Addition for Unexplained Jewellery – ITAT grants relief considering Status & Traditional Practices

Mohamed Mohideen Ayesha Nasreen Vs ACIT (ITAT Chennai)

ITAT held that it could be seen that assessee is living with her husband and three children (Two daughters and one son) in USA. She has got married in the year 2003. In this letter, the assessee has submitted that approx. 1201 grams of jewellery belong to her and about 393 grams of jewellery belonging to her two daughters was received on various auspicious occasions and kept in bank locker of her parents and used by her upon visit to India. Considering the status of the assessee as well as the traditional practices, the assessee could be granted further benefit of 250 grams for each of the two daughters and benefit of 100 grams for minor son. Therefore, out of addition of 970 grams of jewellery as sustained by Ld. CIT(A), we grant further benefit of 600 grams of jewellery to the assessee and sustain the addition to the extent of 370 grams of jewellery. No further benefit could be granted to the assessee in the absence of acceptable satisfactory documentary evidences. Necessary computations shall follow.

FULL TEXT OF THE ORDER OF ITAT CHENNAI

1. Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of the order of learned Commissioner of Income Tax (Appeals)-18, Chennai [CIT(A)] dated 05-08-2022 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s.153B(1)(b) r/w s. 153C r.w.s. 153A r.w.s. 143(3) of the Act on 30-12-2018. The sole grievance of the assessee is confirmation of addition on account of unexplained jewellery.

2. The Ld. AR has filed written submissions supporting the case of the assessee whereas it is the submission of Ld. CIT-DR that adequate relief has already been granted in the impugned order. Having heard rival submissions, the appeal is disposed-off as under.

3. Pursuant to search action u/s 132 on 04.01.2017 in the case of M/s Buhari Holdings Private Ltd., a search operation was conducted at residential premises of Shri S.A. Mohideen Sheik (assessee’s father) wherein gold jewellery of 4530.90 grams was found. The assessee’s father, in statement u/s 132(4), attributed jewellery of 1599.90 grams to the assessee. The same was valued at Rs.45.23 Lacs. Accordingly, notice u/s 153C was issued to the assessee and the assessee was show-caused as to why this jewellery be not treated as her unexplained investment.

The assessee submitted the source of jewellery as under: –

In support, the assessee filed copy of marriage certificate, bank statement, gift deed, declarations by donors, confirmation letters, affidavit etc. However, Ld. AO rejected the claim on the ground that the assessee did not file any Income Tax Returns or wealth tax returns before date of search and accordingly, added amount of Rs.45.23 Lacs to the income of the assessee. The Ld. CIT(A) granted benefit of 500 grams of jewellery as well as benefit of 130 grams of jewellery stated to be received by the assessee as Meher at the time of marriage and directed Ld. AO to reduce the addition to that extent. In other words, addition to the extent of jewellery weighing around 970 grams was confirmed. Aggrieved, the assessee is in further appeal before us.

4. Upon perusal of assessee’s letter dated 11.01.2017, it could be seen that the assessee is living with her husband and three children (Two daughters and one son) in USA. She has got married in the year 2003. In this letter, the assessee has submitted that approx. 1201 grams of jewellery belong to her and about 393 grams of jewellery belonging to her two daughters was received on various auspicious occasions and kept in bank locker of her parents and used by her upon visit to India. Considering the status of the assessee as well as the traditional practices, the assessee could be granted further benefit of 250 grams for each of the two daughters and benefit of 100 grams for minor son. Therefore, out of addition of 970 grams of jewellery as sustained by Ld. CIT(A), we grant further benefit of 600 grams of jewellery to the assessee and sustain the addition to the extent of 370 grams of jewellery. No further benefit could be granted to the assessee in the absence of acceptable satisfactory documentary evidences. Necessary computations shall follow. We order so.

5. The appeal stand partly allowed in terms of our above order.

Order pronounced on 24^th January, 2023.