It is common practice in Indian household that ladies share locker for keeping jewellery with family members- ITAT deletes addition made without any enquiry
ABCAUS Case Law Citation:
ABCAUS 2718 (2019) (01) ITAT
Important Case Laws Cited/relied upon:
Sunita Nigam Vs. DCIT (Central) (2018) 33 ITJ 837
Suresh Chand Agrawal Vs. DCIT (2014) 23 ITJ 46
CIT Vs. M.s. Agrawal (HUF)(2008) 11 ITJ 721 (MP)
This appeal was filed by the assessee against the order of the Commissioner of Income-tax (Appeals) in sustaining the addition for gold jewellery belonging to daughter in Law and grand daughter of the assessee eligible for holding gold jewellery weighing 250 grams each.
A Search operation u/s 132(1) of the Income Tax Act, 1961 (the Act) were carried out in the residential and business premises of a Business Group. Assessee’s husband was also connected with the said group, thus search u/s 132 was also carried out at her residential premises.
During the course of search, a locker held with Bank was found by the search party. In the said locker the search party found gold jewellery weighing 966.00 gram and silver articles weighing 1960.00 grams.
During the course of search, statement u/s 132(4) of the assessee was recorded in which the assessee stated that his family consists of herself, her husband, Son, Daughter-in-law and Daughter.
During the course of assessment proceedings it was explained that the jewellery and silver articles found during the course of search is covered within the guidelines prescribed by the CBDT Circular No.1916 dated 11.5.1994 as under:
| Family member | Ornaments allowed as per CBDT Circular (Grams) |
| Appellant | 500 |
| Husband | 100 |
| Son | 100 |
| Daughter-in-Law | 500 |
| Daughter | 500 |
| Grand daughter | 250 |
| Total | 1950 |
Thus, it was contended before the AO that as per Board’s Circular the assessee family could hold 1950 grams of gold jewellery against which the search party had found only 966 grams gold jewellery. Thus the quantum of jewellery found during the search was much below the guideline prescribed by CBDT.
However, the AO had not accepted assessee’s above submission by stating that assessee was not Income Tax payer, no bills and vouchers in respect of acquisition of jewellery was submitted nor the proof of receipt of jewellery in gift at the time of marriage and other occasions from relatives had been produced.
Thus the AO not accepted that assessee or her any of the family members held any gold jewellery or received it in marriage or other family ceremonies.
Accordingly, he made addition of total value of jewellery found during the course of search.
Aggrieved by the order of the AO, assessee preferred appeal before the CIT(A) and reiterated the submissions. The CIT(A) held that in view of the CBDT circular and decision relied by the assessee gold jewellery to the extent of 700 grams was reasonable as under:
| Appellant | 500 |
| Husband | 100 |
| Son | 100 |
| Total | 700 gms |
However the CIT(A) maintained the addition 266 grams.
The Tribunal observed that it was undisputed that before AO, the assessee had stated that the jewellery recovered from her locker belong to other individuals. However, the AO rejected the contention on the basis that no return was being filed, no documentary evidence was submitted in respect of gifts, etc. and no evidence was produced to prove that jewellery is related to other individuals.
The Tribunal opined that the AO ought to had made enquiry from such other persons. However, no such enquiry was made and also CIT(A) in a mechanical manner without conducting any enquiry from the other members of the family proceeded to give benefit to the extent of 700 gms. only. In the absence of such enquiry, addition so made was not justified.
The Tribunal opined that it is also common practice in Indian household that ladies share their locker for storing ornaments with other family members. Moreover, it was stated that the jewellery is received in the form of gift, then the A.O. should have atleast made enquiries from the persons from whom such gift was received.
Therefore, considering the totality of the facts, the ITAT held that the addition made by the AO was not sustained and directed the AO to give benefit of the CBDT circular and delete the addition.
