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Issues:
1. Addition of undisclosed income based on jewellery found during a search under section 132 of the IT Act. 2. Discrepancy in valuation of jewellery between the Departmental Valuer's report and the jewellery disclosed in previous returns. 3. Consideration of jewellery belonging to family members and the application of the Amnesty Scheme. 4. Justification of addition to income based on orders passed under sections 132(5) and 132(1) of the IT Act. Issue 1: Addition of Undisclosed Income The appeal was against the addition of Rs. 1,66,348 in the income of the assessee from undisclosed sources for the assessment year 1986-87. The jewellery found during the search was partially claimed to belong to the daughters-in-law of the assessee. The Revenue authorities relied on orders passed under sections 132(5) and 132(1) of the IT Act to confirm the assessment. Issue 2: Valuation Discrepancy The appellant argued that the addition was unjustified as the jewellery disclosed in the return of wealth for the previous year exceeded the total jewellery found during the search. The appellant's representative highlighted the discrepancy in the valuation report considered by the Assessing Officer and emphasized the weight of jewellery disclosed in the returns. The Tribunal noted that the detailed explanations provided by the assessee were not objectively considered by the Revenue authorities. Issue 3: Family Members' Jewellery and Amnesty Scheme The jewellery found belonged not only to the assessee but also to her daughters-in-law and unmarried daughter. A portion of the jewellery was accepted as explained based on disclosures made under the Amnesty Scheme. However, a specific amount of jewellery was treated as unexplained, leading to the addition in the assessee's income. Issue 4: Justification of Addition The Tribunal observed that the Revenue authorities did not objectively consider the detailed explanations provided by the assessee. It was noted that the jewellery disclosed in previous returns was not given due consideration, and the authorities relied on older valuation reports. The Tribunal concluded that the entire jewellery found should be treated as fully explained, leading to the deletion of the addition made to the assessee's undisclosed income. In conclusion, the Tribunal allowed the assessee's appeal, emphasizing the need for objective consideration of explanations provided by the taxpayer and the importance of reconciling discrepancies in valuation reports and disclosed jewellery. The judgment highlighted the significance of providing due consideration to disclosures made by family members and the application of relevant schemes in determining the legitimacy of undisclosed income.
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