2011 (6) TMI 918 - AT - Income Tax

Summary

Issues Involved:

1. Legitimacy of the addition of Rs. 16,23,370/- u/s 69A of the IT Act.
2. Applicability of CBDT Instruction No. 1916 dated 11.5.1994.
3. Validity of the revenue's appeal based on the tax amount involved.

Summary:

1. Legitimacy of the addition of Rs. 16,23,370/- u/s 69A of the IT Act:

During a search and seizure action, gold and diamond jewellery worth Rs. 16,23,070/- was found. The Assessing Officer (AO) asked the assessee to explain the sources of investment. The AO noted that Rs. 5,25,000/- was adjusted against the total jewellery value. The assessee claimed the jewellery was received on marriage and other ceremonies, and within the limits of CBDT Instruction No. 1916 dated 11.5.1994. However, the AO recorded that the assessee could not provide purchase bills, gift deeds, or proof of gifts received, and thus made an addition of Rs. 16,23,370/- u/s 69A of the IT Act.

2. Applicability of CBDT Instruction No. 1916 dated 11.5.1994:

On appeal, the CIT(A) gave partial relief to the assessee, applying the limits prescribed in CBDT Instruction No. 1916 for the assessee, his wife, and the jewellery found in the bank locker in the name of the assessee's mother. The CIT(A) rejected the claim that the limits should apply to all family members, including the father and mother of the assessee. The CIT(A) confirmed the addition to the extent of Rs. 9,92,839/- and deleted Rs. 6,30,231/-. The Tribunal upheld the CIT(A)'s decision, noting that the assessee's statement did not claim the jewellery belonged to joint family members but was received by the wife on various occasions and some purchased by the assessee. The Tribunal emphasized that the benefit of the circular could only be availed by the assessee and his wife, and to the extent of the jewellery found in the bank locker in the name of the mother of the assessee.

3. Validity of the revenue's appeal based on the tax amount involved:

The assessee argued that the tax involved in the revenue's appeal was less than Rs. 3 lacs, making the appeal not maintainable as per CBDT circular. However, the Tribunal did not find merit in the cross appeals filed by the assessee and the revenue, dismissing both.

Conclusion:

The Tribunal upheld the CIT(A)'s decision, confirming the addition of Rs. 9,92,839/- and granting relief of Rs. 6,30,231/-. The appeals filed by both the assessee and the revenue were dismissed. The order was pronounced on 15th June 2011.