2023 (10) TMI 653 - AT - Income Tax

Addition u/s 69A r.w.s. 115BBE - unexplained gold jewellery of 1627.5 Grams - Stree dhan of women - HELD THAT - We hold that CBDT's instruction no. 1916 dated 11.05.1994 and press release dated 01.12.2016 pertains to seizure of jewellery. It postulates that by going through the archetypal Indian family standard, a persons of an Income Tax payee of considerable amount could have had the prescribed amount of jewellery in the circular. As brought into force after a series of due deliberation and its impact on taxation. It is never envisaged that the Assessing Authority should restrict the amount of eligible jewellery to the quantity mentioned in the circular. The assesses were trustee of a medical college and also have the returned income in the range of Rs. 21.27 lacs to 49.34 lacs as per the returns. We hold that CBDT's instruction no. 1916 dated 11.05.1994 and press release dated 01.12.2016 pertains to seizure of jewellery. It postulates that by going through the archetypal Indian family standard, a persons of an Income Tax payee of considerable amount could have had the prescribed amount of jewellery in the circular. It was brought into force after a series of due deliberation and its impact on taxation. It is never envisaged that the Assessing Authority should restrict the amount of eligible jewellery to the quantity mentioned in the circular. The assesses were trustee of a medical college and also have the returned income in the range of Rs. 21.27 lacs to 49.34 lacs as per the returns. As decided in the case of Ashok Chaddha 2011 (7) TMI 142 - DELHI HIGH COURT that collecting jewellery of 906.900 gms by a woman in a married life of 25 years in form of stree dhan or on other occasions is not abnormal. As decided in the case of Vibhu Aggarwal 2018 (5) TMI 586 - ITAT DELHI where AO u/s 69A made addition on account of jewellery found in search of assessee, since assessee belonged to a wealthy family and jewellery was received on occasions from relatives, excess jewellery was very much reasonable and, thus, no addition under section 69A was called for. Thus we direct that the addition made on this account be deleted. Appeal of assessee allowed.

Summary

Issues Involved:
1. Addition of Rs. 20,44,870/- as unexplained jewellery under section 69A read with section 115BBE of the Income Tax Act, 1961.
2. Penalty notice under section 271AAB and interest charged under section 234A/B/C/D.

Summary:

Issue 1: Addition of Rs. 20,44,870/- as Unexplained Jewellery
- Proceedings before the Assessing Officer: During a search and seizure operation at the assessee's residence, gold jewellery weighing 3877.5 grams valued at Rs. 1,46,15,635/- was found. The assessee failed to explain the source of the jewellery. The Assessing Officer applied CBDT's Instruction No. 1916 and allowed a claim for 2250 grams, treating the remaining 1627.5 grams valued at Rs. 61,34,610/- as unexplained, and added Rs. 20,44,870/- (1/3 share) to the assessee's income under section 69A read with section 115BBE.

- Proceedings before the CIT(A): The assessee claimed the jewellery was inherited and received during marriages and other ceremonies. The CIT(A) held that the assessee's explanations were vague and lacked specificity, as no purchase bills or valuation certificates were provided. The CIT(A) confirmed the AO's decision, stating that the jewellery belonging to the assessee's sister was not conclusively proven to be kept at the assessee's residence.

- Tribunal's Findings: The Tribunal noted that CBDT's Instruction No. 1916 was intended for seizure purposes and should not restrict the eligible amount of jewellery. The Tribunal observed that the family had substantial income and withdrawals over the years, which justified the possession of the jewellery. Citing various judgments, the Tribunal concluded that the addition made by the AO was not justified and directed that the addition be deleted.

Issue 2: Penalty Notice and Interest Charges
- The Tribunal did not specifically address the issue of the penalty notice under section 271AAB and interest charged under section 234A/B/C/D, as the primary focus was on the addition of unexplained jewellery.

Conclusion:
The appeal of the assessee was allowed, and the addition of Rs. 20,44,870/- as unexplained jewellery was deleted. The Tribunal emphasized the importance of considering the family's status, customs, and traditions, and relied on precedents to support its decision.