Case Law Details

Case Name : Smt. Ritu Bajaj Vs. The Dy. C.I.T (ITAT Delhi)
Appeal Number : ITA No. 4101/DEL/2017
Date of Judgement/Order : 09/03/2018
Related Assessment Year : 2014-15
Courts : All ITAT (4887) ITAT Delhi (1078)

Smt. Ritu Bajaj Vs. The Dy. C.I.T (ITAT Delhi)

The assessee’s family consists of 5 members as described in the reply. The quantity of jewellery found in the possession of the assessee and his family members is 847 gms, whereas if the guidelines of the CBDT vide instruction 1961 dated 11.05.1994 as mentioned above are to be applied, the jewellery, that can be held by the assessee and his family members are as follows:-

Particulars Age (in years) Amount of jewellery permitted as per Board’s Circular (in grams)
Mr. Rakesh Kumar Bajaj 42 100
Mrs. Ritu Bajaj 40 500
Baby Khushi Bajaj 11 250
Master Tuviksh Bajaj 9 100
Smt. Satwanti Devi 70 500
TOTAL 1450

The jewellery found in possession of the Assessee and his family is within the normal limits of the jewellery which as per the Board’s Circular not to be seized during the search proceeding of the Income Tax Act. Moreover, in the case of Haroon Mohd. Unni Mumbai vs Department of Income Tax, the Assessing Officer conducting the search suo-moto allowed 250 gms. each to the married ladies of the family as their `Streedhan’.

CIT(A) has not considered the status of the family, the circular of the Board where in case of married ladies 500 gms. and in case of unmarried lady 250 gms. and in case of male member 100 gms. jewellery need not be seized. The Income-tax department has accordingly released the said jewellery. The assessee, in fact can possessed up to 1450 gms. of jewellery as per the circular and looking to the social and financial status of the family, CBDT Circular I am of the view that the jewellery possessed by the assessee is quite reasonable and no addition on this account can be made and additions so sustained by the ld. CIT(A) is directed to be deleted.

FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-

This appeal of the assessee arises from the order of ld. CIT(A)-25, Delhi vide order dated 27.02.2017 .

2. The assessee has raised the following grounds of appeal.

1. On the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeal) erred in confirming the addition to the extent of Rs. 13,47,827/- on account of alleged undisclosed jewellery.

2. The appellant craves leave to add, alter, modify or delete one or more ground of appeal before or at the time of hearing of appeal.”

3. The brief facts of the case are that search and seizure action u/s 132 of the Act, was carried out on 30.09.13 in the NCML Group. The assessee was also covered under this Search. The NCML Group including the assessee was centralized in Central Circle-5, New Delhi. The case of the assessee was transferred to Central Circle-5, New Delhi vide order u/s 127 of IT Act, 1961 dated 21.01.14, F.No.CIT-VII/Cent./(within Delhi)/11(3)2013-14/1939 passed by the Commissioner of Income Tax, Delhi-VII, New Delhi. During the course of search at the residence of the assessee, gold jewellery of which some was fitted with Diamonds, was found from the possession of the assessee which was valued at Rs. 4,43,491/- as per Valuation Report dated 30.09.13 of M/s. Bhalla Jewellers, New Delhi. Further, during the course of search on 04.10.13 in the locker no.36, ICICI Bank, A-1, Paschim Vihar Branch, New Delhi, Gold jewellery of which some was fitted with Diamonds, weighing 723.100 gms. was found, which was valued at Rs. 20,72,836/- as per Valuation Report dated 04.10.13. Thus, as a result of the Search total jewellery valued at Rs. 25,16,327/-  was found from the possession of the assessee. It was found by the Assessing Officer that the assessee could not explain the source of acquisition of the jewellery, other than jewellery of Rs. 1,07,000/-, that had been purchased by the assessee out of withdrawals from bank account. Hence, the jewellery of Rs. 1,07,000/- was treated as having been acquired by the assessee during the assessment year under consideration from undisclosed sources. Addition of Rs. 24,09,327/-was made to the Income of the Assessee u/s69A of the I.T. Act, 1961.

4. The ld. CIT(A) confirmed the addition to the extent of Rs. 13,47,827/-.

5. I have heard the rival contentions and perused the facts of the case.The assessee has made the submission which has in fact not been taken in the right spirit by the ld. CIT(A). For the sake of convenience, the said submissions are reproduced herein below:

In this regard, it is hereby submitted that the sources of jewellery found in possession of the assessee are as follows:   

Some of the items of jewellery like broken bangles, necklace set with stones belongs to the mother of the assessee and is ancestral etc.

Some of the items of jewellery like kadas were received as a gift during the marriage of the assessee by the assessee and his wife from friends, family and relatives.

Some of the items of jewellery like diamond rings and mangalsutra were purchased by the Assessee’s family at the time of marriage of the assessee as a part of normal Hindu tradition.

Some of the items of jewellery like gold chains, pajeb etc. were received by the children of assessee as a token of love at the time of their birth and birthday functions.

In normal Hindu tradition, it is customary to give gold jewellery at various occasions/events especially to children and ladies by friends, family and relatives. Keeping in view, the big family of the assessee and large friends circle as well as good financial standing of the assessee as well as his family members and relatives, it was normal to receive gold items at various functions and parties. The Hon’ble ITAT in the case of Haroon Mohd. Unni Mumbai vs Department of Income Tax “The quantum and the worth of the gifts also depend upon the social as well as financial status not only of the donor but of the done also.”  

Moreover, it is also submitted that Section 56 of the Income Tax Act,1961 states that:-

“This clause shall not apply to any sum of money received

(a) From any relative; or

(b) On the occasion of the marriage of the individual”

As per “instruction no. 1961 (F.No.286/63/93-IT (INV. Ii), dated 11-5-1994, issued by the Central Board of Direct Taxes (‘CBDT’) directs the income tax authorities, conducting a search, to not seize jewellery and ornaments found during the course of search of varying quantities specified in the instructions, depending upon the marital status and the gender of a person searched. The guidelines are issued to address the instances of seizure of jewellery of small quantity in the course of search operations u/s 132 that have been noticed by the CBDT. A common approach is suggested in situations where search parties come across items of jewellery for strict compliance by the authorities. The CBDT directed that in the case of a jewellery person not assessed to wealth-tax, gold jewellery and ornaments to the extent of 500 gms. per married lady, 250 gms per unmarried lady and 100 gms per male member of the family, need not be seized.

Moreover, the High Courts, under the circumstances, relying on the above referred instructions of the CBDT, has consistently held that the possession of the jewellery and ornaments to the extent of the quantities specified in the instruction is to be  treated as reasonable and therefore explained and should not be the subject matter of additions in assessment of the total income of a person.”

6. The assessee’s family consists of 5 members as described in the reply. The quantity of jewellery found in the possession of the assessee and his family members is 847 gms, whereas if the guidelines of the CBDT vide instruction 1961 dated 11.05.1994 as mentioned above are to be applied, the jewellery, that can be held by the assessee and his family members are as follows:-

Particulars Age (in years) Amount of jewellery permitted as per Board’s Circular (in grams)
Mr. Rakesh Kumar Bajaj 42 100
Mrs. Ritu Bajaj 40 500
Baby Khushi Bajaj 11 250
Master Tuviksh Bajaj 9 100
Smt. Satwanti Devi 70 500
TOTAL 1450

The jewellery found in possession of the Assessee and his family is within the normal limits of the jewellery which as per the Board’s Circular not to be seized during the search proceeding of the Income Tax Act. Moreover, in the case of Haroon Mohd. Unni Mumbai vs Department of Income Tax, the Assessing Officer conducting the search suo-moto allowed 250 gms. each to the married ladies of the family as their `Streedhan’.“

7. As a matter of fact the ld. CIT(A) has not considered the status of the family, the circular of the Board where in case of married ladies 500 gms. and in case of unmarried lady 250 gms. and in case of male member 100 gms. jewellery need not be seized. The Income-tax department has accordingly released the said jewellery. The assessee, in fact can possessed up to 1450 gms. of jewellery as per the circular and looking to the social and financial status of the family, CBDT Circular I am of the view that the jewellery possessed by the assessee is quite reasonable and no addition on this account can be made and additions so sustained by the ld. CIT(A) is directed to be deleted. Thus all the grounds of the assessee are allowed.

8. In the result the appeal of the assessee in ITA No. 4101/Del/2017 is allowed.

The order is pronounced in the open court on 09.03.2018.

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