BALWAN SINGH RANA,BAHADURGARH vs. DCIT, ROHTAK

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ITA 4105/DEL/2015Status: DisposedITAT Delhi15 September 2016AY 2007-086 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the assessee incurred marriage expenses from explained sources, primarily retirement benefits and customary 'shaguns'. The addition on account of alleged interest income was deleted as it was based on a hypothetical presumption without supporting material.

What were the facts?

The assessee, a retired headmaster, incurred expenses for his daughter's marriage. The AO initiated reassessment proceedings based on a complaint regarding these expenses. The assessee claimed the expenses were met from retirement benefits, 'shaguns', and loans, but the AO found discrepancies in the source of funds.

What were the issues?

Whether the marriage expenses were adequately explained by the assessee's sources of income. Whether the addition of interest income was justified based on the available evidence.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES : SMC-I : NEW DELHI

Before: SHRI R.S. SYAL

For Appellant: Shri Dinesh Nangru, CA
For Respondent: Shri N.K. Bansal, Sr. DR
Hearing: 15.09.2016Pronounced: 15.09.2016

ORDER This appeal filed by the assessee is directed against the order passed by the CIT(A) on 28.4.2015 in relation to the assessment year 2007-08.

2.

Ground Nos.1 to 3 are not pressed. I, therefore, dismiss the same.

3.

Ground No.4 is against the confirmation of addition of Rs.12,03,838/. Briefly stated, the facts of the case are that the assessee is a retired head master, who married his daughter on 13th December, 2006.

He retired on 31.1.2006 and, admittedly, received retirement benefits amounting to Rs.16.65 lac. On the basis of some complaint (TEP) received by the AO qua the incurring of expenses by the assessee on the marriage of his daughter, the AO initiated reassessment proceedings.

During the course of such proceedings, the assessee admitted that he incurred marriage expenses of Rs.15,80,838/- whose details were given.

Regarding the source of this amount, he submitted that retirement benefits of Rs.16.65 lac were received apart from Shaguns etc. amounting to Rs.2,36,247/- and loans of Rs.1 lac from Shri Labh Singh Dalaal and Rs.2 lac from Shri Mahesh Kumar. The AO observed that out of retirement benefits received by the assessee, a sum of Rs.4 lac was withdrawn on 11.3.2006 which was paid to Shri Deep Chand and Shri Deep Chand returned an amount of Rs.2 lac before marriage. He further noticed that a sum of Rs.3 lac was withdrawn on 2.5.2006, out of which a sum of Rs.2 lac was given to Shri Jai Kishan which was returned by Smt. Sumitra Devi

Shri Jai Kishan at the time of the marriage. The assessee was called upon to furnish documentary evidence in support of his claims and produce the persons to prove their identity and credit worthiness etc. On 22.11.2012, the assessee produced Shri Labh Singh Dalaal and Smt.

Sumitra Devi, whose statements were recorded on oath. Smt. Sumitra Devi admitted to have returned a sum of Rs.1 lac to the assessee on 8.5.2006 from her bank account after taking a loan of Rs.55,000/- from Shri Daya Kishan. The AO observed from her bank statement that she withdrew only a sum of Rs.16,000/-. In the absence of any evidence about how the remaining amount was managed, the AO refused to accept that she repaid Rs.1 lac to the assessee. Similarly, Shri Labh Singh stated that he gave Rs.1 lac interest free loan in cash to the assessee on 28.10.2006. He submitted that he was a pensioner. Since his bank account did not have sufficient funds, the AO refused to accept the assessee’s version on this score as well. Disregarding the assessee’s claims, the AO noticed that the assessee withdrew a sum of Rs.3,77,000/- from his bank accounts between 1.6.2006 and 31.12.2006. The remaining

Rs.12,03,838/- (Rs.15,80,838 – Rs.3,77,000/-) was added to the assessee’s income. The ld. CIT(A) sustained the addition.

4.

I have heard the rival submissions and perused the relevant material on record. It is noticed that the assessee married his daughter on 13.12.2006 and, admittedly, incurred a sum of Rs.15.8 lac. This fact has not been controverted by the AO. It is also a matter of record that the assessee retired on 31.1.2006 and received retirement benefits amounting to Rs.16.65 lac. Apart from these retirement benefits, the assessee also received shaguns etc. on the marriage amounting to Rs.2.36 lac. The AO appears to have been needlessly swayed by technicalities in rejecting the assessee’s version of meeting marriage expenses of his daughter from the amount available. Some amount out of the retirement benefits was given as advance by the assessee which was claimed to have been received back on the occasion of marriage. The AO has not pointed out any utilization of retirement benefits in some non-retrievable assets. When the facts are considered in entirety, it becomes patent that as against the retirement benefits received by the assessee amounting to Rs.16.65 lac, the marriage expenses were incurred to the tune of Rs.15.80 lac. In addition to that, it 4

is customary to receive shaguns etc. on the eve of marriage of a daughter.

Under the given circumstances, I am satisfied that the assessee incurred marriage expenses out of his explained source of income. The addition so made and sustained is hereby deleted.

5.

The only other issue is against the confirmation of addition of Rs.2,34,262/- on account of alleged interest income on the basis of a page of a diary written by the assessee. Apart from making addition of Rs.12,03,838/-, the AO held that interest @ 1.5% per month was earned by the assessee on a loan of Rs.10 lac given to various persons.

Accordingly, interest income of Rs.2,34,262/- was computed and added to the assessee’s income. This addition was confirmed in the first appeal.

6.

Having regard to the facts of the instant case, it is found that the addition of Rs.2,34,262/- is only hypothetical. The AO simply presumed that the assessee advanced loans to various parties on which interest @ 18% was earned. There is no material worth the name on record to substantiate this charge leveled by the AO. I, therefore, delete this addition made by the AO on hypothesis. 5

7.

In the result, the appeal is partly allowed.

The order pronounced in the open court on 15.09.2016.

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