CBDT Instruction 1916 takes into account quantity of jewellery generally held by family members of a Hindu Family

CBDT Circular though meant for non-seizure of jewellery takes into account quantity of jewellery generally held by family members of a Hindu Family

ABCAUS Case Law Citation
ABCAUS 3482 (2021) (04) ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming the addition made by the Assessing Officer (AO) on account of jewellery found during the course of search & seizure operation u/s 132, while arbitrarily rejecting the explanation given by the assessee.

During the course of search some jewellery was found from the residence and the bank locker of the assessee. The assessee explained that the jewellery was acquired by the assessee at the  time of his marriage and part was purchased after his marriage  which was now more than 20 years. 

It was submitted that the assessee was showing substantially higher income and withdrawals are also substantial, so same was not undisclosed income of the assessee. 

The AO noted that as assessee had not filed any evidence regarding purchase and source of payment of jewellery and the entire jewellery belongs to him and the others members of the family. 

The AO considered CBDT instruction 1916 dated 11.05.94 accepted only 100 gms out of jewellery for the assessee and for the rest made the addition to the total income of the assessee.

The AO had denied the benefit of the said CBDT instruction with respect to the other family members for the reason that during the course of search the assessee stated that jewellery belonged to him.

Before the Tribunal the assessee submitted that in terms of the CBDT Instruction, he should have been allowed the deduction of 500 gms for wife and 100 gms for his son also over and above 100 gms of jewellery for him. 

The Tribunal observed that the issue was squarely covered in favour of the assessee by the decision of the Hon’ble Allahabad High Court, Madras High Court, Rajasthan High Court and Gujarat High Court.

The Tribunal noted that in substance all these Hon’ble High Courts had held that jewellery specified under CBDT Circular No. 1916 dated 11.05.1992 is a reasonable quantity which could be not added in the hands of the assessee even though circular is for the purpose of non-seizure of jewellery during the course of search. Hon’ble High Courts were also of the view that the instruction takes into account the quantity of jewellery which would generally be held by family members of assessee belonging to an ordinary Hindu house hold.

The Tribunal opined that the claim of the assessee was supported by various high courts. Accordingly, the Tribunal directed the AO to restrict the addition only in excess of jewellery found as per instruction No. 1916 dated 11.05.1992 with respect to the family members of the assessee.

The appeal was allowed in favour of the assessee.

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