2013 (10) TMI 1525 - AT - Income Tax

Gold jewellery found short during the course of search - Assessing Officer made addition to the income of the appellant - Correct disclosure given by assessee in wealth tax return details and VDIS certificate - HELD THAT - CIT(A) deleted the addition made on account of gold jewellery. The difference in nature of gold jewellery may be taken different shape as per the ladies requirement in the family which is normally happen in the Indian family. Decision in favor of assessee. Diamond jewellery was found excess during the course of search - Assessing Officer made addition to the income of the appellant - HELD THAT - The appellant s explanation of trying to explain the excess diamond through difference of gold item found in excess as per declaration as stated above cannot be accepted in absence of any such documentary evidence for doing so by the appellant. Addition made by AO on finding excess cash seized at the time of search - HELD THAT - assessee was having more cash as per day-to-day cash books maintained by him, as compared to cash found during course of search. The CIT(A) had also recorded categorical finding to the effect that cash disclosed in the cash book maintained by assessee and his family members were higher than cash found during course of search. Nothing was brought on record by Department to controvert the findings recorded by CIT(A). Accordingly, we do not find any reason to interfere in the findings of CIT(A). CIT(A) deleted the addition. Decision in favor of assessee. The appeal filed by the Department in I.T.A.No. 455/Ind/2013 is less than monetary limit fixed by C.B.D.T. Circular No. 3/2011 dated 9.2.2011 for filing appeal by the Department. Since the tax effect was less than ₹ 3 lakhs even as per C.B.D.T. Circular dated 9.2.2011, the Department should not have filed the appeal before the Tribunal. In the result, appeals filed by the Revenue are dismissed, whereas the appeals filed by the assessee are allowed.

Summary

Issues Involved:
1. Addition on account of gold jewellery found short.
2. Addition on account of diamond jewellery found in excess.
3. Addition on account of cash seized during the search.

Summary:

1. Addition on account of gold jewellery found short:
The CIT(A) deleted the addition made by the Assessing Officer regarding the gold jewellery found short during the search. The gold jewellery disclosed by the assessee and his family was 14,400.020 gms, whereas the gold jewellery found during the search was 13,032.452 gms, resulting in an excess disclosure of 1,367.568 gms valued at Rs. 14,00,923/-. The CIT(A) accepted the explanation that the difference in the nature of gold jewellery could be due to the habit of Indian families to change old jewellery to new jewellery. Thus, the addition made by the Assessing Officer due to gold jewellery seizure was deleted.

2. Addition on account of diamond jewellery found in excess:
The CIT(A) confirmed the addition regarding the diamond jewellery found in excess. During the search, 323.7 Cts of diamond jewellery was found against 239.11 Cts disclosed by the assessee, resulting in a shortage of 84.59 Cts valued at Rs. 10,31,730/-. The assessee's explanation that the excess diamond jewellery could be explained through the difference in gold jewellery was not accepted due to the lack of documentary evidence. Therefore, the addition of Rs. 10,71,730/- in the hands of the assessee and his brother was confirmed proportionately.

3. Addition on account of cash seized during the search:
The CIT(A) deleted the addition made in the hands of Subhash Agrawal regarding the cash seized during the search. The Assessing Officer added Rs. 2,58,041/- to the income of the appellant on the basis of the seizure. However, the CIT(A) found that the cash disclosed in the cash books maintained by the assessee and his family members was higher than the cash found during the search. The source of cash was verifiable from the cash book and bank withdrawals. Therefore, the addition made by the Assessing Officer was not justified, and the CIT(A) directed the deletion of the addition.

Conclusion:
The ITAT upheld the CIT(A)'s decision to delete the addition regarding the gold jewellery found short and the cash seized during the search. The ITAT also confirmed the addition regarding the diamond jewellery found in excess. The appeals filed by the Revenue were dismissed, and the appeals filed by the assessee were allowed. The tax effect in the appeal filed by the Department was less than the monetary limit fixed by the C.B.D.T. Circular No. 3/2011 dated 9.2.2011, and thus, the Department should not have filed the appeal before the Tribunal.