2012 (10) TMI 578 - AT - Income Tax

Unaccounted jewelery - search & seizure - Held that - As decided in CIT Versus Ratanlal Vyaparilal Jain 2010 (7) TMI 769 - GUJARAT HIGH COURT Central Board of Direct Taxes Circular No. 1916, dated May 11, 1994, lays down guidelines for seizure of jewellery and ornaments in the course of search, the same takes into account the quantity of jewellery which would generally be held by the family members of an assessee belonging to an ordinary Hindu household. The approach adopted by the Tribunal in following the said circular and giving benefit to the assessee, even for explaining the source in respect of the jewellery being held by the family is in consonance with the general practice in the Hindu families whereby jewellery is gifted by the relatives and friends at the time of social functions, viz., marriages, birthdays, marriage anniversary and other festivals. These gifts are customary and customs prevailing in a society cannot be ignored. Thus, although the circular had been issued for the purpose of non-seizure of jewellery during the course of search, the basis for the same recognizes customs prevailing in the Hindu society. In the circumstances, unless the Revenue shows anything to the contrary, it can safely be presumed that the source to the extent of the jewellery stated in the circular stands explained. In the present case also the marriage of the assessee took place 25 years ago from the date of search and only jewellery was found of 1164 gms consisting of six family members. Therefore, these are not such jewellery which could not be said that could not acquired on account of marriage of the assessee and on account of the other occasions i.e birthdays of the children and various others religious occasions etc. - in favour of assessee.

Summary

Issues Involved:
1. Addition of Rs. 8,95,058/- sustained by CIT(A) out of total addition of Rs. 13,70,058/-.
2. Department's objection to reducing the addition by Rs. 4,25,000/- out of the total addition of Rs. 13,70,058/-.
3. Deletion of the addition of Rs. 12,36,164/- by CIT(A).
4. Deletion of the addition of Rs. 30,21,912/- by CIT(A).
5. Validity of the assessment due to the alleged lack of specific authorization u/s 132.

Detailed Analysis:

1. Addition of Rs. 8,95,058/- sustained by CIT(A) out of total addition of Rs. 13,70,058/-:
The assessee argued that the jewellery found during the search operation, valued at Rs. 17,95,058/-, was her "Stri Dhan" received over the years, including gifts from her marriage in 1981 and subsequent occasions. The Assessing Officer (AO) allowed an allowance of 500 grams valued at Rs. 4,25,000/-, considering it as "Stri Dhan", and added the remaining Rs. 13,70,058/- as unexplained jewellery. The CIT(A) further allowed an additional 500 grams, reducing the unexplained jewellery to Rs. 9,45,058/-.

2. Department's objection to reducing the addition by Rs. 4,25,000/- out of the total addition of Rs. 13,70,058/-:
The department contended that the entire jewellery found should be treated as unexplained in the hands of the assessee, arguing that the Board circular does not exempt the jewellery from being assessed as unexplained income. The Tribunal, however, upheld the CIT(A)'s decision to reduce the addition, recognizing the customary nature of "Stri Dhan" and gifts received by family members on various occasions.

3. Deletion of the addition of Rs. 12,36,164/- by CIT(A):
The jewellery valued at Rs. 12,36,164/- was found in the possession of Smt. Savita Bansal during the search. The AO had issued a query to Smt. Savita Bansal, and upon receiving a satisfactory explanation, did not make any addition in her assessment. The CIT(A) noted that this jewellery was wrongly added to the assessee's income and directed its deletion. The Tribunal confirmed this decision, emphasizing that the jewellery should be considered in the hands of Smt. Savita Bansal, who is separately assessed.

4. Deletion of the addition of Rs. 30,21,912/- by CIT(A):
The AO made an addition of Rs. 30,21,912/-, which included the jewellery valued at Rs. 12,36,164/- and Rs. 17,95,058/-. The CIT(A) observed that this resulted in a double addition, as the jewellery valued at Rs. 17,95,058/- was already considered separately. The Tribunal upheld the CIT(A)'s decision, confirming that the addition was without basis and constituted a double addition.

5. Validity of the assessment due to the alleged lack of specific authorization u/s 132:
The assessee raised a ground regarding the lack of specific authorization for the search u/s 132, arguing that the assessment should be quashed. However, no arguments were advanced on this ground during the proceedings, leading to its dismissal by the Tribunal.

Conclusion:
The Tribunal dismissed the department's appeal and allowed the assessee's appeal in part. The addition of Rs. 12,36,164/- was deleted, and the double addition of Rs. 30,21,912/- was also deleted. The Tribunal recognized the customary nature of "Stri Dhan" and gifts received by family members, ultimately deleting the entire addition made by the AO on account of unexplained jewellery. The ground regarding the lack of specific authorization u/s 132 was dismissed due to the absence of arguments. The order was pronounced in the open court on 11.10.2012.