2018 (11) TMI 379 - AT - Income Tax

Levy of penalty u/s. 271(1)(c) - undisclosed jewellery - streedhan - Held that - Rendering an explanation as to the entire jewellery being her streedhan and as belonging to other two ladies, which stands accepted by the Revenue in part. The finding of the relevant asset (gold and diamond jewellery) in the present case, as being the assessee s property, could, u/s. 69B, however, be validly invoked by the Revenue only where the same stands found from her possession, as from her room, locker, etc. or, even otherwise, shown to be under her control. An explanation could only follow a finding as to the relevant asset/s as belonging to the assessee. The issue, we may clarify, is not if the assessee owns any jewellery, which she admittedly does, but as to what extent? This is as, apart from other family members, there are two ladies in the house who could also have streedhan or otherwise own the jewellery found. The allowance of a part relief by the Revenue in quantum proceedings on that ground is, again, without any basis in facts, and merely a guess work. The primary onus on the Revenue being not discharged, while jewellery to some extent accepted as being the assessee s streedhan, no case for levy of penalty is, under the circumstances, made out. - Decided in favour of assessee.

Summary

Issues:
Levy of penalty u/s. 271(1)(c) of the Income Tax Act, 1961 for AY 2010-11 based on jewellery found during search u/s. 132.

Analysis:
The appeal was against the order confirming the penalty under section 271(1)(c) of the Income Tax Act, 1961, for the assessment year 2010-11. The assessee claimed that the jewellery found during a search was her streedhan, supported by a credit of ?6 lacs allowed by the Assessing Officer. The CIT(A) further allowed a relief of ?8.29 lacs, considering the presence of other ladies in the house. However, in the penalty proceedings, the AO did not accept the explanation, invoking a penalty of ?61,000, which was confirmed in the first appeal. The issue revolved around the interpretation of the Board Instruction No. 1916 dated 11.05.1994, regarding jewellery allowed for married ladies, and whether it applied to explain the source of the jewellery found during the search.

The Tribunal noted that streedhan is the property acquired by a married lady from savings provided by her spouse or male family member. The Tribunal emphasized that there is no standardization for streedhan, as it depends on the amount provided and the duration of marriage. The assessee's explanation that the jewellery was streedhan lacked supporting material and details about other assets acquired post-marriage. The Tribunal highlighted that streedhan could include gifts received during marriage, which were not clarified by the assessee. The Tribunal pointed out that the Revenue was liberal in allowing a credit of ?6 lacs for streedhan but lacked evidence to show the jewellery exclusively belonged to the assessee.

The Tribunal emphasized that the burden was on the assessee to prove ownership of specific jewellery, considering the presence of other ladies in the house. The Tribunal questioned the Revenue's presumption that all jewellery belonged to the assessee without sufficient investigation. The Tribunal clarified that Explanation 5A, applicable post-31.05.2007, was stringent and could be invoked without specific mention. The Tribunal concluded that without clear evidence of exclusive ownership, Explanation 1 read with Explanation 4 would apply. As the Revenue failed to establish exclusive ownership, the Tribunal found no basis for penalty imposition.

In the absence of conclusive evidence showing the jewellery belonged solely to the assessee, the Tribunal allowed the appeal, emphasizing the lack of sufficient proof to justify the penalty. The Tribunal highlighted the need for a factual determination of ownership and control over the jewellery found during the search.