2020 (10) TMI 1338 - AT - Income Tax

Unexplained jewellery - Contention of assessee that if the correct quantity of jewellery (i.e. 671.53 gms is considered instead of 771.83 gms) and if the credit for jewellery in the hand of his son is also given then there would remain no excess jewellery - HELD THAT - We find that CIT(A) has noted that total jewellery of 771.83 gms valued at Rs. 31, 27, 296/- was found from the possession of the assessee and his wife. The figure of 771.83 gms noted by the CIT(A) appears to be incorrect as in the copy of the panchnama which has been placed by the assessee in the paper book shows the total weight of the jewellery found to be 671.534 gms with the value of Rs 31, 27, 296/-. CIT(A) has given credit of jewellery of 600 gms (500 gms for the wife of the assessee and 100 gms for the assessee) and no credit has been given for jewellery to the son of the assessee. The fact that the family of the assessee consists of himself his wife and son is not disputed. We find that CBDT vide instruction no. 1916 dated 11.05.1994 has issued guidelines which inter alia states that in case of person not assessed to wealth tax gold jewellery ornaments to the extent of 500 gms per married lady 250 gms per unmarried lady and 100 gms per male member of the family need not to be assessed. In the present case we find that CIT(A) has given credit for jewellery only to the assessee and his wife and no credit has been given to assessee s son. If the credit for 100 gms of jewellery to the son of the assessee is granted then there would remain no unexplained excess jewellery in the hands of the assessee and therefore no addition is called for. We therefore direct the deletion of addition upheld by the CIT(A). The ground of assessee is allowed.

Summary

Issues:
- Addition of unexplained jewellery during assessment proceedings.

Analysis:
The appeal was filed against the Commissioner of Income Tax's order relating to the Assessment Year 2014-15. The assessee, an individual with income from various sources, had jewellery found during a search proceeding under section 132 of the Act. The Assessing Officer (AO) made an addition of Rs. 30 Lac based on the valuation of jewellery per gram, as the source of the jewellery was not satisfactorily explained. The Commissioner of Income Tax (Appeals) [CIT(A)] reduced the addition to Rs. 2,70,000 for 71.83 gms of unexplained jewellery. The appellant contested this decision before the Appellate Tribunal, arguing that the correct quantity of jewellery found was 671.53 gms, not 771.83 gms as noted by the CIT(A). The appellant also claimed that credit for 100 gms of jewellery should be given to his son, as per CBDT instructions. The Tribunal found merit in the appellant's arguments, noting discrepancies in the quantity of jewellery recorded and the failure to credit jewellery to the son. Citing CBDT guidelines, the Tribunal directed the deletion of the addition upheld by the CIT(A), thereby allowing the appeal of the assessee.

In the detailed analysis, the Tribunal scrutinized the discrepancies in the quantity of jewellery recorded during the search and the valuation provided. The Tribunal observed that the correct weight of jewellery found was 671.534 gms, not 771.83 gms as mentioned by the CIT(A). Additionally, the Tribunal noted that the CIT(A) had credited jewellery only to the assessee and his wife, neglecting to account for jewellery belonging to the assessee's son. Referring to CBDT instruction no. 1916 dated 11.05.1994, which exempts certain quantities of jewellery from assessment, the Tribunal emphasized that credit for 100 gms of jewellery should be granted to the son of the assessee. By considering the correct quantity of jewellery and providing credit as per CBDT guidelines, the Tribunal concluded that there was no unexplained excess jewellery in the possession of the assessee, warranting the deletion of the addition made during assessment proceedings. Consequently, the Tribunal allowed the appeal of the assessee, directing the removal of the addition upheld by the CIT(A) and ruling in favor of the assessee.