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2019 (8) TMI 1837 - AT - Income TaxUnexplained jewellery - addition of 270 Gms. of Gold - source of acquisition of ornaments - Jewellery found in possession of the family members is in accordance with customs and practice prevalent in the community - Scope of CBDT Circular No. 19 of 2016 - assessee submits that the assessee claimed that out of total gold jewellery of 371 gram belongs to a married female member - HELD THAT - The impugned jewellery of 270 gms is much less than 500 gms as per CBDT Circular No. 19 of 2016 in our view the ratio of SATYA NARAIN PATNI 2014 (5) TMI 1002 - RAJASTHAN HIGH COURT clearly covers the issue in favour of assessee. Therefore we direct the Assessing Officer to allow the relief to the assessee in directing to delete the addition on account of unexplained investment. - Decided in favour of assessee.
Issues Involved:
1. Addition of 270 grams of gold worth Rs. 6,93,630/- as unexplained investment. 2. Treatment of 370 grams of gold jewellery belonging to a family member as unexplained. 3. Application of CBDT Instructions regarding the non-seizure of gold jewellery. 4. Consideration of previous verification and return of jewellery by the officer in charge during the search. 5. Assessment of detailed submissions filed during the hearing. Detailed Analysis: Issue 1: Addition of 270 grams of gold worth Rs. 6,93,630/- as unexplained investment The assessee contested the addition of 270 grams of gold by the Assessing Officer (AO), which was confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)]. The AO treated only 100 grams of the 370 grams of gold jewellery as customary and explained, while treating the remaining 270 grams as unexplained investment under Section 69 of the Income Tax Act. Issue 2: Treatment of 370 grams of gold jewellery belonging to a family member as unexplained The assessee argued that the 370 grams of gold jewellery belonged to Mrs. Nisha M. Mehta, a married female family member, and was received as gifts at her marriage and other festivals, which is a part of Indian traditions. The AO, however, accepted only 100 grams as explained and treated the remaining 270 grams as unexplained. Issue 3: Application of CBDT Instructions regarding the non-seizure of gold jewellery The assessee referenced CBDT Instruction No. 1916 dated 11.05.1994, which allows for the possession of up to 500 grams of gold jewellery by married women without it being seized. The assessee argued that the 370 grams of gold jewellery in question was well within this limit. Issue 4: Consideration of previous verification and return of jewellery by the officer in charge during the search The assessee pointed out that the jewellery had been returned by the officer in charge after due verification during the search, suggesting that no contrary view should be taken by the AO. Issue 5: Assessment of detailed submissions filed during the hearing The assessee claimed that the detailed submissions provided during the hearings before the CIT(A) and AO were not properly considered. Judgment Summary: The Tribunal considered the rival submissions and reviewed the material on record. They noted that the narrow dispute was whether the 370 grams of gold jewellery should be treated as unexplained investment. The Tribunal referred to various precedents, including decisions by the Bombay High Court and the Rajasthan High Court, which supported the assessee's position that jewellery within the permissible limits as per CBDT Circular No. 19 of 2016 should not be treated as unexplained. The Tribunal cited the following key judgments: - Komal Wazir vs. DCIT (Bombay High Court): Recognized that jewellery received during marriage should not be treated as unexplained. - CIT vs. Satyanaran Patni (Rajasthan High Court): Held that jewellery within the limits prescribed by the CBDT Circular should not be added as unexplained investment. - Sachin Garg vs. ACIT (Delhi Tribunal): Allowed credit for jewellery within the CBDT limits, even without wealth tax returns or purchase bills. The Tribunal concluded that the 370 grams of gold jewellery was well within the 500 grams limit specified by the CBDT Circular and thus should not be treated as unexplained investment. Consequently, they directed the AO to delete the addition of 270 grams of gold jewellery. Conclusion: The Tribunal allowed the appeal, directing the deletion of the addition on account of unexplained investment in gold jewellery, based on the CBDT Circular and supporting judicial precedents. The appeal was pronounced in favor of the assessee on 07/08/2019.
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