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TMI Blog2023 (7) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... and silver articles found in the possession of son and wife. Additions towards remaining Jewellery - HELD THAT:- When the assessee has explained source for purchase of new gold jewellery and diamond jewellery and such source is available to explain the shortage or excess gold jewellery and diamond jewellery found during the course of search, the AO ought to have allowed telescopic benefit towards excess jewellery. CIT(A), without appreciating relevant facts simply sustained additions made by the AO. - AO directed to delete additions made towards excess gold jewellery and diamond jewellery found during the course of search and assessed in the hands of the assessee. Appeal filed by the assessee is allowed. - ITA No.: 1096/Chny/2022 - - - Dated:- 28-6-2023 - Shri V. Durga Rao, Hon ble Judicial Member And Shri Manjunatha. G, Hon ble Accountant Member For the Appellant : Shri. D. Anand, Advocate For the Respondent : Shri. D. Hema Bhupal, JCIT ORDER PER MANJUNATHA. G, ACCOUNTANT MEMBER: This appeal filed by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Appeals)-18, Chennai, dated 18.10.2022 and pertains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant. 9. For the above reasons and other reasons that may be adduced at the time of hearing, the Order u/s 250 by the CIT(A) may kindly be quashed and justice be rendered. 10. The appellant craves to amend, alter or delete any of the above grounds of appeal. 3. The brief facts of the case are that, the assessee is an individual and also director in Saravana Global Holdings Limited. The assessee belongs to Challani group of concerns. A search and seizure action u/s. 132 of the Income-tax Act, 1961 (hereinafter referred to as the Act ) was conducted in the Challani Group of Companies on 19.04.2012. During the course of search, gold jewellery of 8611.100 gms, silver articles of 75.805 kgs and diamond of 207.65 carats were found and seized from the bedrooms of Padham Challani, the appellant and Shri. Ajeeth P Challani, son of the appellant and from the locker of Smt. Shobha Challani, wife of the appellant. The details of gold jewellery, diamond jewellery and silver articles found during the course of search was provided in Para 6.2 of appellate order. During the course of assessment, it was noticed that as per wealth tax returns filed before the date of search, the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellery of his wife to the extent of 500 gms and jewellery belongs to his son for 100 gms and confirmed balance excess jewellery found during the course of search and assessed in the hands of the assessee including jewellery belongs to his wife and son. The relevant findings of the CIT(A) are as under: 6.10 Decision on the excess jewellery; 6.10.1 In the original assessment order u/s 143(3) dated 17.03.2015, the AO has allowed the gold jewellery to the extent appearing in the WT returns of Padam J Challani, Shoba Challani, Jawarilal Padmchand (HUF), Ajith Challani and Late Adharsh Challani (Minor) (Wealth clubbed with Shoba Challani since Adarsh was a minor] for the AY 2001- 02 and as appearing in the WT return of Pooja Challani for the AY 2002-03, all filed before the date of search. Whereas in the impugned assessment order u/s 143(3) r.w.s 254 dated 17.10.2018, the AO has not considered the gold jewellery as appearing in the WT returns of Shoba Challani (including minor Adharsh) and Ajith Challani and the reason stated was no evidence filed and the excess jewellery was arrived at 5304.24 grams. As the same has been allowed in the original assessment, the reason stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d jewellery of 1950 grams and 35.570 carats out of the sale proceeds of sale of silver (deficit silver between the quantity found when compared to the quantity in the WT returns already filed), though a claim was made before the Assessing Officer (during the course of set aside assessment) no evidence was produced. Further during the course of search or thereafter no claim or evidence was made/produced by the assessee for this purchases. Even the alleged invoices have no evidentiary value as they are not verifiable in the absence of name, etc. I therefore, reject this claim of the assessee. 6.11 Silver: 6.11.1 As regards silver, the deficit was arrived at 97. 7 kg in the original assessment order u/s 143(3) dated 17.3.2015; AO after fairly giving 10 kg allowance on account of personal effects, considered remaining 87.7 kg as deficit stock arisen on account of unaccounted sale of silver and arrived at the LTCG as follows: Price as on 31.03.2001@ Rs. 7,215 x 87.7Kgs=Rs. 6,32,756/- Price as on 19.04.2012@ Rs. 56,300 x 87.7Kgs= Rs. +9,37,510/- Capital gains = Rs. 43,04,754/- 6.11.2 However, in the assessment order u/s 143(3) r.w.s 254 dated 17.10.2018, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the claimed sale of silver within the due dates u/s 139(1)/ 139(4)/ 139(5). But, it filed its income tax return for AY 2011-12 only on 2.6.2016 much after the search date, that too without paying any capital gains tax on the said silver sale, claiming the entire silver as personal effect as exempt, which is an eyewash. Hence, this claim of the assessee deserves to be ignored. 6.11.6 The assessee claims that the entire silver 97.7 kg is personal effect and cannot come under the definition of capital asset for WT. It is worth mentioning here that a reasonable allowance of 10 kg has been duly given for possible personal effects and remaining 87. 7 kg only has been taken in the calculation and it would be nobody's case that entire 97.7 kg could be personal effect, for which the assessee has not furnished any evidence. As due allowance towards personal effects has already been given, the decisions cited have no relevance here. 6.11.7 The deficit silver has been arrived at based on the search at the assessee's premises. The deficit silver has been quantified after duly taking into account the quantum of silver in the hands of other family members as shown in their wea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther submits that if you exclude jewellery belonging to his wife and son, the excess jewellery belongs to the assessee was only 693.85 gms of gold and 35.570 carats of diamond. Further, said gold jewellery and diamond jewellery was purchased out of sale proceeds of silver utensils for which the assessee has computed long term capital gains and paid taxes. Therefore, credit must be given to long term capital gains computed on sale of jewellery. 7. The ld. DR, on the other hand supporting the order of the CIT(A) submits that during the course of search, jewellery was found in the premises belonging to the assessee. Although, some of jewellery was found in the bedroom of his son and locker of his wife, since the assessee is a joint family residing in a single house, it is for the assessee to explain total jewellery found during the course of search with his known source of income. Since, the assessee was unable to explain excess jewellery found during the course of search, the CIT(A) rightly sustained additions made by the Assessing Officer by allowing prescribed quantity of jewellery for married women and men as per CBDT Circular and thus, there is no error in the order of the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the remaining excess jewellery found in the name of the appellant was only 693.85 gms of gold jewellery and 35.570 carats of diamond jewellery. The claim of the assessee was that there is a shortage of 97.735 kg of silver articles during the course of search, when compared to silver articles declared in the wealth tax returns and the same has been sold by the assessee. The assessee further claimed that he had purchased gold jewellery and diamond jewellery out of sale proceeds of silver utensils. According to the assessee, he had purchased 1950 gms of gold jewellery and 35.570 carats of diamond jewellery out of sale proceeds of silver articles. If you allow credit for jewellery purchased out of sale proceeds of silver articles, then there would be no excess gold jewellery and diamond jewellery in the hands of the appellant. The Assessing Officer is not disputed these facts, but not allowed the claim for deduction towards new jewellery purchased out of sale proceeds of silver articles only for the reason that the assessee could not produce bills and vouchers. We find that the Assessing Officer is completely erred in disregarding arguments of the assessee for the simple reason that wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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