2021 (4) TMI 1339 - AT - Income Tax

Addition on account of jewellery found during the course of search seizure operation carried out u/s 132 - HELD THAT - In substance all the Hon ble High Courts have held that jewellery specified under CBDT Circular No. 1916 dated 11.05.1992 is a reasonable quantity which could be not added in the hands of the assessee even though circular is for the purpose of none seizure of jewellery during the course of search. Hon ble High Courts were also of the view that the instruction takes into account on quantity of jewellery which would generally be held by family members of assessee belonging to an ordinary Hindu house hold. The claim of the assessee is therefore supported by various high courts. We direct the AO to restrict the addition only in excess of jewellery found of instruction No. 1916 dated 11.05.1992 with respect to the family members of the assessee. The assessee is directed to furnish relevant details of family members of the assessee staying with him , which may be verified by the AO, after verification AO may grant reduction in addition to the extent of jewellery of family members as per above instruction of CBDT, and the excess addition thereafter may be deleted. In the result ground no 2 of the appeal of assessee is allowed.

Summary

Issues:
1. Addition of Rs. 32,40,469 on account of jewellery found during search operation.
2. Allowance of total 700 gms of jewellery instead of 100 gms.
3. Consideration of acquisition sources for jewellery.

Analysis:
1. The appeal was against an order sustaining the addition of Rs. 32,40,469 on jewellery found during a search operation. The assessee claimed the jewellery was acquired over the years, some at the time of marriage and some through gifts and purchases. The Assessing Officer (AO) added the entire amount to the income, considering only 100 gms for the assessee. The CIT(A) upheld this addition, leading to the appeal.

2. The assessee argued that considering the family members, a total of 700 gms should have been allowed instead of just 100 gms. The Tribunal referred to various High Court decisions supporting the assessee's claim. It directed the AO to restrict the addition to the excess jewellery found beyond the specified quantity in the CBDT Circular, considering family members. The assessee was asked to provide details for verification.

3. The Tribunal found no merit in the grounds challenging the addition of excess jewellery. It emphasized the need for specific sources to explain the acquisition of such assets, dismissing those grounds. The appeal was partly allowed based on the direction given regarding the excess jewellery addition. The decision was pronounced in open court on 06/04/2021.