Jewellery already Disclosed Before Income Tax Settlement Commission: ITAT Deletes ₹73.84L Addition [Read Order]

The Delhi Bench of theIncome Tax Appellate Tribunal (ITAT) has deleted an addition of ₹73.84 lakh made towards alleged unexplained jewellery, after finding that the jewellery had already been disclosed before the Income Tax Settlement Commission (ITSC) by the assessee’s husband and accepted during settlement proceedings.

A search and seizure operation was conducted under Section 132 at the “Sukhija Group,” a Delhi-based business group engaged in running restaurants and bars.

During the search at residential premises and lockers linked to the assessee, Ashu Ashok jewellery worth ₹95.94 lakh was found. The Assessing Officer (AO) sought an explanation regarding the source and ownership of the jewellery.

According to the assessment order, the assessee failed to furnish evidence before the department during assessment proceedings. The AO treated jewellery amounting to ₹73.84 lakh as excess and unexplained investment, adding the same to the assessee’s income depending upon CBDT Instruction No. 1916 and the Finance Ministry press release dated December 1, 2016.

Before the appellate authorities, however, the assessee submitted that she was not the exclusive owner of the jewellery found during the search. It was explained that her husband, Raju Ashok, had already disclosed substantial jewellery purchases before the Income Tax Settlement Commission during settlement proceedings arising from the same group search.

The Commissioner of Income Tax (Appeals) [CIT(A)] examined the records placed before the Settlement Commission and found that the husband had disclosed jewellery purchases amounting to ₹1.91 crore in a detailed cash flow statement covering the period from September 15, 2015 to October 8, 2016.

The jewellery disclosed before the Settlement Commission was higher than the jewellery found during the search operation from the assessee’s premises and lockers.

The appellate authority further noted that the Interim Board for Settlement Commission-VII, Chennai, had accepted the disclosures and had not suggested any further addition over and above the jewellery already declared by the husband.

Therefore, the CIT(A) concluded that making a separate addition again in the hands of the assessee for the same jewellery was not justified.

The Income Tax department challenged the deletion before the tribunal, arguing that the assessee had furnished incorrect facts and that the jewellery found during the search could not be linked with the cash flow statement submitted before the Settlement Commission.

The department also contended that the jewellery therefore remained unexplained.

However, the bench of Manish Agarwal (Accountant member) and Sudhir Kumar (judicial member) upheld the findings of the CIT(A) and observed that the jewellery disclosed before the Settlement Commission by the husband was worth ₹1.91 crore, whereas the jewellery found during the search was only ₹95.94 lakh.

Since the Settlement Commission had already accepted the disclosure without recommending any further addition, the Tribunal held that the addition of ₹73.84 lakh towards unexplained jewellery could not survive.

Accordingly, the appellate tribunal dismissed the department’s appeal and confirmed deletion of the jewellery addition.

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