Skip to content


Yadu Hari Dalmia Vs. Commissioner of Income-tax, Delhi (Central) - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtDelhi High Court
Decided On
Case NumberIncome tax References Nos. 55 of 1905 and 47 of 1976
Judge
Reported in(1980)17CTR(Del)234; [1980]126ITR48(Delhi)
ActsIncome Tax Act, 1961 - Sections 68, 69, 69A, 69B, 69C and 256(1)
AppellantYadu Hari Dalmia
RespondentCommissioner of Income-tax, Delhi (Central)
Cases Referred(see J. S. Parkay v. V. B. Palekar
Excerpt:
direct taxation - assessment - sections 68, 69, 69a, 69b, 69c and 256 (1) of income tax act, 1961 - where assessed incurred certain expenditure which he is not able to account satisfactorily inference that such expenditure met out of undisclosed income can be drawn - if non-taxable source or capital item was utilised for purpose then assessed could easily come forward with explanationn to satisfaction of income tax officer - no difference between case where there is direct proof of actual amount of expenditure and case where circumstances justify inference that there must have been excess expenditure - amount can only be estimated for want of direct evidence. - - the ito was of opinion that, keeping in view the high status and standard of living of the assessed, the withdrawals shown.....1. i.t.r. no. 55 of 1974 is the case stated by the income-tax appellate tribunal under s. 256(1) on the following question of law arising out of the order passed by the tribunal in the case of yadu hari dalmia for the assessment year 1970-71 : 'whether, on the facts and in the circumstances of the case, the amount of rs. 10,000 representing the difference between the estimated expenditure of the assessed incurred on marriage and the expenditure duly accounted for by him, could be treated as his income of the previous year relevant to assessment year 1970-71 ?' 2. the assessed had requested the tribunal to refer certain other questions of law which are set out in para. 7 of the statement of the case but the tribunal considered it fit to refer only one question as set out above. thereafter.....
Judgment:

1. I.T.R. No. 55 of 1974 is the case stated by the Income-tax Appellate Tribunal under s. 256(1) on the following question of law arising out of the order passed by the Tribunal in the case of Yadu Hari Dalmia for the assessment year 1970-71 :

'Whether, on the facts and in the circumstances of the case, the amount of Rs. 10,000 representing the difference between the estimated expenditure of the assessed incurred on marriage and the expenditure duly accounted for by him, could be treated as his income of the previous year relevant to assessment year 1970-71 ?'

2. The assessed had requested the Tribunal to refer certain other questions of law which are set out in para. 7 of the statement of the case but the Tribunal considered it fit to refer only one question as set out above. Thereafter the assessed approached the High Court by a petition under s. 256(2) (I.T. Case No. 4973) The court by its order dated October 10 1975 directed the Tribunal to refer the following three additional questions for the opinion of the High Court :

Whether the Income-tax Appellate Tribunal was correct in law in holding that the amount of marriage expenditure estimated by the Income-tax Officer to have been incurred by the assessed during the year constituted income taxable under tbe Income-tax Act, 1961

2. Whether, on the facts and in the circumstances of the case, the addition of Rs. 10,000, as income from undisclosed sources, was justifiable in law

3. Whether the finding of the Tribunal that the assesses had incurred additional expenditure of Rs. 10,000 for his marriage which had been met out of his undisclosed income of the previous year was based on any evidence ?'

3. This additional reference has been numbered as I.T.R. No. 47/76 and it does not involve any further statement of facts but merely contains a reference to the three questions which have been referred to the High Court under its directions dated October 10, 1975.

4. The entire controversy in these two references turns round the sum of Rs. 10,000 which has been added as the assessed's income from undisclosed sources for the assessment year 1970-71. Mr. G. C. Sharma, learned counsel for the assessed, contends that the above addition raises far-reaching questions of law and principle. But, after hearing the learned counsel at great length, it appears to us that though the problem is ticklish and one of some nicety, it is in the ultimate analysis only a question of fact and that all that we have to examine is whether the addition of Rs. 10,000 was warranted in the circumstances of the case.

5. The facts may be now stated. The assessment relates to the assessment year 1970-71, for which the corresponding previous year ended on March 31, 1970. The assessed, Yadu Hari Dalmia, is an individual. He is also the member of a joint family of which his fathber, J. Dalmia, is the karta. In early December, 1969, he was married. With effect from January 1, 1970, he was employed at Dalmiapuram by Dalmia Cement (Bharat) Ltd., on a salary of Rs. 4,500 p.m.

6. For the assessment year 1970-71, the assessed returned an income of Rs.1,40,427. The ITO found that the assessed had withdrawn only a sum of Rs. 2,850 to meet his domestic expenses during the year. In addition to this a sum of Rs. 11,500 had been withdrawn by the assessed s father by debit to the joint family account. A sum of Rs. 1,500 was shown to have been paid to Superior Tent House, Karol Bagh, New Delhi, and the balance of Rs. 10,000 was withdrawn in cash and said to have been incurred towards the expenses on the assessed's marriage. The ITO was of opinion that, keeping in view the high status and standard of living of the assessed, the withdrawals shown for meeting the domestic and marriage expenses were very poor. He referred to the fact that the assessed had returned an income varying between Rs. 1.02 lakhs and Rs, 1.78 lakhs in the present and earlier assessment years; that the combined total wealth of the assessed and his wife apart from jewellery and other exempt assets, came to Rs. 20.61 lakhs; that the assessed and his wife were heavily insured; that the assessed was living in grand style in a palatial bungalow op Tees January Marg, till he joined the family company in January, 1970; and that though the assessed did not deny the keeping of domestic servants and though he certified that no domestic servants were provided to him by any of the employers-companies, the expenditure on such employees wes said to have been met out of the petty withdrawals of Rs. 600 a month from January to March, 1970. This was in regard to the domestic expenditure. The ITO also pointed out that, keeping in view the financial status of the family, the assessed or his wife must have spent a lot of money during honeymoon and other occasions. The details of the expenditure for which the sum of Rs. 10,000 was utilised was not furnished by the assessed. The officer felt that the above amount could not be said to be reasonable to meet the expenditure on 'at Home', customary clothings for the bride, bridegroom and other near relations, bands and other numerous expenditure required to be spent at the time of the marriage of a highly placed person of a very well-to-do family. In the light of the above discussion the ITO concluded that the assessed must have spent substantial amounts towards domestic expenses and marriage expenses which had not been properly accounted for. He rejected the plea of the assessed that the domestic expenses during the previous year were quite comparable with those shown in earlier years on the ground that the doctrine of rest judicata or estoppel did not apply to income-tax proceedings. The ITO, in a rhetorical strain invoked 'all those, who happen to read this order, (to) have peep into the budgetary position of their own families and decide whether such petty domestic expenses could at all be commensurate with the family earning financial status and high living'. In the above circumstances, the ITO estimated the assessed's expenses for the year, 'taking a lenient view', at Rs. 24,000 including any shortfall in the marriage expenses. Since Rs. 2,850 had been accounted for by way of withdrawals, he added a sum of Rs. 21,150 as income from undisclosed sources.

7. The assessed preferred an appeal to the AAC. It was pleaded before the AAC on behalf of the assessed that while considering the reasonableness of the domestic expenses accounted for, the assessed's case should not be considered in isolation, but that the expenses of all the members of the Dalmia family should be considered as a whole. It was pointed out that the total monies drawn for household expenses, if all the cases were considered together, came to Rs. 52,820 for the assessment year 1970-71 as against Rs. 51,690, Rs. 50,640, Rs. 49,260, respactively, in 1969-70,1968-69 and 1967-68. The family was living together. Educational expenses had been separately withdrawn. The members of the family had been provided I with rent-free accommodation and other perquisites, including servants, by some of thc companies and the perquisites had been added in the total income of the respective member. The insurance premia had been met from those accounts. The assessed did not engage any separate servants in New Delhi and at Dalmiapuram was having only a part-time servant besides a servant provided by the employer-company. The AAC examined the matter and considering the plea of common expenditure urged by the assessed, he came to the conclusion that there was no specific material to establish that the withdrawals as shown were not sufficient to meet the family expenditure and that the addition made by the ITO on this account could not be sustained. However, turning to the expenditure on the marriage of the assessed, the AAC pointed out that the assessed had not furnished the details in regard to the expenditure which he claimed had been incurred on the marriage. Considering the fact that even a moderate marriage involves an expenditure exceeding Rs. 10,000, the AAC was of opinion that the expenses shown at Rs. 10,000 by debiting the account of J. Dalmia were not enough to meet the marriage expenses. Even otherwise, considering that the assessed himself was a well to do person he must have made some presents to his wife, apart from the gift of jewellery. In view of the meagre expenditure shown on marriage it would be reasonable to infer that the expenditure incurred on marriage was not fully accounted for. In the view of the AAC, an amount of Rs. 10,000 could be taken as representing understatement of expenditure incurred on marriage. He, thereforee, upheld an addition of Rs. 10,000 to the income declared as income from undisclosed sources.

8. Both the assessed and the ITO preferred appeals to the Income-tax Appellate Tribunal. On behalf of the department, it was contended that the AAC was not justified in taking into consideration withdrawals of persons other than the assessed as there was no evidence about there being a common pool among the members of the family and further that it was ridiculous to suggest that the expenditure on the marriage of a boy in the assessed's family would cost only Rs. 11,500. On the other hand, on behalf of the assessed, apart from the question of domestic expenses, it was contended that the assessed and the bride had not to spend much, that the assessed did not go for his honeymoon and that most of his requirements were met from perquisites by his employer and that the expenditure on marriage as recorded was quite adequate.

9. The Tribunal did not find any ground for interfering with the finding of the AAC. The Tribunal did not agree with the assessed's contention that there was a common pool for withdrawals and expenditure amongst all the members of the family. However, the Tribunal agreed with the AAC that the withdrawals shown by the assessed were not enough to meet his personal expenditure with special reference to the expenditure in connection with the marrige. The withdrawals from the family account of Rs. 11,500 were woefully inadequate even after taking into account the fact that the gift of jewellery to the bride worth rupees one lakh (by the assessed's mother) was separately accounted for. The assessed had produced only a bill for Rs. 1,500. But this bill did not cover the expenses of the foodstuffs and the drinks which must have been served at the reception which itself, on a very conservative estimate, would have cost the assessed more than Rs. 5,000. In addition, as the ITO had pointed out, there would be expenditure on the customary clothings of the bride, bridegroom and other near relations, arrangements for the bands, the lighting, etc. The Tribunal proceeded to observe

'In these matters, in the absence of evidence which is entirely in the possession of the assessed, one has necessarily to go by broad probabilities and one cannot ignore the basic realities of the situation. Bearing these in mind, there is no doubt in our minds that the amount withdrawn from the family account was not sufficient to meet the expenditure on the occasion of the assessed's marriage and some part of it must have been met from the assessed's income from undisclosed sources. The Appellate Assistant Commissioner's estimate of such expenditure at Rs. 10,000 cannot be said to be wide of the mark and we would, thereforee, uphold tho same. Since the assessed had started living independently only from January 1, 1970, we do not consider it necessary to order any further addition on account of unexplained expenditure for the year in question.'

10. On the above reasoning, the Tribunal dismissed both the appeals before it by its order dated August 8, 1972. On September 14,1972, the assessed filed an application seeking a review of the order of the Tribunal. But this application was dismissed by the Tribunal on December 18, 1972. In this application for review, apart from certain legal contentions regarding the jurisdiction of the ITO to make a subjective estimate of personal expenditure it was submitted that ven if the marriage expenses had really been larger as estimated by the ITO, the question of an addition, if at all, would be relevant only in the assessment of the joint family. It was pointed out that so far as the reception was concerned the assessed had engaged a confectioner to prepare the snacks at his residence. There was a Guest Control Order in force and there were severe restrictions on the items to be served at such functions. It was urged that these aspects have been overlooked by the Tribunal while disposing of the appeals. The Tribunal, however, held that there was no case for reviewing the earlier order that had been passed after considering the broad probabilities and the basic realities of the situation.

11. It is in the above circumstances that the two references came up before us for a decision on the four questions which have been referred.

12. To clear the ground, we may mention at the very outset that though the addition made by the ITO was made with reference to both the domestic expenditure and the marriage expenses, the addition on account of domestic expenses was deleted by the AAC and that is why he substituted the figure of Rs. 10,000 for the addition of Rs. 21,150 made by the ITO. The appeal of the department was dismissed by the Tribunal. Thus, though the Tribunal did observe that it did not accept the story of a common pool for expenses and that the conclusion of the AAC that the withdrawals shown by the assessed were not enough to meet his personal expenditure with special reference to the expenditure in connection with his marriage had considerable merit, the Tribunal has really sustained only the addition of Rs. 10,000 made by the AAC on account of the shortfall in the marriage expenditure. In the circumstances, it would appear that we are not concerned in this reference about the question regarding the estimate of domestic expenditure. We are concerned only with the question whether the departmental authorities and the Tribunal were justified in rejecting the assessed's claim regarding the marriage expenses and in estimating a further sum of Rs. 10,000 on this account as having been incurred by the assessed and whether on the basis of these estimates they were justified in drawing an inference that the assessed must have had Rs. 10,000 by way of income from undisclosed sources during the previous year out of which such expenditure was met.

13. Mr. G. C. Sharma, learned counsel for the assessed, in a very forceful and persuasive argument, contended that an addition of the type sustained by the Tribunal cannot be justified under the provisions of the Act as it stood at the relevant time. He pointed out that the statute, as it then stood, contained only ss. 68, 69, 69A and 69B which authorised the ITO to make additions in an assessment on the strength of cash credits, unexplained investments and other unexplained items of wealth. Section 69C which permitted an addition on the basis of unexplained expenditure was introduced only with effect from April 1, 1976, by the Taxation Laws (Amendment) Act, 1975. But that apart, even if s. 69C is taken into account, the learned counsel argued, the position would not be different. He pointed out that the provisions of ss. 68, 69, 69A and 69B come into operation when the ITO finds tangible material like cashcrcdits, investments and other items of wealth belonging to the assessed which the assessed is unable to explain. On the same analogy, it is contended that s. 69C would come into operation only when there is a direct and tangible evidence that the assessed has incurred a certain amount of expenditure but he offers no Explanationn about the source of such expenditure or part thereof. Learned counsel submitted that, even if s. 69C is taken into account, the statute does not authorise the ITO to make an addition on the basis of a fictional or estimated item of expenditure. Learned counsel submitted that when thc assessed comes forward with entries in the accounts of his father and the joint family which show that a sum of Rs. 11,500 had been spent in connection with the marriage,the ITO could not, without any positive material and without discovering any specific or concrete instance of any expenditure incurred but not accounted for, merely assume and presume that the figure shown by the assessed was not adequate and indulge in guess work. He pointed out that though two persons may be equally rich and affluent, one might be a spendthrift and a lover of ostentation while the other may be parsimonious and of simple inexpensive habits. Learned counsel contended vehemently that if ITOs were permitted to indulge in mere speculations about the extent of expenditure which an assessed must have incurred on the household, marriage or the like merely on broad and general grounds like status or the financial position of the assessed, that would introduce a very dangerous doctrine which would result in great hardship and embarrassment to assesseds.

14. We shall consider the question posed before us in two parts. The first is whether, in a case where there is direct and clear evidence to show that an assesses has incurred some expenditure on an item which he has not recorded in his books at all or which exceeds the amount recorded in his books and he does not offer an Explanationn regarding the sources from which the expenditure was incurred or the Explanationn offered by him is unsatisfactory, it is open to the ITO to treat the amount of expenditure or the unexplained part of it as having been met out of the aseessee's income from undisclosed sources of the relevant accounting year. The second question will be whether on the facts and in the circumstances of this case there was material before the Tribunal to come to the conclusion that there was expenditure incurred by the assessed on his marriage which has not been satisfactorily accounted for.

15. So far as the first question is concerned, we think that the answer should be in tbe affirmative. It is no doubt true that s. 69C which makes specific provision for this situation was inserted in the I.T. Act only with effect from April 1, 1976, by the Taxation Laws (Amendment) Act, 1975. But we are of opinion that the statutory provision was merely clarificatory and embodies a rule of evidence which is even otherwise quite clear. In the first place, we may point out that s 69B was in operation even during the assessment year 1970-71. This section makes provision for a case where the assessed is found to have purchased or acquired an investment, bullion, jewellery or other valuable articles and the ITO finds that the amount expended on such acquisition exceeds the amount recorded in the books of account maintained by the assessed and the assessed offers no Explanationn about such excess or the Explanationn offered by him is not, in the opinion of the ITO, satisfactory, the excess amount may be deemed to be the income of the assessed for such financial year. The principle behind this section is equally valid where the expenditure incurred by the assessed is, not for the purpose of acquiring bullion, jewellery or other valuable articles but for some other purposes. It is well known that the whole catena of sections starting from s. 68 have been introduced into the taxing enactments step by step in order to plug loopholes and in order to place certain situations beyond doubt even though there were judicial decisions covering some of the aspects. For example, even long prior to the introduction of s. 68 in the statute book, courts had held that where any amounts were found credited in the books of the assessed in the previous year and the assessed offered no Explanationn about the nature and source thereof or the Explanationn offered was, in the opinion of the ITO, not satisfactory, the sums so credited could be charged to income-tax as income of the assessed of a relevant previous year. Section 68 was inserted in the I.T. Act, 1961, only to provide statutory recognition to a principle which had been clearly adumbrated in judicial decisions. The provisions of ss. 69 and 69A are likewise purely clarificatory in nature. It has been held under s. 69A that the section embodies only a rule of evidence and that it would be applicable even in respect of an assessment year prior to its insertion (see J. S. Parkay v. V. B. Palekar : [1974]94ITR616(Bom) . On the same analogy, we think that it follows as a normal rule of presumption and evidence that where an assessed has, in fact, incurred certain expenditure end is not able to account satisfactorily for the same, an inference can be drawn that the expenditure or the unaccounted part thereof must have been met out of the undisclosed income of the previous year. The case of an item of proved expenditure is, in principle, no different from that of a cash credit. In both cases, the assessed is in possession of certain funds during the previous year the source of which he is unable or unwilling to explain satisfactorily. It is a matter entirely within the assessed's knowledge as to how the cash credits came to be introduced or the items of wealth came to be acquired or the expenditure was incurred and once it is postulated that such cash credit or investment or expenditure belongs to the assessed then his failure to explain the same or to explain it satisfactorily can constitute a reasonable ground for an inference that the source thereof must be an item taxable under the Act. Otherwise, if a non-taxable source or a capital item was utilised for the purpose in question, the assessed could and would easily have come forward with an Explanationn to the said effect and proved it to the satisfaction of the ITO. We are, thereforee, of opinion. that the whole history of the introduction of ss. 68 to 69D and the judicial decisions bearing thereupon clearly establish the proposition that these sections are only clarificatory and that even otherwise an addition can be made towards income from undisclosed sources in respect, inter alia, of amounts of expenditure which the assessed is found to have actual incurred but not satisfactorily explained.

16. If we are right in our answer to the first question, we think that, in principle, there can be no difference between a case where there is direct proof (such as, say, discovery of a separate set of books in which they are recorded) of the actual amount of the expenditure incurred and a case where the circumstances clearly justify an inference that there must have been such excess expenditure but the amount thereof can be only estimated for want of direct evidence. In the course of the arguments, we put to the counsel for the assessed the extreme example of a case where an assessed has failed altogether to account for any expenses at all, say, on his daughter's marriage, blandly denies having spent anything at all himself and furnishes no Explanationn as to how he performed the marriage or who else met the expenditure. In such a case, we think, an inference would certainly be justified that marriage expenses must have been incurred by him but have not been accounted for. Such an inference, based on the rules of evidence relating to normal and natural presumptions of fact and the one of proof of matters which are within the special knowledge and control of one of the parties, would be legally sound in assessment proceedings, though it may be debatable as to how far it would be helpful in proceedings for the levy of a penalty or in a criminal prosecution. It seems to us that such an inference cannot be assailed only because there is no direct evidence of some expenditure having been incurred by the assessed. The only question that can arise then would be as to the correctness or maintain ability of the estimate of such expenditure. If that is so where the assessed has not accounted for any expenditure at all, the same considerations should prevail where he has accounted for a nominal or abnormally low expenditure such as, for example, Rs. 100 or Rs. 1,000 only. It would, thereforee, be a question of degree and fact as to whether the expenditure accounted for in a particular case is reasonably adequate or low and nominal in the circumstances of that case. It is, thereforee, clear that the only print that is left to be decided in the present case is whether there was any material before the ITO, the AAC and the Tribunal to come to the conclusion 1(a) that the expenditure on the marriage of the assessed has not been fully accounted for, and (b) that to assessed must have incurred such excess expenditure. We have, thereforee, to consider first the question whether there is material for coming to the conclusion that the actual expenditure on the marriage of the assessed was more than the sum of Rs. 11,500 which has been accounted for in the books of the joint family of which the assessed's father was the karta. Mr. G. C. Sharma dwelt for a considerable time and with great emphasis on this aspect of the case. There is some fore in his contention that a matter like this should not be decided purely on guess-work and on the basis of what has been described as broad probabilities. It will certainly be more satisfactory and proper if the ITO conducts exhaustive or detailed enquiries, survey or investigation and gather some material and on the basis thereof proceeds to estimate the expenditure that must have been incurred on the marriage. There are a number of undisputed items on which expenditure must have been incurred in connection with the marriage and, generally speaking, the ITO could concentrate on each of the various items, gather as far as possible sufficient data for estimating the expenditure thereon and by the process of aggregation of such estimates come to the conclusion that the expenditure on the marriage has not been satisfactorily accounted for. For instancc, the ITO can collect information regarding the rent or hire charges for the place where the marriage was celebrated, the nature of the shamiana that was put up and the usual cost of putting up such a shamiana, and the expenditure which should have been normally incurred in respect of other items like band, reception, bridal clothings and so on. However, we are unable to agree with Mr. Sharma that such a detailed analysis and investigation is a must in every case. In our opinion, the nature and extent of the material would depend upon the extent of the estimate and the circumstances of each case. For instance, in the example which we have already given, suppose the ITO, after referring to the failure of the assessed to account for any expenses at all on the marriage of his daughter, estimates such expenditure, taking a liberal view, at Rs. 5,000, we do not think that one would be justified in calling for a meticulous basis for such an estirnate. In the social and economic conditions prevailing in this decade, an estimate of Rs. 5,000 in respect of the marriage of a daughter is so reasonable : prima facie as to call for no elaborate justification. The basis for the estimate will, thereforee, have to be looked at in the context of the figures of expenditure declared by the assessed and the figure estimated by the authorities. In this context, we are unable to accept Mr. Sharma's contention that the status and the financial background of the assessed, the other transactions connected with the marriage and like matters cannot be taken into account in arriving at an estimate of the marriage expenditure. We are of opinion that in the present case, the ITO's estimate cannot be said to be entirely arbitrary or misconceived. On the contrary, we share the views of the AAC and the Appellate Tribunal that the estimate in this case is so reasonable and conservative that it is unnecessary and futile to insist upon a meticulous item-wise estimate. The ITO has referred to the various items of expenditure which the assessed must have incurred such as on 'At Home, customary clothings for the bride and the bridegroom and other near relations, band, and other items of expenditure'. He has not estimated the expenditure under each of these heads separately because he felt that in the background of the status and financial position of the assessed the expenditure of Rs. 11,500 claimed by the assessed was too low and that an addition thereto was clearly called for. The ITO and the AAC have noticed that though the assessed had been called upon to furnish the details regarding the expenditure of Rs. 10,000 that had been accounted for the details were not furnished. In the circumstances, there was no alternative but to make an estimate. The estimate of the ITO on this account has been fixed by the AAC at Rs. 10,000. Even giving the greatest weight to the arguments of Mr. Sharma as to the risks in allowing mere guess-work to play a part in such matters, we are unable to say that the estimate of an additional expenditure of Rs. 10,000 was totally without basis. The mere fact that the accounts of the assessed's father show a sum Rs. 10,000 to have been withdrawn for the purposes of the marriage cannot be treated as conclusive to show that that was all the expenditure that was incurred. The withdrawal in the books, moreover, was on December 5, 1969, only a day or so prior to the marriage. It is impossible to believe that, for a marriage in such a family, all the expenses were met by the withdrawal of a lump sum of Rs. 10,000 a couple of days before the marriage. There is, thereforee, reason to conclude that this entry cannot explain the entire expenditure on the marriage. The assessment order gives the details of the financial status of the assessed and the members of his family. Apart from the income-tax return (the weight of which Mr. Sharma sought to belittle by referring to the income-tax payable thereon) the ITO has pointed out that the total wealth of the assessed and his wife comes to Rs. 20,61,111 excluding jewellery and many other items of exempt assets.

17. The asessment order refers to a claim of the assessed to have gifted jewellery of the value of Rs. 49,983 to his wife. The Tribunal has pointed out that tbe assessed's mother was stated to have gifted jewellery worth Rs. 1 lakh to the bride. It is not denied that there was a reception after the marriage but it was stated in the application for review that for the reception a confectioner was engaged to prepare the snacks at the residence of the appellant. It was also suggested that because there was a Guest Control Order in force, the expenditure incurred on the reception could not have been considerable. In our opinion, these contentions are purely theoretical and ignore the realities of the situation. Even in conformity with the Guest Control Regulations a reception could have been held and non-cereal snacks supplied to a large number of guests. It is also well known that even during the period when the Guest Control Order was in force, marriages were followed by very well attended receptions on which considerable amounts of money were spant. We share the view of the Tribunal that in a matter of this type, the estimate has to be based to some extent on broad probabilities. As pointed nut by the Supreme Court in the case of CIT v. Duga Prasad More : [1971]82ITR540(SC) , the fact-finding authorities cannot ignore the realities of Life and accept the naive plea put forward that in a family of the present type, the entire expenditure on marriage was met out of a sum of Rs. 10,000, withdrawn in cash a couple of days before the marriage. Regarding the actual estimate made, its sustainability would depend to a large extent upon the actual figure estimated. If the department had estimated a very high figure as having been expended on the marriage then wo would have insisted that some more detailed basis for the estimate should be given. But it appears to us that the estimate in the present case is so conservative that it appears to be unnecessary to insist upon further details for the estimate of Rs. 10,000. As pointed out by the Tribunal even the expenditure on the reception would have cost the assessed more than Rs. 5,000. Having given considerable thought to the matter, we are of opinion that the correctness or other-wise of the estimate is essentially a question of fact and degree. We would like to make it clear that an estimate without details will not be upheld in all circumstances and we would suggest that the department should give some definite basis for arriving at an estimate of expenditure whenever it can. But as, in the present case, the addition made is very moderate by normal standards, we do not think that it should be set aside merely because fuller details have not been given. An assessed who is possessed of several lakhs of rupees by way of wealth and who earns an income (though subject to income-tax) of about Rs. 1 lakh and gives gifts of jewellery to his wife to the extent of Rs. 1.5 lakhs on the eve of the marriage is not likely to have had his marriage performed on a cash withdrawal of Rs. 11,500 on the eve of the marriage. We have, thereforee, come to the conclusion that though it would be satisfactory and desirable as a general rule that in such cases there should be a definite and tangible basis for the estimate, the estimate in the present case upheld by the fact-finding authorities cannot be said to be capricious, arbitrary or without basis.

18. This leaves for consideration one further question which arises in the peculiar facts and circumstances of the present case and that is whether assuming that the expenditure on the marriage was not Rs. 11,500 as claimed by the assessed, but Rs. 10,000 more, there is any material for coming to the conclusion that the extra expenditure must have been incurred by the assessed. That is where, we fear, there is no material and the assessed would be entitled to succeed. The assessed is a young man who has, we are told, just come out of college and who had joined his first employment after the marriage. He is a member of the joint family consisting of his parents and others which is very well to do and financially well off. No doubt, when the assessed was married, the expenditure would be, and admittedly was, met by the family itself. In these circumstances can it be said that the assessed himself would have spent the extra amount of Rs. 10,000 on the marriage. According to the assessed, the marriage expenditure was met by the members of his family and, in particular, his father. This is also natural and reasonable Explanationn. There is nothing to indicate that this was not the position and that the expenses on the marriage were incurred at least in part by the assessed himself. Normally, it is unusual for a bridegroom to spend monies on his marriage particularly when his parents have arranged the marriage and when the entire family members are there to attend to the marriage and look after the expenditure. Where it is admitted that it was the joint family which spent monies on the marriage there is no particular reason why it should be assumed that the extra expenditure on the marriage, which has not been accounted for, came out of the assessed's income from undisclosed sources and not from the family itself. Assuming that, as we have held, the marriage expenditure amounted to Rs. 21,500 (and not Rs. l1,500 only), the extra expenditure could have been met out of the undisclosed income of the assessed's father or of the joint family and there is no reasonable ground for drawing an inference that the extra expenditure should have come out of the assessed's income from undisclosed sources. So far as the assessed himself is concerned hs has admitted that he gifted certain jewellery to his wife soon after the marriage. It is perhaps possible that he might have spent some petty amounts in connection with the marriage himself. But he has stated that he did not go for honeymoon and there is no indication that he spent any monies himself over and above the expenditure met by the family. No enquiry has been directed on that aspect either. It is on this narrow ground that we think that the present assessed is entitled to the benefit of doubt. It is more probable that the family met the entire expenditure on the marriage though it had accounted only for Rs. 10,000 rather than that, in addition to the amount spent by the family, the assessed had incurred expenditure to the extent of Rs. 10,000.

19. For the above reasons, we are of opinion that the questions referred to us should be answered by saying that the addition of Rs. 10,000 as the assessed's income from undisclosed sources was not justified in law. The questions referred to us are answered in the negative and in favor of the assessed. In the circumstances, however, we make no order as to costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //