2013 (11) TMI 1038 - HC - Income Tax

Block assessment - Gold sovereigns found in search Held that - Among other jewellery 27 gold sovereigns were found - The assessee stated that the jewelery found at the time of search including gold sovereigns belonged to his mother and wife and which had been acquired over years - Even though gold sovereigns (ginnis) may not be an item of jewelery, the word jewelery is being used in a loose term and part of the explanation regarding jewelery has been accepted by the Department, then there is no occasion as to why the remaining part relating to 27 gold sovereigns (ginnis) ought not to have been accepted Decided in favour of assessee.

Summary

Issues:
1. Addition of Rs. 1,05,300/- for 27 gold sovereigns with no evidence.
2. Justification for confirming the addition of Rs. 1,05,300/- for 27 gold sovereigns.
3. Denial of benefit of CBDT Instruction for the 27 gold sovereigns.

Analysis:
1. The appeal under Section 260(A) of the Income Tax Act challenged the Tribunal's order adding Rs. 1,05,300/- for 27 gold sovereigns without evidence. The appellant questioned the justification for this addition.
2. The facts revealed a search on the assessee's premises where gold jewelry worth Rs. 4,47,917.20 was found but not seized. The appellant explained that the jewelry belonged to his family members, except for 27 gold sovereigns. The Assessing Officer rejected this explanation for the sovereigns.
3. The Commissioner, Income Tax (Appeals) and the Tribunal upheld the addition of Rs. 1,05,300/- for the sovereigns. The appellant argued that since the sovereigns were part of the jewelry inventory and their weight was included, the explanation for the entire jewelry should have been accepted.
4. The Court considered that although gold sovereigns may not strictly be jewelry, they were listed as such during the search. As part of the jewelry found, the explanation provided by the appellant for the family jewelry should extend to the sovereigns. Therefore, the Court set aside the authorities' decision and accepted the appellant's explanation for the 27 gold sovereigns.
5. Consequently, the appeal was allowed, and the addition of Rs. 1,05,300/- for the 27 gold sovereigns was deemed unjustified. The Court ruled in favor of the appellant regarding the ownership and explanation for the sovereigns found during the search.