2021 (9) TMI 1428 - AT - Income Tax

Tribunal rules in favor of assessee in jewellery seizure case under Income-tax Act

Ankit Manubhai Kachadiya Versus Deputy Commissioner of Income Tax, Central Circle-2

Ankit Manubhai Kachadiya Versus Deputy Commissioner of Income Tax, Central Circle-2 - TMI Issues involved:1. Addition of unexplained jewellery under section 69A of the Income-tax Act.2. Interpretation of CBDT Instruction No. 1916, dated 11-5-1994 regarding seizure of jewellery during search operations.Analysis:Issue 1: Addition of unexplained jewellery under section 69A of the Income-tax ActThe appeal pertained to the Assessment Year 2013-14 against an order passed by the Commissioner of Income-tax (Appeals) confirming the addition of Rs. 1,36,406 under section 69A of the Income-tax Act by the Assessing Officer. The jewellery in question was found during search proceedings, and the assessee failed to provide the source of purchase, leading to it being treated as unexplained. The assessee challenged this addition, arguing that the addition was made purely on presumptions and assumptions without any material contrary to the explanations provided. The Tribunal noted the guidelines in CBDT Instruction No. 1916, dated 11-5-1994, to determine the legitimacy of the addition. The Tribunal ultimately ruled in favor of the assessee, citing that the gold jewellery and ornaments seized were within the limits specified by the CBDT instruction, and no addition was warranted in the hands of the assessee.Issue 2: Interpretation of CBDT Instruction No. 1916, dated 11-5-1994The Tribunal analyzed the provisions of CBDT Instruction No. 1916, dated 11-5-1994, which provided guidelines for seizure of jewellery during search operations. The instruction specified limits for gold jewellery and ornaments that need not be seized based on the status of the individual and family members. The Tribunal considered the total gold jewellery and diamonds seized during the search, along with the family composition of the assessee. It was noted that the seized jewellery fell within the permissible limits set by the CBDT instruction, and therefore, the addition made by the Assessing Officer was deemed unwarranted. The Tribunal emphasized the binding nature of CBDT circulars on the Revenue and cited legal precedents to support this position. Consequently, the Tribunal allowed the appeal of the assessee, directing the deletion of the addition of Rs. 1,36,406.In conclusion, the Tribunal's judgment focused on the adherence to CBDT guidelines in determining the legitimacy of additions under section 69A of the Income-tax Act. The decision underscored the importance of following prescribed limits for seizure of jewellery during search operations and highlighted the binding nature of CBDT circulars on the Revenue.