2023 (10) TMI 1405 - AT - Income Tax

Unexplained gold ornaments found at the time of search - Addition u/s 69A read with section 115BBE - HELD THAT - As decided in Sh. Ankur Sharma 2023 (10) TMI 653 - ITAT DELHI as relying on Vibhu Aggarwal 2018 (5) TMI 586 - ITAT DELHI held that where Assessing Officer under section 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. Appeal of the assessee is 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.
2. Consideration of jewellery belonging to the daughter.
3. Legality of penalty notice under Section 271AAB and interest charged under Section 234A/B/C/D.

Issue-wise Detailed Analysis:

1. Addition of Rs. 20,44,870/- as Unexplained Jewellery:
The assessee contested the addition of Rs. 20,44,870/- (1/3rd of Rs. 61,34,610/-) made by the Assessing Officer (AO) as unexplained jewellery found during a search operation. The AO, invoking Section 69A read with Section 115BBE, treated 1627.5 grams of gold jewellery as unexplained after considering the permissible limits under CBDT Instruction No. 1916 dated 11.05.1994 and the press release dated 01.12.2016. The AO distributed the unexplained jewellery value among the assessee, his father, and his brother.

2. Consideration of Jewellery Belonging to the Daughter:
The assessee argued that the jewellery belonging to his daughter was also kept in the house and should be considered. However, the Commissioner of Income Tax (Appeal) [CIT(A)] dismissed this argument due to a lack of conclusive evidence. The CIT(A) upheld the AO's decision, noting that the assessee failed to provide specific evidence such as purchase bills, wealth tax evidences, and valuation certificates to substantiate the source and ownership of the jewellery.

3. Legality of Penalty Notice and Interest Charges:
The assessee also challenged the penalty notice issued under Section 271AAB and the interest charged under Section 234A/B/C/D. However, the judgment primarily focused on the unexplained jewellery issue, and no detailed analysis was provided regarding the penalty and interest charges.

Judgment Analysis:
The Tribunal considered the facts and circumstances of the case, including the financial status of the assessee's family, which had substantial income and withdrawals over the years. The Tribunal referred to various judicial precedents that supported the assessee's claim that jewellery accumulated over years through inheritance, marriages, and customary gifts should not be treated as unexplained.

Key references included:
- Ashok Chaddha vs. ITO: The Delhi High Court held that it is normal for a woman to collect jewellery over 25-30 years of married life.
- Vibhu Aggarwal vs. DCIT: The ITAT Delhi ruled that excess jewellery found in a wealthy family, received on various occasions, should not be treated as unexplained.
- Suneela Soni vs. DCIT: The ITAT Delhi accepted the explanation of jewellery accumulation based on family status and customs.

The Tribunal concluded that the AO's reliance on CBDT Instruction No. 1916 for limiting the permissible jewellery was misplaced and did not consider the family's financial status and customary practices adequately. Consequently, the Tribunal directed the deletion of the addition made on account 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 financial status, customary practices, and judicial precedents in such matters. The order was pronounced in the open court on 06/10/2023.