2022 (6) TMI 1327 - AT - Income Tax

Addition on account of jewellery found in the search premises of the assessee - HELD THAT - On consideration of the rival submissions of the parties we are of the opinion that in the interest of justice and fair play the matter should be restored back to the file of the AO to verify the veracity of the claims made by the assessee who shall produce evidence which were not available with him during the course of assessment proceedings for the purposes of verification. The Ld. AO shall also consider the claim of the assessee taking into account the CBDT Instruction No. 1916 dated 11.05.1994 and decide the issue afresh after giving reasonable opportunity of hearing to the assessee. Addition u/s 69A on account of cash found during search - HELD THAT - Right from the stage of search the case of the assessee has been that the family withdraws Rs. 40, 000/- every month for meeting house-hold expenses and the cash found in search is accumulation of savings. Moreover documentary evidence of bank statement showing withdrawal of cash of Rs. 1, 00, 000/- by the assessee and Rs. 1, 50, 000/- by his wife on 20.04.2012 just few days before search on 09.05.2012 was placed on record. There is no adverse finding that the said withdrawals of cash was utilised for any specific purpose and that nothing was available out of the said withdrawal of cash. We are therefore inclined to hold that the source of cash available at the time of search has been satisfactorily explained by the assessee and delete the impugned addition.

Summary

Issues:
1. Addition of Rs. 23,54,184 on account of jewelry found in search
2. Addition of Rs. 1,00,000 under section 69A on account of cash found during search

Analysis:

Issue 1: Addition of Rs. 23,54,184 on account of jewelry found in search

The appeal pertains to the assessment year 2013-14, following a search conducted under section 132 of the Income Tax Act, 1961. The Assessing Officer (AO) made an addition of Rs. 23,54,184 on account of jewelry found in the premises of the assessee. The Commissioner of Income Tax (Appeals) upheld this addition, leading to the appeal before the Tribunal. The assessee contended that credit for jewelry should be given based on specific instructions and submitted bills for jewelry purchased. However, the CIT(A) found the bills submitted to be lacking in credibility and declined to interfere. The Tribunal, after hearing both parties, decided to restore the matter to the AO for further verification and consideration in line with the CBDT Instruction No. 1916 dated 11.05.1994.

Issue 2: Addition of Rs. 1,00,000 under section 69A on account of cash found during search

The second issue concerns the addition of Rs. 1,00,000 under section 69A of the Income Tax Act on account of cash found during the search. The AO and CIT(A) upheld this addition despite explanations provided by the assessee regarding the source of the cash. The Tribunal noted that the cash was explained to be savings accumulated from monthly withdrawals for household expenses. Documentary evidence of bank withdrawals just before the search was presented. After careful consideration, the Tribunal held that the source of the cash was satisfactorily explained by the assessee and deleted the impugned addition. Consequently, the appeal of the assessee was allowed, subject to specific directions outlined in the order.

This detailed analysis of the judgment highlights the key issues, arguments presented by the parties, and the Tribunal's decision on each issue, ensuring a comprehensive understanding of the legal aspects involved in the case.