2022 (9) TMI 1268 - AT - Income Tax

Jewellery seized during the course of search - disclosure made by him in VDIS-97 and IDS-2016 - assessee filed a letter in the office of DDIT (Investigation) along with VDIS certification and valuation report stating that all the gold / diamond jewellery found from residence / lockers and valued by the various Government approved valuer is fully explained and supported by necessary documents / evidences and requested for release of jewellery seized during the search action - HELD THAT - There are two adult ladies in the family i.e. assessee s wife and assessee s daughter (who got recently married). The ld. AR had pleaded in his written submissions that the value of addition towards gold coins constitute 2.16% of the gold and diamond jewellery found at the time of search which is insignificant compared to the stature of the assessee. We find that assessee had disclosed substantial amount of time and gold jewellery in VDIS 97 itself. During the intervening period of 22 years it is very likely that the household ladies resorting to change the old jewellery to be in tune with the latest fashion or design thereon. This fact has been duly submitted by the assessee before the ld. AO which was not accepted. In fact the assessee had also submitted that the diamond jewellery had been changed to be in tune with the latest trend and fashion which had resulted in reduction in carats of diamond and correspondingly, contributed to increase in gold jewellery. We are inclined to accept this line of argument advanced by the ld. AR in his written submissions and also the submission made before the lower authorities. However, it is also a fact that assessee had not brought any material on record to prove the receipt of gifts in the form of gold coins completely. As stature of the assessee and also considering disclosure made by him in VDIS-97 and IDS-2016, we hold that assessee should be given credit to the tune of 137 gms in the form of gifts received by it on various occasions. Accordingly, 100 gms of gold coins alone would be subject matter of addition. AO is directed accordingly to recomputed the addition. Hence, the grounds raised by the assessee are partly allowed.

Summary

Issues:
1. Addition of Rs.7,39,440/- for jewellery seized during search.

Analysis:
The appeal in ITA No. 1546/Mum/2021 for A.Y. 2018-19 questions the addition of Rs.7,39,440/- for jewellery seized during a search. The only issue to be decided is whether the ld. CIT(A) was justified in upholding this addition. The assessee, an individual deriving income from business and profession, filed the original return of income for A.Y. 2018-19 declaring total income of Rs.31,08,000/-. A search and seizure action under section 132 of the Income Tax Act, 1961 was conducted, revealing jewellery valued at Rs.1,95,03,439/-. Further jewellery amounting to Rs.1,47,12,701/- was found during the operation of a locker. The ld. AO observed discrepancies in the source of jewellery worth Rs.3,42,16,142/-, leading to the addition in question.

In response, the assessee claimed that the jewellery belonged to family members and explained alterations in the jewellery due to design changes. The ld. AO, however, proceeded to make the addition for diamond jewellery, which was later deleted by the ld. CIT(A). The gold coins totaling 237 grams were also disputed, with the assessee explaining them as gifts received on various occasions. The ld. AO treated the value of these gold coins as unexplained, a decision upheld by the ld. CIT(A).

The Tribunal found that the gifts of gold coins were a customary practice, especially during auspicious occasions and marriages. Considering the stature of the assessee and the explanations provided, the Tribunal held that only 100 grams of gold coins should be subject to addition, directing the ld. AO to recompute the addition. Therefore, the grounds raised by the assessee were partly allowed, resulting in the partial allowance of the appeal.

In conclusion, the Tribunal partially allowed the appeal, directing the ld. AO to recompute the addition for the gold coins. The decision was pronounced on 23/09/2022.