ITAT deletes addition for Unexplained Jewellery supported by Purchase Bills and Books of Accounts [Read Order]

The Income Tax Appellate Tribunal (ITAT) deleted the addition by Commissioner of Income Tax (CIT)(A) on account of unexplained jewellery in the light of the fact that the jewellery seized was supported by purchase bills and Books of Accounts.

The assessee is an individual and derives income from salary and other sources. Search and seizure action under Section 132 of the Act was carried out in the case of Data Group and the assessee was also covered by the said search and seizure action. During the course of a search, gold and silver jewellery valued at Rs. 32,71,895/- were found from the residential premises of the assessee.

In the course of assessment proceeding, the assessee claimed benefit of CBDT Instruction to the extent of 850 grams of jewellery in the hands of his wife, daughter and himself. The AO accepted the said claim and allowed the benefit to the extent of 850 grams of jewellery. The assessee also claimed gold jewellery of 343.328 grams were purchased from time to time and recorded in the books of account and balance sheet of the assessee and his family members. The purchases of the said jewellery are also supported by purchase bills found during the course of search. However, the AO denied the said claim of the assessee in giving the benefit of purchases made on the ground that this quantity of 343.328 gms.of gold jewellery is already the part of 850 gms. jewellery allowed as per CBDT Instruction.

The Tribunal consisting of an Accountant Member, Vikram Singh Yadav and Judicial Member, Vijay Pal Rao held that there was no error or illegality to the extent of the value of said jewellery accepted by the ld. CIT(A). Hence, the addition sustained by the ld. CIT(A) on account of unexplained jewellery is deleted.

“The AO has valued the entire jewellery by applying the prevailing rate of 2700/- per gram and by ignoring the fact of the actual cost of acquisition to the extent of 343.328 gms. at Rs. 4,57,404/- as reflected in the purchase bills as well as in the books of account of the assessee. Therefore, we do not find any error or illegality to the extent of the value of said jewellery accepted by the ld. CIT(A). Hence, the addition sustained by the ld. CIT(A) on account of unexplained jewellery is deleted,” the bench said.