Tribunal rules in favor of assessee, directs deletion of additions for jewellery, paintings, wrist watches.

The Tribunal allowed the assessee's appeal and dismissed the revenue's appeal, directing the AO to delete all the impugned additions related to jewellery, paintings, and wrist watches.

---

---

Issues Involved:
1. Addition of Rs. 3,31,778/- u/s 69B on account of jewellery.
2. Addition of Rs. 37,50,000/- u/s 69B on account of paintings.
3. Addition of Rs. 1,50,000/- u/s 69B on account of wrist watches.

Summary:

Issue 1: Addition of Rs. 3,31,778/- u/s 69B on account of jewellery

The assessee challenged the addition of Rs. 3,31,778/- made by the AO under section 69B for jewellery found during a search operation. The jewellery was claimed to be part of the Wealth Tax return and books of accounts. The CIT(A) accepted most of the reconciliation provided by the assessee but sustained the addition for colour stones/pearls. The Tribunal found that the jewellery declared in the Wealth Tax Return was more than the jewellery found during the search. The Tribunal cited the Delhi High Court's judgment in Ashok Chaddha Vs. ITO, which accepted the explanation for jewellery as "streedhan" and normal accumulation over years. Considering the family's status and income, the Tribunal directed the AO to delete the entire addition of Rs. 3,31,778/-.

Issue 2: Addition of Rs. 37,50,000/- u/s 69B on account of paintings

The AO made an addition of Rs. 37,50,000/- for six paintings found during the search, based on valuations by two different valuers. The CIT(A) directed the AO to adopt the valuation by Delhi Art Gallery. The Tribunal noted discrepancies in the valuation reports and the lack of specific defects pointed out by the AO. It also considered that one painting was purchased by cheque and that the family had substantial withdrawals and income. The Tribunal found no merit in the addition and directed the AO to delete the same.

Issue 3: Addition of Rs. 1,50,000/- u/s 69B on account of wrist watches

The AO added Rs. 1,50,000/- for wrist watches found during the search, questioning the source of acquisition. The assessee argued that the family's substantial income and withdrawals justified the possession of the watches. The Tribunal, referencing its earlier discussion on the family's status and the judgment in Ashok Chaddha, found no merit in the addition and directed the AO to delete it.

Conclusion:

The Tribunal allowed the assessee's appeal and dismissed the revenue's appeal, directing the AO to delete all the impugned additions. The order was pronounced in the open court on 03.05.2023.

---