The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) last week held that the jewellery received by assessee at the time of marriage cannot be treated as unexplained under the provisions of the Income Tax Act.
In the instant case, the department found 2531.5 gms of jewellery during the course of search. After this, income tax proceedings were initiated against assessee and he was asked to explain all the items of jewellery found during the course of search. The assessee responded that the jewellery belongs to the assessee’s parents, their HUF, assessee’s family members and his HUF. Most of the jewellery items were inherited from his grandparents and received as gifts on the occasion of marriage and birth of his children and also gifts were received on marriage anniversary, birthdays of children etc. and there was no occasion to file the wealth tax as the net wealth did not exceed the minimum limit prescribed under the Wealth Tax from period to period in each case, therefore neither the assessee nor his family members were assessed to wealth tax.
While completing assessment proceedings, the assessing officer made an addition of 40,73,373 on account of unexplained investment in jewellery. Out of 2531.5 gms of jewellery, the AO has given assessee the benefit of 950 gms, as per the CBDT Instruction No. 1916 on account of wife and two children of the assessee.
On first appeal, a benefit of 600 gms were granted to assessee.
On second appeal, the bench noted that the assessee has been married from the past 18 years, and also had two children, the jewellery was gifted/inherited to the assessee and his wife by their parents and grandparents and other relatives at the time of their marriage, and also on several occasions after that, such as birth of their two children, marriage anniversaries etc. Also some of the jewellery was purchased by assesse’s wife out of the cash gifts received by her from the relatives on various occasions.
In view of the CBDT instructions, the bench noted that the excess jewellery found in the case of assessee, his parents, his wife, their children and the HUF was very nominal, and was very much reasonable, keeping in mind the riches and high status and more customary practices.
The bench further noticed the decision in Sushila Devi wherein it was held that “Stridhan” of a woman cannot be seized during the course of completing assessment proceedings against her husband. Accordingly, the bench granted relief to the assessee.
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