Shakun Devi Vs JCIT (ITAT Allahabad)
ITAT Allahabad held that allowable limit as CBDT circular dated 11th May 1994 is the gold jewellery and ornaments to the extent of 500 grams per married lady, 250 grams per unmarried lady and 100 grams per male member of the family. Accordingly, no addition to that extent on account of unexplained investment in jewellery can be sustained.
Facts-
During the course of search and seizure action at the resident / business premises of the assessee, gold jewellery weighting 1,796 grams was found. This was the year of search therefore, regular assessment was framed by the AO u/s. 143(3) on the basis of seized material. In response to the notice issued under section 142(1), the assessee explained the source of acquisition of gold jewellery as it belongs to the assessee, her two daughters and some of the jewellery belongs to her mother Smt. Indra Devi.
The AO did not accept the explanation of the assessee and after allowing the jewellery of 500 grams as stridhan of the assessee, the AO treated jewellery of 682 grams as acquired from undisclosed income and made the addition of Rs. 9,49,003/- u/s. 69B of the Act. The assessee challenged the action of the AO before the CIT(A). The CIT(A) granted part relief to the assessee and sustained the addition in respect of jewellery of 499.85 grams as against 682 grams.
Conclusion-
Held that the AO and CIT(A) has allowed the credit of only 500 grams jewellery on account of stridhan of the assessee whereas as per the CBDT Circular No. 1916 dated 11th May, 1994, the gold jewellery and ornaments to the extent of 500 grams per married lady, 250 grams per unmarried lady and 100 grams per male member of the family need not to be seized.
If the full benefit of this Circular is given in the case of the assessee then the gold jewellery of 1100 grams falls in the ambit of the jewellery and ornaments not to be seized and consequentially not required any explanation of source of acquisition.
In view of the above facts and circumstances of the case, if the undisputed quantity of the jewellery / gold bars of 623 grams as well as the benefit of the CBDT Circular dated 11th May, 1994 in respect of 250 grams Gold jewellery of each daughter and 100 grams for the husband of the assessee is given then no addition on account of unexplained investment in the jewellery is called for. Hence, the addition sustained by the CIT(A) on account of 499.85 grams jewellery is liable to be deleted. We order accordingly.
FULL TEXT OF THE ORDER OF ITAT ALLAHABAD
This appeal by the assessee is directed against the order dated 23.08.2014 of CIT(A) for the assessment year 2010-11. The assessee has raised following grounds:-
“1. That in any view of the matter the assessment order dated 20.12.2011 passed u/s 143(3) of the income tax act by the assessing officer and his action as partly confirmed by the Commissioner of Income Tax (Appeals) is bad both on the facts and in law and therefore declared income by the appellant should have been accepted in the facts and circumstances of the case.
2. That in any view of the matter since mandatory requirements were not complied with for framing a legal and valid assessment by the assessing officer and action of the assessing officer were also confirmed partly by the Commissioner of Income Tax (Appeals) without appreciating the facts of the case correctly hence the assessment is invalid.
3. That in any view of the matter undisclosed income/investment was not determined on the basis of any search material and the assessing officer simply proceeded to make the additions arbitrarily as if it is a normal assessment and his action as partly confirmed by the first appellate authority is also highly unjustified and illegal.
4. That in any view of the matter a part sum of Rs. 6,95,541.00 out of the addition of Rs. 9,49,003.00 made by the assessing officer on count jewelleries as maintained by the Commissioner of Income Tax (Appeals) is highly unjustified, incorrect and illegal in the facts and circumstances of the case. Because the addition was made based on pure conjectures and surmises ignoring the status of appellant’s family, social/religious customs and traditions prevailing in community and without supporting any search material, hence the part of the addition so maintained is liable to be deleted.
5. That in any view of the matter addition of Rs. 1,07,651.00 made by the assessing officer by alleging unexplained cash found in search and his action as confirmed by the Commissioner of Income Tax (Appeals) is highly unjustified and illegal because necessary explanations along with evidences regarding acquisition of the cash found at the time of the search was furnished, hence the addition is liable to be deleted in the facts and circumstances of the case.
6. That in any view of the matter the addition of Rs. 56,310.00 made by the assessing officer on account of Kimam when the same is disclosed in regular books of account and his action as confirmed by the Commissioner of Income Tax (Appeals) without appreciating the correct facts is highly unjustified and illegal hence the addition deserves to be deleted.
7. That in any view of the matter observations and findings of the two lower authorities in their orders for making and maintaining the additions are unjustified, incorrect and contrary to the actual facts of the case, therefore the additions are liable to be deleted.
8. That in any view of the matter interest as charged under different sections of the IT Act is highly unjustified and illegal in the facts and circumstances of the case.
9. That in any view of the matter the appellant reserves her right to take any fresh grounds of appeal before hearing of the appeal.”
2. At the time of hearing, the learned AR of the assessee has stated at Bar that the assessee does not press ground nos. 1 to 3 and 7 to 9 and the same may be dismissed as not pressed. The learned DR has raised no objection if ground nos. 1 to 3 and 7 to 9 are dismissed as not pressed. Accordingly, the ground nos. 1 to 3 and 7 to 9 of the assessee’s appeal are being dismissed being not pressed.
3. Ground no. 4 is regarding addition sustained by the CIT(A) of Rs. 6,95,541/- on account of unexplained investment in the jewellery. The assessee is an individual and derives income from salary and interest on capital from partnership firm of M/s Kesarwani Distributors. The assessee is also proprietrix of M/s Gupta Traders which is engaged in the business of Kimam. There was a search and seizure action carried out on 27.8.2009 in group cases of Kesarwani Zarda Bhandar. During the course of search and seizure action at the resident / business premises of the assessee, gold jewellery weighting 1,796 grams was found. This was the year of search therefore, regular assessment was framed by the AO under section 143(3) on the basis of seized material. In response to the notice issued under section 142(1), the assessee explained the source of acquisition of gold jewellery as it belongs to the assessee, her two daughters and some of the jewellery belongs to her mother Smt. Indra Devi. The assessee further explained that she married in the year 1995 with Sh. Ramesh Kumar s/o Mata Saran Kesarwani. Her husband belongs to a respectable business family of Allahabad. The assessee received jewellery from both sides at the time of marriage as well as on subsequent occasions namely birthdays of children and on other occasion. The assessee further stated that her husband deposited 623 gram gold under tax free gold bond scheme and received back the same on 29.12.1998. The said declared gold was found at the time of search and mentioned at Sr. No. 13 of jewellery inventory in panchnama. Similarly, there was disclosure under VDIS-97 of 796.150 grams of jewellery. The rest of the jewellery was claimed as stridhan of the assessee as well as her two daughters. The AO did not accept the explanation of the assessee and after allowing the jewellery of 500 grams as stridhan of the assessee, the AO treated jewellery of 682 grams as acquired from undisclosed income and made the addition of Rs. 9,49,003/- under section 69B of the Act. The assessee challenged the action of the AO before the CIT(A). The CIT(A) granted part relief to the assessee and sustained the addition in respect of jewellery of 499.85 grams as against 682 grams.
4. Before the Tribunal, the learned AR of the assessee has submitted that the assessee explained the source of jewellery during her statement recorded under section 132(4) of the Act on 27.8.2009 by the search party. The learned AR has referred to the copy of the statement of assessee recorded under section 132(4) placed at page nos. 46 to 50 of the paper book and submitted that in reply to question no. 6, the assessee has explained each and every item of jewellery recorded in the inventory prepared at the time of search. In this explanation, the assessee has clearly given the details of the jewellery of 504 grams belonging to her mother who kept the jewellery with the assessee as she is also residing in Allahabad and frequently visiting the assessee. The assessee also explained that the gold bar weighting 623 grams belongs to her husband Shri. Ramesh Kumar which is also supported by the fact that it was received by the husband under gold bond scheme of Government. The rest of the jewellery weighting 678 grams belongs to the assessee and her two daughters. Thus, the learned AR has submitted that at the time of search itself, the assessee explained the source of the jewellery found during the search from her residence. The learned AR thus referred to the affidavit of the mother of the assessee filed before the AO and copy of which is placed at page nos. 38 and 39 of the paper book. The learned AR has also referred to the certificate issued by the Reserve Bank of India regarding Gold Bond Scheme 1998 at page nos. 40 and 42. Thus, the explanation of the assessee was duly supported by the documentary evidence in the shape of gold bond certificate wherein the quantity of the gold bar is matching with the quantity found during search as well as the affidavit of the mother of the assessee confirming the jewellery about 504 grams belongs to her and kept with the assessee. The learned AR has then referred to the decision of the co-ordinate Bench of this Tribunal dated 06.07.2018 in the case of Shri Praveen Kumar Kesarwani vs. Jt. CIT (OSD), Allahabad and submitted that an identical issue has been considered and decided by the Bench in favour of the assessee. He has also relied upon the judgment of Hon’ble Rajasthan High Court in the case of CIT vs. Satya Narain Patni 106 DTR 436 and submitted that the Hon’ble High Court has held that as per the CBDT instruction dated 11th May, 1994, the jewellery to the extent of 500 grams per married lady, 250 grams per unmarried lady and 100 grams per male member of the family need not be seized and therefore, to that extent, the jewellery found in the possession of the assessee cannot be questioned about its source and acquisition. Thus, the learned AR has submitted that the addition sustained by the CIT(A) is not justified and same may be deleted.
5. On the other hand, learned DR has submitted that the explanation of the assessee cannot be accepted as the quantities of the jewellery explained by the assessee are not tallying with the actual jewellery found during the course of search. He has relied upon the orders of the authorities below.
6. We have considered the rival submissions as well as relevant material on record. The facts are not in dispute so far as jewellery weighted 1,796 grams found during the course of search and seizure from the resident of the assessee. The assessee in her statement recorded under section 132(4) on the date of search explained the source of acquisition of the jewellery in reply to question no. 6 as under:-
