2015 (12) TMI 823 - AT - Income Tax

Unaccounted gold jewellery found to the extent of 863.920 gms was treated as undisclosed investment - Held that - This Tribunal is of the considered opinion that by taking into consideration of the status of the assessee and other family members, the gold jewellery owned by Smt. Sharmila, Shri Manivannan (HUF), Shri M. Ramalingam (HUF) cannot be totally ruled out. When the Assessing Officer accepted the jewellery to the extent of 1801.800 gms in the hands of three persons, he should have taken note of the status of the assessee as HUF, the status of Shri Manivannan (HUF) and the jewellery owned by Smt. Sharmila. Since they are family members, this Tribunal is of the considered opinion that they might have owned gold jewellery to the extent of 863.920 gms of gold jewellery. It is also an admitted fact that the assessee filed return of income in his HUF capacity for the assessment year 2006-07 and disclosed 410 gms of Jewellery. The assessee claimed before the Assessing Officer that the HUF purchased 410 gms of gold jewellery in the month of February, 2006. In the absence of purchase bill, the Assessing Officer made addition in the hands of the individual assessee. This Tribunal is of the considered opinion that when the assessee filed return of income for assessment year 2006-07 claiming that 410 gms of jewellery was purchased by HUF, the addition cannot be made in the hands of the assessee in his individual capacity. At the best, the addition could have been made in the hands of the assessee in HUF capacity. For the failure of the assessee-HUF to substantiate the purchase of 410 gms of jewellery in the month of February, 2006, this Tribunal is of the considered opinion that there cannot be any addition in the hands of the individual assessment of the assessee. - Decided in favour of assessee.

Summary

Issues:
Assessment of undisclosed investment based on excess gold jewellery found during a search operation.

Analysis:
The appeal concerned the addition of Rs. 7,51,610 as undisclosed investment due to excess gold jewellery found during a search under Section 132 of the Income-tax Act, 1961. The assessee, a partner in multiple businesses, claimed that the excess jewellery belonged to family members and was duly disclosed. However, the Assessing Officer disbelieved this claim as purchase bills were not provided. The Commissioner of Income Tax (Appeals) upheld the addition, noting discrepancies in the disclosed jewellery and lack of proof for purchases. The Tribunal considered the explanations and found that the unaccounted jewellery was treated as undisclosed investment without sufficient evidence. The Tribunal highlighted that the jewellery could belong to family members and the HUF, emphasizing that the addition should have been made in the HUF's capacity, not the individual's. The Tribunal concluded that the addition was unjustified and directed its deletion.

In summary, the Tribunal set aside the lower authorities' orders and directed the Assessing Officer to delete the addition of Rs. 7,51,610, ruling in favor of the assessee.