2018 (3) TMI 1177 - AT - Income Tax

Addition on account of alleged undisclosed jewellery - search and seizure action u/s 132 - Held that - The jewellery found in possession of the Assessee and his family is within the normal limits of the jewellery which as per the Board s Circular not to be seized during the search proceeding of the Income Tax Act. Moreover, in the case of Haroon Mohd. Unni Mumbai vs Department of Income Tax, the Assessing Officer conducting the search suo-moto allowed 250 gms. each to the married ladies of the family as their Streedhan . CIT(A) has not considered the status of the family, the circular of the Board where in case of married ladies 500 gms. and in case of unmarried lady 250 gms. and in case of male member 100 gms. jewellery need not be seized. The Income-tax department has accordingly released the said jewellery. The assessee, in fact can possessed upto 1450 gms. of jewellery as per the circular and looking to the social and financial status of the family, CBDT Circular the jewellery possessed by the assessee is quite reasonable and no addition on this account can be made and additions - Decided in favour of assessee.

Summary

Issues:
1. Addition on account of alleged undisclosed jewellery.

Analysis:
The case involved an appeal by the assessee against the order of the ld. CIT(A)-25, Delhi confirming the addition of ?13,47,827 on account of alleged undisclosed jewellery. The search and seizure action under section 132 of the Income Tax Act was conducted, leading to the discovery of jewellery valued at ?25,16,327 from the assessee's possession. The Assessing Officer made an addition of ?24,09,327 to the income of the assessee under section 69A of the IT Act, 1961. The ld. CIT(A) upheld the addition to the extent of ?13,47,827.

The assessee contended that the jewellery found in possession had various sources, including being ancestral, received as gifts during marriage, purchased as part of Hindu tradition, and received as tokens of love at family events. The assessee also referred to Section 56 of the Income Tax Act, 1961, exempting certain sums of money received from relatives or on the occasion of marriage. Additionally, the assessee cited instructions from the CBDT regarding the seizure of jewellery during search operations, specifying quantities that need not be seized based on marital status and gender. The assessee's family composition and the jewellery found were within the limits specified by the CBDT circular.

The ITAT, after considering the submissions and circulars, held that the jewellery possessed by the assessee was reasonable and fell within the prescribed limits, as per the CBDT circular. The ITAT noted that the ld. CIT(A) did not adequately consider the family status and circular provisions, leading to the direction to delete the addition sustained by the ld. CIT(A). Consequently, all grounds of the assessee were allowed, and the appeal in ITA No.4101/Del/2017 was allowed.

In conclusion, the ITAT set aside the addition made on account of undisclosed jewellery, emphasizing the reasonableness of the jewellery possessed by the assessee based on family composition and the CBDT circular guidelines. The ITAT's decision was in favor of the assessee, directing the deletion of the sustained addition by the ld. CIT(A).