TaxTMI 
TaxTMI 
2018 (11) TMI 1704
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....taining the addition to the extent of Rs. 4,24,773/- on account of diamond jewellery found during the course of search. 3. The facts of the case, in brief, are that the assessee is an individual. A search and seizure operation u/s 132(1) of the IT Act was conducted at the residential premises of Shri Rajesh Kumar Kanodia and his group concern and family members on 28th March, 2011. Simultaneously, a search in the case of the assessee was also conducted. The assessee filed her return of income declaring an income of Rs. 32,83,430/-. During the course of assessment proceedings, the Assessing Officer noted that at the time of search, certain jewellery were found which was valued by the Departmental Valuer as under:- Valuation Reports ....
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....n account of the same. So far as the remaining jewellery of Rs. 41,72,650/- is concerned, the A.O rejected the explanation of the assessee and noted that the CBDT Instruction No.1916 dated 11th April, 1994 does not cover diamond jewellery of 154 ct. valued at Rs. 13,86,500/-. Rejecting the various explanation given by the assessee, the A.O. made addition of Rs. 13,86,500/- to the total income of the assessee and determined the income at Rs. 46,69,930/-. 6. In appeal, the ld. CIT(A) restricted such disallowance to Rs. 4,24,773/- by observing as under:- 4.2.1 In this ground the appellant is agitating against addition of Rs. 13,86,5007/- being unexplained diamond jewellery found during the course of search. It is noted here that in....
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....hat after giving credit to the jewellery belonging to M/s Pashupati Jewellers, excess jewellery comes to 1745.98 gms (3233.500-1487.52) of gold and 47.18 carats (353-305.82) of diamond. He has submitted that the Instruction No. 1916 of the CBDT does not differentiate gold and diamond jewellery. As per the said circular, the appellant's family is eligible for getting credit to the tune of 1950 gms of jewellery as noted by the AO himself. If the jewellery weighing 1745.98 gms of gold and 47.18 carats of diamond are together deducted from 1950 gms, there would be no excess jewellery available with the appellant's family. He, therefore, submitted that no addition on account of unexplained jewellery was called for. I have considered AR's submiss....
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....ined diamond jewellery treating the same as not covered by the CBDT Instructions. Referring to the decision of the Mumbai Bench of the Tribunal in the case of Mrs. Nawaz Singhania vs. DCIT reported in (2017) 88 taxmann.com 327, he submitted that the Tribunal, under similar circumstances, has deleted the addition on account of gold and diamond jewellery keeping in mind the CBDT Instructions No.1916 dated 11th April, 1994. Referring to the CBDT Instructions No.1916 dated 11th April, he submitted that the said instruction refers to jewellery as disclosed in the Wealth-tax Act and Wealth-tax Act defines jewellery under Explanation 1(a) to section 2(ea) of the Act which read as under:- "(a) jewellery includes (i) ornaments made....
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....strongly supported the order of the CIT(A). He submitted that the ld.CIT(A) has already granted substantial relief and he has only sustained the addition on account of diamonds studded in the jewellery. Since the order of the CIT(A) is in accordance with the law, therefore, the same should be upheld and the grounds raised by the assessee should be dismissed. 11. We have considered the rival arguments made by both sides and perused the orders of the authorities below. We find that out of the total jewellery valued at Rs. 87,82,230/- comprising two reports, the Assessing Officer has not made any addition in the hands of the assessee on account of jewellery valued at Rs. 46,09,580/- being the jewellery purchased by M/s Pashupati Jewellers, ....