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2018 (12) TMI 1207 - AT - Income TaxUnexplained investment u/s. 69A - jewelry found in search - Held that - CIT(A) has rightly held that assessee has sufficiently explained the jewellery found during search and therefore, no addition is called for and accordingly, correctly deleted the addition, which does not need any interference on our part, hence, we uphold the order of the CIT(A) on the issue in dispute and reject the grounds raised by the Revenue. - Decided against revenue.
Issues involved:
1. Addition of unexplained investment under section 69A of the Income Tax Act. 2. Validity of valuation report as evidence. 3. Allocation of jewellery ownership among family members. 4. Rejection of valuation report by the AO. 5. Explanation provided by the appellant regarding the jewellery. Detailed Analysis: 1. The primary issue in this case was the addition of ?65,42,564 as unexplained investment under section 69A of the Income Tax Act. The AO made this addition based on jewellery found during a search, questioning the source of such assets. The Ld. CIT(A) partially allowed the appeal and deleted the said addition, leading to the Revenue's appeal before the Tribunal. 2. The validity and evidentiary value of the valuation report were crucial aspects of the case. The Ld. CIT(A) noted that the valuation report was not found during the search, but the appellant provided explanations and evidence to support the ownership and acquisition of the jewellery. The AO rejected the valuation report, citing lack of supporting documents and payments for the valuation. However, the Ld. CIT(A) found the explanations provided by the appellant to be satisfactory, especially regarding the ancestral nature of the jewellery and its acquisition before 31.03.2006. 3. Another significant issue was the allocation of jewellery ownership among family members. The appellant claimed that the jewellery belonged to multiple family members, and a valuation report supported this claim. The AO, however, added all the jewellery in the hands of the appellant alone without providing sufficient reasoning for this allocation. The Ld. CIT(A) emphasized that the jewellery belonging to four family members should not have been added solely to the appellant's income. 4. The rejection of the valuation report by the AO was a point of contention. The AO questioned the timing and authenticity of the valuation report, especially since no payments were recorded for its preparation. The Ld. CIT(A) considered the statements of the approved valuer and the supporting affidavit, concluding that the valuation report was not fabricated post-search and that the explanations provided were credible. 5. The appellant's detailed explanation regarding the jewellery, supported by old valuation reports, purchase bills, and family ownership details, played a crucial role in the case. The Ld. CIT(A) found the appellant's submissions to be consistent and reliable, ultimately leading to the deletion of the addition made by the AO. The Tribunal upheld the Ld. CIT(A)'s order, emphasizing the sufficiency of the explanations provided by the appellant and dismissing the Revenue's appeal. This detailed analysis highlights the key legal and factual aspects considered in the judgment, focusing on the valuation report's validity, ownership allocation, and the appellant's explanations regarding the disputed jewellery.
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