The Income Tax Appellate Tribunal (ITAT) in Delhi ruled that if there is additional jewelry beyond what was accounted for in the wealth tax assessment, the taxpayer must provide a more detailed explanation in their Wealth Tax Returns (WTR) to meet the requirements of Section 69B of the Income Tax Act, 1961.
The tribunal stated that granting benefits based on the family’s status, such as stridhan or ownership by another family member, as per the circular issued by the Commissioner of Income Tax Appeals (CIT(A)), is not legally justified.
Search and seizure actions were carried out under Sections 132/133A of the Income Tax Act, 1961, in relation to the Gautam Khaitan Group of cases, at multiple residential and business locations. Rekha Khaitan is the assessee in this particular case. A notice was issued to Rekha Khaitan under Section 153A of the Income Tax Act, and in response, the assessee filed an income tax return disclosing a total income of Rs. 1,57,590.
The AO had made two tables. The Table I had list of jewelry recovered from Premises weighing (Gross weight) 2345.72 grams, and (net weight) 1426.97 grams and Table II had list of jewelry recovered from Bank Locker weighing (Gross weight) 1885.16 grams and (net weight) 1221.07grams.
The assessee was directed to explain the source of jewelry weighing worth Rs. 7,64,46,500/- found from residence and bank locker of the assessee.The assessee claimed benefit of CBDT Circular and instructions dated 11.05.2014 and certain judicial pronouncements to claim that the balance 558.74 grams should be considered to be explained.
AO thus concluded that rest remained unexplained amounting Rs. 1,14,15,054 weighting 1634.59 and made the addition.
Aggrieved by the order, the assessee filed an appeal before Commissioner of income Tax Appeals [CIT (A)] which restricted the addition made by the AO under Section 69 A of Income Tax Act from Rs. 1,14,15,054 to Rs. 38,60,667.
Appeal was filed before ITAT and the assessee submitted that the additions under Section 69B of Income Tax Act are not legally sustainable as AO has not given any finding to the fact that the amount spent on acquiring the Jewelry in question exceeds the amount recorded in this behalf in the books of assessee from known source of income.
Further, the assessee has contended that and in the grounds of appeal is that the excess of 770.9 grams. (Net Weight), valued at Rs. 5008 per gram. totaling 38,60,667/- arrived by CIT(A) is also liable to be deleted in the light of Circular no. 1916 and that this remaining found excess can be validly accepted to be ‘stridhan’ of the assessee.
The Departmental Representative submitted that CIT (A) has wrongly interpreted the instructions no.1916. of CBDT Circular.
The Bench comprising of Shamim Yahya, Accountant Member and Anubhav Sharma, Judicial Member observed that in the case of a wealth-tax assessee, gold jewellery and ornaments found in excess of the gross weight declared in the wealth-tax return only need to be seized, hence the plea of assessee that the excess 770.9 grams, was all “stridhan” is rather a self destructive plea to take benefit of Circular No. 1916 which CIT (A) failed to appreciate.
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