Addition u/s 69A deleted as there was no difference in the quantity of jewellery found during search and jewellery declared in the wealth tax return.
In a recent judgment, ITAT Hyderabad deleted addition u/s 69A as Assessing Officer (AO) made addition only on the basis of value of the jewellery without pointing out difference in the quantity of jewellery found during the course of search and the jewellery declared by the assessee in the wealth tax return.
ABCAUS Case Law Citation:
4426 (2025) (02) abcaus.in ITAT
In the instant case, the Revenue had challenged the order passed by the CIT(A) in deleting the addition made u/s 69A of the Income Tax Act, 1961 (the Act) towards unexplained jewellery found during the course of the search.
The respondent assessee was an individual and one of the promoters of a developer company and director in other group companies. A search and seizure operation u/s 132 of Income Tax Act, 1961 (“the Act”) was conducted in the case of the assessee and his related concerns.
During the course of search and seizure operation, jewellery worth Rs. 2,20,13,880/- was found at the residence and lockers of the assessee. The assessee was called upon to explain the source for the jewellery for which, he could not explain the source for the jewellery worth Rs.1,14,91,700/- except claiming that the jewellery found was acquired through gifts and purchased long back and also the jewellery was declared in the wealth tax returns filed in his individual capacity and in his wife.
Consequent to search, the case was selected for scrutiny and during the course of assessment proceedings, the Assessing Officer observed that although the assessee claimed that the jewellery found during the course of search was declared in the wealth tax return filed for one of the preceding year, in his individual capacity and his spouse, but the value declared in the return was much less, whereas, the value of jewellery found during the course of search was much higher. Therefore, observed that the assessee could not explain the source for difference in the value of jewellery and rejected the explanation of the assessee and thus, made addition of the difference u/s 69A of the Act.
The CIT(A) deleted the additions towards jewellery found during the course of search, by holding that the assessee and his spouse have filed wealth tax return for a preceding Assessment Year declaring jewellery. The Assessing Officer made additions towards jewellery, without bringing on record any difference in the quantity of jewellery, when compared to the jewellery declared in the wealth tax return, however, considered only the value, but the assessee had explained the reasons for increase in the value of jewellery on account of appreciation in the gold prices over the period.
The Tribunal observed that the Assessing Officer had not made out a case of difference in the quantity of jewellery found during the course of search and the jewellery declared by the assessee in the wealth tax return. The Assessing Officer made addition only on the basis of value of the jewellery and claimed that there is difference between value of jewellery found during the course of search and the value of jewellery declared in the wealth tax return, but the said difference was mainly on account of appreciation in the value of jewellery over a period of time, but not on account of difference in quantity.
Therefore, the Tribunal opined that once there was no difference in the quantity of jewellery, then there cannot be addition only towards value in jewellery, more particularly, when the assessee explained the value out of appreciation in value of the jewellery.
Accordingly, the Tribunal upheld the findings of the CIT(A) and rejected the grounds taken by the Revenue. In the result, appeal filed by the Revenue was dismissed.
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