The Delhi Bench of Income Tax Appellate Tribunal (ITAT) found no wrongdoing in jewellery being kept in the maternal family by a married daughter, leading to the deletion of the related addition.
The appellant, Prem Prakash Sethi, challenged the order of the Commissioner of Income Tax (Appeals), New Delhi, which upheld the assessment order under Section 143(3) of the Income Tax Act, 1961. The primary focus of the appeal was on two additions made by the Assessing Officer (AO): unexplained jewellery amounting to Rs. 22,20,698/- and unexplained cash totaling Rs. 24,91,700/-.
The appellant, represented by P.K. Mishra and Neeraj Jain, contended that the jewellery weighing 1903.97 grams, valued at Rs. 70,00,582/-, found during the search included pieces belonging to his married daughter, stored as per customary practices for safety.
The counsels argued that the CIT(A) granted relief for 1300 grams of jewellery attributable to family members but upheld the addition for the remaining 603.97 grams, valued at Rs. 22,20,698/-. The appellant maintained that the jewellery should be considered explained as per CBDT Instruction No. 1916 dated 11 May 1995. Regarding the unexplained cash, the appellant claimed that the amount found during the search was associated with companies and family members, and submitted supporting documents to the CIT(A), which were overlooked.
The respondent, represented by Sanjay Pandey, countered these arguments, stating that the CIT(A) had already considered the CBDT instructions and that the appellant’s claims about the married daughter’s jewellery were unsupported. The respondent also argued that the CIT(A) correctly rejected the appellant’s explanation regarding the cash without substantial evidence.
The two-member bench of Pradip Kumar Kedia (Accountant Member) and Sudhir Kumar (Judicial Member) found merit in the appellant’s argument that jewellery belonging to a married daughter could be kept with the maternal family for safety and must be considered while evaluating the unexplained jewellery.
“We find traction in the aforesaid plea raised on behalf of the assessee. We are convinced with the assertions raised on behalf of the assessee that jewellery are, at times, kept by the married daughters with the maternal family. There is no warrant to deny credit of 500 gms on account of married daughter in terms of CBDT Instruction No. 1916 dated 11th May, 1994. The assessee thus gets the relief to the extent of 500 gms as against aggregate 603.97 gms for which the additions were sustained before the CIT(A).” The bench stated.
Accordingly, relief for 500 grams of jewellery was granted, and the remaining 103.97 grams were conceded by the appellant to be treated as unexplained to avoid prolonged litigation.
The ITAT emphasised principles of natural justice and directed the Assessing Officer (AO) to reconsider the assessee’s case. This decision came after the assessee faced challenges in presenting evidence regarding a cash source.
The tribunal noted that the assessee should be granted a reasonable opportunity to justify their case. The AO is required to consider any new evidence presented and issue a detailed order outlining their reasoning.
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