marriage. The Tribunal also observed that it is customary to make some payments after the marriage event, which the lower authorities failed to consider. The Tribunal concluded that the addition of Rs. 7,48,900/- was arbitrary and without basis, leading to the deletion of the said addition.

Conclusion:

The appeal of the assessee was allowed, and the addition of Rs. 7,48,900/- made by the lower authorities was deleted. The Tribunal emphasized that the assessee had sufficiently explained the source of the marriage expenses and that the lower authorities had failed to consider the evidence appropriately.