2011 (1) TMI 1378 - AT - Income Tax

Summary

Issues Involved:
1. Legality of the addition of Rs. 13,91,520/- as unexplained investment in jewellery.
2. Validity of the CIT(A)'s decision to delete the addition to the extent of 1255.700 grams of jewellery.
3. Justification for the CIT(A)'s restriction on the explained jewellery to 500 grams per lady.
4. Denial of benefit for jewellery claimed to belong to the assessee's aunt and minor children.

Summary:

Issue 1: Legality of the addition of Rs. 13,91,520/- as unexplained investment in jewellery.
The Assessing Officer (AO) added Rs. 13,91,520/- to the income of the assessee as unexplained investment in jewellery found during a search and seizure action u/s 132(1). The jewellery was found in a locker held by the assessee, and the assessee initially admitted it as undisclosed income. However, the assessee later retracted the statement, claiming the jewellery belonged to multiple family members.

Issue 2: Validity of the CIT(A)'s decision to delete the addition to the extent of 1255.700 grams of jewellery.
The CIT(A) deleted the addition to the extent of 1255.700 grams, noting that the AO relied solely on the initial statement of the assessee without considering the retraction and supporting affidavits. The CIT(A) held that no addition could be made merely on the basis of a retracted statement without corroborative evidence.

Issue 3: Justification for the CIT(A)'s restriction on the explained jewellery to 500 grams per lady.
The CIT(A) allowed credit for 500 grams of jewellery per married lady and 255.700 grams for the elder sister, based on CBDT Instruction No. 1916. The CIT(A) found contradictions in the assessee's statements regarding the ownership of the jewellery but concluded that the jewellery could be considered to belong to the three ladies only.

Issue 4: Denial of benefit for jewellery claimed to belong to the assessee's aunt and minor children.
The CIT(A) denied the benefit for jewellery claimed to belong to the assessee's aunt and minor children, considering it an afterthought as no such claim was made during the investigation. The Tribunal upheld this decision, finding no credible evidence to support the claim.

Conclusion:
The Tribunal dismissed both the revenue's and the assessee's appeals, upholding the CIT(A)'s decision to delete the addition to the extent of 1255.700 grams of jewellery and denying the benefit for jewellery claimed to belong to the assessee's aunt and minor children. The Tribunal relied on CBDT Instruction No. 1916 and the lack of corroborative evidence for the retracted statement.