2021 (9) TMI 1428 - AT - Income Tax

Addition u/s. 69A for the alleged unexplained jewellery - HELD THAT - We note that gold seized was only 636.790 grams embedded with diamonds of 7.95 carats and in the assessee s family there are three married ladies three married males and two minors. Three married ladies may hold the gold up to 1500 grams which need not to be explained by the assessee as per said CBDT instruction therefore it seems to us clearly that gold seized was only 636.790 grams embedded with diamonds of 7.95 carats which is below the limit prescribed by the CBDT therefore the Department ought not to have seized such gold. It is a settled law that the Circulars issued by CBDT are binding on the Revenue. This position was confirmed in the case of Commissioner of Customs v. Indian Oil Corpn. Ltd. 2004 (2) TMI 66 - SUPREME COURT wherein Their Lordships examined the earlier decisions of the Apex Court with regard to binding nature of the Circular and laid down that when a circular issued by the Board remains in operation then the Revenue is bound by it and cannot be allowed to plead that it is not valid or that it is contrary to the terms of the statute. At the cost of repetition we state that in assessee s case the family contains three married ladies three married male members and two minors therefore considering the number of family members as mentioned above no addition is warranted in the hands of the assessee therefore we delete the addition. Appeal of assessee allowed.

Summary

Issues involved:
1. Addition of unexplained jewellery under section 69A of the Income-tax Act.
2. Interpretation of CBDT Instruction No. 1916, dated 11-5-1994 regarding seizure of jewellery during search operations.

Analysis:

Issue 1: Addition of unexplained jewellery under section 69A of the Income-tax Act
The appeal pertained to the Assessment Year 2013-14 against an order passed by the Commissioner of Income-tax (Appeals) confirming the addition of Rs. 1,36,406 under section 69A of the Income-tax Act by the Assessing Officer. The jewellery in question was found during search proceedings, and the assessee failed to provide the source of purchase, leading to it being treated as unexplained. The assessee challenged this addition, arguing that the addition was made purely on presumptions and assumptions without any material contrary to the explanations provided. The Tribunal noted the guidelines in CBDT Instruction No. 1916, dated 11-5-1994, to determine the legitimacy of the addition. The Tribunal ultimately ruled in favor of the assessee, citing that the gold jewellery and ornaments seized were within the limits specified by the CBDT instruction, and no addition was warranted in the hands of the assessee.

Issue 2: Interpretation of CBDT Instruction No. 1916, dated 11-5-1994
The Tribunal analyzed the provisions of CBDT Instruction No. 1916, dated 11-5-1994, which provided guidelines for seizure of jewellery during search operations. The instruction specified limits for gold jewellery and ornaments that need not be seized based on the status of the individual and family members. The Tribunal considered the total gold jewellery and diamonds seized during the search, along with the family composition of the assessee. It was noted that the seized jewellery fell within the permissible limits set by the CBDT instruction, and therefore, the addition made by the Assessing Officer was deemed unwarranted. The Tribunal emphasized the binding nature of CBDT circulars on the Revenue and cited legal precedents to support this position. Consequently, the Tribunal allowed the appeal of the assessee, directing the deletion of the addition of Rs. 1,36,406.

In conclusion, the Tribunal's judgment focused on the adherence to CBDT guidelines in determining the legitimacy of additions under section 69A of the Income-tax Act. The decision underscored the importance of following prescribed limits for seizure of jewellery during search operations and highlighted the binding nature of CBDT circulars on the Revenue.