The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition under Section 69B of the Income Tax Act 1961 as the bank accounts extract evidencing payment of purchase of jewellery was produced.
A search & seizure operation was conducted in the case of Satish P Chandra on 01-02-2018. The assessee filed his original return of income on 31-10-2018. Notice was issued on 06-05-2019 calling for information. During the search proceedings, Jewellery of 8650.81 gms of gold was found from residential premises of the assessee. The aforesaid jewellery found at the time of search was valued by an Approved Valuer. As per return of income filed for the AY 2016-17 of himself, wife and son the assessee, as on 31-03-2016, had accounted for total jewellery. The assessee was asked to explain the excess jewellery found during the search proceedings.
The assessee in the statement stated that jewellery purchased after 1.4.2016 amounts to Rs.1 crore approximately for which he was unable to produce bills during the search proceedings but he had submitted bank statement as a proof for the purchases. But the assessee could not produce the bills for the purchase of the jewellery. the AO made addition towards unexplained investment in jewellery u/s 69B of the Act.
The CIT(A) observed that it was not disputed that the jewellery valued at Rs. 3,93,50,000/- was declared in the Return of Income as on 31-03-2016. As per the inventories, panchanama, and valuation report, the said jewellery available with the assessee came to be valued at the rate of Rs. 3123 p/gms applying the prevalent rate as on date of search. The jewellery declared in the return of income for AY 2016-17 should be valued applying the rate of Rs. 2611 p/gms prevailing as on 31-03-2016.
As the value of ornaments found on the date of search included the value of precious stones as well and in the inventory of ornaments belonging to the assessee’s wife and daughter, a sum was considered as the value of precious stones. Some of these ornaments with precious stones had also been acquired by the assessee and his wife after 01-04-2016 which had been established from the invoices produced and these items were excluded from the working since these items were not seized.
He further observed that it was also not disputed that the payments made for the purchase of jewellery after 01-04-2016 through the banking channels as evidenced by the bank account extracts were not considered by the Assessing Officer. Since the adaptation of the correct rate, the value of jewellery itself showed there was no unexplained jewellery. Thus, he directed the ld. AO to delete this addition and allowed the ground of the assessee.
Nischal B. appeared on behalf of the appellant revenue and Srinivasan appeared on behalf of the assessee.
The two-member Bench of Chandra Poojari, (Accountant Member) and Madhumita Roy, (Judicial Member) dismissed the appeal filed by the assessee holding that the value of jewellery as on 31.3.2016 was Rs.2,611/- p.gm., the CIT(A) had arrived at the possible quantity of gold with the assessee as on 31.3.2016 weighing at 9089 gms. and thus, the quantity of gold found during the course of search was 8650.81 gms., which was lesser than the possible gold to be with assessee as on 31.3.2016 at 9089 gms. As such, he gave a relief to the assessee for having the gold, which is less than the possible gold to be with the assessee as on 31.3.2016.
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