The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently held that no addition could be made under Section 69B of Income Tax Act on account of jewellery shown in wealth tax return.
Salil Aggarwal, appeared for the assessee . Sarita Kumari appeared for revenue .
Section 69B of Income Tax Act states that, if the assessee incurred any expenditure, and the assessee did not provide any explanation relating to such expenditure, then such expenditure is considered as the deemed income of assessee.
The appeal was filed by the assessee Nirmal Kumar Minda.
When a search and sezure operation was conducted at the residence of the assessee jewelry, Silver articles were found and were seized .
During the course of assessment proceedings, the assessee was asked to explain the source of acquisition of the above mentioned jewelry with documentary evidence.
Assessee explained that the jewelry found during the search operation is part of the Wealth Tax Return / books of accounts. Further, assesee said that he mentioned the full details of the jewelry in the above wealth tax return .
Without admitting the submission of the assessee, AO made addition under Section 69B of the Income Tax Act.
Being aggrieved by the order of the AO, the assessee filed an appeal before the CIT(A).
Before the CIT(A) once again a detailed reconciliation statement was furnished explaining the jewellery shown in the Wealth Tax Return and found at the time of search.
Even Though CIT(A) was satisfied with the reconciliation but was of the opinion that the color stone/ pearls have not been properly reconciled and sustained the addition to the extent of Rs.331778/-thereby giving relief of Rs.26103251/-. Against the order the assessee filed an appeal before the tribunal.
It was observed that assessee has given item wise reconciliation of Wealth Tax Return items with the valuation report prepared during search.
Also AO has not pointed out any specific defect in the reconciliation but has given general remarks that items are not matching.
The bench considered that It is customary amongst married women to keep on changing the jewelry as and when new designs come in the market.
The bench also noted that It is customary amongst married women to keep on changing the jewelry as and when new designs come in the market. it was the reason for arising confusion to AO.
The tribunal N. K. Billaiya, (Accountant Member) and Anubhav Sharma, (Judicial Member) observed that “weight of the jewellery more or less remained the same though the design may change. Sometimes new stones are engraved and sometimes the engraved stones are taken out of the jewellery. However, the status of the family, the return of income of the family has to be kept in mind.”
Therefore, considering the wealth tax return and books of assessee, the bench deleted the addition made by the assessing officer.
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