DCIT Vs Suresh Kanaji (ITAT Bangalore)
Conclusion: Addition made under Section 69B concerning seized jewellery was deleted as gold jewellery found during a search at the residence of the taxpayer was within the permissible limits prescribed by CBDT Circular No. 1916, and therefore, could not be treated as an unexplained investment.
Held: Assessee was a Bangalore-based contractor, whose residence was searched by Income Tax authorities. During the search, officials discovered 1,724.82 grams of gold jewellery, out of which 612.86 grams were seized on the ground that the taxpayer failed to explain its source satisfactorily. AO treated the seized jewellery as undisclosed income and made an addition of ₹16,15,611 under Section 69B. Assessee claimed that the jewellery belonged to multiple family members, including his wife, mother-in-law, father-in-law, and himself. He explained that part of the jewellery was received as gifts at the time of marriage, while some were inherited from family elders. Assessee also argued that the jewellery should be assessed in line with CBDT Instruction No. 1916, which provided exemptions for jewellery up to: 500 grams for a married woman, 250 grams for an unmarried woman, and 100 grams for a male family member. On appeal before Tribunal. It was held that considering the provisions of CBDT Circular No. 1916 and the explanation provided by the assessee, the seized gold jewellery up to the specified thresholds for each family member should be treated as explained. Accordingly, AO was directed to delete the addition made by him.
