ACIT Vs Gurpreet Kochar (ITAT Delhi)
The Revenue filed an appeal before the Income Tax Appellate Tribunal (ITAT) Delhi against the order dated 05.10.2023 of the Commissioner of Income Tax (Appeals) [CIT(A)], Delhi-27, in the case of ACIT, Central Circle-17, New Delhi v. Gurpreet Kaur Kochar for Assessment Year 2017–18. The dispute arose from additions made during scrutiny assessment under Section 143(3) of the Income Tax Act, 1961, following a search and seizure operation conducted under Section 132 on 22.10.2016 in the “Sukhija Group of cases,” which included the assessee.
Assessment and Additions
The assessee filed her return of income on 01.08.2017 declaring total income of ₹18,87,080. The Assessing Officer (AO) completed the scrutiny assessment at an income of ₹1,72,98,552 by making several additions, including:
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₹1,11,15,429 — unaccounted investment in jewellery;
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₹37,57,693 — unaccounted jewellery found in locker No. 983, Punjab & Sind Bank, Malkaganj;
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₹1,64,500 — cash found in the same locker;
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₹1,23,850 — cash found at the residence (5, Kasturba Gandhi Marg, New Delhi);
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₹2,50,000 — unaccounted cash deposited during demonetization.
The primary dispute in appeal related to the jewellery additions totaling ₹1,48,73,122 (₹1,11,15,429 + ₹37,57,693) under Section 69A (unexplained money or investment).
Findings of the CIT(A)
The CIT(A) partly allowed the assessee’s appeal and deleted both additions related to jewellery.
The AO had objected that the assessee failed to give a one-to-one reconciliation of declared and found jewellery and argued that since the family lived together, the total jewellery found should be treated as belonging to the entire family. The CIT(A) noted that while ideally, each jewellery item should match in description and weight, in Indian social and cultural contexts, jewellery alterations and exchanges among family members are common. Therefore, the comparison should be based on gross weight rather than individual item details, with loose diamonds considered separately.
It was further observed that all panchnamas bore the same address (5, Kasturba Gandhi Marg), confirming that the jewellery found belonged collectively to family members.
The CIT(A) also referred to settled legal principles that jewellery accepted by the department as received during marriage or other family occasions cannot later be treated as unexplained, and if the gross declared jewellery weight exceeds the quantity found during search, no addition is warranted. The value of diamonds embedded in jewellery is determined only by estimation, not actual measurement.
The CIT(A) listed permissible sources of declared jewellery as:
