ITAT deletes Addition since AO combined Value of Gold and Silver together, ignored CBDT Circular [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has recently deleted the addition made by the income tax department since it is found that the Assessing Officer while making the addition, combined the value of gold and silver together.

The income tax department seized gold worth 831.74 gms and silver worth 7433.65gms, pursuant to search operations at the assessee’s premises certain jewellery. The Assessing Officer made an addition of Rs.562,400 made on account of unexplained gold.

The assessee contended that as against the jewellery as found in search the Assessing Officer has erred in making the addition by taking the value of gold found on search at Rs.28,83,301, which is actually the combined figure of gold and silver. It was, therefore, argued by the assessee that the addition of Rs.462,095 is unjustified.

Upon careful consideration of the arguments and the documents submitted, the Tribunal found that the submissions of the assessee are cogent.

“The Assessing Officer has started by considering the valuation of gold at the quantity of 831.74 at Rs.28,83,301 and has finally added a sum of Rs.562,400 as unexplained gold. However, it is the fact that actually the valuation of gold seized was Rs.24,21,206. In the valuation the silver found was Rupees 462 095, hence the inclusion of silver valued at Rupees 462 095 into gold ornaments and consequent addition to this extent is not sustainable,” the Tribunal said.

The assessee further contended that the Assessing Officer, despite mentioning and considering the CBDT Circular in this regard has not provided the necessary relief for the jewellery described by the CBDT Circular No.1916 dated11/05/1994.

Allowing the contention, the Tribunal added that “as per the assessee’s contention assessee should have been granted relief of 600 gms on his and his wife’s belongings. As against this, the Assessing Officer has granted relief of only 500 gms. We find that this claim of the assessee is also correct and we direct the Assessing Officer to grant the assessee the required relief as per the said CBDT Circular.”