2011 (1) TMI 1582 - AT - Income Tax

Summary

Issues Involved:
1. Addition made for unexplained jewellery.
2. Explanation for the source of jewellery.
3. Acceptance of ancestral jewellery.
4. Evidence for purchase of jewellery.

Summary:

Issue 1: Addition made for unexplained jewellery
The Tribunal initially failed to consider facts regarding the addition made for unexplained jewellery. The appeal was revisited to address this specific issue. The AO had added Rs. 5,86,145/- for unexplained jewellery, which was later reduced by the CIT(A) to Rs. 1,03,378/-.

Issue 2: Explanation for the source of jewellery
During a search, gold jewellery weighing 3139.900 grams and diamond jewellery were found. The assessee explained the source of 2053.100 grams of gold jewellery, attributing 1260 grams to various occasions and gifts. The AO accepted the explanation for 960 grams of gold and 23 carats of diamond jewellery, leaving 791.95 grams of gold and 12.05 carats of diamond unexplained. The CIT(A) required the assessee to explain 1035.95 grams of gold and 17.05 carats of diamond jewellery, considering additional jewellery claimed to belong to the assessee's wife.

Issue 3: Acceptance of ancestral jewellery
The assessee claimed possession of ancestral jewellery from forefathers, supported by Estate Duty and Wealth-tax assessments. The CIT(A) accepted 600 grams of gold and 15 carats of diamond jewellery as ancestral. The Tribunal noted that while forefathers' assessments showed possession of jewellery, it was unreasonable to assume all was received by the assessee. The Tribunal estimated the ancestral jewellery received by the assessee at 300 grams of gold and 10 carats of diamond.

Issue 4: Evidence for purchase of jewellery
The assessee claimed to have purchased 300 grams of gold jewellery from an advance of Rs. 50 lakhs received for a property sale. The AO found no evidence for this purchase. The Tribunal considered 150 grams of gold jewellery as purchased from the available balance. Consequently, out of 1035.95 grams of gold jewellery, 450 grams were considered explained, leaving 585.95 grams unexplained. Similarly, 10 carats of diamond jewellery were considered explained, leaving 2.05 carats unexplained.

Conclusion:
The Tribunal directed the AO to make additions based on the revised unexplained quantities of 585.95 grams of gold and 2.05 carats of diamond jewellery. The appeal of the Revenue was partly allowed.