Phool Chand Bharat, Patiala V. Pr. CIT, Central, Patiala

ITA 467/CHANDI/2022

AI Insights

The case involves an appeal by the assessee, Phool Chand Bharat, against the order of the PCIT, Ludhiana, which revised the assessment order for the Assessment Year 2017-18. The revision was based on the grounds that the AO failed to conduct proper inquiries during the assessment proceedings regarding the source of expenditure claimed by the assessee on his daughter's marriage. The AO had initially accepted the assessee's explanation and partially allowed the claimed expenditure. However, the PCIT found the assessment order erroneous and prejudicial to the interest of the Revenue, leading to the revision. The Tribunal's decision reversed the PCIT's order, emphasizing the thoroughness of the AO's examination and the lack of specific deficiencies in the AO's inquiries as pointed out by the PCIT.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127757 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-02-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 24-05-2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Gift; Revision of order; Income from undisclosed sources; Source of fund; Assessment record; Set aside
• Section: 147; 148; 263; 143(3); 13

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ “बी” , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH ी आकाश द प जैन, उपा य एवं ी $व%म 'संह यादव, लेखा सद,य BEFORE: SHRI. AAKASH DEEP JAIN, VP & SHRI. VIKRAM SINGH YADAV, AM ITA NO. 467/Chd/ 2022 Assessment Year : 2017-18 Phool Chand Bharat, C-29 Ekta Colony, Near Gagan Factory, Rajpura, Patiala-140401, Punjab The Pr. CIT Central, Ludhiana PAN NO: AIDPB1017H Appellant Respondent ! " Assessee by : Shri Deepak Aggarwal, Advocate # ! " Revenue by : Shri Sarabjeet Singh, CIT, DR $ % ! & Date of Hearing : 28/02/2023 '()* ! & Date of Pronouncement : 07/03/2023 आदेश/Order PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the assessee against the order of the Ld. PCIT, Patiala passed u/s 263 of the Act dt. 25/03/2022 pertaining to A.Y. 2017-18 wherein the assessee has taken the following ground of appeal: “The Ld. CIT has erred in revising the assessment order dated 27.12.2019 on the ground that the assessing officer failed to conduct enquiries during the course of assessment proceedings whereas, as per the assessee the enquiry was properly conducted by the Assessing Officer and therefore the order u/s 263 passed by the CIT may kindly be quashed and set aside being not tenable.” 2. Briefly the facts of the case are that the Assessing officer was in receipt of certain information that the assessee had spend Rs. 25 Lacs on the marriage of his daughter during the previous year 2016-17 and certain preliminary enquiries were made from the assessee, however finding the same not satisfactory, 2 reasons for reopening were recorded and notice under section 148 was issued on 16/03/2019 which was duly served on the assessee. In response, the assessee filed his return of income and thereafter in response to notice under section 142(1) dt. 06/09/2019, the assessee submitted that he is a retired defense person and earlier worked as warrant officer in Indian Air Force. He has carried out no other business or professional activities and only pension income has been received by him alongwith interest on certain FDRs made out of his past savings which have been duly disclosed in the return of income. It was further submitted by the assessee that he has solemnized the marriage of his daughter on 24/07/2016 and has spent a sum of Rs. 16,00,000/- on the marriage of his daughter. As regards the source of the said expenditure, the assessee submitted that gold ornaments worth Rs. 6,50,000/-, which belonged to his wife who has since expired in November 2011, were gifted by him to his daughter and an amount of Rs. 9,50,000/- was spent by him out of his past savings from his regular employment as warrant officer in Indian Air Force. In support, the assessee submitted copy of his bank statement, details of gold ornaments and gift Items purchased and given to the daughter on her marriage. 3. The submissions so submitted were considered and examined by the AO and subsequently, the AO asked the assessee to submit source / genuineness of the expenses claimed to have been incurred and to also explain how the claim of Rs. 25,00,000/- has been made in the Court of Law, whereas the assessee has stated in his submission that he has spent Rs. 16,00,000/- only on the marriage of her daughter. 4. In response, the assessee submitted that he has only spent a sum of Rs. 16,00,000/-details of which has already been submitted. As regards the figure of Rs. 25,00,000/-, a copy of the petition no. TA457 filed before the Hon’ble Punjab & Haryana High Court was submitted and it was stated that in the said petition, the Advocate on behalf of the assessee has included an alimony amount of Rs. 3 9,00,000/- being the extra amount claimed by the assessee for the defamation faced by them from the other party. It was submitted that the assessee has only spent a sum of Rs. 16,00,000/- and the remaining Rs. 9,00,000/- was just compensation which was demanded as part of the petition before the Hon’ble High Court. 5. The submissions so filed by the assessee were considered by the AO and thereafter after due examination thereof, the AO accepted the assessee’s submission regarding Rs. 9,00,000/- being alimony amount which was merely a claim and not actually spent by the assessee as no addition was made by him. Further, out of Rs. 9,50,000/- spent by the assessee, the AO only accepted an amount of Rs. 6,30,000/- and the remaining amount of Rs. 3,20,000/- was held as unexplained expenditure. Further the amount of Rs. 6,50,000/- being value of the gold ornaments belonging to the assessee’s late wife and gifted by the assessee to her daughter was also not found accepted and was held as unexplained. Therefore out of total Rs. 25,00,000/-which was the basis for reopening the assessment, the AO made an addition of Rs. 9,70,000/- and as against the returned income of Rs. 3,91,920/- and has determined the assessed income at Rs. 13,61,920/- vide the order dt. 27/12/2019 passed under section 148 r.w.s 143(3) of the Act. 6. Being aggrieved the assessee carried the matter in appeal before the Ld. CIT(A) and an appeal was filed before the Ld. CIT(A), Patiala on 24/01/2020 which is currently pending adjudication. 7. Subsequently, the assessment records were called for and examined by the Ld. CIT, Patiala and a show cause dt. 12/03/2022 was issued to the assessee stating that while examining the assessment records, it is noted that your daughter had filed an application before the Hon’ble High Court claiming that you have spent a sum of Rs. 25,00,000/- in her marriage on 24/07/2016. However 4 your income for A.Y. 2017-18 has been assessed for Rs. 13,61,920/- and as such a sum of Rs. 11,38,080/- (Rs 25,00,000- 13,61,920/-) remained unverified/ unexplained from undisclosed sources of income. 8. In response to the show cause, the assessee submitted that the AO had conducted proper inquiry and accepted the assessee’s claim after proper verification. It was submitted that the assessee had spent a sum of Rs. 16,00,000/- only on the marriage of his daughter and the details of which were also submitted before the AO. It was reiterated that that the amount of Rs. 9,00,000/- was added by the Advocate by way of alimony while filing the petition before the Hon’ble High Court being extra money demanded being the aggrieved party for the defamation faced and as such the petition was filed for total sum of Rs. 25,00,000/-. It was emphasized that the sum of Rs. 9,00,000/- was not actually spent rather it was just a compensation which was demanded and which is yet to be received. A copy of the writ petition TA No. 457 of 2017 filed before the Hon’ble Punjab & Haryana High Court and details of the expenditure incurred by the assessee on the marriage of his daughter were again submitted during the revisionary proceedings before the Ld. PCIT. 9. The submissions so filed by the assessee were considered but not found acceptable to the Ld. PCIT. As per the Ld. PCIT, the contention of the assessee having not spent a sum of Rs. 9,00,000/- being the alimony amount is not acceptable for the reason that on the perusal of the writ petition T.A. NO. 457 of 2017, it nowhere reveals/mention about any alimony demand of Rs. 9,00,000/- and the figure of Rs. 25,00,000/- is the latest version/ figure filed before the Hon’ble Punjab & Haryana High Court by the assessee’s daughter and which cannot be ignored. It was further stated by the Ld. PCIT that during the assessment proceedings, the assessee had stated that he is a retired defense personnel and getting pension of Rs. 28,912/- per month and to manage the marriage ceremony of his daughter, he has withdrawn a sum of Rs. 2,00,000/- 5 from his bank account. He has also stated to have the ornaments of his late wife valuing at Rs. 6,50,000/- which he failed to justify before the AO who made the addition of this amount and assessed his income at Rs. 13,61,920/-. It was held by the Ld. PCIT that the assessee has basically reiterated the facts which are on records and has not brought any new fact or evidence to justify the expenditure of Rs. 25,00,000/- spent on his daughter’s marriage. Therefore, the sum of Rs. 11,38,080/- (Rs. 25,00,000 – Rs. 13,61,920) remained unexplained and has not been properly verified by the AO. It was accordingly held by the Ld. PCIT that the assessment order was passed without making proper inquiry or verification and the order so passed by the AO was held as erroneous as the AO did not examine/verify the complete/details facts and the matter therefore is also prejudicial to the Revenue being the unexplained money which has escaped taxation and the assessment order so passed by the AO was set aside for passing a fresh order in accordance with law after giving sufficient opportunity to the assessee. 10. Against the said findings and directions of the Ld. PCIT, the assessee is in appeal before us. 11. During the course of hearing, the Ld. AR submitted that the matter has been thoroughly examined by the AO, the notices were issued, submissions were filed which were duly verified and thereafter, further notices were issued which were also responded and thereafter the AO has gone ahead and completed the assessment proceedings. 12. It was submitted that as is evident from the assessment order, the AO has enquired about the figure of Rs. 25,00,000/- as mentioned in the petition before the Hon’ble High Court and after taking into consideration the submissions of the assessee that the figure of Rs. 9,00,000/- is only the alimony amount which the assessee has demanded as compensation from the other party and not the 6 actual expenditure, the same has been accepted by the AO. It was further submitted that the writ petition TA No. 457 of 2017 before the Hon’ble Punjab & Haryana High Court was a petition filed under section 24 of CPC praying for transfer of petition u/s 9 of Hindu Marriage Act, for restitution of Conjugal rights filed by the husband of the assessee and pending before the District Judge, Family Court, Karnal, to Court of Civil Judge Senior Division, Rajpura (exercising the power of District Judge under Hindu Marriage Act) District Patiala. It was submitted that as the matter stand today, the husband of the assessee has since withdrawn the said petition bearing registration no. 554/HMA/18 as evident from the affidavit dated 1/10/2022 submitted by the assessee in respect of another petition filed by the husband of the assessee u/s 13 of the Hindu Marriage Act for dissolution of the marriage and in the said affidavit, there is clear mention of figure of Rs 16,00,000/- being spent on marriage of the assessee’s daughter. 13. It was further submitted that out of amount actually spent by the assessee amounting to Rs. 16,00,000/-, the AO has examined the details submitted by the assessee and after examination thereof, has only accepted a figure of Rs. 6,30,000/- and the remaining figure has been brought to tax in the hands of the assessee. It was submitted that the same clearly demonstrates that the AO has duly examined the assessee’s explanation and the supporting documentation and thereafter after due application of mind, he has only accepted a sum of Rs. 6,30,000/- out of Rs. 16,00,000/- and an addition of Rs 9,70,000/- has been made by him. It was accordingly submitted that the Ld. PCIT was not correct in stating that the figure of Rs. 11,38,080/- remained unexplained or unverified by the AO. 14. It was submitted that the Ld. PCIT has simply and mathematically looked at the figure of the assessed income and has compared it with figure of Rs. 25,00,000/- and has held that the remaining amount remained unexplained and unverified by the AO. It was submitted that the same clearly shows that there is lack of examination and due application of mind on part of the ld PCIT in 7 invoking his jurisdiction under section 263 of the Act. It was accordingly submitted that both the invocation of jurisdiction and passing of the impugned order by the ld PCIT U/S 263 deserve to be set-aside. 15. Per contra, the Ld. DR has relied on the order of the Ld. PCIT. 16. We have heard the rival contentions and purused the material available on record. It is a case where the assessee, a retired defence person, has been asked to explain the source of expenditure on marriage of her daughter. The marriage was solemised on 24/07/2016 and unfortunately, the marriage is under dissolution and petition u/s 13 of the Hindu Marriage Act filed by the husband of the assessee is pending adjudication before the Family Court. 17. Apparently, the information had been received initially basis writ petition filed by the assessee before the Hon’ble Punjab & Haryana High Court under section 24 of CPC praying for transfer of petition u/s 9 of Hindu Marriage Act, for restitution of Conjugal rights filed by the husband of the assessee from the District Judge, Family Court, Karnal, to Court of Civil Judge Senior Division, Rajpura (exercising the power of District Judge under Hindu Marriage Act) District Patiala. In the said petition, no doubt, there is an averment regarding the amount of Rs 25,00,000/- having been spent on marriage of the assessee’s daughter and basis which, the case of the assessee was reopened and notice u/s 148 was issued. The said issue was examined by the AO and the explanation of the assessee that the figure of Rs 9,00,000/- was the alimony amount demanded and the actual expenditure was Rs 16,00,000/- was examined and accepted by the AO. Thereafter, the AO had gone ahead and examined the source of expenditure of Rs 16,00,000/-. 18. Having said that, even as the matter stand today, the husband of the assessee’s daughter has since withdrawn the said petition u/s 9 of the Hindu Marriage Act bearing registration no. 554/HMA/18 as evident from the affidavit 8 dated 1/10/2022 submitted by the assessee’s daughter and another petition has been filed by the husband of the assessee’s daughter u/s 13 of the Hindu Marriage Act for dissolution of the marriage and in the said affidavit of the assessee, there is clear mention of figure of Rs 16,00,000/- being spent on marriage of the assessee’s daughter. Therefore, as the matter stand today, the figure of Rs 25,00,000/- has undergone a change to Rs 16,00,000/- which is of course subject to examination and adjudication by the Family Court and what is relevant to examine for the present purposes is whether the matter relating to source of expenditure of Rs 16,00,000/- has been duly examined by the AO or not. 19. On perusal of the assessment order, we find that the matter has been thoroughly examined by the AO wherein specific queries have been raised regarding source of gold ornaments amounting to Rs 650,000/- and source of other expenditure amounting to Rs 950,000/- and after due examination of the submissions and documentation filed by the assessee, the AO has partially accepted the assessee’s explanation to the extent of Rs 630,000/- and has made the addition of Rs 9,70,000/- in the hands of the assessee and has passed a speaking order. The fact that the explanation has been called for and not accepted on face value shows due application of mind on part of the Assessing officer and the ld PCIT in his order has not brought out what further enquiries or verification which ought to be done and has not been done by the Assessing officer and how the order so passed by the AO can be held as erroneous and prejudicial to the interest of the Revenue. 20. In light of aforesaid discussion and considering the entirety of facts and circumstances of the case, we are of the considered view that the order so passed by the AO cannot be held as erroneous in so far as prejudicial to the interest of the Revenue and the impugned order passed u/s 263 by the ld PCIT is 9 set-aside and that of the AO’s assessment order passed u/s 147 r/w 143(3) is sustained. 21. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 07/03/2023. Sd/- Sd/- आकाश द प जैन $व%म 'संह यादव (AAKASH DEEP JAIN) ( VIKRAM SINGH YADAV) उपा य / VICE PRESIDENT लेखा सद,य/ ACCOUNTANT MEMBER AG Date: 07/03/2023 ( + ! , - . - Copy of the order forwarded to : 1. The Appellant 2. The Respondent 3. $ / CIT 4. $ / 0 1 The CIT(A) 5. - 2 ग 4 5 & 4 5 678 ग9 DR, ITAT, CHANDIGARH 6. ग 8 : % Guard File ( + $ By order, ; # Assistant Registrar