Drawings and returned income speak volumes about richness of family – ITAT deleted addition for jewellery found during search.
ABCAUS Case Law Citation:
ABCAUS 3737 (2023) (05) ITAT
Important Case Laws relied upon:
Ashok Chaddha vs. ITO 14 taxman.com 57
In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming the addition u/s 69B the Income Tax Act, 1961 (the Act) in respect of the jewellery and other valuable articles found during the search.
A search and seizure operation u/s 132 of the Act was conducted at the residence of the assessee. During the course of the search operation, jewellery, Silver articles etc. were found and seized.
During the course of assessment proceedings, the assessee was asked to explain the source of acquisition of the said jewellery with documentary evidence.
The assessee explained that jewellery found during the course of search formed part of Wealth Tax return/ books of accounts of the assessee and filed a detailed re-conciliation of jewellery with the Wealth Tax Return/ books of accounts.
However, the reply of the assessee did not find any favour with the Assessing Officer (AO) who was of the firm belief that the assessee had not submitted source of payment made for the purchase of the jewellery item and the assessee had not been able to reconcile the various items of jewellery with the valuation report.
Accordingly, the AO made an addition u/s 69B r.w.s. 115BE of the Act.
The CIT(A) was though satisfied with the reconciliation, was of the opinion that the coloured stone/pearls had not been properly reconciled and sustained a smaller part of addition.
The Tribunal observed that undisputed fact was that all the family members were residing at one place and could be considered as one family unit.
The Tribunal observed that the jewellery declared/disclosed by the family in Wealth Tax Returns as one unit was more than the total jewellery found during search. In view of the above, the Tribunal opined that there was no merit in making any addition on account of unexplained jewellery.
The Tribunal further observed that the assessee had given item wise reconciliation of Wealth Tax Return items with the valuation report prepared during search and the AO had not pointed out any specific defect in the reconciliation but had given general remarks that items were not matching.
The Tribunal opined that it is customary amongst the married women to keep on changing the jewellery as and when new designs come in the market. The fact needed to be considered was that the weight of the jewellery more or less remained the same though the design may change.
The Tribunal stated that sometimes new stones are engraved and sometimes the engraved stones are taken out of the jewellery. However, the status of the family, the return of income of the family has to be kept in mind.
The Tribunal placed reliance on the judgment of the Hon’ble High Court where jewellery in excess of limit prescribed by CBDT Instruction was accepted in the case of married lady even without documentary evidence holding that denying the explanation would tantamount to overlooking the realities of life.
The Tribunal in the light of the judgment of the Hon’ble High Court opined that the withdrawals made month after month cannot be brushed aside lightly. The withdrawals were evident from the details furnished and were enormous and further the returned income of the assessee was in crores.
The Tribunal opined that withdrawals and the returned income speak volumes about the richness of the family.
Accordingly, considering the totality and in particular the wealth tax returns viz-a-viz the jewellery found, the ITAT directed the AO to delete the entire addition made on account of jewellery found during the search.
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