2019 (1) TMI 469 - AT - Income Tax

Assessment u/s 153A - Unexplained investment in jewellery - Jewellery recovered from her locker belong to other individuals - benefit of circular of CBDT Instruction No.1916 prescribes the limit that gold jewellery and ornaments to the extent of 500 grams per married lady, 2520 grams per unmarried lady and 100 grams per male member of the family - Held that - CIT(A) gave benefit of CBDT circular to the extent of 700 gms. only. Rest of the addition was sustained. It is undisputed that before A.O., the assessee had stated that the jewellery recovered from her locker belong to other individuals. A.O. rejected the contention on the basis that no return was being filed. No documentary evidence was submitted in respect of gifts, etc. No evidence was produced to prove that jewellery is related to other individuals namely Smt. Mandakini Roy and Smt. Mansi Roy Srivatsav. A.O. ought to have made enquiry from other persons. No such enquiry was made. Ld. CIT(A) also in a mechanical manner without conducting any enquiry from the other members of the family proceeded to give benefit to the extent of 700 gms. only. A.O. ought to have made enquiries from the other persons. In the absence of such enquiry, in our view, addition so made is not justified. It is also common practice in Indian household that ladies share their locker for storing ornaments with other family members. The jewellery is received in the form of gift, then the A.O. should have atleast made enquiries from the persons from whom such gift was received. Therefore, considering the totality of the facts, addition made by the A.O. is not sustained. We direct the A.O. to give benefit of the circular of CBDT and delete the addition. Grounds raised in this appeal are allowed.

Summary

Issues:
1. Justification of order by CIT(A)-III, Bhopal
2. Consideration of CBDT Instruction No.1916
3. Assessment of investment in jewellery
4. Submission of supporting evidence before authorities
5. Application of CBDT circular in assessment

1. Justification of order by CIT(A)-III, Bhopal:
The appeal by the assessee was directed against the order of CIT(A)-III, Bhopal dated 13.9.2017 pertaining to the assessment year 2015-16. The grounds of appeal raised by the assessee included challenging the justification of the order by CIT(A)-III, Bhopal as being beyond the facts and circumstances of the case.

2. Consideration of CBDT Instruction No.1916:
The issue revolved around the erred passing of the order by CIT(A)-III under section 250 of the Income Tax Act, 1961. The dispute arose from the proportionate allowance of gold jewellery and ornaments weighing 700 grams while disallowing the remaining 266.5 grams. The appellant argued for the consideration of CBDT Instruction No.1916, which prescribes limits for gold jewellery and ornaments based on gender and marital status within the family.

3. Assessment of investment in jewellery:
The assessment of investment in jewellery was conducted following a search & seizure operation under section 132(1) of the Income Tax Act, 1961 at residential and business premises associated with Regal Homes and Dwarkadheesh Haveli Builders Group. The assessment resulted in an addition of &8377;24,52,309/- on account of investment in jewellery, which was partially deleted by the CIT(A) and sustained to the extent of 266 grams.

4. Submission of supporting evidence before authorities:
The assessee submitted detailed explanations during the assessment proceedings, including the source and ownership of the jewellery found during the search operation. However, the Assessing Officer rejected these submissions due to lack of documentary evidence, non-filing of returns, and failure to prove the acquisition of jewellery through accounted income or gifts. The rejection was based on the absence of bills, vouchers, and supporting documents.

5. Application of CBDT circular in assessment:
The application of the CBDT circular was crucial in determining the quantum of jewellery found during the search operation. The CIT(A) provided benefit to the extent of 700 grams based on the circular guidelines, but failed to conduct further enquiries or consider evidence related to the ownership and acquisition of jewellery by other family members. The Tribunal directed the Assessing Officer to give full benefit of the circular and delete the addition, emphasizing the need for proper enquiry and consideration of familial arrangements regarding jewellery ownership.

In conclusion, the Tribunal allowed the appeal filed by the assessee, highlighting the importance of following CBDT guidelines, conducting thorough enquiries, and considering supporting evidence in assessments related to jewellery investments.