Section 69A and 115BBE addition for jewellery in bank locker deleted as total found was within CBDT permissible limits

ITAT Jodhpur held that addition under section 69A read with section 115BBE for jewellery found in bank locker was unjustified. The tribunal found 141.10 gms jewellery in locker and 700 gms claimed at residence, totaling 841.10 gms. However, appellant was entitled to 950 gms credit under CBDT guidelines (500 gms for wife, 250 gms for daughter, 100 gms each for son and appellant). Since total found jewellery was less than permissible limit, no addition was warranted. The tribunal deleted the addition of Rs. 3,86,552 and allowed appellant's ground.

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Issues Involved:
1. Addition of Rs. 3,86,552/- on account of jewellery found in Bank Locker u/s 69A r.w.s 115BBE.
2. Applicability of higher rate of taxation @ 60% under section 115BBE.

Summary:

Issue 1: Addition of Rs. 3,86,552/- on account of jewellery found in Bank Locker u/s 69A r.w.s 115BBE

The assessee appealed against the addition of Rs. 3,86,552/- for jewellery found in a bank locker, arguing it belonged to his wife. The AO made the addition as the source of the jewellery remained unexplained during search proceedings. The CIT(A) upheld the addition, stating the jewellery was over the limit prescribed by CBDT Instruction No. 1916 dated 11.05.1994. The assessee's argument that the jewellery belonged to his wife was rejected as the source of acquisition was not explained. The CIT(A) found the AO's reliance on the statement recorded during the search proceedings justified and confirmed the addition of Rs. 3,86,552/-.

Upon further appeal, the Tribunal noted that only 141.10 gms of jewellery was physically found and seized, while the remaining 700 gms was based on the assessee's statement. The Tribunal observed that no physical verification of the 700 gms of jewellery was done and that the AO failed to establish ownership of this jewellery. The Tribunal also noted that the assessee was entitled to credit for 950 gms of jewellery as per CBDT guidelines, against which only 841.10 gms was claimed. Consequently, the Tribunal directed the deletion of the addition of Rs. 3,86,552/-.

Issue 2: Applicability of higher rate of taxation @ 60% under section 115BBE

The assessee contended that the higher rate of taxation under section 115BBE was not applicable. The CIT(A) upheld the AO's decision to tax the jewellery under section 115BBE, stating that the jewellery found during the search was not business stock. However, since the Tribunal deleted the addition of Rs. 3,86,552/-, the issue of higher taxation became moot.

In conclusion, the Tribunal allowed the appeal of the assessee, deleting the addition of Rs. 3,86,552/- and rendering the issue of higher taxation under section 115BBE moot.

Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board.

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