Case Law Details
Lakshmanan Indirani Vs ACIT (ITAT Chennai)
The assessee was subjected to search action u/s 132 on 08-9-2015. During search operations, the jewellery belonging to the assessee and her family members was found. The jewellery weighed 3574.590 Grams which was valued at Rs.85.78 Lacs. In statement u/s 132(4), the assessee submitted that the jewellery belonged to assessee, her daughter Smt. Padmavathi and two grand-daughters.
During assessment proceedings, the assessee also submitted that the jewellery was acquired by inheritance from her parents, in-laws and some of the jewellery was purchased by her over a period of time. However, the assessee did not file any wealth tax returns and the assessee could not produce purchase bills or any other evidence. Accordingly, the jewellery of Rs.92.64 Lacs (after adding 8% for making charges) was added to assessee’s income u/s 69A.
Upon perusal of family tree as placed on record, the assessee has three daughters and two grand-daughters. The assessee’s husband and one of the daughters are no more. In statement u/s 132(4), the assessee submitted that jewellery belonged to her, one of her daughters and two of grand-daughters. Considering CBDT Circular No. 1916, Ld. CIT(A) has allowed partial relief to the assessee. Further jewellery to the extent of 1081 grams was reflected in the accounts for which the benefit has already been granted to the assessee. The assessee could produce certain bills which have also been factored in by Ld. CIT(A) while granting partial relief to the assessee. We find that concession of 400 grams has been allowed against assessee’s daughter as against 500 grams prescribed in the circular. Further, no concession has been granted for jewellery acquired by the assessee out of customs/ traditions.
Therefore, we grant a further concession of 600 grams (500 grams for assessee + 100 grams for daughter). The concession of 250 grams for each of grand-daughters and 100 grams for husband is quite reasonable which would not require any interference on our part.
ITAT allows
FULL TEXT OF THE ORDER OF ITAT CHENNAI
1. Aforesaid appeal by assessee for Assessment Year (AY) 2016-17 arises out of the order of learned Commissioner of Income Tax (Appeals)-18, Chennai [CIT(A)] dated 20-11-2020 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 31-12-2017. The grounds taken by the assessee read as under:
1. The order of the learned Commissioner of Income tax (Appeals)-18, Chennai dated 20-11-2020 in ITA No.294/17-18 in partly allowing the addition under sec. 69A and upholding the assessing officer’s reasons is against the provisions of law and contrary to facts and circumstances obtained in the case.
2. The learned Commissioner of Income tax (Appeals) should have allowed the appeal in full instead of part. While allowing the appeal in part viz. 1,879.350 grams of gold jewellery on the reasoning as per Page 11, Para 2 as per order which reads as under:
“The appellant had deposed before the Investigation authorities that the jewellery belong to her daughter Mrs. Padmavathy and two grand daughters besides her”. I have bestowed my personal attention to the facts of the case and the family status social norms and customary practices prevailing in the Indian Society in general and in the community to which the appellant belongs to, in particular. It is an accepted practice that jewellery would be given by the bride’s family as shreedhan at the time of marriage; and jewellery would be gifted by relatives and friends on the occasion of various functions such as birth of children, birthdays, ear boring ceremonies, puberty attainment functions etc. The quantum only varies that would depend inter alia on factors such as the family status, community, social norms, traditions, geographical orientations etc. These factors cannot be ipso facto brushed aside. At the same time, it is incumbent on the revenue authorities to be reasonable in bringing such valuables that are reckoned as unexplained to taxation. In the appellant’s case, having held that the appellant is from a reasonably well to do socio / economic back ground, I am of the considered view that a relief of 400 gms of jewellery in respect of her daughter Padmavathy; a relief of 250 grams of jewellery for both the grand daughters and 100 gm for her husband is considered is as reasonable.”
Such being the conclusion, the entire jewellery of 3574.590 grams should have been allowed as explained.
3. The learned Commissioner of Income tax (Appeals) conveniently omitted to consider the sworn statement recorded on 08-09-2015 at the time of action under sec. 132, wherein question to answer item 8.
“The total jewellery comprised of jewellery inherited from my parents, in-laws and also purchased from my own money”.
The appellant relies on decision of Delhi ITAT in the case of Suneela Soni, New Delhi Vs. DCIT, Central Circle-20, New Delhi dated 16-03-2018 in ITA No.5259/DEL/2017 – Asst. Year 2011-12. This decision is squarely applicable in the appellant’s case.
4. The learned Commissioner of Income tax (Appeals) fails to consider the appellant’s additional grounds of appeal under sec. 46A dated 14-01- 2019 in full and no specific reason given for the retention of jewellery of 1695.24 grams. The appellant relies decision of P & H High Court in the case of CIT Vs. Sh. Jawahar Lal Oswal reported in (2016) 382 ITR 453 (P & H)
As is evident, the assessee is aggrieved by confirmation of addition of unexplained jewellery.
2. The Registry has noted delay of 3 days in the appeal, the condo nation of which has been sought by the assessee. Considering the period of delay, we condone the same and admit the appeal for adjudication on merits.
2. The Ld. AR relied on CBDT Circular No.1916 dated 11-05-1994 to support the submissions. The Ld. DR, on the other hand, submitted that adequate relief, as applicable, has already been granted by the lower authorities. Having heard rival submissions, our adjudication would be as under.
3.1 The assessee was subjected to search action u/s 132 on 08-9- 2015. During search operations, the jewellery belonging to the assessee and her family members was found. The jewellery weighed 3574.590 Grams which was valued at Rs.85.78 Lacs. In statement u/s 132(4), the assessee submitted that the jewellery belonged to assessee, her daughter Smt. Padmavathi and two grand-daughters.
3.2 During assessment proceedings, the assessee also submitted that the jewellery was acquired by inheritance from her parents, in-laws and some of the jewellery was purchased by her over a period of time. However, the assessee did not file any wealth tax returns and the assessee could not produce purchase bills or any other evidence. Accordingly, the jewellery of Rs.92.64 Lacs (after adding 8% for making charges) was added to assessee’s income u/s 69A.
3.3 Upon further appeal, Ld. CIT(A), after considering factual matix, partially allowed the appeal as under: –
16.2 The appellant had deposed before the Investigation authorities that the jewellery belong to her daughter Mrs. Padmavathy and two granddaughters besides her. I have bestowed my personal attention to the facts of the case and the family status, social norms and customary practices prevailing in the Indian Society in general and in the community to which the appellant belongs to, in particular. It is an accepted practice that jewellery would be given by the bride’s family as shreedhan at the time of marriage; and jewellery would be gifted by relatives and friends on the occasion of various functions such as birth of children, birthdays, ear boring ceremonies, puberty attainment functions etc. The quantum only varies that would depend inter alia on factors such as the family status, community, social norms, traditions, geographical orientations etc. These factors cannot be ipso facto brushed aside. At the same time, it is incumbent on the revenue authorities to be reasonable in bringing such valuables that are reckoned as unexplained to taxation. In the appellant’s case, having held that the appellant is from a reasonably well to do socio/economic background. I am of the considered view that a relief of 400 gms of jewellery in respect of the her daughter Padmavathy ; a relief of 250gms of jewellery for both the grand daughters and 100 gm for her husband is considered is considered as reasonable
16.3 In view of the foregoing discussions, I am of the view that 1879.35 gms of jewellery [108I + 48.350+400+250+100] is to be reckoned as explained jewellery and the AO is accordingly directed to work out the unaccounted income attributable to the remaining unexplained jewellery 1695.24 gms [3574.59 – 1879.35 gms] and to bring the same to tax. Accordingly, the appellants ground is partly allowed.
Still aggrieved, the assessee is in further appeal before us wherein the assessee seeks further benefit in terms of CBDT Circular No.1916 dated 11.05.1994.
4. Upon perusal of family tree as placed on record, the assessee has three daughters and two grand-daughters. The assessee’s husband and one of the daughters are no more. In statement u/s 132(4), the assessee submitted that jewellery belonged to her, one of her daughters and two of grand-daughters. ConsideringCBDT Circular No. 1916, Ld. CIT(A) has allowed partial relief to the assessee. Further jewellery to the extent of 1081 grams was reflected in the accounts for which the benefit has already been granted to the assessee. The assessee could produce certain bills which have also been factored in by Ld. CIT(A) while granting partial relief to the assessee. We find that concession of 400 grams has been allowed against assessee’s daughter as against 500 grams prescribed in the circular. Further, no concession has been granted for jewellery acquired by the assessee out of customs/ traditions.
Therefore, we grant a further concession of 600 grams (500 grams for assessee + 100 grams for daughter). The concession of 250 grams for each of grand-daughters and 100 grams for husband is quite reasonable which would not require any interference on our part. The Ld. AO is directed to re-compute the impugned addition.
5. The appeal stands partly allowed.
Order pronounced on 02nd November, 2022.
