2021 (10) TMI 657 - AT - Income Tax

Tribunal overturns CIT(A) decision, accepts family-owned jewellery explanation. CBDT Instruction No. 1916 upheld.

Smt. Chhavi Anand Versus ACIT, Central Circle-06, New Delhi

The Tribunal allowed the appeal filed by the assessee, setting aside the CIT(A)'s order. It accepted the explanation that the jewellery was family-owned ... Addition u/s 69A r.w.s. 115BBE - Unexplained jewellery found from the locker - assessee was unable to explain the source of jewellery found from the locker maintained with Union Bank of India - assessee was stating that the jewellery found from the locker was belonging to the assessee Chhabi Anand, her husband Mr. Shail Anand, her minor son Tarush Anand, unmarried sister-in-law Ms. Shikha David and Late mother-in-law Sobha David - HELD THAT:- The submission of the assessee before the lower authorities that the address of Ms. Shikha David, the unmarried sister-in-law of the assessee is the same as that of the assessee has not been controverted. Merely because the husband of the assessee did not mention the name of Ms. Shikha David in his statement recorded u/s 132(4) in my opinion cannot be a ground to disregard the contention of the assessee that Ms. Shikha David was staying with her in the house belonging to her mother Shikha David who is the mother-in-law of the assessee. There is no evidence on record brought by the Revenue that Ms. Shikha David who is unmarried at the relevant time was staying elsewhere and not at her parental property. Under these circumstances, the affidavit of Shikha David stating that jewellery weighing 468.260gms which was kept by her in locker of her sister-in- law for safe custody cannot be brushed aside, especially when the entire family doesn’t have any other locker. Affidavit of the husband and sister-in-law of the assessee stating that jewellery weighing 442.344gms belonging to their late mother Mrs. Sobha David i.e. mother-in-law of the assessee was rejected by the learned CIT(A) on the ground that there is no credible or reliable documentary evidence - there cannot be any credible or reliable evidence except the affidavit of the children of the deceased person in such cases. Although, it may not be accepted in toto however the same also cannot be rejected in toto. Therefore, considering the CBDT instruction/circular 1916 dated 11.05.1996 if the benefit of 500gms of every married woman, 250gms for unmarried woman and 100gms jewellery for every male member of the family is allowed then entire jewellery found from the locker stands explained. - Decided in favour of assessee. Issues Involved:1. Legitimacy of the addition of Rs. 23,46,108/- as unexplained investment in jewellery under Section 69A read with Section 115BBE of the Income Tax Act, 1961.2. Application of CBDT Instruction No. 1916 dated 11.05.1994 regarding the seizure of jewellery.3. Ownership and source of the jewellery found in the locker.4. Validity of affidavits and other documentary evidence provided by the assessee.5. Initiation of penalty proceedings under Section 271AAB(1)(c) of the Income Tax Act, 1961.6. Charging of interest under Section 234A/B/C/D of the Income Tax Act, 1961.Detailed Analysis:1. Legitimacy of the Addition of Rs. 23,46,108/- as Unexplained Investment in Jewellery:The Assessing Officer (AO) added Rs. 23,46,108/- to the assessee's income under Section 69A, stating that the jewellery found in the locker was unexplained. The AO rejected the assessee's claim that the jewellery was family-owned, citing the assessee's low declared income and lack of credible evidence. The CIT(A) upheld this addition, noting that the assessee did not provide satisfactory evidence of the jewellery's source.2. Application of CBDT Instruction No. 1916:The assessee argued that the jewellery found (1302.698 gms) was within the permissible limit of 1700 gms as per CBDT Instruction No. 1916, which allows 500 gms for every married lady and 100 gms for every male member. The CIT(A) dismissed this argument, stating that the benefit of the CBDT instruction was already considered during the seizure, and the remaining jewellery was rightly seized.3. Ownership and Source of the Jewellery:The assessee claimed the jewellery belonged to various family members, including her husband, minor son, unmarried sister-in-law, and late mother-in-law. The CIT(A) rejected these claims due to lack of credible evidence and inconsistencies in the statements provided during the search. However, the Tribunal found the affidavits and statements provided by the family members to be credible, noting that the jewellery could reasonably be considered family-owned and acquired over time.4. Validity of Affidavits and Other Documentary Evidence:The Tribunal considered the affidavits from the assessee's husband and sister-in-law, which stated that part of the jewellery belonged to their late mother. The Tribunal held that in the absence of credible documentary evidence, affidavits from family members could not be entirely disregarded. The Tribunal found the explanation regarding the source of the jewellery plausible and consistent with cultural practices.5. Initiation of Penalty Proceedings under Section 271AAB(1)(c):The assessee contended that the penalty proceedings initiated by the AO were unjustified. The Tribunal did not specifically address this issue in the judgment, focusing instead on the legitimacy of the jewellery's source and the application of CBDT instructions.6. Charging of Interest under Section 234A/B/C/D:The assessee also challenged the interest charged under Sections 234A/B/C/D. The Tribunal's decision to accept the explanation for the jewellery implicitly affects the interest charged, as the addition to income under Section 69A was the basis for the interest calculation.Conclusion:The Tribunal set aside the CIT(A)'s order and accepted the assessee's explanation regarding the source of the jewellery. The Tribunal found that the jewellery was reasonably explained as family-owned and acquired over time, consistent with cultural practices and CBDT Instruction No. 1916. Consequently, the addition of Rs. 23,46,108/- as unexplained investment was deleted, and the appeal filed by the assessee was allowed.