Shri Harishkumar Dungarmal Jain, Kolhapur V. ACIT, Circle-2, Kolhapur

ITA 901/PUN/2013

• Counselvise Citation: 90124514 RSA 2013
• Duration Of Justice: 1 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 23-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MAZHAR AKRAM
• Keywords: Unexplained expenditure; Gift; Principle of natural justice
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.901/PN/2013 (ASSESSMENT YEAR: 2008-09) SHRI HARISHKUMAR DUNGARMAL JAIN 39, E WARD, SHIVAJI PARK KOLHAPUR PAN: AAHPH2287D . APPELLANT VS. THE ASST. COMMISSIONER OF INCOME TAX CIRCLE-2, KOLHAPUR . RESPONDENT APPELLANT BY : SHRI NIKHIL PATHAK RESPONDENT BY : SHRI MAZHAR AKRAM DATE OF HEARING : 16-10-2014 DATE OF PRONOUNCEMENT : 27-10-2014 ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), KOLHAPUR DATED 28.02.2013 RELATING TO ASSESSMENT YEAR 20 08-09 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE LEARNED A.O . WAS JUSTIFIED IN MAKING AN ADDITION TO THE EXTENT OF RS.1 5,00,000/- ON ACCOUNT OF UNACCOUNTED EXPENDITURE INCURRED BY THE A SSESSEE ON THE WEDDING OF HIS DAUGHTER. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 15,00,000/- MADE BY THE A.O. ON THE BASIS OF PRESUMPTION S AND SURMISES WITHOUT ANY EVIDENCE TO INDICATE THAT THE A SSESSEE HAD ACTUALLY INCURRED ANY EXPENDITURE OVER AND ABOVE THE AMOUNT RECORDED IN THE BOOKS. 3. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE ASSESS EE HAD NOT INCURRED ANY EXPENDITURE OVER AND ABOVE THE AMOUNT R ECORDED IN THE BOOKS AND HENCE, THE ADDITION MADE OF RS.15,00,000/- MAY KINDLY BE DELETED. ITA NO.901/PN/2013 SHRI HARISHKUMAR D JAIN 2 4. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT NO SUCH ADDITION WAS JUSTIFIED IN THE ABSENCE OF ANY INCRIMIN ATING EVIDENCE AND HENCE, THE ADDITION MADE PURELY ON PRESU MPTIONS AND SURMISES MAY KINDLY BE DELETED. 5. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE ASSESSEE SUBMITS THAT THE ADDITION MADE BY THE LEARNED A.O. IS VERY HIG H AND MAY KINDLY BE REDUCED SUBSTANTIALLY. 6. THE LEARNED CIT(A) ERRED IN DISMISSING THE GROUNDS RE LATING TO SET OFF OF BUSINESS LOSS AND LOSS FROM HOUSE PROPERTY BY STATING THAT THE ASSESSEE HAD NOT PRESSED THE SAME WITHOUT APPRE CIATING THAT THE ASSESSEE HAD NOT MADE ANY SUCH CONCESSION IN TH E APPELLATE PROCEEDINGS. 7. THE LEARNED CIT(A) ERRED IN NOT ALLOWING THE SET OFF OF BUSINESS LOSS OF RS.4,26,199/- AND SET OFF OF HOUSE PROPERTY LOSS OF RS.4,800/- AGAINST THE SHORT TERM CAPITAL GAIN WITHOUT APPRECIATING THAT AS PER SECTION 71, THE SAID LOSSES WERE CLEARLY ALLOWABLE. 8. THE APPELLANT CRAVES LEAVE TO ADDITION, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL 3. THE ISSUE IN GROUNDS OF APPEAL NO.1 TO 3 IS AGAINST T HE ADDITION OF RS.15,00,000/- ON ACCOUNT OF UNACCOUNTED EXPENDITURE IN CURRED ON THE WEDDING OF THE DAUGHTER OF THE ASSESSEE. 4. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT, DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD SOLEMNIZED THE MAR RIAGE OF HIS DAUGHTER. THE TOTAL EXPENDITURE INCURRED ON THE SAID WE DDING WERE CLAIMED BY THE ASSESSEE AT AROUND RS.6,38,054/- WHICH WAS INCURRED BY THE ASSESSEE AND HIS FAMILY MEMBERS. THE ASSESSING O FFICER NOTED THAT THE WEDDING TOOK PLACE AT SURAT AND THE ASSESSEE ALONG WITH HIS FAMILY MEMBERS HAD TRAVELLED FROM KOLHAPUR TO SURAT AND H AD ALSO INCURRED EXPENSES ON LODGING & BOARDING AND TRANSPORTAT ION. THE ASSESSING OFFICER ALSO NOTED THAT THE ASSESSEE HAD CLAIMED NOT TO HAVE INCURRED ANY EXPENDITURE ON CLOTHES OR JEWELLARY FOR THE BRIDE, GROOM AND THE FAMILY MEMBERS AND EVEN ON THE DECORATION, PAND AL AND POST- ITA NO.901/PN/2013 SHRI HARISHKUMAR D JAIN 3 MARRIAGE EXPENSES. THE FINANCIAL STATUS OF THE ASSESSEE W AS CONSIDERED BY THE ASSESSING OFFICER, WHEREIN THE ASSESSEE WAS FOUND TO BE PARTNER IN SEVEN CONCERNS AND WAS HAVING MORE T HAN 23 IMMOVABLE PROPERTIES VALUED AT ABOUT 1.47 CRORES. THE A SSESSEE THUS, WAS FOUND TO BE HAVING HIGH STATUS IN SOCIETY AND THE AS SESSING OFFICER ACCORDINGLY, ESTIMATED THE EXPENDITURE INCURRED BY THE ASSESSEE ON THE WEDDING OF HIS DAUGHTER. A SUM OF RS.3,0 0,000/- WAS ESTIMATED TO HAVE BEEN INCURRED ON THE TRAVEL / STAY O F FAMILY MEMBERS AND GUESTS AT SURAT AND FOR OTHER EXPENSES. FURTHER SUM OF RS.2,00,000/- WAS ESTIMATED FOR STAY OF OUTSTATION GUESTS AT KOLHAPUR DURING THE RECEPTION. THE ASSESSING OFFICER ALSO ESTIMATED THE VALUE OF GOLD JEWELLARY GIVEN TO THE DAUGHTER AT RS.15,00,000/- AS AGAINST THE CLAIM OF THE ASSESSEE THAT IT HAD INCURRED EXPENDITURE RS .5,00,000/- ON THE JEWELLARY OF HIS DAUGHTER. FURTHER ESTIMATION ON OTHER MISCELLANEOUS EXPENDITURE INCLUDING DECORATION, PANDAL, ETC. WA S MADE AT RS.2,00,000/- AND ON GIFTS TO RELATIVES, IN-LAWS, FAMILY MEMBERS, ETC. AT RS.3,00,000/-, TOTAL IN ALL RS.25,00,000/- AND ADDITION OF RS.25,00,000/- WAS MADE IN THE HANDS OF THE ASSESSEE. 4. THE CIT(A) RESTRICTED THE ADDITION TO RS.15,00,000/- BY ACCEPTING THE PLEA OF THE ASSESSEE WITH REGARD TO THE S OURCE OF JEWELLARY GIVEN TO THE DAUGHTER BEING OUT OF THE JEWELLARY CLAIMED TO HAVE BEEN PURCHASED BY THE ASSESSEE AND SOME PORTION BEING GIFTED BY THE GRAND-MOTHER. THE CREDIT OF RS.10,00,000/- ON ACCOUN T OF JEWELLARY WAS ALLOWED TO THE ASSESSEE. 5. THE ASSESSEE IS IN APPEAL AGAINST THE SAID RESTRICTION OF ADDITION TO RS.15,00,000/-. IT WAS POINTED OUT BY THE LEARNED AUT HORIZED REPRESENTATIVE FOR THE ASSESSEE THAT NO EVIDENCE WAS FO UND VIS--VIS ITA NO.901/PN/2013 SHRI HARISHKUMAR D JAIN 4 THE EXPENDITURE INCURRED BY THE ASSESSEE ON THE WEDDIN G FUNCTION AND THE ADDITION HAS BEEN MADE IN THE HANDS OF THE ASSESSEE TOTALLY ON ESTIMATE BASIS. FURTHER, NO BENEFIT HAS BEEN ALLOWED TO THE ASSESSE E OF THE AMOUNT INCURRED BY THE ASSESSEE AT ABOUT RS.6.78 LAKHS. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVE NUE HAS PLACED RELIANCE ON THE ORDER OF CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E RECORD. THE ISSUE RAISED VIDE GROUND NOS.1 TO 5 IN THE PRESENT APPEAL IS AGAINST THE ESTIMATION OF WEDDING EXPENDITURE IN THE HANDS OF THE ASSESSEE. DURING THE YEAR UNDER CONSIDERATION, THE ASSE SSEE HAD SOLEMNIZED THE WEDDING OF HIS DAUGHTER AND WHEN ENQUIRIES WERE MADE IN RELATION TO THE EXPENDITURE INCURRED ON THE MARR IAGE OF HIS DAUGHTER, THE ASSESSEE CLAIMED THAT IT HAD WITHDRAWN A S UM OF RS.98,982/- FOR THE SAID PURPOSE. IN ADDITION, VARIOUS FAMILY MEMBE RS OF THE ASSESSEE BEING BROTHERS, SISTERS AND NEPHEWS AS DETAILED AT PAGE 5 OF THE ASSESSMENT ORDER ALONG WITH THE CONTRIBUTIONS M ADE BY THE ASSESSEE, HAD SPENT RS.6,38,054/- ON THE SAID WEDDING FUN CTION. THE ASSESSEE VIDE EXPLANATION DATED 29.11.2010 HAD FURTHER EXPLAINED TH AT THE SAID AMOUNT OF RS.6,38,054/- WAS SPENT MAINLY ON TH E DIFFERENT BANQUET HALLS AND OTHER EXPENDITURE OF RS.1,79,800/- WAS CLAIMED TO BE INCURRED BY THE ASSESSEE TOTALING RS.6,38,054/-. THE PLEA OF THE ASSESSEE WAS THAT RS.2,74,897/- WAS PAID FOR THE LAWN KN OWN AS BHAGWATI BANQUET, SURAT, FROM WHERE THE MARRIAGE CEREMON Y AT SURAT WAS PERFORMED. FURTHER, THE RECEPTION WAS ARRANGED AT KOLHAPUR WHICH WAS ATTENDED BY 700 PERSONS AND THE FOOD EXPENS ES WERE RS.84,375/- AND SINCE THE LAWN WAS OWNED BY THE JOINT FAMILY, NO CHARGES WERE PAID FOR LAWN RENT. FURTHER, SUM OF RS.98,98 2/- WAS ITA NO.901/PN/2013 SHRI HARISHKUMAR D JAIN 5 PAID FOR THE STAY OF THE JOINT FAMILY AND THEIR FRIENDS AT A GRASEN BHAWAN AT SURAT. IN ADDITION, THE ASSESSEE CLAIMS TO HAV E SPEND RS.1,79,800/- ON VARIOUS OTHER ITEMS IN CONNECTION WITH TH E MARRIAGE CEREMONY. THE SAID EXPENSES WERE FOUND TO BE ON THE LO WER SIDE BY THE ASSESSING OFFICER KEEPING IN MIND FINANCIAL STATUS OF THE ASSESSEE WHO HAS FOUND TO BE A PARTNER IN SEVEN PARTNERSHIP CON CERNS AND IN ADDITION, HE WAS HOLDING ABOUT 23 IMMOVABLE PROPERTIES. K EEPING IN MIND THE TOTALITY OF THE CIRCUMSTANCES AND THE NATURE OF EXPENSES, THE ASSESSING OFFICER ESTIMATED THE EXPENDITURE AT RS.25,00,000 /- ON ACCOUNT OF THE FOLLOWING HEADS. S.NO. HEAD OF EXPENSE AMOUNT RS. I. TRAVEL / STAY OF FAMILY AND GUEST TO SURAT AND OTHER EXPENSES FOR WEDDING CEREMONIES RS.3,00,000/- II. STAY OF OUTSTATION GUESTS AT KOLHAPUR DURING RECEPTION (INCLUDING THEIR LODGING AND BOARDING AND TRANSPORT) RS.2,00,000/- III. GOLD JEWELLERY GIVEN TO DAUGHTER RS.15,00,000/- IV. OTHER MISCELLANEOUS EXPENSES INCLUDING DECORATION, PANDAL AND POST MARRIAGE CEREMONIES ETC. RS.2,00,000/- V. GIFTS TO RELATIVES, IN-LAWS, FAMILY MEMBERS AND FRIENDS RS.3,00,000/- 8. THE CIT(A) HOWEVER, HAD GIVEN THE BENEFIT TO THE ASSE SSEE IN RESPECT OF THE EXPENDITURE INCURRED ON GOLD JEWELLERY BY ACCEPTING THE PLEA OF THE ASSESSEE THAT PART OF THE JEWELLERY WAS GIFTED BY HIS MOTHER TO HIS DAUGHTER AND REDUCED THE ADDITION TO RS.15,00,000 /-. THE ASSESSEE CLAIMS BEFORE US THAT THE EXPENDITURE INCURRED HAD ALREADY BEEN ACCOUNTED FOR OUT OF THE MONEY SPENT BY THE ASSE SSEE AND HIS FAMILY MEMBERS AND THIS ADDITION WAS PURELY MADE ON ESTIM ATE BASIS. THE ASSESSEE CLAIMS THAT HE ALONG WITH HIS FAMILY MEMBERS HAD ITA NO.901/PN/2013 SHRI HARISHKUMAR D JAIN 6 CONTRIBUTED A SUM OF RS.6,38,054/- TOWARDS THE MARRIAGE EXPENSES. WE ARE OF THE VIEW THAT CREDIT OF THE AMOUNTS SPENT BY THE ASSESSEE IS ALSO TO BE ALLOWED TO THE ASSESSEE AND IN ALL FAIRNESS, WE R EDUCE THE ADDITION TO RS.8,00,000/-. THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. THE GROUNDS OF APPEAL NO.1 TO 5 RAISED BY T HE ASSESSEE ARE PARTLY ALLOWED. 9. THE ISSUE IN GROUND NOS.6 & 7 IS IN RELATION TO THE SET OFF OF BUSINESS LOSS AND LOSS FROM HOUSE PROPERTY AGAINST SHORT TERM CAPITAL GAIN. BOTH THESE ISSUES WERE RAISED BEFORE THE CIT(A) VI DE GROUND NOS.5 & 6 AND THE CIT(A) HAS DISMISSED THE SAID GROUNDS O F APPEAL AS NOT BEEN PRESSED. THE LEARNED AUTHORIZED REPRESENTATIV E FOR THE ASSESSEE POINTED OUT THAT BEFORE THE CIT(A), THE ASSESSE E HAD RAISED TWO DIFFERENT ISSUES I.E. (I) AGAINST THE SET OFF OF BUSINESS LOSS AND LOSS FROM PROPERTY ARISING IN THE YEAR UNDER CONSIDERATION ITSE LF AGAINST SHORT TERM CAPITAL GAIN VIDE GROUNDS OF APPEAL NO.5 & 6 A ND FURTHER VIDE GROUND NO.7 IT HAS RAISED THE ISSUE OF SET OFF OF BROUG HT FORWARD BUSINESS LOSSES. DURING THE APPELLATE PROCEEDINGS, THE ASS ESSEE CLAIMS THAT IT HAD NOT PRESSED GROUND NO.7 BUT IT AGITATE D THE GROUND NOS.5 & 6 WHICH IS APPARENT FROM THE WRITTEN SUBMISSIONS FI LED BEFORE THE CIT(A) PLACED AT PAGES 56 TO 65 OF THE PAPER BOOK. THE ASSESSEE HAS PRESSED TWO GROUNDS I.E. 5 & 6 RAISED BEFORE THE CIT (A) BUT HAD STATED THAT GROUND NO.7 MAY BE TREATED AS NOT PRESSE D. THE PERUSAL OF THE ORDER OF CIT(A) REFLECTS THAT THE CIT(A) HAS NOT GIVEN ANY FINDING VIS--VIS GROUND NO.7 BUT HAS STATED THAT GROUND NOS.5 & 6 WERE NOT PRESSED BY THE ASSESSEE. THE ASSESSEE CLAIMS THAT IT H AD ALREADY MOVED A RECTIFICATION APPLICATION BEFORE THE CIT(A) IN THIS REG ARD WHICH IS PLACED AT PAGES 86 OF THE PAPER BOOK. IN THE TOTALIT Y OF THE ABOVE FACTS AND CIRCUMSTANCES, WE ARE IN CONFORMITY WITH THE SU BMISSIONS OF ITA NO.901/PN/2013 SHRI HARISHKUMAR D JAIN 7 THE ASSESSEE. THE CIT(A) HAD OVERLOOKED THAT ONLY GROU ND NO.7 RAISED IN THE MEMO OF APPEAL WAS NOT PRESSED. HOWEVER, THE ASS ESSEE HAD MADE THE SUBMISSIONS WITH REGARD TO THE GROUNDS OF APPE AL NOS.5 & 6. THE CIT(A) HAS FAILED TO ADDRESS THE SAME. FOLLOWING THE PR INCIPLE OF NATURAL JUSTICE, WE DEEM IT FIT TO RESTORE THE SAID ISSUES RAISED VIDE GROUNDS OF APPEAL NOS.5 & 6 TO THE FILE OF THE CIT(A), WHO S HALL DECIDE THE SAME AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE GROUNDS OF APPEAL NOS.6 & 7 THUS, ARE ALLO WED FOR STATISTICAL PURPOSES. 10. AS A RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF OCTOBER, 2014. SD/- SD/- (R.K. PANDA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 27 TH OCTOBER, 2014. GCVSR COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A), KOLHAPUR; 4) THE CIT, KOLHAPUR; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE