2023 (2) TMI 761 - AT - Income Tax

Unexplained gold jewellery and ornament - Search proceedings - CIT(A) allowed the rebate of gold jewellery as per CBDT Instruction No.1916 dated 11.05.1994 - CIT(A) allowed the relief of 950 grams and balance, he held to be unexplained and deleted the making charges added by AO @ 5% - HELD THAT - As noticed that the assessees have purchased this gold through banking channels or through accounting entries, this needs verification. Hence, all these three appeals are remanded back to the file of the AO and orders of AO as well as the CIT(A) restricting the addition are set aside. Assessees will file all these details before AO, who will verify and examine in detail the source of jewellery as well as explanation. In term of the above, all the three appeals are allowed for statistical purposes.

Summary

Issues:
- Time-barred appeals for condonation of delay
- Addition made by AO in regard to gold jewellery and ornament found, treated as unexplained

Analysis:
1. The judgment dealt with three appeals by different assessees arising from orders of the Commissioner of Income Tax (Appeals). The appeals were time-barred by 9 days, but the delay was condoned due to reasonable cause and small duration of the delay, with no objection from the Revenue. The appeals were admitted for adjudication.

2. The common issue in all three appeals was the order of the CIT(A) partly restricting the addition made by the Assessing Officer (AO) concerning gold jewellery and ornaments treated as unexplained. The facts were identical in all three cases, except for the quantity of gold jewellery involved.

3. Taking the facts from one of the appeals, it was noted that the AO treated a certain amount of gold as unexplained based on the search conducted. The AO valued this unexplained gold and added making charges, resulting in a confirmed addition to the income of the assessee.

4. The CIT(A) allowed a rebate of gold jewellery as per CBDT Instruction No.1916, restricting the seizure of jewellery up to certain limits. The CIT(A) allowed a portion of the gold and ornaments, holding the rest as unexplained. Additionally, the making charges added by the AO were deleted.

5. The assessee appealed to the Tribunal, submitting a complete paper-book with evidence of declared gold jewellery in wealth tax returns, bills, and vouchers of jewellery purchases, including entries in the accounts. The Tribunal advised further verification by the AO and remanded the case back to verify the details of jewellery purchased through explained sources.

6. After considering the submissions and evidence, the Tribunal observed that the gold was purchased through banking channels or accounting entries, requiring verification. Consequently, all three appeals were remanded back to the AO for detailed examination of the source of jewellery and explanation provided by the assessees.

7. As a result, all three appeals were allowed for statistical purposes, with the orders of the AO and CIT(A) restricting the addition being set aside. The assessees were directed to provide necessary details for verification by the AO.

This judgment highlights the importance of providing detailed explanations and evidence regarding unexplained additions to income, emphasizing the need for thorough verification by tax authorities to ensure accurate assessments.