ITAT CHANDIGARH BENCH ‘B’
Rajinder Mohan Lal
Deputy Commissioner of Income Tax
IT APPEAL NO. 578/CHD./2011- [ASSESSMENT YEAR= 2007- 08]
JANUARY 4, 2012
Mehar Singh, Accountant Member- The present appeal filed by the assessee is directed against the order dated 19.01.2011 passed by the ld. CIT(A) u/s 250 of the Income-tax Act, 1961 (in short ‘the Act’).
2. In this appeal, the assessee has raised the following Grounds of Appeal:
“1. That the order passed u/s 250(6) by the ld. CIT(A) Chandigarh in Appeal No. 386/P/09-10 dated 19.01.2011 is contrary to law and facts of the case.
2. That in the facts and circumstances of the case, the ld. CIT(A) gravely erred in sustaining the addition of Rs. 21,07,513/- which represented the amount received as shoguns on behalf of his daughter Ms. Radhika Lal at the time of her marriage.
3. That in the facts and circumstances of the case, the ld. CIT(A) gravely erred in sustaining the addition of Rs. 5,50,000/- on account of foreign traveling expenses for alleged personal use of the assessee. No such expenses were incurred by the assessee.
4. That without prejudice to the above, the addition is highly excessive.
5. Any other ground that may be taken up at the time of hearing with the permission of the Hon’ble ITAT Chandigarh.”
3. Ground Nos. 1 & 5 raised by the assessee are general in nature and need no separate adjudication.
4. In Ground No. 2, the assessee challenged the confirmation of addition of Rs. 21,07,513/- by the CIT(A) representing the amount received as ‘shaguns’ on behalf of the assessee’s daughter Ms. Radhika, at the time of her marriage. The ld. ‘AR’ contended that the provisions of Section 56 cannot be applied to the facts of the present case as the gifts were received on the occasion of marriage of daughter of the assessee. He referred to various pages of the Paper Book demonstrating the date of marriage of the assessee’s daughter as also the receipt of gifts from some NRI friends and relatives.
5. Ld. ‘DR’, on the other hand, defended the orders of the lower authorities and categorically stated that the provision of Section 56(2)(vi) of the Act are applicable to the facts of the present case.
6. We have carefully perused the facts of the case, rival submissions and found that the AO made an addition of Rs. 21,07,513/- on account of gifts received from NRI relatives and friends on the occasion of the marriage of assessee’s daughter. The AO afforded opportunity to the assessee to show cause as to why the provisions of Section 56(2)(vi) of the Act may not be invoked in the present case as the gifts have been received by the assessee and not by the daughter of the assessee.
7. In para 2.3 of the assessment order, the AO recorded his categorical findings on the issue, which are reproduced hereunder :
“2.3 In the submission the counsel has submitted that the gifts on account of daughter’s marriage are not to be treated as income from other sources. As per Section mentioned above, any sum of money received on the occasion of the marriage of the individual is not to be included in income from other sources. However, this amount has been received on the occasion of assessee’s daughter marriage and not on the marriage of the assessee, therefore it is to be treated as income from other sources of the assessee. All these payments have been received through cheques and credited in assessee’s account. Therefore the aggregate gifts exceeding Rs. 50,000/- are to be treated as income from other sources. Hence Rs. 21,07,513/- is added to the returned income of the assessee. As the assessee has concealed his income, penalty proceedings u/s 271(1)(c) of the Income-tax Act,1961 are also being initiated.”
8. A perusal of the findings recorded by the AO clearly reveals that the gifts have been received by the assessee and utilized by the assessee. Consequently, ld. AO was of the opinion that such gifts were received through cheque and credited in assessee’s account and consequently, the aggregate gifts exceeding Rs. 50,000/- were treated as income from other sources by the AO u/s 56 of the Act. Such findings of the AO were upheld by the CIT(A). The CIT(A) recorded the findings that the cheques were issued in the name of the assessee and not in favor of the individual i.e. daughter of the assessee, whose marriage was solemnized. The ld. CIT(A) afforded further opportunity to the assessee to adduce evidence to establish his case to the effect that the donors were having credit worthiness and relations existed between the donor and donee. Ld. CIT(A) further recorded that the submission made by the assessee in the matter is purely stereo type and does not prove his case. It was further highlighted by the ld. CIT(A) that the money was never transferred to the account of the assessee’s daughter. The findings of the ld. CIT(A) are reproduced hereunder :
“7. I have considered the rival contentions and material on record and I am inclined to agree with the ld. AO since none of the cheques are in the name of the daughter of the appellant Smt. Radhika Uppal. The counsel argued that the shoguns are never given to the bride but to her parents to which I agree to some extent but that is normally when one attends a wedding, the shoguns are given to the parents who receive the guests. But if someone sends a cheque for the bride, logically it should be in her name.
8. Secondly, I asked the counsel to produce some such evidence which could clinch the issue in his favor, for instance bank entries/ transfer whereby the money credited to appellant’s bank account was transferred to daughter/ spent on her wedding-basically I needed the utilization of these amounts received and secondly I had asked him to give a profile of the appellant, his level and status and his relationship with the donors. For example, how is Nandini Chopra related to the appellant who gifted 5100 USD. The appellant was asked to prove the same in case of the following persons :
|Oru Bose||3100 USD|
|Baldev Lakhanpal||3100 USD|
|Amar J. Kohli||2100 USD|
|Sukh & Bani Farukh||5100 USD|
|Mohan Krishan Bazaz||3100 USD|
|Sarin & Nimmi||5100 USD|
|Rahul Malhotra||5100 USD|
9. The appellant was asked to elaborate the relationship and give the copies of their bank accounts for verifying credit worthiness etc., since the letters from the donors are stereotyped revealing only the names and nothing else regarding the donors.
10. Since no information was given in response to the queries, I am unable to accept these letters-an extract of one of which reads as under :
“Thank you very much for the invitation for the forthcoming marriage of your daughter dear Radhika. It is our strong desire to come to India and personally attend the function but some business compulsions hold us back.
Please accept our heartiest congratulations on this event and our best wishes for the couple. Since I am not sure of Radhika having a Bank Account, I am enclosing a Cashier’s Check for USD 5100/- (No. 012104) dated 03.04.2006 in your name, the amount of which you may kindly pass on to her.
11. In view of the above, I agree with the finding of the AO that the amounts are covered u/s 56 and have to be treated in the hands of the appellant as such, the addition so made is therefore, confirmed, dismissing this ground of appellant.”
9. A perusal of the provisions of Section 56(1) sub-clause (vi) read with second proviso to Section 56(1) sub-clause (vii) clearly reveals that the provisions of Section 56(1) shall not apply to any sum of money or any property received – “(b) on the occasion of the marriage of the individual”. Sub-clause (b) of the said proviso clearly contemplates the sum of money or any property received by the individual on the occasion of his or her marriage. The language of the expression is very simple and clear and no other meaning can be assigned to the word “individual” appearing therein. Ld. ‘AR’ placed reliance on the decision of the Calcutta High Court in the case of CIT v. Shri Krishna Bandar Trust  201 ITR 989 for the purpose of meaning of the word ‘individual’. We are of the considered opinion that the ratio of the Hon’ble Calcutta High Court is not applicable to the facts of the present case. The Hon’ble High Court defined the word ‘individual’ in the context of status-individual or AOP in the context of provisions of Section 2(31) & 164 of the Act. The word ‘individual’ used by the legislature under clause (b) of the second proviso to Section 56(1) of the Act is in the specific context of marriage of the individual. Therefore, the word ‘individual’ in the context of marriage can only be the bride or the bridegroom and cannot include group of individuals. The legislative intent can be clearly discernible from the context in which the word ‘individual’ is used in such clause ‘b’. Thus, the legislative intent is clear and word ‘individual’ includes only the individuals, whose marriage is solemnized. The legislature consciously employed definite Article ‘the’ and not indefinite Article “a” before the word ‘individual’ in clause ‘b’ of the said proviso, which means the specific ‘individual’. Thus, the legislative intent is clear in meaning, content and text of the word “individual”. It is settled law of interpretation of statute that primacy is to be given to the text in which the intention of the law-giver has been expressed. In view of this, the case law relied upon by the ld. ‘AR’ does not support his contention. The assessee has failed to demonstrate non-applicability of the provision of Section 56(1)(vi) read with second proviso thereunder. Further, routing transaction through banking channel represents merely movement of funds and not the genuineness of transactions, as held by the Apex Court in various decisions. It is also undisputed fact, as recorded by the AO, which remained unrebutted that the impugned gifts cheques were in the name of the assessee and not in the name of the assessee’s daughter, whose marriage was solemnized and the quantum of such gifts were credited by the assessee to his bank account. It is also a fact that the sum of money received by the assessee were not transferred to the bank account of his daughter, whose marriage was solemnized. In view of the above legal and factual discussions and clear findings of the lower authorities, we do not find any infirmity in the order of the CIT(A) and, hence, the same are upheld. This ground of appeal of the assessee is dismissed.
10. In Ground No. 2, the assessee contended that CIT(A) gravely erred in sustaining the addition of Rs. 5,50,000/- on account of foreign traveling expenses, attributed to the personal element embedded therein. The AO estimated foreign travel expenses, at Rs. 50,000/-, per trip and accordingly, for 11 trips, such expenditure was computed at Rs. 5,50,000/-. The AO made an addition of such foreign travel expenses attributing the same for personal use by the assessee. Ld. CIT(A) upheld the findings of the AO.
11. We have carefully perused the rival submissions, facts of the case and found that revenue has failed to bring any relevant and cogent material on record indicating personal element in the expenses incurred by the assessee on foreign travel. The AO merely proceeded on the basis of assumptions and made an estimate without foundation of any material brought on record. In view of this, such findings of the AO as confirmed by the CIT(A), cannot be upheld. Therefore, the assessee succeeds in this ground of appeal.
12. In the result, appeal of the assessee is partly allowed.