2022 (3) TMI 1079 - HC - Income Tax

Addition made in respect of jewellery found at the time of search - value of 887 grams of jewellery as undisclosed income - HELD THAT - There is no dispute with regard to the search and seizure of 1387 grams of jewellery in the premises of the appellant on 02.01.2003. The appellant claimed that the said jewels were received from her parents, mother-in-law and sister on various occasions, by way of gift. However, the assessing officer found that there was no evidence adduced by the appellant to support her claim and hence, after deducting 500 grams as gift received by the appellant, the value of balance 887 grams of jewels at ₹ 4,07,880/- was added as undisclosed income. The said addition by the assessing officer in the assessment order was confirmed by the CIT(A) which was also affirmed by the Tribunal Admittedly, the CBDT, vide Instruction No.1916 dated 11.05.1996 has directed not to seize jewellery to the extent of 500 grams in the case of married women. Further, the appellant did not produce any bills / books of accounts / document, except her oral statement, to substantiate her claim that the entire jewels belonged to her. In such circumstances, this court finds no good reason to disagree with the findings so rendered by the Tribunal. No substantial question of law.

Summary

Issues:
- Appeal against order passed by Income Tax Appellate Tribunal for block period from 01.04.1996 to 02.01.2003.
- Addition of undisclosed income based on jewellery found during search under section 132 of Income-tax Act.
- Appellant's explanation regarding jewellery ownership and source of acquisition.
- Tribunal's affirmation of addition of jewellery value as undisclosed income.
- Interpretation of guidelines issued by CBDT regarding jewellery seizures.
- Applicability of concurrent findings of lower authorities in tax assessment.

Analysis:

1. The appellant challenged the order passed by the Income Tax Appellate Tribunal concerning the addition of undisclosed income based on jewellery discovered during a search conducted under section 132 of the Income-tax Act for the block period from 01.04.1996 to 02.01.2003.

2. The appellant claimed that a portion of the jewellery belonged to her, sourced from her parents, mother-in-law, and sister. However, the assessing officer found the explanation unsatisfactory and added the value of 887 grams of jewellery as undisclosed income. This addition was upheld by the Commissioner of Income Tax (Appeals) and the Tribunal.

3. The appellant raised substantial questions of law regarding the Tribunal's decision to confirm the addition without considering her explanation and the guidelines issued by the CBDT. The appellant argued that the Tribunal erred in not appreciating her explanation and status.

4. The respondent, representing the department, supported the Tribunal's decision, citing the Supreme Court's precedent that once an assessee's explanation is found unsatisfactory, the value of jewellery can be charged as income. The respondent contended that there was no need to interfere with the concurrent findings of fact by the lower authorities.

5. The High Court examined the evidence and found that the appellant failed to provide substantial proof, such as bills or documents, to support her claim regarding the jewellery ownership. The Court noted the absence of evidence regarding the disclosed income of the appellant's family members and the failure to produce relevant documentation.

6. Referring to the CBDT guidelines and the Supreme Court's decision, the Court emphasized that the concurrent findings of fact by the lower authorities, based on material evidence, were valid. The Court highlighted that there was no substantial question of law arising from the appeal, and therefore, dismissed the tax case appeal without costs.