2016 (9) TMI 1567 - AT - Income Tax

Addition towards Gold, silver jewellery found released at the time of search - Stridhan - HELD THAT - As per Circular No. 1916 dated 11.05.1994 issued by the Central Board of Direct Taxes, possession of 500gms of jewellery by each married lady is permissible. Circular requires non-seizure of jewellery to the extent of 500gms for married lady, 250gms for unmarried lady and 100grms for male to be extended to assessment proceedings and the same to be treated as explained income. Since there are three lady members in the family, as per the above CBDT Circular, possession of seized jewellery cannot be questioned. We, therefore, delete the addition sustained by the learned CIT(A). Appeal of the assessee stands partly allowed.

Summary

Issues:
1. Addition of ?2,00,000 towards gold and silver jewellery found during search.
2. Interpretation of Circular No. 1916 dated 11.05.1994 by the Central Board of Direct Taxes regarding possession of jewelry.

Analysis:
1. The appeal was filed against the order of the CIT(A) regarding the addition of ?2,00,000 towards gold and silver jewellery found during the search. The Assessing Officer had made an addition of ?12,77,409, which was reduced by the CIT(A) to ?2,00,000. The appellant argued that the addition was erroneous as the source of the jewellery was explained during the search and the Board Circular was ignored. The gold ornaments and silver articles were found at the residence of the assessee and were mainly acquired during marriages, representing Stridhan. The CIT(A) considered the statements made during the search and reduced the addition based on the explanation provided, ultimately confirming an addition of ?2,00,000 and granting relief of ?10,77,049 to the appellant.

2. The appellant cited Circular No. 1916 dated 11.05.1994 issued by the CBDT, which allows possession of certain amounts of jewelry for married and unmarried ladies and males. The possession of 639.50gms of gold jewellery and 6.325gms of silver articles found during the search was argued to be permissible under this Circular. The DR supported the CIT(A)'s order. The ITAT analyzed the Circular, which requires non-seizure of jewelry within specified limits for family members, and concluded that the possession of seized jewellery in this case cannot be questioned. Therefore, the addition of ?2,00,000 sustained by the CIT(A) was deleted by the ITAT.

In conclusion, the ITAT partly allowed the appeal of the assessee, deleting the addition of ?2,00,000 towards gold and silver jewellery found during the search based on the interpretation of the CBDT Circular regarding possession of jewelry for family members.