No addition for jewellery found in search as net weight was lower than found in earlier search

Addition for jewellery found in search deleted as net weight found in search was lower than jewellery found during earlier search despite minor mismatch in items of jewellery. 

ABACUS Case Law Citation
ABCAUS 3376 (2020) (08) ITAT

Important case law relied upon by the parties:
Krishan Kumar Modi versus ACIT 180 DTR (Delhi) Trib. 274.
Mrs Nawaz Singhania
Raj Kumar B Agrawal Vs DCIT  176 DTR (Pune) Trib 273
Ashok Chaddha vs ITO (2012) 69 DTR (DEL) 8

In the instant case, the assessee had challenged the order passed by the CIT(A) in sustaining addition u/s 69A r/w Section 115BBE of the Income Tax Act, 1961 (the Act) on account of jewellery found during search.

The assessee was an individual. During the relevant assessement year, she was subjected to search proceedings under section 132A of the Act. 

During the course of search proceedings, certain jewelry was found from the premises of the assessee and out of which part of the jewelry was seized by the Income-tax Department.

The assessee submitted that net weight of 947.074 gms of the jewelry found in present search was lower than the jewelry found during the earlier search conducted nine years before.

But, according to the Assessing Officer, the assessee failed to reconcile items of jewellery found in the present search with the list of the jewellery found in the earlier search and therefore he held the part of the jewellery seized during search, as unexplained jewelry  u/s  69A  of  the  Act read with section 115BBE of the Act. 

Aggrieved, the assessee filed appeal before the CIT(A) and reiterated the submission that weight of the jewellery found in present search being less than the weight of the jewellery found in the earlier search & therefore, the jewelry found in the current search stood explained.

However, the CIT(A) following CBDT Instruction No. 1961 dated 11/05/1994 allowed credit of total jewellery of 500 gms in the hands of the assessee as explained and balance jewellery was upheld as unexplained.

The Tribunal noted that the Coordinate Bench had deleted the addition of unexplained jewellery on account of the jewellery declared in the wealth tax returns of the assessee in his family members was higher in weight as compared to the jewelry found during the course of the search.

In another case, the gross weight of the jewellery disclosed in  the  regular  wealth  tax  returns  was  in  excess  of the  gross weight of the jewelry found in the course of the search and the Tribunal held that no addition was permissible merely because there was frequent remaking of the old jewellery into new designs.

Further, in yet another case, the Tribunal had concluded that so long as the total weight of the gold jewellery found  at  the  time  of  the  search  matches  with  the  earlier declaration made by the assessee in wealth tax  returns and VDIS declaration the addition cannot be made simply on the ground that description of the items in the list declared under wealth tax returns/VDIS is different from those actually found.

The Tribunal observed that the assessee had filed a copy of the valuation report prepared during the course of the earlier search which was a document of the Department having evidential value akin to a copy wealth tax return or VDIS declaration.

The Tribunal rejected the contention of the Revenue that slight mismatch in the name of the jewelry articles, should not be allowed just because the jewellery weight found during earlier search was not supported by wealth tax returns as the the wealth of the assessee was less than the threshold and therefore the assessee did not file the wealth tax return.

The Tribunal observed that it was undisputed that the total weight of the jewelry found and seized during the course of the earlier search was more than the jewelry found during the current search.

Accordingly, following the decision of the Tribunal it was held that no addition of unexplained jewellery u/s 69A of the Act was warranted just due to minor mismatch in the items of the jewellery  found in the current searchand the jewellery found during the earlier search.

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