Weight of Diamond shall be Excluded to Determine Gross Weight of Jewellery Seized by Income Tax Dept: ITAT [Read Order]

The Surat Bench of Income Tax Appellate Tribunal (ITAT) has held that the weight of diamonds should be excluded to determine the gross weight of jewellery seized by the Income Tax Department.

A search action under section 132 of the Income Tax Act was carried out on 08.06.2017 in the case of Balar Group of Surat and assessee, Bhaveshkumar Amulakhbhai Sonani was one of them wherein residential premises was also searched.

During the search action conducted at the above premises of assessee and other group members, various incriminating documents and evidence were seized. The assessee filed his return of income and the case was selected for scrutiny.

during assessment, the Assessing Officer noted that in conducting search action, gold jewellery of 738.69 grams having net weight of 624.13 grams was found.Further in locker with Princess Plaza Safe Deposit Vault, Surat, which was in the name of family members of assessee was found. In the locker diamond jewellery was also found and seized.

During the assessment, the assessee explained that the jewellery belonged to the assessee and his family members. The assessee also furnished details of his family members and shared thereof. The Assessing Officer recorded that no evidence was furnished and in the absence of evidence, the Assessing Officer made addition as unexplained jewellery under Section 69A of the Income Tax Act and brought the same to tax under Section 115BBE of the Income Tax Act.

Chaitali Shah, on behalf of the assessee submitted that the jewellery which was found at the residence of assessee at the time of search action consisted of 624.13 grams of gold jewellery and 6.02 carats of diamond jewellery. The entire jewellery ornaments were within the permitted limit as penalty the CBDT Circular.

Ashok B. Koli, on behalf of the revenue submitted that the jewellery and ornaments found at his residence as well as in the locker was not proportionate to their respective income and status.

The Bench referred to the decision in Ratanlal Vyaparilal Jain which held that the seized jewellery which was within permissible limit could not be treated as undisclosed jewellery.

A Single Bench of Pawan Singh, (Judicial Member) allowed the appeal filed by the assessee holding that merely because jewellery consisted diamond could not be added in the hands of assessee particularly when the jewellery had forming part of gross weight jewellery found from the residence as well as locker was within permissible limit prescribed by CBDT in Circular No.1916 dated 11.05.1994.

To Read the full text of the Order CLICK HERE

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