Excess Jewellery found during Search in Wealthy Family belonged to Married Woman is Reasonable: ITAT Deletes Addition u/s 69A of Income Tax Act [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition under Section 69A of the Income Tax Act holding that the excess jewellery found during the search in a wealthy family belonging to a married woman was reasonable.

The assessee, Ankit Sharma, has filed appeal alleging that the Commissioner of Income Tax (Appeal) Kanpur erred in confirming the action of the assessing officer to make an addition to the income of the appellant in respect of the alleged unexplained gold ornaments found a t the time of search by invoking the provisions of Section 69A of the Income Tax Act read with Section 115BBE of the Income Tax Act.

That on the facts of the case, in law and under the circumstances, the Commissioner of Income Tax (Appeal), erred to confirm the action of the assessing officer to make an addition ignoring the plea that jewellery belonging to the daughter was also kept in the house. The addition confirmed by the Commissioner of Income Tax (Appeal) was unjustified, unwarranted based on surmises, conjectures.

That on the facts of the case, in law and under the circumstances, the Commissioner of Income Tax (Appeal) erred to confirm the action of the assessing officer to make an addition to the incomer of the appellant for the alleged loan figures jotted on the rough paper by invoking the provisions of Section 69A of the Income Tax Act, while no such loan was ever received but these were only figures jotted to show higher cost.

Rajiv Khandelwal, appeared on behalf of the assessee and Waseem Arshad, appeared on behalf of the revenue.

The two-member Bench of C. M. Garg, (Judicial Member) and B. R. R. Kumar, (Accountant Member) observed that the CBDT’s instruction no. 1916 dated 11.05 .1994 and press release dated 01.12 .2016 pertained to seizure of jewellery. It postulated that by going through the archetypal Indian family standard, a person of an Income Tax payee of considerable amount could have had the prescribed amount of jewellery in the circular. It was brought into force after a series of due deliberation and its impact on taxation. It was never envisaged that the Assessing Authority should restrict the amount of eligible jewellery to the quantity mentioned in the circular. The assesses were trustees of a medical college and also have the returned income in the range of Rs.21.27 lacs to 49.34 lacs as per the returns.

The Bench further referred to the decision of Coordinate Bench of ITAT Delhi in the case of Vibhu Aggarwal vs. DCIT which held that where Assessing Officer under Section 69A of the Income Tax Act made addition on account of jewellery found in search of assessee , since assessee belonged to a wealthy family and jewellery was received on occasions from relatives, excess jewellery was very much reasonable and , thus, no addition under section 69A was called for.

The Bench relying upon these decisions allowed appeals filed by assessees.

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