The Income Tax Appellate Tribunal (ITAT), Jaipur Bench deleted additions made on account of unexplained jewellery as valuation report contained details of individual jewellery items available on record.
The assessee, Vijay Kumar Maheshwari has received the jewellery from Late Shri Ramswaroop Maheshwari, it is noted that the assessee has submitted before the CIT(A) as well as before the AO that Late Ramswaroop Maheshwari during the period 2005-06 was not keeping well and wanted to handover the jewellery to the assessee and other family members and for the purposes, has got the valuation of the jewellery done by M/s Kankariya jewellers on 12.07.2005 and thereafter, he has handed over the jewellery as well as valuation report to the assessee and other members of the family; and in support of the said explanation, the assessee has submitted the valuation report of registered valuer, M/s Kankariya jewellers, confirmation letter from the registered valuer, confirmation letters regarding receipt of the inherited jewellery by the family members, copy of balance sheet and ITR of Late Ramswaroop Maheshwari for A.Y 2005-06 reflecting gold and diamond jewellery, and assessee’s and his wife’s own ledger and books of accounts where the said jewellery was recorded. During the appellate proceedings, the CIT(A) called for the remand report from the AO and after considering the explanation and documentation submitted by the assessee and the remand report of the AO, the CIT(A) accepted the factum of jewellery received by the assessee, his wife and other family members from Late Shri Ramswaroop Maheshwari and while doing so, has accepted the valuation report of the registered valuer as well as appreciated the fact of possession of substantial jewellery by Late Shri Ramswaroop Maheshwari as reflected in his tax return filed for A.Y 2005-06. At the same time, in terms of quantum of jewellery, the CIT(A) has accepted the jewellery only to the extent of 75% as explained and remaining 25% has been treated as unexplained.
The reason for the same has been stated to be non-availability of details/break up of gold and diamond jewellery in the return of income so filed on behalf of Late Shri Ramswaroop Maheshwari for A.Y 2005-06. In this regard, the ld AR has submitted that the valuation report of the registered valuer shows detail break up of individual gold and diamond jewellery which were possessed by Late Ramswaroop Maheshwari and the details of jewellery have also been recorded in assessee’s own books of accounts which were submitted for verification and no adverse inference has been drawn by either of the authorities. In our view, where the valuation report has been accepted by the ld CIT(A) which not just contains the total value rather it contains the valuation in respect of individual items of gold and diamond jewellery, the details of gold and diamond jewellery were very much on record along with disclosure thereof in the tax return filed for A.Y 2005-06.
The coram of Judicial Member, Sandeep Gosain and Accountant Member, Vikram Singh Yadav held that the valuation report and factum of possession of substantial jewellery and the fact that necessary details of individual jewellery items are available on record, the action of the CIT(A) in treating only 75% of jewellery as explained and remaining 25% as unexplained doesn’t have a rational basis with the material available on record and as to how the CIT(A) has arrived at the figure of 75% has also not been spelt out in the order so passed by him and the said action of CIT(A) of restricting the explained jewellery to 75% and treating the remaining 25% as unexplained therefore cannot be upheld.
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