2015 (10) TMI 1407 - AT - Income Tax

Unexplained jewellery found during the course of search - assessee has relied on the Instruction of the Central Board of Direct Taxes No. 1916 of May 11 1994 laying down the guidelines that in the case of a person not assessed to wealth tax gold jewellery and ornaments to the extent of 500 grams for a married lady need not be seized - Held that - Tribunal in various cases has relied on the said circular to hold that the guidelines laid down by the Central Board of Direct Taxes in Circular No. 1916 are suggestive of normal quantity of gold ornaments held by any Indian family. In one such decisions rendered in the case of Asst. CIT v. Rameshchandra R. Patel 2004 (2) TMI 271 - ITAT AHMEDABAD-A Tribunal has held that the Central Board of Direct Taxes Instruction No. 1916 dated May 11 1994 impliedly suggests the quantity of jewellery that a family is supposed to hold as received at the time of marriage from parents and in laws. It was also held that though the said Instruction gives a guideline in the matter of seizure the same can be extended to treat the quantum of jewellery as mentioned therein as explained keeping in view the customs and practices in the Indian society. Thus we hold that the gold jewellery of 472 grams found during the course of search can reasonably be treated as explained being the streedhan of the assessee s wife having been received by her on the occasion of marriage as well as subsequent occasions over the period. Accordingly we delete the addition - Decided in favour of assessee.

Summary

Issues:
Addition of unexplained jewellery during search

Analysis:
The judgment pertains to an appeal filed by the assessee against the order of the Commissioner of Income-tax (Appeals) regarding the addition made by the Assessing Officer on account of unexplained jewellery discovered during a search. The assessee, an individual, had gold and silver articles found during the search, with the gold jewellery being the subject of contention. The assessee claimed that a portion of the gold was purchased and duly disclosed, while the remaining gold represented streedhan of his wife received over several occasions. The Assessing Officer treated a significant portion of the jewellery as unexplained, leading to an addition to the total income of the assessee.

On appeal, the Commissioner of Income-tax (Appeals) partially accepted the explanation, allowing relief for a portion of the jewellery but sustaining the addition to some extent. The Commissioner held that a portion of the gold jewellery could be attributed to the streedhan of the assessee's wife, while the rest was considered unexplained. The assessee then appealed to the Tribunal against this decision.

During the proceedings, the Tribunal considered the guidelines provided by the Central Board of Direct Taxes regarding the seizure of jewellery and ornaments during searches. Referring to past decisions, the Tribunal observed that the guidelines implied a normal quantity of gold ornaments held by an Indian family. Citing a specific case, the Tribunal concluded that the gold jewellery in question could reasonably be explained as streedhan of the assessee's wife, received on various occasions over time. Consequently, the Tribunal decided to delete the addition made by the Assessing Officer and upheld by the Commissioner of Income-tax (Appeals), thereby allowing the appeal of the assessee.

In conclusion, the Tribunal ruled in favor of the assessee, overturning the addition made on the grounds of unexplained jewellery during the search. The decision was based on the interpretation of the guidelines provided by the Central Board of Direct Taxes and the customary practices regarding the possession of gold ornaments in Indian families.