Case Law Details
Neeti Rastogi Vs ACIT (ITAT Delhi)
Introduction: The Income Tax Appellate Tribunal (ITAT) in Delhi, in a recent case between Neeti Rastogi and ACIT, passed a judgment concerning the “unexplained jewellery” under section 69 of the Income Tax Act. The case delved into the acceptable limits of gold jewellery as defined by the CBDT Circular.
Background of the Case: Neeti Rastogi appealed against an order dated 18.03.2016 passed by the Commissioner of Income Tax. The primary contention revolved around an addition of Rs. 10 lacs estimated by the Assessing Officer (AO) for the jewellery found during a search operation.
Search & Seizure Details: A search under section 132 was executed on 09.07.2008 across various premises of Neeti Rastogi and her husband, Shri Paresh Rastogi. Jewellery worth Rs. 14,97,838/- was discovered but not confiscated. The AO considered Rs. 10,00,000/- of this jewellery as unexplained and added it under section 69A of the Act.
Circular No. 1916 and Its Significance: The CIT (A) provided partial relief by referencing the CBDT Circular No. 1916 from 1994. The circular suggests that 500 grams of jewellery for each married lady should not be labeled as unexplained. Rastogi argued that the discovered jewellery belonged to her family, acquired as gifts over the years from events like weddings, births, and festivals.
Relief Sought Based on the CBDT Circular: Neeti Rastogi’s contention was that, considering the CBDT Circular’s provisions, the total allowable jewellery for her family, comprising herself, her husband, and her two unmarried daughters, comes to Rs.11,31,900/-. Hence, no addition should be made to her income.
Precedents Backing the Assessee’s Claim: Various rulings, from the Rajasthan High Court, Gujarat High Court, and the Tribunal, have supported such a viewpoint. These judgments confirm that if the gold jewellery found falls within the permissible limit as per the CBDT circular, it shouldn’t be deemed unexplained, acknowledging the customary practices in India. Notable cases include:
- CIT vs. Satya Narain Patni (Rajasthan HC)
- CIT vs. Ratanlal Vyaparilal Jain (Gujarat HC)
- DCIT vs. Shri Mehul Johnson (Mumbai ITAT)
Final Verdict: Given the aforementioned judgments and the CBDT Circular’s clarity on gold possession limits, the unexplained jewellery addition by the Assessing Officer was revoked. The appeal made by Neeti Rastogi was therefore allowed.
Conclusion: The case of Neeti Rastogi Vs ACIT underscores the importance of clear guidelines provided by the CBDT Circular regarding the possession of gold jewellery. ITAT Delhi’s judgment reinstates the legitimacy of holding jewellery up to a specific limit, taking into account the customary practices in India. This verdict not only offers clarity but also provides relief to those complying with the stipulated guidelines.
FULL TEXT OF THE ORDER OF ITAT DELHI
The aforesaid appeal has been filed by the assessee against the order dated 18.03.2016 passed by Ld. Commissioner of Income Tax (Appeals)-IV, Kanpur for the quantum of assessment passed under section 143(3) of the Income Tax Act, 1961 for the assessment year 2009-10.
2. The only ground raised by the assessee in partly confirming the addition out of Rs. 10 lacs made by the AO on estimated basis on account of jewellery found during the course of search.
3. Brief facts are that a search and seizure action under section 132 was conducted on 09.07.2008 at various premises of assessee in which assessee and her husband, Shri Paresh Rastogi was also covered. During search at the residence, jewellery aggregating to Rs. 14,97,838/- was found belonging to Shri Paresh Rastogi and Smt. Neeti Rastogi which was not seized. Ld. Assessing Officer on estimated basis has treated jewellery to the extent of Rs. 10,00,000/- as unexplained in his opinion and added the same under section 69A of the Act. Ld. CIT (A) has given part relief by stating that jewellery to the extent of 500 gms per married lady should not be treated as unexplained in view of the circular No. 1916 dated 1994.
4. We have heard both the parties and also perused the relevant finding given in the impugned orders. One of the issue which was raised before the authorities below was that the jewellery found belonged to the assessee, her husband and two unmarried daughters who are staying together and all these jewelleries have been gifted over the period of time at her marriage and on birth of her both the daughters and on various festivals and occasions for more than two decades. It was also explained that, if as per the circular, 500 gms for the assessee, 100 gms for her husband and 250 gms for her two unmarried daughters are to be considered in light of CBDT circular 1916 (supra), then the value of said jewellery works out to Rs.11,31,900/. Thus, if benefit of this circular is being given, then no addition is called for.
5. We find that this proposition stands approved by various judgments of Hon’ble Rajasthan High Court, Hon’ble Gujarat High Court and various decisions of the Tribunal wherein it has been held that the quantity of gold jewellery found and to the extent it is covered by CBDT circular for family member same should not be treated as unexplained in view of the customary practice in India. The few of the judgments on this point are as under:
1. CIT vs. Satya Narain Patni in Income Tax Appeal No. 196/2010 dtd. 07.04.2014 of Hon’ble Rajasthan HC
2. CIT vs. Ratanlal Vyaparilal Jain in Income Tax Appeal No. 661 of 2009 dtd. 19.07.2010 of Hon’ble Gujarat HC
3. DCIT vs. Shri Mehul Johnson in ITA No. 1647/MUM/2020 dtd. 19.05.2012 of Mumbai ITAT
6. In view of the aforesaid judgments, the unexplained jewellery added by the Assessing Officer stands deleted.
7. In the result appeal of the assessee is allowed.
Order pronounced in the open court on 26th July, 2023.
