2015 (12) TMI 1663 - AT - Income Tax

Unexplained jewelry - excess jewellery found in a search - explanation offered by the assessee that if the credit is given for 500 grams for each family members in terms of instruction no.1916 dated 11-05-1994 which governs the seizure during the course of search and seizure operations source for 1300 grams can be treated as explained - Held that - Now we deal with the applicability of CBDT instruction in terms of which credit of 1300 grams of jewellery was claimed by the assessee. It is the duty of the assessee to bring on record the family members with supporting evidence and also prove that other family members i.e. father of assessee had not claimed the same relief. We find from material on record that it is father of the assessee who offered the explanation in support of source of jewellery found. We also find that father of the assessee and assessee are residing jointly. Mere reliance on the case laws does not come to the rescue of the assessee without bringing any supporting material on record in support of legal proposition. Therefore in absence of any material on record we are not able to grant any relief on this ground. Regarding the ancestral jewellery of 500 grams the assessee had not produced any evidence proving the existence of ancestral jewellery of 500 grams therefore it cannot be treated as explained. Regarding the balance jewellery of 400 grams in the hands of the assessee s wife Smt.Saritha Bai the order of learned CIT(A) is well reasoned since the wealth tax return of the assessee s wife was filed after conclusion of search & seizure operation it cannot be treated as explained. - Decided against assessee

Summary

Issues:
1. Addition of unexplained gold jewellery
2. Liability to pay interest
3. Applicability of CBDT Circular No.1916
4. Claim of ancestral jewellery
5. Wealth tax return filing and its impact on explanation of gold jewellery

Issue 1: Addition of unexplained gold jewellery
The appeal was against the Commissioner of Income-tax (Appeals)-11 order regarding the addition of Rs. 83,73,748 for holding 4226.58 grams of gold jewellery as unexplained. The assessee claimed the jewellery was acquired over the years through family traditions and gifts. The assessment involved a search and seizure operation, leading to scrutiny assessment. The assessee's explanations during the proceedings were deemed vague and unsubstantiated. The AO rejected the claim based on family traditions and CBDT Circular No.1916, emphasizing the need for proper documentation. The AO also dismissed the claim of ancestral jewellery. The CIT(A) partly allowed the appeal, directing credit for 990 grams in the hands of the assessee's wife but rejecting the claim for other family members. The Tribunal upheld the CIT(A)'s decision, stating the assessee failed to provide sufficient evidence to support the claims, resulting in the dismissal of the appeal.

Issue 2: Liability to pay interest
The assessee denied liability to pay interest, contending it was levied erroneously and should be deleted. However, the Tribunal did not address this issue specifically in the judgment.

Issue 3: Applicability of CBDT Circular No.1916
The assessee relied on CBDT Circular No.1916 to support the claim regarding family members' jewellery credit. However, the AO rejected this submission, emphasizing the need for the assessee to explain the total quantum of gold found. The Tribunal upheld this decision, stating that the circular did not exempt the assessee from explaining the sources of all gold and silver items found.

Issue 4: Claim of ancestral jewellery
The assessee made a claim of 500 grams as ancestral jewellery but failed to provide evidence supporting this claim. The Tribunal held that without proof of the existence of ancestral jewellery, this claim could not be accepted.

Issue 5: Wealth tax return filing and its impact on explanation of gold jewellery
The wealth tax return filing by the assessee's wife after the search and seizure operation was a crucial factor in determining the explanation of gold jewellery. The Tribunal considered this timing in evaluating the explanations provided by the assessee and upheld the CIT(A)'s decision regarding the treatment of jewellery declared in the wealth tax return.

In conclusion, the Tribunal dismissed the appeal, upholding the decision regarding the unexplained gold jewellery and related claims made by the assessee. The judgment emphasized the importance of providing concrete evidence to support claims in such cases, especially concerning family traditions and ancestral jewellery.