2023 (8) TMI 511 - AT - Income Tax

Unexplained jewellery - search and seizure operation concluded - claim of assessee was that the assessee is a member of enlarged close knit family, who is also assessed with Centre Circle, Karnal and there are two ladies in the family and the jewellery is interchanged between all the members as and when required - AO observed that the assessee is income tax payee and return income is below taxable limit. HELD THAT - As husband of the assessee, staying under the same roof with the assessee ha disclosed an amount equal to the unaccounted jewellery seized or belonging to his family. In the group case of Pallavi Mittal 2021 (9) TMI 1335 - ITAT DELHI considered the similar details filed by father-in-law of assessee Pallavi Mittal and observed that the very purpose of centralization of the cases of family members is to have a comprehensive understanding and determination of undisclosed income. Accordingly, in that case the undisclosed income accounted by the father-in-law was taken into account for the jewellery allegedly found in the locker of Pallavi Mittal. The seized component of the assessee has been duly accounted by her husband. Revenue authorities have given the benefit to the assessee of the Circular No. 1916 dated 11.05.1994 at the time of search by not seizing the entire jewellery worth Rs. 5,18,310/- in the hands of Shri Sat Narain Mittal and Rs. 29,44,036/- in the hands of assessee Urmil Mittal. The assessee is a married woman and not assessed to wealth-tax returns. Her claim of being into possession of family jewellery could not have been completely discarded. The benefit given could not have been withdrawn without evidence to contrary. The arguments raised on behalf of the Revenue on the basis of reference to Section 110 of the Evidence Act, which provides that where a person is found in possession of anything the burden of proving that he is not the owner is on the person who affirms that he is not the owner, is not applicable to the facts as in the case in hand with regard to the claim of assessee that the jewellery was family jewellery and a part of which has been disclosed as unaccounted income by the husband, justifies and explains her claim. Appeal of the assessee is allowed.

Summary

Issues involved: Appeal against order dated 29.12.2017 of CIT(A)-2, Gurgaon regarding addition of Rs. 36,81,549/- as undisclosed investment in jewellery under Income Tax Act, 1961.

Summary:

Issue 1: Addition of Rs. 36,81,549/- as undisclosed investment in jewellery.

The appeal was filed against the order of CIT(A)-2, Gurgaon regarding the addition of Rs. 36,81,549/- as undisclosed investment in jewellery. The assessee claimed that the jewellery found in the locker belonged to the family and was interchanged among family members. The AO made the addition as the sources of jewellery were not satisfactorily explained. The CIT(A) upheld the addition, stating that the jewellery found in the locker was not covered by the undisclosed income declared by the husband of the assessee. The AR argued that the jewellery was family jewellery and part of it had been disclosed as unaccounted income by the husband. The Tribunal observed that the seized component of the jewellery had been duly accounted for by the husband, and the benefit given to the assessee under Circular No. 1916 dated 11.05.1994 could not have been withdrawn without evidence to the contrary. The Tribunal allowed the appeal of the assessee, stating that the burden of proving ownership was on the person claiming otherwise, and in this case, the claim of the assessee regarding family jewellery was justified and explained.

Order: The appeal of the assessee was allowed.

Judges:
- Sh. N.K.Billaiya, Accountant Member
- Sh. Anubhav Sharma, Judicial Member

This summary provides a detailed overview of the issues involved in the legal judgment, focusing on the specific arguments, findings, and conclusions related to the addition of undisclosed investment in jewellery.