Case Law Details
Jayashri Shrikant Deshmukh Vs ACIT (ITAT Pune)
Introduction: In a significant ruling by the Income Tax Appellate Tribunal (ITAT) Pune, in the case of Jayashri Shrikant Deshmukh Vs Assistant Commissioner of Income Tax (ACIT), it was held that the provisions of Section 69A of the Income Tax Act would not be applicable if the assessee has a plausible explanation regarding the source of jewellery found during search operations. The tribunal deleted the addition made by the Assessing Officer, marking an important precedent in the interpretation of the said provision.
Analysis: This case involves an assessee who was found to possess a substantial amount of gold and jewellery during a search and seizure operation conducted under Section 132 of the Income Tax Act. While the majority of the gold was accounted for, a certain quantity was treated as unexplained by the Assessing Officer. The assessee offered an explanation stating that the unaccounted jewellery belonged to his Hindu Undivided Family (HUF) and was obtained from the agricultural income of the larger HUF.
The ITAT Pune considered this explanation plausible and thus concluded that the Assessing Officer was not justified in treating the remaining gold as unexplained and taxing it under Section 69A of the Act.
Conclusion: In conclusion, the ruling by ITAT Pune in the case of Jayashri Shrikant Deshmukh Vs ACIT is an essential benchmark in cases involving the application of Section 69A of the Income Tax Act. It highlights that a plausible explanation regarding the source of the assets found during search operations can render the application of Section 69A non-applicable, thereby providing relief to the assessee from the addition of such assets to their income.
FULL TEXT OF THE ORDER OF ITAT PUNE
This is an appeal filed by the assessee directed against the order of ld. Commissioner of Income Tax (Appeals)-12, Pune [‘the CIT(A)’] dated 30.08.2022 for the assessment year 2019-20.
2. Briefly, the facts of the case are that the appellant is an individual deriving income under the head “salary”. He is working in CSMSS Ayurved Mahavidyalaya, Aurangabad. The Return of Income for the assessment year 2019-20 was filed on 29.07.2019 disclosing total income of Rs.11,11,330/-. The search and seizure operations u/s 132 of the Income Tax Act, 1961 (‘the Act’) were conducted in the business and residential premises of the appellant on 21.08.2018. During the course of such search and seizure operations, a Locker bearing Locker No.51, SBI, Kanchanwadi, Aurangabad and Locker No.335, IDBI Bank, Samarthnagar, Aurangabad was found in the names of the assessee and her husband, Shri Shrikant Gunwantrao Deshmukh respectively and in the said Locker, Gold and Jewellery of 957.48 gms was found. Out of said gold, jewellery of 957.48 gms, the gold, jewellery of 850 gms was treated as explained by the Assessing Officer in terms of the CBDT Instruction 1961 dated 11.05.1994 and the value of gold, jewellery of 107.48 gms was treated as unexplained rejecting the explanation of the appellant that this gold, jewellery belongs to his HUF which is received on partition of Bigger HUF. It was further explained that the said gold, jewellery was acquired out of the agricultural income on the land belonging to Bigger HUF.
3. Being aggrieved by the above order of assessment, an appeal was filed before the ld. CIT(A), who vide impugned order confirmed the action of the Assessing Officer.
4. Being aggrieved, the appellant is in appeal before us in the present appeal.
5. When the appeal was called on, an adjournment petition was moved by the appellant on the ground that the appellant’s counsel could not attend the hearing due to his health issue. Since the matter was adjourned on several occasions earlier, we are not inclined to grant any further adjournment. Accordingly, the adjournment petition moved by the assessee is rejected. Therefore, we proceed to decide the issue in appeal after hearing the ld. CIT-DR.
6. We heard the ld. CIT-DR and perused the material on record. The provisions of section 69A provides that if an assessee is found to be the owner of any money, bullion, jewellery or other valuable article, which is not recorded in the books of account, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not satisfactory in the opinion of the Assessing Officer, then such money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee. In the present case, it was found that the appellant was in possession of the gold, jewellery of 957.48 gms and out of which gold, jewellery of 850 gms was treated as explained by the Assessing Officer in terms of the CBDT Instruction (supra). As regards to the balance of jewellery of 107.48 gms, the assessee had offered an explanation that this jewellery was acquired out of the agricultural income generated by the Bigger HUF on the lands held by it. This explanation cannot be termed as “not plausible explanation” and, therefore, we are of the considered opinion that the Assessing Officer was not justified in treating the gold, jewellery of 107.48 gms as unexplained and brought to tax. In the circumstances, we direct the Assessing Officer to delete the addition of Rs.3,26,740/- made u/s 69A of the Act.
7. In the result, the appeal filed by the assessee stands allowed.
Order pronounced on this 17th day of May, 2023.
