2025 (3) TMI 459 - AT - Income Tax

Addition u/s 69A - unexplained jewellery out of the total gold jewellery and silver article found from the locker - HELD THAT - It is a matter of fact that the said Sh. S. S. Lal had already filed affidavit before the AO on his behalf stating that he along with his spouse have for jointly gifted 300 gram jewellery to the Assessee which has been accepted. There is no such bar on late Vimla Devi gift additional 350 grams jewelery on her behalf apart from gifting 300 grams of jewellery jointly along with husband. On keeping the relationship between the donor and the Assessee in mind and we are of the opinion that the CIT(A) committed error in rejecting the claim of the Assessee regarding 350 grams jewellery without appreciating the facts narrated in the affidavit. In respect of the gold jewellery of 27.9 grams are concerned the same has been valued at Rs. 82, 703/-. Considering the statues of the family which is admittedly been searched the authorities below have committed error in doubting the same. In any case the said 27.900 grams could have been accepted as Stridhana . Regarding the silver jewelry of 85.5 grams are concerned as per the valuation the same is valued at Rs. 3, 420/- however the AO committed error in valuing the said silver item at gold rates. Considering the smallness of the amount which is valued we are of the opinion that the Lower Authorities have committed error in doubting the same. Appeal of the Assessee is allowed.

Summary

The present appeal was filed by the Assessee against the order of the Commissioner of Income Tax (Appeals) dated 20/06/2023 for the Assessment Year 2020-21. The key issues presented in the appeal were as follows:1. Whether the assessment proceedings were valid due to the absence of a mandatory Document Identification Number (DIN) in the notice issued under section 143(2) of the Income Tax Act.2. Whether the subsequent notice issued with a DIN after the prescribed time limit was valid.3. Whether the assessment order communicated on the Income Tax Business Application (ITBA) platform was legally sustainable.4. Whether the addition of Rs. 12,93,307 under section 69A of the Act as unexplained jewelry was justified.5. Whether the calculations of the alleged unexplained jewelry were accurate.The Tribunal dismissed the Assessee's first three grounds as not pressed. The main contention of the Assessee was that the addition of Rs. 12,93,307 as unexplained jewelry was erroneous. The Assessee argued that the Assessing Officer (AO) erred in not accepting 350 grams of gold gifted by her deceased mother-in-law and in doubting the legitimacy of certain gold and silver items found in the locker.The Departmental Representative argued that the Assessee failed to provide a satisfactory explanation for the jewelry gifted by her late mother-in-law and that the affidavits submitted were contradictory. The Departmental Representative sought to uphold the addition made by the AO.After considering the arguments and evidence, the Tribunal found that the late mother-in-law had indeed gifted the 350 grams of gold jewelry independently, as confirmed by the father-in-law in his affidavit. The Tribunal held that the CIT(A) erred in rejecting the Assessee's claim regarding this jewelry.Regarding the other disputed items, the Tribunal found that the AO had erred in doubting the legitimacy of the 27.9 grams of gold and the 85.5 grams of silver jewelry. The Tribunal concluded that these items could have been accepted as 'Stridhana' and that the valuation of the silver jewelry at gold rates was incorrect.In light of the above findings, the Tribunal allowed the Assessee's appeal and deleted the addition of Rs. 12,93,307. The Tribunal's decision was based on the errors identified in the assessment of the jewelry and the failure to consider the evidence provided by the Assessee.In conclusion, the Tribunal ruled in favor of the Assessee, finding that the addition of unexplained jewelry was not justified based on the evidence and arguments presented during the proceedings.