Section 69A of IT Act not applicable if Assessee has plausible Explanation regarding Source of Jewellery Found during Search : ITAT deletes Addition [Read Order]

The Pune  bench of Income Tax Appellate Tribunal (ITAT) has recently while deleting the addition made by the Assessing Officer (AO) held that provision of Section 69A of the Income Tax Act should not be applied if assessee has brought plausible explanation regarding the source of jewelry found during search.

Assessee Jayashri Shrikant Deshmukh is an individual deriving income under the head “salary". When a search operation under Section 132 of the Income Tax Act, was conducted in the business and residential premises of the assessee, the department seized several Gold and Jewellery.

The gold, jewellery of 850 gms was treated as explained by the Assessing Officer and the value of gold, jewellery of 107.48 gms was treated as unexplained rejecting the explanation of the appellant that this gold, jewellery belongs to his HUF which is received on partition of Bigger HUF.

Aggrieved by the assessment order assessee filed an appeal before the CIT(A), who confirmed the action of the Assessing Officer. Thereafter the assesee filed a second appeal before the tribunal.

Before the bench Assesee submitted that the said gold,  jewellery was acquired out of the agricultural income on the land belonging to Bigger HUF.

Tribunal while considering the appeal, observed that in terms of the CBDT Instruction dated 11.05.1994 the Assessing Officer treated 850 gms of gold jewellery  as explained.

As regards to the balance of jewellery of 107.48gms, the assessee had offered an explanation that this jewellery was acquired out of the agricultural income generated by the Bigger HUF on the lands held by it. This explanation cannot be termed as “not plausible explanation”.

Therefore, if the Assessee brought plausible Explanation regarding Source of Jewelry Found during Search no addition can be made under Section 69A of the Income Tax Act.

Hence, the two member bench of tribunal comprising Inturi Rama Rao (Accountant Member) and S. S. Viswanethra Ravi (Judicial Member) deleted the addition and allowed the appeal filed by the assesee.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates