2023 (4) TMI 185 - AT - Income Tax

Unexplained jewellery - objection of the assessee that the AO failed to consider the explanation offered by the assessee and without confronting with the real owner of the jewellery he, in an arbitrary manner, made the addition - HELD THAT - Before the Assessing Authority as stated that the jewellery found in the locker belonged to third party. We find merit in the contention of the assessee that without confronting third party who had herself confirmed about the ownership of the jewellery CIT(Appeals) was not justified in sustaining the addition - direct AO to delete the impugned addition. Hence, the ground of appeal is allowed. Addition u/s 69A on account of cash found during the search - In respect of this addition it is stated that a sum of Rs. 3,31,200/- belonged to the company namely M/s Dolsun Containers Pvt. Ltd. in which the assessee was a director. The agreement to sell is also placed on record. Considering the same as considered view that this evidence ought to have been considered and same could not be brushed aside. Therefore, the addition of Rs. 3,31,200/- out of Rs. 5,00,000/- in respect of cash found during the course of search is deleted. Remaining addition is sustained.

Summary

Issues Involved:
The judgment involves issues related to income tax assessment for the assessment year 2018-19, specifically regarding additions made by the Assessing Officer on account of unexplained jewellery and cash found during search operations.

ITA No. 2204/Del/2022 (A.Y. 2018-19):
The appeal pertains to the order of the Commissioner of Income-tax (Appeals) where the Assessing Officer added unexplained jewellery amounting to Rs. 31,78,150/- to the income of the assessee. The assessee contended that the jewellery belonged to a third party, Smt. Sakshi Kaura, and not to the assessee. The Tribunal found merit in the contention, directing the Assessing Officer to delete the addition due to lack of proper verification of ownership.

ITA No. 2203/Del/2022 (A.Y. 2018-19):
In this appeal, Shri Sunil Sethi challenged additions made by the Assessing Officer on account of unexplained jewellery and cash found during search operations. The Tribunal considered evidence presented regarding the cash amount, agreeing that a portion of it belonged to a company in which the assessee was a director. The Tribunal deleted the addition related to the cash amount but sustained the addition for unexplained jewellery. The Tribunal directed the Assessing Officer to delete the addition after finding that the ownership of the jewellery was not properly verified.

Separate Judgment Delivered by Judges:
The judgments for ITA No. 2204/Del/2022 and ITA No. 2203/Del/2022 were delivered together, with the former being allowed and the latter being partly allowed. The Tribunal emphasized the importance of proper verification of ownership in cases of additions made on account of unexplained assets, directing the Assessing Officer to delete the additions where ownership was not conclusively established.

Order Pronounced:
The order was pronounced on 10th March, 2023, with the Tribunal allowing ITA No. 2204/Del/2022 and partly allowing ITA No. 2203/Del/2022 based on the merits of each case and the evidence presented regarding the ownership of assets in question.