Nirmal Kumar Agrawal Vs ACIT (ITAT Nagpur)
ITAT Nagpur allowed the assessee’s appeal for AY 2017-18 and deleted the addition of Rs.3,86,166/- relating to four jewellery items. The Tribunal held that two items weighing 55.8 gms belonged to the assessee’s wife and could not be treated as unexplained investment in the assessee’s hands. It further held that the assessee’s remaining jewellery of 48.9 gms was within the limit prescribed under CBDT Instruction No. 1916 dated 11-05-1994, considering the facts stated in the order, and rejected the CIT(A)’s view that the instruction did not cover diamond-studded jewellery. The Tribunal also allowed the challenge to the enhanced 60% tax rate under Section 115BBE, holding it applicable prospectively from 15-12-2016 and therefore inapplicable where the search was conducted on 26-07-2016. The appeal was accordingly allowed.
The Nagpur ITAT deleted the addition of ₹3,86,186 under section 69A towards jewellery found during search, holding that identifiable ownership by the assessee’s wife, jewellery acquired through explained banking transactions and recorded in books, and the remaining jewellery being within the reasonable limit contemplated by CBDT Instruction No. 1916, read with the assessee’s age, family status, social standing, profession and customary practices, sufficiently explained the jewellery; the Tribunal further held that CBDT Instruction No. 1916 could not be artificially restricted so as to exclude diamond/precious-stone studded jewellery and that the enhanced rate under section 115BBE was not applicable to the assessee where the search had taken place on 26.07.2016.
