No Addition of LTCG can be made u/s 69A on Account of Alleged Unexplained Investment in Jewellery: ITAT [Read Order]

The New Delhi bench of Income Tax Appellate Tribunal(ITAT) held that addition of long term capital gain can be made by the assessing officer under Section 69A of Income Tax Act, 1961 on account of investment in jewellery is not valid.

Ballabh Prasad Aggarwal, the appellant assessee had received income under the head ‘Income from salary’ from M/s Surya Food & Agro Ltd. and also income from other sources as interest from saving bank account.

The assessee appealed against the order passed by the Commissioner of Income Tax (appeals)  for the addition of long term capital gain made under Section 69A of Income Tax Act 1961 on account of unexplained investment in jewellery.

Ved Jain, the counsel for the assessee contended that there was absolutely no material to prove that there had been such sale which led to Long Term Capital Gains and there was no provision in the Income Tax Act to deem the difference between value of the jewellery declared (in the Wealth Tax Return) and the value of the jewellery found in the search, in case the jewellery falls short of the amount/quantity declared.

P. Praveen Sidharth, the counsel for the respondent contended that out of the jewellery found, some were seized due to mismatch of the description of the jewellery and the assessing officer calculated Long Term Capital Gains on the presumption that the jewellery “undetected” during the search was sold and determined the long term capital gain.

The bench observed that the most important details was the addition made on account of Long Term Capital Gains on the purported, notional, fictitious sale of jewellery and that there were loose diamonds as per the Wealth Tax Return and the jewellery seized which had been treated as unexplained investments , but the jewellery seized was intra polated in the jewellery found and no addition can be made on this account. The two member bench comprising of Shri. Yogesh Kumar US (Judicial Member) And Dr. B. R. R. Kumar (Accountant Member) held that the addition made under Section 69A of the Income Tax Act, 1961 was not valid and no addition can be made on this account while allowing the appeal.

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