The two member bench of Delhi Income Tax Appellate Tribunal ( ITAT ) comprising Yogesh Kumar Us (Judicial Member) and Pradip Kumar Kedia. (Accountant Member) while deleting the addition made by the assessing officer held that jewelry collection of married life of 25 to 30 years not treated as abnormal for levying tax.
When a search and seizure action under Section 132 of the Act was conducted at the premises of M/s. Shiv Shakti Construction which included the assessee, Kirti Singh herein. During the course of search at the premises occupied by the assessee jewelry worth Rs.81,12,090/- (gross weight 2217.30 gms) was found at the residence whereas jewelry worth Rs.12,06,000/- (gross weight 261.900 gms.) was found in the locker.
Thereafter the assessee filed a return and the assessment was concluded. The source of jewellery in the course of the assessment was inquired. It was pointed out to AO that jewellery pertains to the assessee, her husband, two sons, mother-in-law and two sister-in laws.
Thus the AO after analyzing the CBDT Instruction No.1916 dated 11.05.1994,treated Rs.48,86,060/- out of Rs.93,18,090/- worth of jewellery as explained The remaining amount of Rs.44,32,030/- was thus treated as unexplained as the assessee has failed to furnish any bills/vouchers or source of purchase of jewellery.
Aggrieved, the assessee filed an appeal before the CIT(A). The CIT(A) also affirmed the action of the Assessing Officer and declined to interfere with the additions carried out towards unexplained jewellery. Therefore the assessee filed an appeal before the two member bench of tribunal.
During the appeal proceedings Assesee representative, Mohit Choudhary before the bench argued that the Assessing Officer has ignored the normal practices and customs of Indian Society where the women, for a variety of reasons, have been keeping their jewelry in their maternal house.
Further argued that the CBDT Instruction No.1994 dated 11.05.1994 does not bar the retention of gold jewelry and ornaments above 500 per lady.
The Department representative, Waseem Arshand supported the decision of lower authorities .
The tribunal observed that assessee and her family members are high net worth individuals and having regard to their high status, holding such jewelry found in the custody of members of their families cannot be seen to be abnormal and consequently unexplained
After observing the decision of Ashok Chaddha vs ITO the bench observed that collecting jewelry above the limit prescribed in the instruction, in a married life of 25 to 30 years, was not treated as abnormal.
Therefore the bench deleted the addition made under Section 69A of the Income Tax Act towards the gold ornaments.
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