2013 (10) TMI 556 - AT - Income Tax

Unexplained investment u/s 69 - Unexplained jewellery found during search and seizure - Held that - assessee has tried to explain the jewellery as acquired from father and father-in-law sides. The assessee has also explained the jewellery acquired by her and which has been duly recoded and shown in the regular returns filed much before the date of search. Thus the acquisition of jewellery to the extent of 227.010 was duly explained - in so far as credit of jewellery belonging to assessee i.e. 500 gms and her husband i.e. 100 gms was only given by him however the ld. CIT(A) has not given credit for jewellery belonging to minor children of assessee - CBDT Circular No. 1916 dated 11-05-94 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 family members of an assessee belonging to an ordinary Hindu Household - In view of the decision of Hon ble Gujarat High Court vis a vis CBDT Circular No. 1916 dated 11-05-1994 we direct the Assessing Officer to allow further deduction of 100 gms in respect of minor male children and 250 gms in case of minor female children of assessee which the ld. CIT(A) has failed to give. Thus the assessee desires further credits of 350 gms jewellery as belonging to her minor children - Decided in favour of assessee.

Issues Involved:
1. Sustaining an addition of Rs. 3,47,440/- in respect of gold jewellery weighing 316.718 gms.
2. Consideration of the explanation regarding the source of acquisition of the jewellery.
3. Reasonableness of jewellery held by the family in light of Board Circular No. 1916 dated 11-05-1994 and the decision of Hon'ble Gujarat High Court in CIT vs Ratanlal Vayapari Lal Jain.
4. Awarding appeal fees, advocate fees, and incidental charges.
5. Permission to raise additional or alternative grounds.

Issue-wise Detailed Analysis:

1. Sustaining an Addition of Rs. 3,47,440/- in Respect of Gold Jewellery Weighing 316.718 gms:
The assessee contested the addition of Rs. 3,47,440/- for 316.718 gms of gold jewellery. The Assessing Officer (AO) had initially considered 1295.95 gms of jewellery as unexplained, valued at Rs. 14,21,657/-. The assessee had declared Rs. 7,14,183/- as unexplained investment, leaving a balance of Rs. 7,07,474/- added to the total income. The CIT(A) allowed credit for 600 gms (500 gms for the assessee and 100 gms for her husband) and after considering surrendered jewellery of 652.222 gms, determined 316.718 gms as unexplained, confirming the addition of Rs. 3,47,440/-.

2. Consideration of the Explanation Regarding the Source of Acquisition of the Jewellery:
The assessee provided a detailed explanation for the source of the jewellery, including gifts from her father and father-in-law at the time of marriage, purchases from the market, and jewellery belonging to her husband and minor children. The AO did not fully accept these explanations, leading to the disputed addition. The CIT(A) also partially accepted the explanation but did not give full credit for the jewellery claimed to belong to minor children.

3. Reasonableness of Jewellery Held by the Family in Light of Board Circular No. 1916 and the Gujarat High Court Decision:
The CIT(A) referenced Board Circular No. 1916, which allows credit for 500 gms per married lady, 250 gms per unmarried lady, and 100 gms per male member. The CIT(A) also considered the Gujarat High Court's decision in CIT vs Ratanlal Vayapari Lal Jain, which acknowledges the customary holding of jewellery in Hindu families. The CIT(A) gave credit for 600 gms (500 gms for the assessee and 100 gms for her husband) and 227.010 gms for market purchases. However, the Tribunal found that the CIT(A) did not fully apply the Gujarat High Court's decision, particularly regarding jewellery belonging to minor children. The Tribunal directed the AO to allow an additional deduction of 350 gms (100 gms for minor male children and 250 gms for minor female children), resulting in the deletion of the entire addition of 316.718 gms.

4. Awarding Appeal Fees, Advocate Fees, and Incidental Charges:
The Tribunal did not specifically address the request for awarding appeal fees, advocate fees, and incidental charges in the detailed analysis, focusing instead on the primary issues of jewellery and its explanation.

5. Permission to Raise Additional or Alternative Grounds:
The Tribunal did not explicitly address the request to raise additional or alternative grounds, implying that the primary issues were sufficiently addressed within the existing grounds.

Conclusion:
The Tribunal allowed the appeal of the assessee, directing the deletion of the addition of Rs. 3,47,440/- for 316.718 gms of gold jewellery, based on the proper application of Board Circular No. 1916 and the Gujarat High Court's decision. The Tribunal recognized the customary holding of jewellery in Hindu families and provided additional credit for jewellery belonging to minor children, which the CIT(A) had failed to consider. The appeal was pronounced in favor of the assessee on 13-06-2013.

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