Vinay Dugar Vs ACIT (ITAT Jaipur)
Conclusion: Tribunal held that CBDT Instruction No. 1916 could not override valid documentary evidence explaining jewellery ownership. Since assessee furnished genuine and verifiable documents establishing lawful acquisition, the addition of ₹41,48,824 on account of alleged unexplained jewellery was unwarranted and deleted in full.
Held: A search under section 132 was conducted at the premises of the assessee and his family. Jewellery aggregating 4984.78 grams was found from residence and bank lockers of various family members. Out of this, 1334.141 grams (valued at ₹41,48,824) was seized and treated by AO as unexplained, after giving credit as per CBDT Instruction No. 1916 (dated 11.05.1994). The balance jewellery of 3650.639 grams was accepted as explained. During assessment, the assessee furnished detailed explanations supported by documentary evidences—VDIS certificate, Wills, loan agreements, and affidavits—to explain the source of entire jewellery. AO, however, restricted acceptance only to the extent of CBDT Instruction limits and treated the excess as unexplained investment. Assessee contended that the seized jewellery was duly supported by credible documents predating the search, including: 628 grams declared in VDIS by Smt. Sweta Dugar (supported by certificate and valuation report); 611.52 grams inherited through Wills of late Shri Dhanpat Lal Mehta and Smt. Sajjan Bai Mehta; 550.39 grams received by the assessee’s father, Shri Kesari Singh Dugar, from his brother through loan and surrender agreements; 415.86 grams belonging to Smt. Usha Devi Dugar, supported by a sworn affidavit. AO and CIT(A) erred in rejecting documentary evidence without pointing out any defect. Reliance was placed on Ram Prakash Mahawar v. DCIT (2020) 115 taxmann.com 241 (Jaipur ITAT), wherein it was held that CBDT Instruction 1916 only prescribed tolerance limits but did not restrict acceptance of jewellery independently proved through documents. Revenue argued that AO rightly applied CBDT Instruction No. 1916 and that assessee failed to substantiate ownership and source beyond that limit. It was held that all documentary evidences filed by assessee were genuine, pre-existing, and duly notarised or issued by competent authorities. None of the family members stated during search that jewellery was acquired from undisclosed income. AO erred in restricting explanation merely up to CBDT Instruction limits, without examining valid evidences. The documents—VDIS certificate, notarised Wills, and loan agreements—were credible and could not be disregarded without contrary material or enquiry. Accordingly, Tribunal held that the entire 1334.141 grams (₹41,48,824) of jewellery stood satisfactorily explained, and therefore, the addition under section 69A was deleted.
