ITAT Appeal Partially Allowed: Seized Jewelry Exempt under CBDT Circular

The ITAT partly allowed the appeal, deleting the addition of Rs. 2,00,000 towards gold and silver jewellery found during the search. The ITAT concluded that the possession of the seized jewellery was permissible under Circular No. 1916 issued by the CBDT, which allows possession of jewelry for family members within specified limits. Therefore, the addition was deleted based on the interpretation of the Circular regarding possession of jewelry for family members.

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Issues:
1. Addition of Rs. 2,00,000 towards gold and silver jewellery found during search.
2. Interpretation of Circular No. 1916 dated 11.05.1994 by the Central Board of Direct Taxes regarding possession of jewelry.

Analysis:
1. The appeal was filed against the order of the CIT(A) regarding the addition of Rs. 2,00,000 towards gold and silver jewellery found during the search. The Assessing Officer had made an addition of Rs. 12,77,409, which was reduced by the CIT(A) to Rs. 2,00,000. The appellant argued that the addition was erroneous as the source of the jewellery was explained during the search and the Board Circular was ignored. The gold ornaments and silver articles were found at the residence of the assessee and were mainly acquired during marriages, representing Stridhan. The CIT(A) considered the statements made during the search and reduced the addition based on the explanation provided, ultimately confirming an addition of Rs. 2,00,000 and granting relief of Rs. 10,77,049 to the appellant.

2. The appellant cited Circular No. 1916 dated 11.05.1994 issued by the CBDT, which allows possession of certain amounts of jewelry for married and unmarried ladies and males. The possession of 639.50gms of gold jewellery and 6.325gms of silver articles found during the search was argued to be permissible under this Circular. The DR supported the CIT(A)'s order. The ITAT analyzed the Circular, which requires non-seizure of jewelry within specified limits for family members, and concluded that the possession of seized jewellery in this case cannot be questioned. Therefore, the addition of Rs. 2,00,000 sustained by the CIT(A) was deleted by the ITAT.

In conclusion, the ITAT partly allowed the appeal of the assessee, deleting the addition of Rs. 2,00,000 towards gold and silver jewellery found during the search based on the interpretation of the CBDT Circular regarding possession of jewelry for family members.

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