Partial win in appeal for AY 2018-19 on gold coin addition under Income Tax Act

The Tribunal partially allowed the appeal in ITA No. 1546/Mum/2021 for A.Y. 2018-19, directing the ld. AO to recompute the addition for gold coins seized during a search under section 132 of the Income Tax Act, 1961. The Tribunal considered the customary nature of receiving gold coins as gifts and the explanations provided by the assessee, leading to the decision that only 100 grams of gold coins should be subject to addition. The appeal outcome resulted in the partial allowance of the appeal, with the decision pronounced on 23/09/2022.

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Issues:
1. Addition of Rs.7,39,440/- for jewellery seized during search.

Analysis:
The appeal in ITA No. 1546/Mum/2021 for A.Y. 2018-19 questions the addition of Rs.7,39,440/- for jewellery seized during a search. The only issue to be decided is whether the ld. CIT(A) was justified in upholding this addition. The assessee, an individual deriving income from business and profession, filed the original return of income for A.Y. 2018-19 declaring total income of Rs.31,08,000/-. A search and seizure action under section 132 of the Income Tax Act, 1961 was conducted, revealing jewellery valued at Rs.1,95,03,439/-. Further jewellery amounting to Rs.1,47,12,701/- was found during the operation of a locker. The ld. AO observed discrepancies in the source of jewellery worth Rs.3,42,16,142/-, leading to the addition in question.

In response, the assessee claimed that the jewellery belonged to family members and explained alterations in the jewellery due to design changes. The ld. AO, however, proceeded to make the addition for diamond jewellery, which was later deleted by the ld. CIT(A). The gold coins totaling 237 grams were also disputed, with the assessee explaining them as gifts received on various occasions. The ld. AO treated the value of these gold coins as unexplained, a decision upheld by the ld. CIT(A).

The Tribunal found that the gifts of gold coins were a customary practice, especially during auspicious occasions and marriages. Considering the stature of the assessee and the explanations provided, the Tribunal held that only 100 grams of gold coins should be subject to addition, directing the ld. AO to recompute the addition. Therefore, the grounds raised by the assessee were partly allowed, resulting in the partial allowance of the appeal.

In conclusion, the Tribunal partially allowed the appeal, directing the ld. AO to recompute the addition for the gold coins. The decision was pronounced on 23/09/2022.

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