Addition for unexplained expenses incurred on marriage of daughter. High Court remands matter to Tribunal

Addition for unexplained expenses incurred on marriage of daughter. High Court remands the matter to Tribunal for fresh adjudication

ABCAUS Case Law Citation:
ABCAUS 2486(2018) 08 HC

The instant appeal was filed by assessee against the order of the Income Tax Appellate Tribunal (ITAT/Tribunal) in confirming the part addition for unexplained expenses incurred on marriage of the daughter

A notice under Section 148 of the Act was issued to the assessee on the ground that he had spent a huge amount in the marriage of his daughter while income declared in the return filed by him was meagre.

Not satisfied with the reply of the assessee, the Assesing Officer mad addition on account of unexplained marriage expenses. The AO also noted that the assessee had received an amount as advance against land and an amount as unsecured loans. Those amounts were also added in the returned income under Section 68 of the Act.

The assessee filed appeal before Commissioner, Income Tax (Appeals) who partly confirmed the addition on account of unexplained marriage expenses on account of 1 kg. Gold brick received by the assessee’s wife from her father-in-law many years back. As regards addition under Section 68 of the Act, CIT(A) deleted addition on the ground of confirmation filed by the creditor and the fact that the creditor had PAN and that the money was received through banking channels. CIT(A) also deleted addition of unsecured loan on the ground that the source thereof was satisfactorily explained.

The AO filed appeal before the ITAT. The assessee also filed cross appeal against part confirmation of disallowance on account of marriage expenses.

The ITAT confirmed the part addition on account of unexplained marriage expenses on the ground that there was no evidence in the form of a will or gift deed to support the fact that a gold brick was given to the assessee’s wife by her father-in-law many years back and that the affidavit filed in support thereof was from the assessee and not from either the donor or the donee.

However, the ITAT reversed order of CIT(A) with regard to credit of advance for land on the ground that the filing of confirmation and the fact that money had been received from banking channels was not enough to discharge initial onus cast upon the assesee.

Before the Hon’ble High Court, the assessee contended that the ITAT erred in confirming the part addition doubting the explanation of the assessee that the source of the amount was a gold brick given to the assessee’s wife by her father-in-law, which was utilised to meet the expenses of the marriage. The occasion being the marriage of their daughter, the assessee’s wife was also the parent of their daughter and had the social obligation to share in the expenses of her daughter’s marriage. It was argued that the assessee had filed an affidavit to confirm the source of the amount and the affidavit could not be rejected unless there was evidence to the contrary. If ITAT had any doubt, it at the maximum could have asked for affidavit of donor or donee in this regard.  

It was submitted that the ITAT erred in holding that no will or gift deed had been filed whereas in earlier times, such documents were not prepared and gifting of gold items was common.

Also, the initial onus cast upon the assessee with regard to advance for land had been discharged by the assessee when he filed a confirmation from the creditor, its PAN number and the proof that the money had come through banking channels. It was argued that ITAT had erred in law in holding that no sale deed of the impugned land had been produced, whereas the ITAT as the highest fact finding body could have asked the appellant to produce the sale deed, which it never did.

The Hon’ble High Court observed that in view of the fact that sale deed filed and its confirmation letter pertains to the relevant period showing sale of the property by the assessee, it would be appropriate to set aside the judgment passed by the ITAT and remit the matter back to ITAT to examine the same afresh in the light of aforesaid documents and pass fresh judgment in the appeal in accordance with law.

Accordingly, the order passed by the ITAT was set aside and the matter was remitted back to the ITAT for fresh examination

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Note:
Under sub section (5) of section 133A of the Income Tax Act, 1961, the Income Tax Officers have been authorised to require the assessee to furnish information on the expenses incurred on any function, ceremony or event. The AO has also been empower to record a statement in this regard