2022 (1) TMI 275 - AT - Income Tax

Unexplained jewellery - Diamond studded in the jewellery were out of the undisclosed income of the assessee - HELD THAT - As AO himself mentioned that the gold worth ₹ 10,14,418/-is attributable to Smt. Kanta Bansal, wife of the assessee. According to the CBDT instructions in case of a married woman 500 g is the threshold limit and Hon ble Gujarat High Court said that to such an extent of jewellery, the source shall be presumed to have been explained. In view of this position of law laid down in the case of Ratan Lal 2010 (7) TMI 769 - GUJARAT HIGH COURT and also the view taken by the Tribunal in the case of Smt. Satya Bhalla 2016 (5) TMI 1571 - ITAT DELHI we are of the considered opinion that pursuant to the CBDT instructions, the wife of the assessee is entitled to keep 500 g of jewellery the source of which is a demoted have been explained and, therefore, no addition could be made are sustained. We accordingly allow ground No. 1 and 2 of assessee s appeal. Cash found during the search operations - As per AO that no proper explanation supported by documents was given by the assessee regarding this amount - CIT(A) observed that even during the appellate proceedings, though it was submitted on behalf of the assessee that the amount of ₹ 50,000/- was available due to the withdrawal from the bank from different members of the family, no evidence to show the withdrawals from the bank or the cashbook or through any other documentary evidence was produced and thereby confirmed the addition. Before us also no new facts are forthcoming nor any bank withdrawals are proved by any evidence. We therefore, do not consider it necessary to interfere with the findings of the Ld. CIT(A) on this issue and accordingly uphold the same.

Summary

Issues:
Assessment of income based on seized jewellery and unexplained cash.

Analysis:
1. The case involved an individual assessee deriving income from various sources during the assessment year 2013-14. A search and seizure operation revealed jewellery worth a significant amount in the possession of the assessee, leading to the Assessing Officer adding the value of the jewellery to the assessee's income.

2. The assessee appealed the addition before the Ld. CIT(A), citing CBDT instruction No. 1916 to argue that a portion of the jewellery was explained. The Ld. CIT(A) partially allowed the appeal by giving credit for a portion of the jewellery based on the CBDT instruction, but confirmed the addition for the remaining unexplained jewellery and unexplained cash amount of ?50,000.

3. The assessee further appealed to the ITAT, arguing that based on the CBDT instruction and the family size, the jewellery attributed to the assessee should be considered explained. The ITAT considered the CBDT circular and the decision of the Gujarat High Court in a similar case, emphasizing the customary practices of gifting jewellery in Hindu families.

4. The ITAT held that as per CBDT instructions and legal precedents, the wife of the assessee was entitled to retain a certain amount of jewellery without it being considered undisclosed income. Therefore, the ITAT allowed the appeal regarding the jewellery addition but upheld the addition of ?50,000 unexplained cash, as the assessee failed to provide evidence supporting the source of the cash.

5. The ITAT concluded the appeal by partially allowing the assessee's appeal, modifying the additions made by the Assessing Officer and Ld. CIT(A) based on the CBDT instruction and legal interpretations. The ITAT pronounced the order on November 3, 2021, allowing the appeal in part.