AO's misapplication of Board Instruction 1916 on Streedhan for unexplained gold jewellery justified revision under section 263

ITAT Cochin-AT dismissed assessee's appeal in revision proceedings u/s 263. AO applied Board Instruction 1916 regarding Streedhan to unexplained gold jewellery found during search, treating it as not requiring assessment. Pr. CIT found this erroneous and prejudicial to revenue, noting BI 1916 only regulates seizure parameters and doesn't provide assessment concessions. ITAT held AO's interpretation was misapplication of law, as Board Instructions cannot usurp adjudication powers or travel beyond legal bounds. The assessment was liable for revision regarding unexplained investment u/s 69/69B.

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Issues:
The appeal involves a single issue regarding the assessment revision under section 143(3) of the Income Tax Act, 1961 for Assessment Year 2020-21.

Summary:
The case involved the assessment of gold jewellery found during a search at the assessee's residence and business premises. The Board Instruction 1916 dated 11.05.1994 (BI 1916) provided guidelines for the seizure of gold jewellery during searches. The Principal Commissioner of Income Tax, Cochin found the assessment erroneous as the gold jewellery, though not seized, was not brought to tax as per law. The revisionary authority directed the Assessing Officer (AO) to re-examine and adjudicate the matter afresh.

The assessee argued that the AO's assessment was reasonable and supported by Tribunal decisions. The Revenue and revisionary authority contended that the AO's view was incorrect, and the gold jewellery should have been assessed as unexplained investment despite BI 1916.

The Tribunal analyzed the AO's observations and the Board Instruction 1916. It found that the AO misread the instruction, which required the assessing authority to consider unseized jewellery for assessment purposes. The AO's interpretation was contrary to the law and prejudicial to the Revenue's interest, warranting revision under section 263.

The Tribunal concluded that the assessee's case lacked merit, and the appeal was dismissed without expressing a view on the assessment of the jewellery. The order was pronounced on December 07, 2023, under Rule 34 of The Income Tax (Appellate Tribunal) Rules, 1963.

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