Unexplained jewellery addition of 1179.10 gms deleted under Section 69A for high-income family

ITAT Delhi allowed the assessee's appeal regarding unexplained jewellery addition of 1179.10 gms under Section 69A. The AO had accepted 1300 gms as attributable to family members but rejected 764.40 gms claimed to belong to sisters-in-law. The tribunal held that high-income bracket assessees can legitimately hold substantial jewellery quantities. Considering the family's overall status and normal Indian customs, the tribunal found the entire gold ornaments adequately explained. Following Delhi HC precedent in Ashok Chaddha case, which recognized jewellery accumulation over 25-30 years of married life as normal, the tribunal directed deletion of Section 69A additions.

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Issues Involved:
1. Withdrawal of duplicate appeal.
2. Treatment of unexplained jewellery found during search and seizure.
3. Applicability of CBDT Instruction No. 1916 dated 11.05.1994.
4. Consideration of family status and customs in explaining jewellery possession.
5. Reference to previous judicial decisions on similar matters.

Issue-wise Detailed Analysis:

1. Withdrawal of Duplicate Appeal:
When the matter was called for hearing, the counsel for the assessee pointed out that two appeals had been filed inadvertently for the same cause of action. Consequently, ITA No.977/Del/2023 was treated as withdrawn based on the written application submitted by the counsel. The Tribunal dismissed ITA No.977/Del/2023 as withdrawn.

2. Treatment of Unexplained Jewellery Found During Search and Seizure:
A search and seizure action under Section 132 of the Income Tax Act was conducted on 27.11.2020 at the premises of the assessee, where jewellery worth Rs. 81,12,090/- was found at the residence and Rs. 12,06,000/- in the locker, totaling 2479.20 gms. The Assessing Officer accepted 1300 gms as explained, attributing it to different family members, and treated the remaining 1179.10 gms valued at Rs. 44,32,030/- as unexplained due to the lack of bills or vouchers. The CIT(A) affirmed the Assessing Officer's decision, leading the assessee to appeal before the Tribunal.

3. Applicability of CBDT Instruction No. 1916 dated 11.05.1994:
The Assessing Officer applied CBDT Instruction No. 1916, which allows 500 gms per married lady, 250 gms per unmarried lady, and 100 gms per male member without seizure. The assessee argued that the instruction does not bar retention above these limits and that the jewellery attributed to the sisters-in-law should be considered explained. The Tribunal noted that the instruction allows for considering the family's status and customs, permitting larger quantities of jewellery.

4. Consideration of Family Status and Customs in Explaining Jewellery Possession:
The Tribunal observed that the assessee and her family members are high net worth individuals, with substantial income reported over the years, justifying the possession of high-value jewellery. The Tribunal acknowledged the common practice in Indian society of women keeping jewellery in their maternal house and accepted the explanation that the sisters-in-law's jewellery was kept in the assessee's custody. The Tribunal found the explanation plausible and aligned with the family's affluent status and customs.

5. Reference to Previous Judicial Decisions on Similar Matters:
The Tribunal referred to the Delhi High Court's decision in Ashok Chaddha vs. ITO, where it was held that collecting jewellery over 25-30 years of married life is not abnormal. The Tribunal also cited the Supreme Court's decision in Pratibha Rani vs. Suraj Kumar, recognizing a Hindu married woman's absolute ownership of her Streedhan property. Additional references were made to decisions by Co-ordinate Benches in similar cases, where high-income status justified holding jewellery beyond CBDT limits.

Conclusion:
The Tribunal concluded that the additions made under Section 69A towards gold ornaments were inconsistent with judicial precedents and the CBDT instruction. The Tribunal set aside the CIT(A)'s order and directed the Assessing Officer to delete the additions. Consequently, the appeal in ITA No.1067/Del/2023 was allowed, and the combined result was the dismissal of ITA No.977/Del/2023 as withdrawn and the allowance of ITA No.1067/Del/2023.

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