The Income Tax Appellate Tribunal ( ITAT ) Chennai Bench has ruled in favor of Laxmi Nanda Kishore, setting aside the Rs.12.14 lakh addition made under Section 69 of the Income Tax Act, 1961.
The tribunal found that the Assessing Officer ( AO ) had wrongly classified seized gold and silver jewellery as unexplained investment, ignoring CBDT Instruction No. 1916 (dated 11.05.1994), which allows for certain quantities of jewellery to be considered as explained.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
Laxmi Nanda Kishore,appellant-assessee a Chartered Accountant and General Manager of Finance & Accounts at Varficus Ventures Pvt. Ltd., was subject to an income tax search on November 27, 2020. During the search, the authorities seized 299.7 grams of gold and 3,108 grams of silver jewellery, claiming that it was an unexplained investment. The AO rejected the taxpayer’s explanation and added ₹12.14 lakh to the total taxable income under Section 69.
CIT(A) Disposes Matter After 4-Year Gap Without Proper Hearing: ITAT Orders Fresh Adjudication
Aggrieved by this, the appellant filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)], who partially allowed the claim, treating 50% of the jewellery as explained and sustaining Rs.6.07 lakh as an unexplained investment. Dissatisfied with the partial relief, the appellant approached the ITAT Chennai.
The ITAT reviewed the appellant’s financial background and the supporting documents submitted. Kishore had provided purchase invoices for 276.945 grams of gold jewellery, which he had acquired between Assessment Years 2015-16 and 2021-22. The tribunal noted that CBDT Instruction No. 1916 allows 500 grams of jewellery for a married woman, 250 grams for an unmarried woman, and 100 grams for a male family member to be considered as explained without additional proof.
The tribunal found that the Assessing Officer (AO) failed to apply these CBDT guidelines while assessing the seized jewellery.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The AO wrongly included the already declared 276.945 grams of jewellery as additional unexplained assets, which inflated the total taxable amount. The ITAT also noted that the appellant had provided valid purchase bills and income tax returns, which showed that he had sufficient income to justify the ownership of the jewellery.
A Two Member Bench composed of George George K ( Vice-President ) and S R Raghunatha ( AccountantMember ) ruled that the entire Rs.12.14 lakh addition was unjustified and deleted it in full.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
