2024 (3) TMI 429 - AT - Income Tax

Addition on account of jewellery found in Bank Locker u/s 69A r.w.s 115BBE - appellant was not owner of the jewellery so found - HELD THAT - The bench noted at the time of opening of bank locker 141.10 gms of jewellery was found during search jewellery of 700 gms estimated to be lying at the residence of the assessee. While search action at the residence of the assessee, no jewellery was found at his residence. Fact of existence of any such jewellery came on record only through statement recorded at the time of operation of the bank locker this indicate that assessee was forced to admit some jewellery and even after such admission no attempt was made to physically examine any such jewellery at the residence of the assessee. We also find that father of assessee s wife Shri Hukmi Chand Jain has not claimed any credit in relation to his daughter i.e. assessee s wife in his assessment. Therefore, jewellery if any of assessee s daughter lying at his mother s residence has already been considered in the hands of his father. Though assessee had declared about 500 gms of jewellery in wealth tax return of HUF, no credit for the same is has been granted. Further, against the total assessed quantity of 841.10 gms, assessee is entitled for credit of 950 gms as per Board s Circular 500 gm for assessee wife, his daughter 250 gm and assessee s son 100 gms and 100 gms for assessee . As against the eligible 950 gms the total found quantity is 841.10 gms therefore, no addition is required to be made in the hands of the assessee considering the CBDT guideline and therefore, we direct the to delete the addition of Rs. 3,86,552/-. Based on this observation the ground no. 1 raised by the assessee is allowed.

Summary

Issues Involved:
1. Addition of Rs. 3,86,552/- on account of jewellery found in Bank Locker u/s 69A r.w.s 115BBE.
2. Applicability of higher rate of taxation @ 60% under section 115BBE.

Summary:

Issue 1: Addition of Rs. 3,86,552/- on account of jewellery found in Bank Locker u/s 69A r.w.s 115BBE

The assessee appealed against the addition of Rs. 3,86,552/- for jewellery found in a bank locker, arguing it belonged to his wife. The AO made the addition as the source of the jewellery remained unexplained during search proceedings. The CIT(A) upheld the addition, stating the jewellery was over the limit prescribed by CBDT Instruction No. 1916 dated 11.05.1994. The assessee's argument that the jewellery belonged to his wife was rejected as the source of acquisition was not explained. The CIT(A) found the AO's reliance on the statement recorded during the search proceedings justified and confirmed the addition of Rs. 3,86,552/-.

Upon further appeal, the Tribunal noted that only 141.10 gms of jewellery was physically found and seized, while the remaining 700 gms was based on the assessee's statement. The Tribunal observed that no physical verification of the 700 gms of jewellery was done and that the AO failed to establish ownership of this jewellery. The Tribunal also noted that the assessee was entitled to credit for 950 gms of jewellery as per CBDT guidelines, against which only 841.10 gms was claimed. Consequently, the Tribunal directed the deletion of the addition of Rs. 3,86,552/-.

Issue 2: Applicability of higher rate of taxation @ 60% under section 115BBE

The assessee contended that the higher rate of taxation under section 115BBE was not applicable. The CIT(A) upheld the AO's decision to tax the jewellery under section 115BBE, stating that the jewellery found during the search was not business stock. However, since the Tribunal deleted the addition of Rs. 3,86,552/-, the issue of higher taxation became moot.

In conclusion, the Tribunal allowed the appeal of the assessee, deleting the addition of Rs. 3,86,552/- and rendering the issue of higher taxation under section 115BBE moot.

Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board.