Tribunal decisions on foreign currency, deemed dividends, and jewellery addition.

The tribunal partially allowed the assessee's appeal for statistical purposes and dismissed the revenue's appeal. The tribunal directed the Assessing Officer to re-examine the addition of foreign currency, emphasizing verification if it belonged to the company and was accounted for. Regarding the deemed dividend addition, the tribunal upheld the justification but instructed limiting it to the company's accumulated profits. The addition of jewellery was restricted to the amount of Rs. 15,44,780 as per the CIT(A)'s decision, as the assessee failed to prove the source and acquisition timing of the jewellery.

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Issues:
1. Addition of foreign currency during search action
2. Deemed dividend addition under section 2(22)(e) of the Act
3. Addition of jewellery found during search action

Analysis:

Issue 1: Addition of Foreign Currency
The case involved the discovery of foreign currency valued at Rs. 7,63,340 during a search and seizure action at the assessee's premises. The Assessing Officer added this amount as undisclosed income, assuming the surplus foreign currency was kept by the assessee instead of returning it to the company. The CIT(A) upheld this addition. However, the assessee contended that the currency belonged to the company, was duly accounted for, and was returned to the company. The tribunal directed the Assessing Officer to re-examine the issue, considering the submissions made by the assessee and verifying if the foreign currency belonged to the company and was accounted for by the company as of 31.03.2011. The tribunal also noted that as per RBI rules, the assessee could retain foreign exchange for 180 days.

Issue 2: Deemed Dividend Addition
The second ground raised by the assessee related to the addition of Rs. 60,00,000 under section 2(22)(e) of the Act as deemed dividend. The tribunal agreed with the CIT(A) that the addition was justified but directed the Assessing Officer to restrict the deemed dividend to the accumulated profits of the company as specified in the Act. The issue was restored to the Assessing Officer for quantification and verification of the deemed dividend, limiting it to the company's accumulated profits.

Issue 3: Addition of Jewellery
The last issue concerned the addition of jewellery worth Rs. 15,44,780 found during the search. The assessee explained that some jewellery belonged to forefathers and was acquired over time, while the rest was acquired in the relevant financial year. The Assessing Officer added a higher amount, but the CIT(A) restricted the addition to Rs. 15,44,780 considering various factors and precedents. The tribunal upheld the CIT(A)'s decision, as the assessee failed to substantiate the claim that the jewellery was purchased in earlier years and its source.

In the end, the tribunal partly allowed the assessee's appeal for statistical purposes and dismissed the revenue's appeal, upholding the CIT(A)'s decision on the issues discussed.

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