The Income Tax Appellate Tribunal (ITAT) of Delhi bench directed the Assessing Officer (AO) to delete the addition since collecting jewellery by a woman in a married life of 25-30 years is not an abnormal act.
A search and seizure operation under section 132 of the Income Tax Act was conducted on 08.06.2017. During the search operation Jewellery, Silver articles were found at the residence of Sh. Nirmal Kumar Minda, the assessee amounting to Rs.2,64,35,029/- was seized from the premises. During assessment proceedings, the assessee was asked to explain the source of the acquisition of the above-mentioned jewellery with documentary evidence.
The assessee explained that the jewellery found duringthe search is part of the Wealth Tax return/ books of accounts of the assessee and filed a detailed reconciliation of jewellery with the Wealth Tax Return/books of accounts.
The reply of the assessee did not find any favour with the AO who was of the firm belief that the assessee has not submitted a source of payment made for the purchase of the jewellery item and the assessee has not been able to reconcile the various items of jewellery with the valuation report. The AO made the addition of Rs.26435029/- under section 69B r.w.s. 115BE of the Income Tax Act.
The addition was challenged before the CIT(A) and once again a detailed reconciliation statement was furnished explaining the jewellery shown in the Wealth Tax Return and found at the time of the search.
The CIT(A) was satisfied with the reconciliation but believed the colour stone/ pearls have not been properly reconciled and sustained the addition to the extent of Rs.331778/-thereby giving relief of Rs.26103251/-.
The assessee has given item-wise reconciliation of Wealth Tax Return items with the valuation report prepared during the search and the AO has not pointed out any specific defect in the reconciliation but had given general remarks that items are not matching.
The CIT (A) confirmed the addition stating that the Assessing Officer had been fair in accepting the part of the jewellery as unexplained. She also submitted that another glaring fact ignored by the Assessing Officer as well as other authorities was that as the department had searched all the financial dealings which were within his knowledge and no paper or document was found to indicate that this jewellery belonged to the appellant and that it was undisclosed income of the assessment year 2006-07.
It was also argued that jewellery is “Streedhan” of the assessee’s wife. Further argued that it is a normal custom for a woman to receive jewellery in the form of marriage and other occasions such as the birth of a child. The assessee had been married for more than 25-30 years and the acquisition of the jewellery of 906.900 grams could not be treated as excessive.
Collecting jewellery of 906.900 grams by a woman in a married life of 25-30 years is not abnormal. Furthermore, there was no valid and/or proper yardstick adopted by the Assessing Officer to treat only 400 grams as a “reasonable allowance” and treat the other as “unexplained”.
The two bench members, Shri. N.K. Billaiya,( accountant) and Shri. Anubhav Sharma, (judicial) directed the AO to delete the addition and allowed the appeal of the assessee.
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