Jewellery prescribed limit treated explained Revenue shows anything contrary

Divya Devi Vs ACIT (ITAT Delhi)

Jewellery upto prescribed limit must be treated as explained unless Revenue shows anything to contrary

Though it is true that the CBDT Instruction No. 1916, dt. 11th may, 1996 lays down guidelines for seizure of jewellery and ornaments. In the course of search, the same takes into account the quantity of jewellery which would generally be held by family members of an assessee belonging to an ordinary Hindu household. The approach adopted by the Tribunal in following the said circular and giving benefit to the assessee, even for explaining the source in respect of the jewellery being held by the family is in consonance with the general practice in Hindu families whereby jewellery is gifted by the relatives and friends at the time of social functions, viz., marriages, birthdays, marriage anniversary and other festivals. These gifts are customary and customs prevailing in a society cannot be ignored. Thus although the circular had been issued for the purpose of non-seizure of jewellery during the course of search, the basis for the same recognizes customs prevailing in Hindu society. In the circumstances, unless the Revenue shows anything to the contrary, it can safely be presumed that the source to the extent of the jewellery stated in the circular stands explained. Thus, the approach adopted by the Tribunal in considering the extent of jewellery specified under the said circular to be a reasonable quantity, cannot be faulted with. In the circumstances, it is not possible to state that the Tribunal has committed any legal error so as to give rise to a question of law.” We find that the aforesaid decision of the Hon’ble Gujarat High Court would be squarely applicable to the case under appeal before us. No contrary decision is brought to our notice. We, therefore, respectfully follow the above decision of the Hon’ble Gujarat High Court and direct the AO to allow the rebate of 950 gms. of jewellery as against the 700 gms. of jewellery directed by the CIT(A).

FULL TEXT OF THE ITAT JUDGMENT

In this appeal by the Assessee following grounds were raised.

“1. That having regard to the facts and circumstances of the case, Ld. CXIT(A) has erred in law and on facts in holding that the AO was right in assuming jurisdiction to frame the impugned assessment u/s. 153A and in passing the impugned assessment order, more so when there was no valid search in accordance with provisions of section 132 conduced in the case of the asseessee.

2. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in allowing a rebate of only 700 gms of jewelry in respect of the entire family and thereby upholding the addition made by the Ld. AO of the balance of 1232.8 gms. On account of unexplained investment in jewellery u/s. 69 of the I.T. Act, 1961.

3. In any view of the matter and in any case the order under appeal is bad in law and against the facts and circumstances f the case.

4. That the appellant craves the leave to add, amend, modify, delete any of the grounds of appeal before or at the time of hearing and all the above grounds are without prejudice to each other.

2. At the time of hearing before us, it is submitted by the Ld. Counsel of the assessee that there was a search at the assessee’s residence u/s. 132 of the I.T. Act. The total jewellery found from the assessee and from her bank locker valued at Rs. 15,09,955/- was treated as unexplained by the Assessing Officer and addition was made therefore.

3. Before the Ld. CIT(A), it was submitted by the assessee that the family of the assessee is consisting of herself, her husband, two minor children i.e. one son and one daughter. The assessee has claimed for relief in view of the CBDT’s Instruction No. 1916 dated 11.5.1994. The Ld. CIT(A) after considering the said Instructions directed the Assessing Officer to allow the rebate of 700 gms of jewellery in respect of assessee’s family. It is submitted by the Ld. Counsel of assessee that as per the Board’s Instruction the rebate should be 950 gms. as under:-

He, therefore, submitted that the AO may be directed to allow the relief of 950 gms as against 700 gms as directed by the Ld. CIT(A).

3.1 Ld. Departmental Representative, on the other hand submitted that the CBDT’s Instructions No. 1916 dated 11.5.1994 is only in respect of seizure of the jewellery. In these instructions the Authorised Officer were instructed not to seize the jewellery to the extent of 500 gms. per married lady member; 250 gms of jewellery per unmarried lady member and 100 gms. of jewellery per male member. These instructions have no relevance with the assessment proceedings. That during the assessment proceedings, the assessee did not give any explanation. Therefore, the AO has treated the entire jewellery as unexplained. The Ld. CIT(A) was quite fair and reasonable to allow rebate of 700 gms. of jewellery. She, therefore, submitted that no further relief is due to the assessee.

4. We have considered the arguments of both sides and perused the material placed before us. We find that the issue of applicability of the Instruction No. 1916 dated 11.5.1994 to the assessment proceedings was considered by the Hon’ble Gujarat High Court in the case of CIT vs. Ratanlal Vyaparilal Jain (339 ITR 351). In this case the ITAT has allowed the rebate to the assessee as per the aforesaid CBDT’s Instructions. The Revenue aggrieved with the decision of the ITAT, has filed the appeal before the Hon’ble Gujarat High Court which held “The Tribunal found that the jewellery held by the assessee and his family members was well within the limit laid down the CBDT circular and accordingly, deleted the whole addition on the ground that the jewellery held by each of the family members was below the limits specified in the said circular. Though it is true that the CBDT Instruction No. 1916, dt. 11th may, 1996 lays down guidelines for seizure of jewellery and ornaments. In the course of search, the same takes into account the quantity of jewellery which would generally be held by family members of an assessee belonging to an ordinary Hindu household. The approach adopted by the Tribunal in following the said circular and giving benefit to the assessee, even for explaining the source in respect of the jewellery being held by the family is in consonance with the general practice in Hindu families whereby jewellery is gifted by the relatives and friends at the time of social functions, viz., marriages, birthdays, marriage anniversary and other festivals. These gifts are customary and customs prevailing in a society cannot be ignored. Thus although the circular had been issued for the purpose of non-seizure of jewellery during the course of search, the basis for the same recognizes customs prevailing in Hindu society. In the circumstances, unless the Revenue shows anything to the contrary, it can safely be presumed that the source to the extent of the jewellery stated in the circular stands explained. Thus, the approach adopted by the Tribunal in considering the extent of jewellery specified under the said circular to be a reasonable quantity, cannot be faulted with. In the circumstances, it is not possible to state that the Tribunal has committed any legal error so as to give rise to a question of law.” We find that the aforesaid decision of the Hon’ble Gujarat High Court would be squarely applicable to the case under appeal before us. No contrary decision is brought to our notice. We, therefore, respectfully follow the above decision of the Hon’ble Gujarat High Court and direct the AO to allow the rebate of 950 gms. of jewellery as against the 700 gms. of jewellery directed by the CIT(A).

5. In the result, assessee’s appeal is allowed.

Order pronounced in open court on 16-05-2014.