2024 (8) TMI 345 - AT - Income Tax

Unexplained jewellery and cash u/s. 69A - jewellery found during the search - HELD THAT - The jewellery to the tune of 2110 gms has been duly declared in aggregate in the respective Wealth Tax return of the assessee and his wife. The jewellery declared in the Wealth Tax Return override the jewellery found in the course of search of 1903.97 gms and therefore, the jewellery found is broadly explained by direct and circumstantial evidences, Credit of jewellery of belonging to married daughter to the extent of 500 gms in any case, is available to the assessee in terms of CBDT Instruction. It is common knowledge that a married daughter do at times, keep her jewellery and other belongings at the maternal place to safeguard and protect her interest. It is thus the case of the assessee that the entire jewellery is explained. On being inquired by the bench, assessee fairly submitted that once the credit for jewellery relatable to married daughter namely, Priya Sethi is given in terms of CBDT Instruction to the extent of 500 gms, the grievance of the assessee would be broadly redressed and therefore, urged for granting relief to the extent of 500 gms without any riders. In respect of remaining 103.97 gms, in order to avoid the protracted allegation, circumstances has given the concession to treat the 103.97 gms as unexplained jewellery - As further hastens to add that no adverse inference however shown drawn for 103.97 gms in penalty proceedings etc. Such concession is being given to bring an end to ongoing litigation. We are convinced with the assertions raised on behalf of the assessee that jewellery are, at times, kept by the married daughters with the maternal family. There is no warrant to deny credit of 500 gms on account of married daughter in terms of CBDT Instruction No. 1916 dated 11th May, 1994. The assessee thus gets the relief to the extent of 500 gms as against aggregate 603.97 gms for which the additions were sustained before the CIT(A). Ground No.1 of the appeal of the assessee is allowed in part. Unexplained cash - counsel fairly submitted that the paper book giving evidence in relation to source of cash was never confronted to the AO and no remand report was obtained either - Keeping in mind, the salutary principles of natural justice on which Rule 46A of the Income Tax Rules is founded upon, we consider it expedient to restore the matter to the file of the AO rather than the CIT(A) for examination of such facts afresh as may be placed on behalf of the assessee. The assessee shall be at liberty to adduce such evidences as may be considered expedient in corroboration of source of cash in question and may make such submissions as may be advised. Reasonable opportunity shall be given by the AO to the assessee to justify its case. AO shall take into account all evidences as may be placed and pass speaking order in this regard. Ground No.2 of the appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
1. Addition of unexplained jewellery under Section 69A.
2. Addition of unexplained cash under Section 69A.

Issue 1: Addition of unexplained jewellery under Section 69A:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) concerning the assessment order passed by the Assessing Officer under Section 143(3) of the Income Tax Act, 1961. The grounds of appeal raised by the assessee challenged the additions made on account of unexplained jewellery and unexplained cash under Section 69A of the Act. The counsel for the assessee argued that documents supporting the lack of justification for the additions were filed before the CIT(A) for the first time. The jewellery found during the search was detailed, and the counsel contended that the remaining unexplained jewellery amount was unjustified. The counsel referred to past declarations of jewellery in wealth tax returns to support the explanation for the jewellery found during the search. The Tribunal found merit in the assessee's plea and granted relief for the extent of jewellery related to the married daughter, as per CBDT Instruction, allowing the appeal in part.

Issue 2: Addition of unexplained cash under Section 69A:
Regarding the additions made on account of unexplained cash found during the search, the counsel for the assessee explained that the cash belonged to companies where the assessee was a director and to family members. The counsel argued that the explanations and evidence were overlooked by the CIT(A), leading to the confirmation of the additions. The Tribunal observed that the AO did not consider the evidence related to the source of the cash and decided to restore the matter to the AO for a fresh examination. The AO was directed to allow the assessee to present evidence and submissions, ensuring a fair opportunity to justify the source of the cash. Consequently, the Tribunal allowed this ground of appeal for statistical purposes.

In conclusion, the Tribunal partially allowed the appeal of the assessee, granting relief on the issues of unexplained jewellery and unexplained cash by considering the explanations and evidence presented by the assessee. The matter related to unexplained cash was remanded to the AO for a fresh examination, emphasizing the principles of natural justice and providing the assessee with a fair opportunity to substantiate the source of the cash.