‘Mother-in-Law’ includable as ‘Family Members’: ITAT deletes Addition on Excess Gold [Read Order]

The Visakhapatnam bench of the Income Tax Appellate Tribunal (ITAT) while deleting an addition, held that the mother-in-law of the assessee can be treated as a “family member” and therefore, the excess gold found during search cannot be subject to addition under the Income Tax Act, 1961 as per the circular issued by the Central Board of Direct Taxes (CBDT) on gold jewellery.

The assessee, Muppavarapu Kavitha, is an individual derives income from business and remuneration from a partnership firm M/s. Lifestyle Housing. A Search and Seizure operation under section 132 of the Act was conducted in the group cases of M/s. Yugandhar Housing Private Limited and others on 25/10/2017 including the residence of Sri M. Maheswara Reddy, Managing Director of M/s. Yugandhar Housing Pvt Ltd. The assessee (Smt. Muppavarapu Kavitha) is the wife of Sri M. Maheswara Reddy. The assessment was completed on the basis of the excess gold found from the family members of the assessee.

A bench of Shri Duvvuru Rl Reddy, Judicial Member & Shri S Balakrishnan, Accountant Member observed that the gold jewellery belonging to family members was seized to the extent of 1628.025 grams and there is no dispute on the fact that as per the CBDT Instruction No.1916, dated 11/5/1994 that in a case of a person who is not assessed to wealth tax, gold jewellery and ornaments to the extent of 500 grams per a married lady, 250 grams per an unmarried lady and 100 grams per male member of the family should not be seized.

Granting relief to the assessee, the Tribunal held that “As per the list mentioned in para 4 of the assessment order it is noted that the AO has erred in disallowing the excess gold of 284.600 grams belonging to the mother of the assessee who is staying with the assessee being the only daughter, and considered as belonging to the family members of the assessee. In these peculiar circumstances, we find merit in the argument of the Ld. AR and we are of the considered view that the order of the Ld. CIT(A) needs to be quashed and allow the appeal of the assessee.”

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