Family Jewellery & Silver Articles Not Unexplained Assets: ITAT Jaipur

Ajay Data Vs ACIT (ITAT Jaipur)

Jewellery and silver articles belonging to family cannot be added as unexplained jewellery

ITAT Jaipur held that once the jewellery and silver articles are considered as belonging to the family as a whole, there does not remain any unexplained gold jewellery. Hence, addition towards unexplained gold jewellery is liable to be deleted.

Facts- A search and seizure action u/s. 132 of the Income Tax Act, 1961 was carried out by the Income Tax Department on the members/concerns of Data Group, Alwar on 14.10.2015 of which the assessee is one of the members. During the course of search, stock-in-trade, documents, books of account and/or loose papers were found and seized from the premises of the members of the Data Group of which one such member happens to be the assessee. Consequently, the case was selected for manual scrutiny, being search case, as per prevalent CBDT guidelines.

AO completed assessment by making addition towards unaccounted cash Rs. 11,76,400/- and undisclosed jewellery Rs. 21,02,279/-.

CIT(A) restricted the addition to Rs. 4,28,830/- as against the addition of Rs. 11,76,400/- made by the AO on account of cash found seized during the search and enhanced the addition by Rs. 17,33,800/- over and above the addition made by the AO in respect of jewellery found and seized during the search.

Conclusion- Held that the assessee has claimed that he is a member of joint family along with the family of his father Sh. Babu Lal Data and family of his brother Sh. Deepak Data and it is not uncommon that jewellery & silver articles of one person is kept with other person at Jaipur or Alwar. The fact is jewellery found at Alwar and Jaipur to be considered together has been accepted by Hon’ble ITAT in ITA No.1232/JP/2019 dt. 05.05.2022. Once the jewellery and silver articles are considered as belonging to the family as a whole, there does not remain any unexplained gold jewellery.

Held that that in respect of the jewellery found from the room & locker of Nidhi Data, assessee has furnished the evidences as to the source of same but without controverting the evidences and the affidavits filed it was not correct to consider any part of gold jewellery found from the bedroom and locker of Nidhi Data as unexplained. Hence the addition of Rs.27,15,544/- (9,81,744 + 17,33,800) confirmed by the Ld. CIT(A) is deleted.

FULL TEXT OF THE ORDER OF ITAT JAIPUR

This is an appeal filed by the assessee against the order of ld. CIT (Appeals), Jaipur-4, dated 20.08.2024 passed under section 250 of the I.T. Act, 1961, for the assessment year 2016-17. The assessee has raised the following grounds of appeal :

1. That Ld. CIT(A) has erred on facts & in law in confirming the addition of 428830.00 on account of cash found during the course of search as unexplained cash, which is just on presumption, assumption and surmises of learned Commissioner of Income Tax-(Appeals), and against the material and evidences submitted during the course of assessment proceedings as well as appellate proceedings, therefore the same deserves to be deleted.

2. That Ld. CIT(A) has erred on facts & in law in confirming the addition of 2102279.00 as undisclosed jewellery u/s 69A of the Income Tax Act, 1961, by

(2.1) not considering the sources of jewellery found during the course of search proceedings and its explanation submitted during the course of assessment pro-ceedings as well as appellate proceedings .

(2.2) ignoring the affidavits, valuation reports of Mehta Jewels dated 31.07.2002, declaration under VDIS 1997 gift deeds and gift declaration

(2.3) not controverting the factum of joint family living of the assessee, which stands accepted by the Assessing Officer,

(2.4) rejecting the mandate of CBDT instructions number 1916 for all the family members

(2.5) not accepting the 1088.53 gm. of gold jewellery owned by Smt. Nidhi Data, assessees’s wife, prior to her marriage

(2.6) incorrectly mentioning the fact on page number 83 of the appellate order, which are just on his presumption, assumption and surmises, without any material and record

(2.7) incorrectly mentioned the fact on page no. 85 in second last para of the appellate order that “as the figures mentioned in the assessment order are not rec-oncilable and even the learned AR was not able to reconcile and explain the source of the figures mentioned in the assessment order in this regard. The source of figures (2038.87 grams, 317.80 grams, 1550 grams) (mentioned on page 18 of the assessment order), how and where these were claimed by the appellant is not explained”. These findings are incorrect on two counts, firstly by 317.80 grams, and 1550.00 grams are not in addition to 2038.87 grams, whereas are part of 2038.87 grams and secondly the source of 1867.80 grams (317.80+1550.0) are already explained in the table in the assessment order on page no. 18.

(2.8) total jewellery found 3861.800 grams, jewellery explained 3500.455 grams, unexplained jewellery 361.345 grams (3861.345­3500.455) (page 24 of assess-ment order), balance unexplained jewellery 171.07 grams of Ritika (supported by purchase bills) and 190.275 grams of Nidhi out of 1088.53 grams (duly supported by valuation report)

(2.9) placing reliance upon the statement submitted during the course of search proceedings, which is simply an indicative and estimated statement and

(2.10) giving various contradictory finding in the appellate or-der.

3. That Ld. CIT(A) has erred on facts & in law in enhancing the income of assessee by Rupees 1733800.00 (638.13 gm.) by

(3.1) making a contradictory finding in the enhancement notice in the form of “there is no dispute regarding how much jewellery is owned by which mem-ber”

(3.2) incorrectly mentioning that “Appellant has not made any claim or submission that any more part of the jewellery was owned by Smt. Nidhi Data”

(3.3) not considering the reply of the assessee filed in response to enhancement notice

(3.4) not accepting the 1088.53 gm. of gold jewellery owned by Smt. Nidhi Data, assessees’s wife, prior to her marriage, which is duly supported by affidavit of her father and valuation report of Mehta Jewels dt. 31.07.2002

(3.5) making the addition of 638.13 gms. of gold jewellery in the hands of the assessee, the total jewellery explained (3500.455 gms) (as per assessment order) and unexplained (999.475 gms) (as per CIT- A order), totalling 4499.930 gms, will exceed the total jeweller found (3861.800 gm) from the premises, (as per assessment order), which cannot happen in any case or in other words, the addition cannot be made more than the jewellery found at the time of search.

2. The brief facts of the case are that a search and seizure action under section 132 of the Income Tax Act, 1961 was carried out by the Income Tax Department on the members/concerns of Data Group, Alwar on 14.10.2015 of which the assessee is one of the members. During the course of search, stock-in-trade, documents, books of account and/or loose papers were found and seized from the premises of the members of the Data Group of which one such member happens to be the assessee. Consequently, notice under section 153A of the IT Act was issued and served upon the assessee on 04.07.2016 requiring him to file a true and correct return of income. In response, the assessee filed his return under section 139 on 24.03.2017 declaring income of Rs. 19,26,220/-. The case was se-lected for manual scrutiny, being search case, as per prevalent CBDT guidelines. The assessee derives income from salary, business income and other sources. The assessment proceedings were initiated by issuing notice under section 143(2) of the IT Act on 11.08.2017 and duly served upon the as-sessee on 18.08.2017. Notice under section 142(1) dated 31.08.2018 was issued to the assessee requiring the assessee to furnish details as per questionnaire enclosed therewith. Further, notices under section 142(1) were issued from time to time and the matter was discussed with the Author-ized Representative of the assessee. In compliance to the notices served upon the assesee, the as-sessee furnished the relevant details which were examined and placed on record. During the assess-ment proceedings, the assessee was asked to explain and furnish documentary evidences regarding Unexplained Cash, Unexplained Jewellery found and seized during the course of search. The submis-sion made by the assessee was examined in detail along with the details furnished. After examination of the submission and details placed on record, the AO completed the assessment at a total income of Rs. 52,04,899/- under section 143(3) of the IT Act, 1961, as under :-

3. Aggrieved by the order of the Assessing Officer, the assessee challenged the action of the AO by preferring an appeal before the ld. CIT (Appeals). The ld. CIT (Appeals) after considering the detailed submissions and evidences placed on record, restricted the addition to Rs. 4,28,830/- as against the addition of Rs. 11,76,400/- made by the AO on account of cash found seized during the search and enhanced the addition by Rs. 17,33,800/- over and above the addition made by the AO in re-spect of jewellery found and seized during the search.

4. Aggrieved by the order of ld. CIT (Appeals), the assessee is in appeal before the us. During the course of hearing, the ld. AR of the assessee has submitted his ground-wise written submission as under :-

“Assessee filed the return on 24.03.2017 declaring total income of Rs.19,26,220/-. A search was carried out on the assessee on 14.10.2015. In search cash of Rs.15,97,510/- was found from the residence of Sh. BabuLal Data at D-47, Laxman Marg, Hanuman Nagar, Vaishali, Jaipur and from locker no.333 with SBI (Annexure 8.1)out of which Rs.15,50,000/- was seized. Out of this amount, AO considered an amount of Rs.13,47,450/-, comprising of Rs.7,56,030/- found from the room of assessee, Rs.4,20,410/-found from the room of Deepak Data and Rs.1,71,010/- found from the room of BabuLal Data as pertaining to the assessee.

In course of assessment proceedings assessee explained that the to-tal cash found from the residence &locker at Jaipur and residence at Alwar is Rs.20,28,775/- out of which Rs.19,75,00/- was seized. The explanation in respect of the cash found was provided which is reproduced at Pg 3-5 of the assessment order. The AO accepted that Rs.1,71,010/- found in case of BabuLal Data is to be considered in his case. However he did not accept the explanation with reference to the cash of Rs.4,20,410/- found from the room of Deepak Data and Rs.7,56,030/- found from the room of assessee and thus made addition of Rs.11,76,400/- u/s 69A of the Act.

The Ld. CIT(A) at Pg 30 held that cash of Rs.4,20,410/- was found from the room of Deepak Data and therefore the same cannot be considered in the hands of as-sessee and thus deleted the addition of the same in the hands of assessee. Out of the cash of Rs.7,56,030/- found from the room of assessee, the Ld. CIT(A) at Pg 31-32 deleted the addition of Rs.3,27,200/-(3,02,000+25,200) as belonging to Smt. Nidhi Data, wife of assessee being amount received by her on her birthday on 07.10.2015of Rs.3,02,000/- and pin money of Rs.25,200/-. However, he did not accept the explanation of the remaining cash of Rs.4,28,830/- claimed to be out of amount withdrawn from M/s Vijay Industries on 05.04.2014- Rs.72,000/-, on 02.07.2014-Rs.2,00,000/- and on 20.04.2015- Rs.2,00,000/- for the reason that no explanation was given as to why cash was withdrawn when assessee has already withdrawn cash of Rs.72,000/- on 05.04.2014 and the entire household expenses are incurred by Sh. BabuLal Data by referring to various decisions on preponderance of probabilities and in the absence of nexus between the cash withdrawn and the cash found.

Thus the limited issue in this ground is whether the cash of Rs.4,28,830/- considered as unexplained by Ld. CIT(A) is to be allowed set off against cash with-drawal of Rs.4,72,000/- between 05.04.2014 to 20.04.2015 or not. It is submitted that there is no law prohibiting an assessee to keep cash in hand. It is not disputed that assessee has made with-drawal of Rs.4,72,000/- between 05.04.2014 to 20.04.2015 from M/s Vijay Industries, Khairthal. No document is found in search that the amount so withdrawn has been utilized elsewhere particu-larly when the expenditure on household expenses are incurred by Sh. BabuLal Data and the with-drawal for household expenditure has been accepted by the AO. Further cash of Rs.2 lacs was with-drawn on 20.04.2015 which is only few months prior to the date of search on 14.10.2015. The low-er authorities have not brought on record any evidence that the amount so withdrawn has been uti-lized elsewhere. Therefore, the cases relied by Ld. CIT(A) as to the preponderance of probabilities is not applicable on the facts of the assessee. As against this in following cases it has been held that where no evidence is brought on record that cash withdrawal has been utilized elsewhere, such cash should be considered as explained:-

Muon Computing (P) Ltd. Vs. ITO ITA No. 7606/Del/2019 order dt.04.08.2021(Del.) (Trib.)

The relevant para 9 of this decision is reproduced as under:-

“9. There is no dispute with regard to the fact that Revenue has not brought any material suggesting that the withdrawal made by the assessee were utilized for making payments. It is also not brought on record that the amounts so withdrawn from the bank account was utilized for any other undisclosed purposes. Further, it is noticed that learned CIT(A) observed that despite having sufficient cash in hand, the assessee withdraw the amount. It is correct that the assessee has withdrawn higher amounts than the immediate preceding years but that cannot be sole reason for making addition purely on the basis of suspicion. Further, I failed to understand the reasoning of the AO that the amount was withdrawn to justify the cash deposits during demoneti-zation period i.e., between 9th Nov., 2016 to 30th Dec., 2016. It is also seen that the cash was with-drawn much prior to such event. So far observation regarding sharp increase in payable expenses is concerned, there is no finding by the AO that such expenses are bogus. Therefore, in my considered view, the addition has been made purely on the basis of suspicion. Such action of authorities below cannot be affirmed. I, therefore, direct the AO to delete the impugned addition. Thus, ground raised by the assessee in this appeal is allowed.”

Nand Kumar Taneja & Anr. Vs. ITO (2019) 55 CCH 0705 (Del.) (Trib.)

The relevant para 6 & 7 of this decision is reproduced as under:-

“6. Apart from that, the details of; opening cash, cash withdrawal, cash deposited, cash expenditure; closing cash in hand and increase cash in hand, in case of both the assessees were given before the authorities below, which has been incorporated above in para 3 and 3.1 No discrepancy or any inquiry has been done by Assessing Officer to disapprove the cash dis-closed in the books of account and balance sheet. The sole reason for disbelieving the assessee’s ex-planation is that, firstly, no prudent person after withdrawing the cash will keep at home; and sec-ondly, if there was an OD account having negative balance on which interest is being charged, then there was no need to keep such huge cash in hand at home. Such reasoning dehors any contrary ma-terial on record that the cash disclosed in the books of accounts has been invested somewhere else, then on mere surmise assessee’s explanation cannot be discarded. If assessees have genuine sources of income which are received through banking channels, out of which cash has been withdrawn and have been disclosed in the income tax return and in the balance sheet as cash-in-hand, then I am unable to apprehend how the provision of section 69A is applicable. Because the section can only be invoked where in any financial year the assessee is found to be the owner of any money, etc., which has not been recorded in the books of accounts and assessee offers no explanation. Here in these cases, Assessee’s cash in hand duly stands recorded and source has been explained from the income deposited in the bank account and withdrawal, then in my opinion deeming provision of section 69A cannot be invoked. The reasoning given by the AO and Ld. CIT (A) is vague and based on surmise as to what a prudent person should have done. Once assessee has explained that being of senior citizen they have maintained such liquidity of cash out of their own disclosed income with them for certain contingencies, then without any material to controvert such an explanation, addition cannot be sus-tained. Assessees before the lower authorities have filed following documents to substantiate the cash in hand with them:-

a.Income Tax Return with computation of total income.

b. Balance Sheets for FY 2013-14, 2014-15 and FY 2015-16.

c. Comparative Chart of cash movement FY 2013-14, 2014-15 and FY 2015-16.

d. Cash book maintained by the assessee.

e. Kotak Mahindra Bank Statement bearing A/c No. 6311509485

f. Standard Chartered Bank: Statement of account .

g. Bank: Book of Kotak Mahindra Bank.

h. Bank Book of Standard Chartered Bank.

i. Copy of all medical treatment documents.

7. All these documents have neither been rebutted nor there is any finding that cash-in-hand disclosed in the balance sheet was beyond the scope of their income or are not substantiated from the bank account. Simply because after the period of demonetization, that is, 08.11.2016, certain amount of cash has been deposited in the bank account, it does not mean that the cash-in-hand as on 31.3.2015 and 31.03.2016, duly shown in the balance sheet and dis-closed to the department in the respective income tax return filed much earlier, is unexplained. Ac-cordingly, in view of the above reasoning, addition made by the AO and sustained by the Ld. CIT (A) is directed to be deleted.”

Neeta BrejaVs. ITO ITA No. 524/Del/2017 order dt.25.11.2019(Del.) (Trib.)

The Hon’ble ITATat Para 12 of its order held as under:-

“12. In the present case also the learned assessing officer or the learned CIT A did not show that above cash was not available in the hands of the assessee or have been spent on any other purposes. Further the coordinate bench in ACIT vs Baldev Raj Charla 121 TTJ 366 (Delhi) also held that merely because there was a time gap between withdrawal of cash and cash deposits explanation of the assessee could not be rejected and addition on account of cash de-posit could not be made particularly when there was no finding recorded by the assessing officer or the Commissioner that apart from depositing this cash into bank as explained by the assessee, there was any other purposes it is used by the assessee of these amounts. In view of above facts, the ground number 1 of the appeal of the assessee is allowed and orders of lower authorities are re-versed.”

DCIT Vs. Veena Awasthi(2018) ITA No.215/LKW/2016order dt.30.11.2018 (Lucknow) (Trib.)

The Hon’ble ITAT at Para 8 of its order held as under:-

“8. We have perused the case record and heard the rival contentions. We find that addition has been made by the Assessing Officer, as is evident from his order, on the ground that he has come to the conclusion that cash deposits were from some other source of in-come which is not disclosed to the Revenue. Assessing Officer nowhere in his order has brought out any material on record to show that assessee is having any additional source of income other than that disclosed in the return nor Assessing Officer could spell out in his order that cash deposits made by the assessee was from some undisclosed source. All throughout Assessing Officer has raised sus-picion on the behavioural pattern of frequent withdrawal and deposits by the assessee. There is no law in the country which prevents citizens to frequently withdraw and deposit his own money. Doc-umentary evidences furnished before the Revenue clearly clarifies that on each occasion at the time of deposit in her bank account, assessee had sufficient availability of cash which is also not disputed by the Revenue. Entire transaction of withdrawals and deposits are duly reflected in the bank ac-count of the assessee and are verifiable from relevant records. Assessing Officer himself admitted that assessee had sufficient cash balance on each occasion at the time of deposit in her bank account on different dates during the assessment year under consideration. We have also examined the or-der of ld. CIT(A) and we find that his decision is based on facts on record and is supported by ade-quate reasoning and, therefore, we do not want to interfere with the order of ld. CIT(A) and accord-ingly we uphold the findings of the ld. CIT(A) sustaining relief granted to the assessee.”

In view of above, addition of Rs.4,28,830/- confirmed by Ld. CIT(A) be deleted.

Ground No.2

That Ld. CIT(A) has erred on facts & in law in confirming the ad-dition of 2102279.00 as undisclosed jewellery u/s 69A of the Income Tax Act, 1961, by

(2.1) not considering the sources of jewellery found during the course of search proceedings and its explanation submitted during the course of assessment pro-ceedings as well as appellate proceedings

(2.2) ignoring the affidavits, valuation reports of Mehta Jewels dated 31.07.2002, declaration under VDIS 1997 gift deeds and gift declaration

(2.3) not controverting the factum of joint family living of the as-sessee, which stands accepted by the Assessing Officer,

(2.4) rejecting the mandate of CBDT instructions number 1916 for all the family members

(2.5) not accepting the 1088.53 gm. of gold jewellery owned by Smt. Nidhi Data, assessees’s wife, prior to her marriage

(2.6) incorrectly mentioning the fact on page number 83 of the ap-pellate order, which are just on his presumption, assumption and surmises, without any material and record

(2.7) incorrectly mentioned the fact on page no. 85 in second last para of the appellate order that “as the figures mentioned in the assessment order are not reconcila-ble and even the learned AR was not able to reconcile and explain the source of the figures men-tioned in the assessment order in this regard. The source of figures (2038.87 grams, 317.80 grams, 1550 grams) (mentioned on page 18 of the assessment order), how and where these were claimed by the appellant is not explained”. These findings are incorrect on two counts, firstly by 317.80 grams, and 1550.00 grams are not in addition to 2038.87 grams, whereas are part of 2038.87 grams and secondly the source of 1867.80 grams (317.80+1550.0) are already explained in the ta-ble in the assessment order on page no. 18.

(2.8) total jewellery found 3861.800 grams, jewellery explained 3500.455 grams, unexplained jewellery 361.345 grams (3861.345-3500.455) (page 24 of assess-ment order), balance unexplained jewellery 171.07 grams of Ritika (supported by purchase bills) and 190.275 grams of Nidhi out of 1088.53 grams (duly supported by valuation report)

(2.9) placing reliance upon the statement submitted during the course of search proceedings, which is simply an indicative and estimated statement and

(2.10) giving various contradictory finding in the appellate order.

Ground No.3

That Ld. CIT(A) has erred on facts & in law in enhancing the in-come of assessee by Rupees 1733800.00 (638.13 gm.) by

(3.1) making a contradictory finding in the enhancement notice in the form of “there is no dispute regarding how much jewellery is owned by which member”

(3.2) incorrectly mentioning that “Appellant has not made any claim or submission that any more part of the jewellery was owned by Smt. Nidhi Data”

(3.3) not considering the reply of the assessee filed in response to enhancement notice

(3.4) not accepting the 1088.53 gm. of gold jewellery owned by Smt. Nidhi Data, assessees’s wife, prior to her marriage, which is duly supported by affidavit of her father and valuation report of Mehta Jewels dt. 31.07.2002

(3.5) making the addition of 638.13 gms. of gold jewellery in the hands of the assessee, the total jewellery explained (3500.455 gms) (as per assessment order) and unexplained (999.475 gms) (as per CIT- A order), totalling 4499.930 gms, will exceed the total jewel-lery found (3861.800 gm) from the premises, (as per assessment order), which cannot happen in any case or in other words, the addition cannot be made more than the jewellery found at the time of search.

AO Pg9-24

CIT(A) Pg41-88 (relevant finding at Pg80-82&Pg 83-88)

Facts:-

During the course of search gold jewellery weighing 7181.730 gms and silver articles weighing 43.916kgs(Annexure 15) was found from the residence/ bank locker of assessee & his family members at Jaipur and Alwar as under:-

In search at Jaipur, an indicative statement showing gold & silver jewellery in the name of various persons was found (Annexure 8.3) according to which total of gold jewellery is 5383.13 gms and total of silver article is 20.406 kg. Sh. Ajay Data in his statement u/s 132(4) dt. 14.10.2015 and reply to Q. No.38 (Annexure 19)stated that whatever gold jewellery & silver item was found in search at residence and at locker is verifiable from such indicative statement of jewellery.

In course of assessment proceedings assessee furnished the person wise list of gold jewellery held by different members of the family aggregating to 7186.208 gms(Annexure 8.14). This is also supported by affidavit of various family members/ wealth tax re-turns, etc(Annexure 8.15 to Annexure 8.27). This fact is also accepted by the AO at Para 9.5, Pg15 of the order where he admitted that such sheet of jewellery furnished by the assessee during search action while recording the statement has an evidentiary value to some extent and the same cannot be held as an afterthought but at the same time he further observed that such sheet does not put evidential value to a document itself until and unless it is supported with documentary evidences. Thereafter in respect of jewellery found at the residence and locker at Jaipur it is held that out of total gold jewellery of 3861.80 gms, jewellery of 3500.455 gms is explained as per the chartgiven at Pg 24 of the assessment order and the remaining 361.345 gms is unexplained which is valued at Rs.9,81,744/-. Further out of total silver of 35.96 kg, silver of 8 kg is considered explained and the remaining silver of 9.96 kgs is considered unexplained valued at Rs.11,20,505/- resulting into an ad-dition of Rs.21,02,279/-.

The Ld. CIT(A) at Pg 84 of the order held that total gold jewellery found from the room and the locker of assessee and his wife was 2304.30 gms out of which only 1304.825 gms (907.425+200+98+99.40) is explained. Thus unexplained gold jewellery is 999.475 gms whereas AO made addition only for 361.345 gms and thus addition of 638.13 gmsof gold jew-ellery has been missed out in the assessment order. Accordingly Ld. CIT(A) issued the enhancement notice. The assessee furnished the submission on the enhancement notice but the Ld. CIT(A) with-out considering the same held that the explanation given by the assessee was not found satisfactory and thus the addition on account of gold jewellery is further enhanced in respect of 638.13 gms val-ued at Rs.17,33,800/- over and above the addition made in the assessment order.In respect of silver articles no finding was given and thus addition made by the AO is confirmed.

Submission:-

It is submitted that the family of assessee is a joint family comprising of the family of assessee, family of his father Sh. BabuLal Data and family of his brother Sh. Deepak Data. The family has residence at Alwar and also at Jaipur. Sh. BabuLal Data usually resides at Alwar whereas the assessee and his brother along with their family normally reside at Jaipur. However, at Jaipur there is separate bedroom of Mohini Data wherealso gold jewellery was found. Therefore, it is not uncommon that the jewellery of the wife of assessee and his brother is kept at the residence/ locker at Alwar or the jewellery of the wife of assessee’s brother is kept in the room of the assessee. Hence, the jewellery so found at Alwar and Jaipur needs to be considered together. The AO in course of assessment proceedings in case of Sh. BabuLal Data in the assessment order dt.20.12.2017 (An-nexure 20) has not accepted this contention by referring to the statement of assessee, Deepak Dataand Mohini Data, mother of assessee.However, the Ld. CIT(A) vide order dt. 19.08.2019 (An-nexure 21)has accepted that the jewellery found at Alwar and Jaipur needs to be considered togeth-er and the CBDT circular squarely applies. This finding of CIT(A) is upheld by the Hon’ble ITAT in ITA No.1232/JP/2019 dt. 05.05.2022 (Annexure 22)and thus the addition of Rs.25,34,587/-made on account of unexplained jewellery in case of BabuLal Data was deleted. Hence when in case of BabuLal Data considering the entire jewellery found from the residence and bank locker at Alwar& Jai-pur, the jewellery found was considered as explained, the addition confirmed by Ld. CIT(A) consider-ing the jewellery found from the room and the locker of assessee as belonging to him only is unjusti-fied.

It is submitted that Smt. Mohini Devi in her statement dt. 05.11.2015 in Q.No.1 stated that her residence is at Alwar and Jaipur. Further in reply to Q.No.2 & 3 which was with reference to the jewellery found in locker at Alwarshe stated that the same belongs to her, her husband and HUF. However, no question was asked to her as to the jewellery found at residence. In the statement of Deepak Data dt. 15.10.2015, in reply to Q.No.24 where he was questioned about the jewellery found at residence at Alwar, he only stated that the explanation about the same can be given by his parents. Sh. Ajay Data in statement dt. 14.10.2015 (Annexure 19)in reply to Q.No.38 & 39 where he was questioned about the jewellery found at residence from various rooms and lockers at Jaipur including the jewellery found from the room of Smt. Mohini Data, w/o Sh. BabuLal Data explained that all the jewellery and silver items belongs to various family members for which the person wise list of jewellery was furnished during search itself. Thus the jewellery found needs to be considered in totality and on that basis no excess jewellery was found particularly when in search no evidence was found that assessee has purchased any jewellery/ silver articles which is not disclosed.

The AO in the assessment order observed that from the room of Nidhi and Ajay Data 1354.500 gms and from locker of Nidhi Data 909.80 gms, totaling to 2264.30 gms of gold jewellery was found but in the jewellery sheet which is part of the statement of Ajay Data only 907.425 gms was shown and therefore he considered the gold jewellery to that extent as explained in case of Nidhi Data. Thereafter he considered gold jewellery of Ritika Data and Deepak Data found from her room at 1506 gms but since in the jewellery sheet made part of the statement of Ajay Data 2038.87 gms was noted, this much gold jewellery was considered as explained in her case after excluding gold jewellery of 171.07 gms in her hand as unexplained. The AO also consid-ered the gold jewellery as claimed in case of Ajay Data, Deepak Data and the minor children’s to that extent claimed as explained and thus arrived at gold jewellery explained to the extent of 3500.45 gms out of the total gold jewellery of 3770.30 gms found from the residence and from locker at Jai-pur but in doing so it is ignored that 91.500 gms of gold jewellery was found from the room of Mohini Devi which cannot be considered in the hands of assessee and thus wrongly calculated the unexplained gold jewellery at 361.345 gms (3861.345-3500.455) as against the correct calculation of 269.845 gms (3770.30-3500-0.455).

The Ld. CIT(A), however, moved one step forward and considered only the jewellery found from room of Nidhi Data at 1354.500 gms(wrongly taken by CIT(A) at 1394.500 gms at Pg 84 of the order) and from her locker at 909.800 gms, i.e. 2264.300 gms(wrongly taken by CIT(A) at 2304.300 gms) in the hands of assessee. From the same he consid-ered 1304.825 gms (907.425+200+99.400+98) as explained and thus considered 999.475 gms (2304.300-1304.825) as unexplained. This calculation made by CIT(A) is incorrect in as much as the total gold jewellery found from the room and locker of Nidhi Data 2264.300 gms (1354.500+909.800) and from this if the explained jewellery considered by CIT(A) at 1304.825 gms is reduced, the remaining unexplained gold jewellery even as per CIT(A) would be 959.475 gms.

It is submitted that in case of BabuLal Data the jewellery found both from locker and residence at Alwar and Jaipur was considered together. In case of assessee the AO considered the jewellery of assessee’s family and family of his brother Deepak Data together. How-ever Ld. CIT(A) has considered it individually. If such is the case and the jewellery found at Jaipur from bedroom of Nidhi Data and from her locker is to be considered as explained, the addition can be made only in case of Nidhi Data and not in case of assessee in as much as no material is brought on record that assessee acquired such jewellery from his own sources. Hence the addition confirmed and enhanced by Ld. CIT(A) is unjustified.

Otherwise also,the family of assessee comprises of himself, his wife and 2 minor ons. The total gold jewellery found from bedroom and locker of Nidhi Data is 2264.30 gms. The Ld. CIT(A) has accepted the gold jewellery to the extent of 1304.825 gms(907.425+200+98+99.40)as explained leaving balance jewellery of 959.475 gms as unex-plained. In holding so the Ld. CIT(A) has not accepted the fact that Nidhi Data in her affidavit dt. 08.12.2017 (Annexure 8.20) has specifically stated that out of the total gold jewellery found, gold jewellery weighing 1980.038 gms belongs to her. In support of the same affidavit dt. 20.12.2017 of Sh. Tarun Jain, father of Nidhi Jain supported by the report of jewellery valuation dt.31.07.2002 and the documents regarding the VDIS dt. 06.01.1998 was filed (Annexure 8.22). According to this affi-davit of Tarun Jain, 1088.853 gms of gold jewellery which she was holding was handed over to her at the time of her marriage which she has taken away with her. Further Sh. Tarun Jain in his declara-tion dt. 30.12.2017 has stated that he gifted 633.15 gms on 16.08.2002, from his HUF 25.925 gms gold jewellery was gifted on 16.08.2002(Annexure 8.23) and Smt. Manjari Jain, mother gifted 248.35 gms gold jewellery on 16.08.2002 (Annexure 8.24). Thus in all Nidhi Data received gold jew-ellery of 1996.278 gms (1088.853+633.15+25.925+248.35) whereas the lower authorities without controverting the affidavits and the evidences filed have only considered 907.425 gms (633.15+25.925+248.35) as explained in the hands of Nidhi Data. Thus considering the totality of fact, the entire gold jewellery of 2264.300 gms found from the bedroom and locker of Nidhi Data is fully explained.

It is also submitted that considering the status of assessee, the jewel-lery found can’t be presumed to be excessive/ unreasonable. In this connection reliance is placed on the decision of Hon’ble Delhi High Court in case of Ashok Chaddha Vs. ITO 69 DTR 82 where gold jewellery weighing 906 gms found in search was held to be not substantial as being ‘StriDhan’ of the assessee’s wife and accordingly addition u/s 69A was deleted. Again Hon’ble ITAT Delhi Bench in case of VibhuAggarwal Vs. DCIT (2018) 170 ITD 580 where jewellery of 2531.50 gms was found at the assessee’s residential premises, considered the same as reasonable by holding that in view of CBDT Instruction No. 1916 dt. 11th May, 1994, the excess jewellery found in the case of assessee, his parents, his wife, their children and the HUF was very nominal and was very much reasonable keeping in mind the riches and high status and more customary practices. In the present case also, considering the family background of the assessee, 2264.30gms of jewellery found from the family of assessee is reasonable particularly when no evi-dence was found in search to suggest that assessee made any unexplained investment in jewel-lery.

So far as silver utensils/ ornaments is considered, the AO out of 37960.05 gms(correct 37960.800 gms) found from locker and residence at Jaipur considered only 8000gms as explained and made addition of remaining silver of 29960.05 gms valued at Rs.11,20,505/- as unexplained. The assessee at Pg 61-63 of the order of CIT(A) furnished his expla-nation but the Ld. CIT(A) without giving any finding confirmed the addition. It may be noted that from the bedroom and the common room 12322.80 gms(3188.800+9134)of silver ornaments was found from Nidhi Data, w/o assessee. This comprises of 8000 gms owned by Nidhi Data, 1170 gms owned by Ajay Data and 3152.80 gms belonging to the children. The lower authorities have consid-ered only 8000 gms as explained. Thus the unexplained silver items arrived by the lower authorities is 4322.800 gms but addition has been incorrectly made for 29960.05 gms. Further even if any ad-dition was to be made, it could have been in case of Nidhi Data and not in case of assessee. Other-wise also, when no evidence of any unexplained purchase of silver items was found in search and considering the status of assessee, the silver items found from the family of assessee cannot be con-sidered as unreasonable. Hence the addition of Rs.11,20,505/- made by AO and confirmed by CIT(A) without any discussion in the order is unjustified and the same be deleted.”

5. On the other hand, the ld. D/R has relied upon the order of the ld. CIT (A). He has also not contro-verted the submission and contention raised by the assessee and has merely supported the order of the ld. CIT (A).

Ground No. 1 :

6. We have considered the rival submissions as well as the relevant material on record. We note that the only issue in this ground is whether the Ld. CIT(A) is justified in not allowing set off of cash con-sidered unexplained by him against the cash withdrawal of Rs.4,72,000/- made from M/s Vijay In-dustries between 05.04.2014 to 20.04.2015. We note that no document is found in search to come to a conclusion that the amount withdrawn by the assessee from M/s Vijay Industries has been uti-lized elsewhere. There is no law which prohibits an assessee to keep cash in hand and therefore only because assessee has not given explanation as to why the cash was withdrawn, when he has with-drawn the cash earlier also cannot be a ground to reject the explanation of assessee. In various cases referred above, it has been held that where no evidence is brought on record that cash withdrawal has been utilized elsewhere, such cash should be considered as available with the assessee. Consid-ering all these facts, we direct the AO to delete the addition of Rs.4,28,830/- made by him.

Ground Nos.2 & 3 :

6.1 We have heard the rival submission and perused the material available on record.We note that in search, gold jewellery of 3319.930 gms & silver articles of 5.96 kg was found from the resi-dence and bank locker at Alwar and gold jewellery of 3861.800 gms & silver articles of 37.96 kg was found from the residence and bank locker at Jaipur. The assessee has claimed that he is a mem-ber of joint family along with the family of his father Sh. Babu Lal Data and family of his brother Sh. Deepak Data and it is not uncommon that jewellery & silver articles of one person is kept with other person at Jaipur or Alwar. The fact is jewellery found at Alwar and Jaipur to be considered to-gether has been accepted by Hon’ble ITAT in ITA No.1232/JP/2019 dt. 05.05.2022. Once the jewel-lery and silver articles are considered as belonging to the family as a whole, there does not remain any unexplained gold jewellery.

6.2 We also note that the Ld. CIT(A) has considered only the jewellery found from the room of Nidhi Data at 1354.500 gms (wrongly taken by the CIT(A) at 1394.500 gms) and from her locker at 909.800 gms, i.e. 2264.300 gms in the hands of assessee. Out of it he considered 1304.825 gms as explained and thus considered the remaining old jewellery of 959.475 gms (wrongly taken by the CIT(A) at 999.475gms) as unexplained. Thus when the jewellery was found from the bedroom and locker of Nidhi Data, the addition made by Ld. CIT(A) in the hands of assessee is otherwise unjusti-fied. We also found that in respect of the jewellery found from the room & locker of Nidhi Data, assessee has furnished the evidences as to the source of same but without controverting the evi-dences and the affidavits filed it was not correct to consider any part of gold jewellery found from the bedroom and locker of Nidhi Data as unexplained. Hence the addition of Rs.27,15,544/- (9,81,744 + 17,33,800) confirmed by the Ld. CIT(A) is deleted.

6.3 So far as ilver utensils/ ornaments are concerned, out of 37,960.05 gms, silver articles of 8000 gms was considered as explained and the addition was made for remaining silver articles of 29,960.05 gms. The Ld. CIT(A) even after reproducing the submission of assessee at Pg 61-63 of the order has not given any finding but confirmed the addition. We note that from the bedroom and the common room, 12,322.80 gms (3188.800+9134) of silver article was found from Nidhi Data. It comprises of 8000 gms owned by Nidhi Data, 1170 gms owned by assessee and 3152.80 gms be-longing to the children. Out of it, 8000 gms is considered as explained by AO leaving the remaining silver items at 4322.800 gms but addition has been made for 29,960.05 gms. Thus the addition made is prima facie incorrect. Otherwise also, when the silver article was found in the possession of Nidhi Data, addition made in the hands of assessee is unjustified. We also note that in search no evi-dence of purchase of silver item was found in search. Therefore, considering the status of family and other material evidences, we direct deletion of Rs.11,20,505/- made by AO on account of unex-plained silver articles in the hands of assessee.

7. In the result, appeal of the assessee is allowed.

Order pronounced in the open court on 07/01/2025.