2016 (7) TMI 1529 - AT - Income Tax

Undisclosed investment in jewellery - Search operation in the premises of the assessee - credit to the jewellery declared under the VDIS by the assessee s mother-in-law - wealth tax return was not filed either by the assessee or her husband or by her mother-in-law - AO rejected this claim of the assessee on the ground that the item of jewellery mentioned in the VDIS does not match with the inventory of the jewellery seized during the course of search operation - HELD THAT - This Tribunal is of the considered opinion that fashion in jewellery is changing day by day and it is the practice of every lady to change the pattern of jewellery in accordance with the latest trend. Therefore what is to be seen is whether the quantum of jewellery declared matches with the jewellery found during the course of search operation. When the assessee s mother-in-law declared 3650 gms of gold jewellery under VDIS the Assessing Officer is expected to give credit to the jewellery to the extent of 3650 gms. In other words the jewellery declared by the assessee s mother-in law is very much available at the residence of the assessee. Therefore this Tribunal is of the considered opinion that the CIT(A) has rightly directed the Assessing Officer to give credit to the jewellery declared under the VDIS by the assessee s mother-inlaw Late Smt. Prema. Therefore this Tribunal do not find any reason to interfere with the order of the CIT(A) and accordingly the same is confirmed. - Decided against revenue

Summary

Issues:
Addition of undisclosed investment in jewellery

Analysis:
The appeal pertains to the addition of ?53,63,591 towards undisclosed investment in jewellery for the assessment year 2012-13. The Departmental Representative argued that unaccounted gold jewellery was seized during a search operation in the assessee's premises, valuing it at ?1,69,36,121. The jewellery was claimed to belong to the assessee's husband, who inherited it from his mother. The Assessing Officer concluded that the jewellery found during the search did not match what was disclosed under the Voluntary Disclosure of Income Scheme (VDIS) by the assessee's mother-in-law. The CIT(A) found that 3650 gms of jewellery was declared under VDIS, directing the Assessing Officer to give credit for this amount. The assessee claimed that some jewellery was melted into a gold bar for the jewellery business. The Revenue authorities argued that the gold bar found during the search cannot be part of the jewellery declared under VDIS. The Tribunal observed that the jewellery declared under VDIS by the mother-in-law matched the jewellery found during the search, directing the Assessing Officer to credit the VDIS jewellery. The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal.

This case primarily revolves around the discrepancy between the jewellery found during a search operation and what was declared under the VDIS by the assessee's mother-in-law. The Department argued that the jewellery seized did not match the VDIS declaration, leading to the addition of undisclosed investment. However, the assessee contended that the jewellery inherited was converted, part of it melted into a gold bar for business purposes. The Tribunal emphasized that the focus should be on whether the quantum of jewellery declared aligns with what was found during the search. Ultimately, the Tribunal agreed with the CIT(A) that the VDIS jewellery should be credited, as it matched the jewellery found, and upheld the decision, dismissing the Revenue's appeal.