2020 (8) TMI 126 - AT - Income Tax

Unexplained jewellery - silver jewellery so found belongs to all the family members as stated by the assessee in his statement recorded u/s 132(4) - HELD THAT - Once it is accepted that these items belong to all family members and where the assessee has thereafter given specific details regarding such items identified to each of the individual members as per his submissions dated 18.08.2017, the remaining items should therefore be accepted as belonging to respective family members and not just that of the assessee only. Secondly, the assessee and her mother have already declared silver jewellery items in their respective wealth tax returns which need to be considered. In case of assessee, he has declared 0.5 kgs of silver in his wealth tax return for A.Y 92-93 and to that extent, the same stand explained. Therefore, as against 1.480 kgs of silver items belonging to the assessee, he has already declared 0.5 kgs of silver in his wealth tax return for A.Y 92-93. The possession of remaining 0.98 kgs of silver items over the period of 24 years and given the societal customs of accepting/buying such items on occasion of birth and other social functions seems reasonable and the addition sustained by the ld CIT(A) is hereby deleted. - Appeal of the assessee is allowed.

Issues:
1. Addition of unexplained jewellery by the Assessing Officer.
2. Confirmation of the addition by the ld. CIT(A) for silver ornaments and jewellery.
3. Application of CBDT circular No. 1916 dated 11-05-1994.
4. Assessment of unexplained investment in silver items and jewellery.

Analysis:
1. The assessee appealed against the addition of ?1,50,000 made by the Assessing Officer for unexplained jewellery. The search and seizure operation revealed jewellery items in the locker operated by the assessee's mother. The authorized valuer valued the items, but the AO disagreed with the valuation. The AO considered a portion of the jewellery unexplained and added it to the taxable income under Section 69A of the IT Act, initiating penalty proceedings. The Tribunal noted discrepancies in the AO's assessment and ruled in favor of the assessee, deleting the addition as the jewellery belonged to multiple family members and had been partially declared in wealth tax returns.

2. The ld. CIT(A) confirmed the addition of ?1.50 lakhs related to silver ornaments and jewellery. The assessee failed to provide a satisfactory source for the investment in silver items. The Tribunal considered the explanations provided by the assessee, witnesses, and family members. It noted that the silver items belonged to various family members and had been partially declared in wealth tax returns. The Tribunal found the AO's estimation flawed and deleted the sustained addition of ?1,50,000, as it was based on incomplete assessment and failed to consider the family ownership of the items.

3. The appellant invoked CBDT circular No. 1916 dated 11-05-1994, highlighting the cultural significance of possessing silver ornaments in Indian society. The Tribunal considered the family's possession of silver items and the societal customs of acquiring such items on special occasions. It emphasized that the authorities should have accepted the family's ownership of the silver jewellery and coins, especially when the possession had been declared in wealth tax returns. The Tribunal ultimately ruled in favor of the appellant, deleting the impugned addition.

4. The Tribunal analyzed the valuation and ownership of the silver items in detail. It noted discrepancies in the AO's assessment, including the failure to consider the family ownership of the items and the partial declarations in wealth tax returns. The Tribunal emphasized that the remaining silver items should be accepted as belonging to respective family members, not solely to the assessee. Considering the societal customs and declarations in wealth tax returns, the Tribunal deleted the addition sustained by the ld. CIT(A), providing relief to the assessee.

In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing the importance of considering family ownership, societal customs, and declarations in wealth tax returns when assessing unexplained jewellery and investments.

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