Explanation that jewellery was acquired out of income of Bigger HUF was plausible – ITAT

Explanation that jewellery was acquired out of agricultural income of Bigger HUF before its partition cannot be termed as not plausible – ITAT

ABCAUS Case Law Citation:
ABCAUS 3753 (2023) (05) ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming addition u/s 69A of the Income Tax Act, 1961 (the Act) towards gold jewellery found during search.

The appellant assessee was an individual deriving income under the head “salary”. The search and seizure operations u/s 132 of the Act were conducted in the business and residential premises of the appellant.   

During the course of such search and seizure operations, Lockers were found in the names of the assessee and her husband and in the said Locker, Gold and Jewellery of more than 900 gms was found. 

Out of said gold, jewellery, the gold, jewellery of 850 gms was treated as explained by the Assessing Officer in terms of the CBDT Instruction 1961 dated 11.05.1994 and the value of rest of the gold, jewellery was treated as unexplained rejecting the explanation of the appellant that this gold, jewellery belongs to his HUF which is received on partition of Bigger HUF. 

It was further explained that the said gold, jewellery was acquired out of the agricultural income on the land belonging to Bigger HUF.

The Tribunal observed that the provisions of section 69A provides that if an assessee is found to be the owner of any money, bullion, jewellery or other valuable article, which is not recorded in the books  of  account,  and  the assessee offers no explanation  about  the  nature  and  source  of acquisition  of  the  money,  bullion, jewellery or other valuable article, or the explanation offered by him is not satisfactory in the opinion of the Assessing Officer, then such money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee. 

The Tribunal noted that in the present case, it was found that the appellant was in possession of the gold, jewellery out of which gold, jewellery of 850 gms was treated as explained by the Assessing Officer in terms of the CBDT Instruction.  As regards to the balance of jewellery which was around only 100 gms, the assessee had offered an explanation that this jewellery was acquired out of the agricultural income generated by the Bigger HUF on the lands held by it before partition. 

The Tribunal opined that this explanation cannot be termed as “not plausible explanation” and, therefore, the Assessing Officer was not justified in treating such gold, jewellery as unexplained and brought to tax. 

Accordingly, the Tribunal directed the Assessing Officer to delete the addition made u/s 69A of the Act. 

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