2024 (7) TMI 774 - AT - Income Tax

Unexplained jewellery found in search and seizure - addition being 1179.10 gms - jewellery found during the search stands at 2479.10 gms AO has accepted 1300 gms as attributable to different family members - remaining jewellery being 1179.10 gms has been treated as unexplained on the ground that 514 gms and 250.400 gms stated to be relatable to sisters-in-law i.e. sister of husband was not accepted by the AO - HELD THAT - As per the instruction the Income Tax Department also recognizes holding of such high quantity of jewellery as explained where the assessee is in the high income tax brackets. The assessee has thus sufficiently demonstrated the plausibility for holding gold ornaments in excess of the limit prescribed by the CBDT instruction. We also find merit in the explanation offered by the assessee that credit should be given for gold jewellery and ornaments held in custody of the assessee on behalf of the sister-in-law Smt. Anju Singh and Smt. Surekha Singh. Keeping in mind the overall status of the family as demonstrable from the facts of records whole of the gold ornaments found at the time of search requires to be treated as clearly explained. We refer to the observations made in the case of Ashok Chaddha 2011 (7) TMI 142 - DELHI HIGH COURT wherein collecting jewellery above the limit prescribed in the instruction in a married life of 25 to 30 years was not treated as abnormal. The normal custom of Indian society and realities of life were taken into account by the Hon ble Jurisdictional High Court. The additions made u/s 69A towards gold ornaments are at odds with the decision rendered by the Jurisdictional High Court in Ashok Chhadha (supra) therefore cannot be countenanced. We thus set aside the order of the CIT(A) and direct the Assessing Officer to delete the additions made under Section 69A of the Act on this score. Assessee appeal allowed.

Issues Involved:
1. Withdrawal of duplicate appeal.
2. Treatment of unexplained jewellery found during search and seizure.
3. Applicability of CBDT Instruction No. 1916 dated 11.05.1994.
4. Consideration of family status and customs in explaining jewellery possession.
5. Reference to previous judicial decisions on similar matters.

Issue-wise Detailed Analysis:

1. Withdrawal of Duplicate Appeal:
When the matter was called for hearing, the counsel for the assessee pointed out that two appeals had been filed inadvertently for the same cause of action. Consequently, ITA No.977/Del/2023 was treated as withdrawn based on the written application submitted by the counsel. The Tribunal dismissed ITA No.977/Del/2023 as withdrawn.

2. Treatment of Unexplained Jewellery Found During Search and Seizure:
A search and seizure action under Section 132 of the Income Tax Act was conducted on 27.11.2020 at the premises of the assessee, where jewellery worth Rs. 81,12,090/- was found at the residence and Rs. 12,06,000/- in the locker, totaling 2479.20 gms. The Assessing Officer accepted 1300 gms as explained, attributing it to different family members, and treated the remaining 1179.10 gms valued at Rs. 44,32,030/- as unexplained due to the lack of bills or vouchers. The CIT(A) affirmed the Assessing Officer's decision, leading the assessee to appeal before the Tribunal.

3. Applicability of CBDT Instruction No. 1916 dated 11.05.1994:
The Assessing Officer applied CBDT Instruction No. 1916, which allows 500 gms per married lady, 250 gms per unmarried lady, and 100 gms per male member without seizure. The assessee argued that the instruction does not bar retention above these limits and that the jewellery attributed to the sisters-in-law should be considered explained. The Tribunal noted that the instruction allows for considering the family's status and customs, permitting larger quantities of jewellery.

4. Consideration of Family Status and Customs in Explaining Jewellery Possession:
The Tribunal observed that the assessee and her family members are high net worth individuals, with substantial income reported over the years, justifying the possession of high-value jewellery. The Tribunal acknowledged the common practice in Indian society of women keeping jewellery in their maternal house and accepted the explanation that the sisters-in-law's jewellery was kept in the assessee's custody. The Tribunal found the explanation plausible and aligned with the family's affluent status and customs.

5. Reference to Previous Judicial Decisions on Similar Matters:
The Tribunal referred to the Delhi High Court's decision in Ashok Chaddha vs. ITO, where it was held that collecting jewellery over 25-30 years of married life is not abnormal. The Tribunal also cited the Supreme Court's decision in Pratibha Rani vs. Suraj Kumar, recognizing a Hindu married woman's absolute ownership of her Streedhan property. Additional references were made to decisions by Co-ordinate Benches in similar cases, where high-income status justified holding jewellery beyond CBDT limits.

Conclusion:
The Tribunal concluded that the additions made under Section 69A towards gold ornaments were inconsistent with judicial precedents and the CBDT instruction. The Tribunal set aside the CIT(A)'s order and directed the Assessing Officer to delete the additions. Consequently, the appeal in ITA No.1067/Del/2023 was allowed, and the combined result was the dismissal of ITA No.977/Del/2023 as withdrawn and the allowance of ITA No.1067/Del/2023.

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