While hearing the case of Shri Keshav Lila vs Assistant Commissioner of Income Tax, Indore bench of Income Tax Appellate Tribunal (ITAT) held that the gold which have been duly declared in the wealth tax returns cannot be seized again during the search operations and the search party can decide whether to follow Central Board of Direct Taxes (CBDT) guidelines.
Assessee in the present case is an individual derived income from salary, income from other sources and agriculture income. He is also Director of Lilasons Industries Limited. He has filed his return of income for the relevant assessment year and declared his total income of Rs.11,89,296.
Thereafter a search under Section 132 of the Income Tax Act 1961 was conducted at his residential premises as well as on the premises of his other concerns and accordingly a notice under section 153A of the act was issued to the assessee for reopening the assessment. In response to the notice the assessee has the return showing the same income as declared earlier. However the Assessing Officer (AO) made an addition of Rs. 22,65,625 against ornaments and jewellery found during the course of search.
On appeal CIT(A) also upheld the order of the AO and confirmed the addition made by him.
Aggrieved by the order passed by the CIT(A) assessee preferred an appeal before the tribunal.
After considering the rival submissions of both the parties the tribunal bench comprising of Judicial Member Kul Bharat and Accountant Member Manish Borad objected the findings of the lower authorities and the bench observed that CBDT guidelines in the matter of seizure of jewellery reads as “In the case of person not assessed to wealth-tax gold jewellery and ornaments to the extent of 500 gms. per married lady 250 Gms per unmarried lady and 100 gms per male member of the family, need not be seized”.
While perusing the account books of the assessee it is clear that the aforementioned jewellery and ornaments have been duly declared in the wealth tax returns filed by the assessee himself and the seized ornaments are not exceeding the limit mentioned in the CBDT guidelines also. It was also observed that the assessee successfully proved that gold jewellery were received through “WILL” from his mother in law and some other part of the jewellery was purchased by the assessee’s wife and the assessee also disclosed the same as gift in his balance sheet, therefor there is no need to make any addition regarding the same.
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