2019 (8) TMI 1393 - AT - Income Tax

Additions towards Unexplained gold jewellery found during the course of search action - personal effect - HELD THAT - The probability of any part of the gold jewellery having been received by the assessee or his family members as gifts was also ruled out by the A.O, who observed that except for a gift deed for 100 gms of gold gifts received by Smt. Swati Joshi Vora from her parents, no other confirmations of gifts received by the assessee or his family members was placed on record. As the assessee could not put forth an explanation as regards the gold jewellery (weight 938.03 gms) of a value of ₹ 22,70,314/-, therefore, the A.O after considering gold jewellery (weight 100 gms) of a value of ₹ 2,80,000/- as explained, made an addition of the balance gold jewellery (weight 838.03) of a value of ₹ 19,90,313/- as an unexplained investment in the hands of the assessee. CIT(A) after taking cognizance of the CBDT Instruction No. 1916, dated 11.05.1994, had observed that as observed by various courts, gold jewellery found to the extent of the limit mentioned in the aforesaid instruction was to be treated as explained and no addition could be made to that extent. On the basis of his aforesaid observations, the CIT(A) had after considering 600 gms of gold jewellery 500 gms for assesses wife ( ) 100 gms for the assessee as explained jewellery, therein restricted the addition as regards the balance jewellery (weight 338.03 gms) of a value of ₹ 8,18,134/-. CIT(A) by adopting a liberal approach had already granted substantial relief to the assessee. As is discernible from the orders of the lower authorities, the CIT(A) had after giving benefit of gold jewellery of 600 gms 500 gms for the assesses wife ( ) 100 gms for assessee , had rightly observed that balance gold jewellery (weight 338.03 gms) of a value of ₹ 8,18,134/- was to be treated as an unexplained investment in the hands of the assessee. No infirmity arises from the aforesaid well reasoned order of the CIT(A), therefore, finding no merit in the appeal filed by the assessee, we dismiss the same. - Decided against assessee.

Summary

Issues:
1. Addition of unexplained gold jewellery during search action

Analysis:
The appeal before the Appellate Tribunal ITAT Mumbai involved the addition of unexplained gold jewellery found during a search and seizure action under Sec. 132(1) of the Income Tax Act, 1961. The total value of gold and diamond jewellery found during the search proceedings was &8377;1,03,67,275. The Assessing Officer (A.O) made an addition of &8377;19,90,313 as unexplained investment in the hands of the assessee, considering 100 gms of gold jewellery as explained. The CIT(A) referred to CBDT Instruction No. 1916 and various judicial pronouncements to determine the permissible limit of gold jewellery to be treated as explained. The CIT(A) allowed a benefit of 600 gms of gold jewellery for the assessee and his wife, holding the balance of 338.03 gms as unexplained, resulting in an addition of &8377;8,18,134.

The assessee challenged the CIT(A)'s order before the Appellate Tribunal. However, as the assessee did not appear during the appeal hearing, the Tribunal proceeded as per Rule 25 of the Appellate Tribunal Rules, 1963. The Departmental Representative supported the lower authorities' orders, stating that the CIT(A) correctly upheld the addition due to the lack of substantiation regarding the source of the gold jewellery.

Upon reviewing the case, the Tribunal noted that the assessee failed to provide any bills, invoices, or explanations for the acquisition of the gold ornaments. The A.O also highlighted the non-filing of wealth tax returns by the assessee, except for one filed by a family member in 1992. The Tribunal concurred with the CIT(A)'s application of CBDT Instruction No. 1916 and upheld the addition of &8377;8,18,134 for the unexplained gold jewellery weighing 338.03 gms.

In conclusion, the Tribunal found no merit in the appeal, as the CIT(A) had already granted substantial relief by allowing the explained limit of gold jewellery and treating the balance as unexplained. Therefore, the Tribunal dismissed the appeal, affirming the addition of &8377;8,18,134 for the unexplained gold jewellery.

This detailed analysis covers the issues involved in the legal judgment, providing a comprehensive overview of the case and the decisions made by the authorities involved.