Jewellery Bills found during search-benefit of CBDT Instruction can not be denied if only bills are found and the jewellery is not available
ABCAUS Case Law Citation:
ABCAUS 2778 (2019) (02) ITAT
Important Case Laws Cited/relied upon by the parties
CIT V Rtanlal Vyaparilal Jain 339 ITR 351
During the course of search carried out at business and residential premises of the appellant assessee, invoices of the purchases of gold and diamond jewelry were found. The assessee was asked to show the source of the investment in the jewelry disclosed in the balance-sheet was much lower.
The assessee explained that he purchased the above jewelry for relatives and friends on their behalf. The Assessing Officer (AO) rejected the explanation of the assessee as no documentary evidences were filed in support of the ownership of jewelry mentioned in the invoices.
As the invoices have been found from possession of the assessee from his residence, the AO held that jewelry belongs to the assessee and was purchased by him.
The AO completed the assessment under section 153A, read with section 143 (3) of the Income Tax Act, 1961 (the Act) by making additions inter alia on account of alleged unexplained jewelry under section 69B of the Act.
On appeal before the learned CIT-A, the addition was confirmed.
The assessee challenged the order of the CIT(A) confirming the addition made on account of alleged unexplained jwellery and contened that it was very well covered by CBDT instruction & was in accordance with hindu social customs and marital status of assessee.
The Tribunal observed that in the instant case, the bills of purchase of jewelry were found instead of jwellery itself and assessee had explained that the jwelery is purchased for the friends and relatives of the assessee.
The Tribunal noted that in the decision of Hon Gujarat High court relied upon by the assessee, the purpose of the issue of the circular was accepted.
The Tribunal observed that when the jewelry itself is found but the bills are not found the addition is made u/s 69 of the act. Further when the bills are found but the jewellery is not available with the assessee during the course of search the addition is also required to be made u/s 69 of the act.
Therefore the Tribunal opined that there is no difference in the above those situations so far as the overall jewellery found during the course of search as well as the bills of such jewellery did not exceed the limits specified in the CBDT instructions.
Accordingly, following the decision of the Gujarat High Court, the Tribunal set aside this issue back to the file of the AO, with a direction to the assessee to identify the total grams of the jewelry contained in the purchase bills as well as the actual jewellery found along with the details of the family members staying with the assessee, thereafter the AO may examine the same and grant benefit of CBDT Instruction dated 11/05/1994 to the assessee.