2006 (2) TMI 216 - AT - Income Tax

Summary

Issues:
1. Addition of unexplained income of the assessee.
2. Addition of alleged unexplained expenditure pertaining to jotting of letter.
3. Addition of jewellery as undisclosed income.

Analysis:
1. The appeal challenged the addition of Rs. 2,48,453 as unexplained income of the assessee for the block period. The assessee claimed the amount was wrongly added, stating the jewellery seized belonged to family members and was gifted. The CIT(A) upheld the addition, leading to the appeal. The assessee argued the burden of proof under s. 69C/69D was not discharged by the department, and the seized paper was not connected to the assessee. The tribunal found the addition arbitrary and unjustified, deleting it.

2. The appeal also contested the addition of Rs. 4,75,671 as unexplained expenditure related to a seized letter. The assessee argued the paper was irrelevant, mentioning silk which the assessee never dealt with. The tribunal noted the presumption of ownership from possession was rebuttable, and the initial onus on the assessee was successfully dislodged. The addition was deemed unjustified and deleted.

3. Regarding the addition of jewellery worth Rs. 4,09,267, the assessee provided detailed evidence of gifts received during marriage celebrations, totaling Rs. 3,55,616. The tribunal found the affidavits supporting the gifts were wrongly rejected by the taxing authorities. The valuation of jewellery and stones was discussed, with the tribunal noting the family's status and the need for more consideration. The addition was deemed unwarranted, and the appeals of the assessees were allowed, deleting the additions.