Bhaveshkumar Amulakhbhai Sonani Vs DCIT (ITAT Surat)
ITAT Surat held that seized jewellery within the permissible limit prescribed by CBDT Circular No 1916 dated 11.05.1994 couldn’t be treated as undisclosed jewellery. Accordingly, addition u/s 69A of the Income Tax Act liable to be deleted.
Facts- During the search action conducted at the above premises of assessee and other group members, various incriminating documents and evidences were seized.
The case was selected for scrutiny, during assessment, AO noted that in conducting search action, gold jewellery of 738.69 grams having net weight of 624.13 grams was found. As per valuation report, the value of gold jewellery at Rs.17,45,849/-.
Out of total jewellery, jewellery of Rs.16,32,732/- was also seized due to no proper explanation. During the assessment, the assessee was explained that jewellery of Rs.16,32,732/- belongs to assessee and his family members. The assessee also furnished details of his family members and share thereof.
AO recorded that no evidence was furnished and in the absence of evidence, AO made addition of Rs.16,32,732/- as unexplained jewellery under section 69A of the Act and brought the same to tax under section 115BBE of the Act.
CIT(A) upheld the action of AO. Being aggrieved, the present appeal is filed.
Conclusion- Held that the permitted limit as per CBDT Circular no. 1916 dated 11.05.1994 the permitted limit of all members of assessees family is 1700 grams of gold jewellery. Such gold jewellery consists of some diamond therein. I further find that lower authorities while making addition has not treated the cost of diamond separately though the Ld. AR for the assessee submits that gold jewellery includes ornament with diamond. In my view, merely because jewellery consists with diamond cannot be added in the hands of assessee particularly when the jewellery forming part of gross weight jewellery found from the residence as well as locker is within permissible limit prescribed by CBDT in Circular No.1916 dated 11.05.1994. Thus, respectfully following the decisions of Hon’ble superior courts I direct the Assessing Officer to delete the entire addition. In the result, the grounds of appeal raised by the assessee are allowed.
FULL TEXT OF THE ORDER OF ITAT SURAT
1. This appeal by assessee is directed against the order of Ld. Commissioner of Income-tax (Appeals)-4, Surat [for short to as “Ld. CIT(A)”] dated 03.03.2022 for assessment year 201819, which in turn arises from the addition made by the Assistant Commissioner of Income-tax, Central Circle-3, Surat / Assessing Officer in assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 28.12.2019. The assessee has raised the following ground of appeal:-
“1. On the facts and circumstances of the case and in law, the learned CIT(A) has grossly erred in in making an addition of Rs.16,32,732/- u/s 69A of the Act treating the jewellery found and seized during the cruse of search as unexplained, on erroneous grounds without appreciating that the same is fully reflected in the appellant’s and his family member’s regular books of accounts. Hence, the impugned addition as confirmed by the learned CIT(A) needs to be deleted as being absolutely erroneous, incorrect, illegal and bad-in-law.
2. The appellant company craves leave to add, amend, alter substitute, modify in any or all the above grounds of appeal, if necessary, on the basis of submissions to be made at the time of personal hearing.”
2. Facts in brief are that a search action under section 132 of the Act was carried out on 08.06.2017 in the case of Balar Group of Surat and assessee is one of them wherein residential premises i.e., 604, Sai Residency, Near Gajera School, Katargam, Surat-395004, was also searched. During the search action conducted at the above premises of assessee and other group members, various incriminating documents and evidences were seized. The assessee filed his return of income for assessment year 2018-19 on 13.07.2018 declaring total income of Rs.3.00 lakh. The case was selected for scrutiny, during assessment, the Assessing Officer noted that in conducting search action, gold jewellery of 738.69 grams having net weight of 624.13 grams was found. As per valuation report, the value of gold jewellery at Rs.17,45,849/-. Further in locker with Princess Plaza Safe Deposit Vault, Surat, which was in the name of family members of assessee was found. In the locker diamond jewellery was also found and seized, as per Government approved valuer, value of such diamond jewellery was at Rs.22,14,632/-. Out of total jewellery, jewellery of Rs.16,32,732/- was also seized due to no proper explanation. During the assessment, the assessee was explained that jewellery of Rs.16,32,732/- belongs to assessee and his family members. The assessee also furnished details of his family members and share thereof. The Assessing Officer recorded that no evidence was furnished and in the absence of evidence, the Assessing Officer made addition of Rs.16,32,732/- as unexplained jewellery under section 69A of the Act and brought the same to tax under section 115BBE of the Act.
3. Aggrieved by the addition in the assessment order the assessee filed appeal before Ld. CIT(A). Before Ld. CIT(A) the assessee filed detailed written submission. The submission of assessee duly recorded in para-6.1 of the order of Ld. CIT(A). In the submission, the assessee explained that during the search action at his residence on 08.06.2017 and from locker belonging to his family members, the jewellery aggregated value of Rs.39,60,481/- was found and seized. The jewellery belongs to assessee and his other family members and assessee furnished the details of such jewellery narrating the gold weight and its value in the following manner:
