TaxTMI 
TaxTMI 
2023 (7) TMI 25
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....ealth Tax Return and quantum of jewellery found during the search operation: Returned Income Rs. 9,39,116 Addition u/s 69A- Excess value Jewellery Rs. 1,28,83,999 Addition u/s 69A- Excess value Diamond Jewellery Rs. 32,60,474 Addition due to LTCG on sale of articles & jewellery Rs. 21,00,593 Assessed Income Rs. 1,91,84,182 3. The order of the CIT (A) is contrary to law, facts and circumstances of the case. 4. The CIT (A) has erred in rejecting the explanation offered by the appellant as unsatisfactory without giving reasons. 5. The ld. CIT (A) has erred in not considering the panchanama which clearly indicate that only 1,507.20 grams of gold was found during the search. 6. The ld. CIT(A) has erred in ignoring the fact that the sale value of silver during the AY 2011-12 has been utilised for purchase of gold and diamond jewellery during the AY 2011- 12. The ld. AO failed to apply telescopic view on the utilisation of sale proceeds of silver utensils for the computation of unexplained investment in gold and diamond jewellery. 7. The ld. CIT (A) has failed to consider the documentary evidences furnished by the appellant, namely, WT returns, reconciliation statem....
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....re, claimed that telescoping should be given to the extent of long term capital gains computed on sale of silver articles against excess jewellery found during the course of search. The Assessing Officer rejected the arguments and assessed excess gold jewellery of 5304.24 gms, excess diamond of 81.71 carats and made additions of Rs. 1,61,44,473/-. The Assessing Officer had also computed long term capital gains towards sale of silver articles for Rs. 21,00,593/-. 4. Being aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee contended that he is liable to explain gold jewellery, diamond jewellery and silver articles found in his possession, but need not explain gold jewellery, silver articles and diamond jewellery found in the possession of Ajeeth Challani and Smt. Shobha Challani. He further submitted that excess jewellery found in the possession of the assessee was only 693.85 gms and the same is purchased out of sale proceeds of silver articles. 5. The ld. CIT(A), after considering relevant submissions of the assessee and also taken note of various facts brought on record by the Assessing Officer, rejected argumen....
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....ut any evidence that his family has received +/-51A and diamond jewellery during the marriage of his son, from the relatives and friends of both son and the daughter-in-law in 2003- 04, the quantity claimed is huge when compared to the total holdings of the entire family accumulated for over a period of life time of the assessee and his family. Further the assessee has not given any details of jewellery given out to his daughter at the time of her marriage. Further the assessee and his family would hay, attended/invited for many auspicious occasions from 2001 {WT return filed before the search) to 2012 (year of search) and in the reconciliation filed, the assessee has not shown to have given even a single gram of gold or diamond jewellery as gift to otheRs. No corresponding drawings were also shown in his capital account or bank accounts. However, it is also true that during the course of marriages in the assessee's custom it is possible to have received some gift of gold jewellery. Hence taking this into account, inspite of absence of any evidence I allow 500 grams of gold jewellery totally in both hands-son and daughter-in-law on this count. No such allowance is given for the....
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....he deficit of stock of silver utensils to the tune of 87.7 kg is on account of sale of silver utensils belonging to Jawarilal Padamchand (HUF) during AY 2011-12 and that the same is declared in the WT return filed by the HUF. Hence, capital gains can be charged in the hands of HUF only and not in the hands of the assessee. (ii) The silver utensils are personal effects and will not come under the definition of capital assets. For this proposition, the AR furnished certain decisions. 6.11.5 I have considered the submissions of the AR. There is no dispute on the quantum of 97.7 kg arrived at. The date of search is 19.4.2012. The original assessment order u/s 143(3) charging capital gains of Rs. 43,04,755 on 87. 7 kg sale (after giving 10 kg of allowance for personal effects) was passed on 17.3.2015. Thereafter, the assessee filed WT return in the name of HUF for the A Y 2011-12 on 1.7.2016 showing sale of exactly the same amount of 87. 7 kg appearing in the order u/s 143(3) already passed. It is an invalid return. It has been filed after the date of search. The much more valid point to be noted is that it has been filed after the order u/s 143(3) which charged the capital gains on....
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....stock. Had there really been purchase of gold jewellery out of the sale of silver, it ought to have been reflected in the WT return. The WT return including the alleged gold and diamond purchased out of the sale of silver, as claimed now, was not filed before the date of search. In the absence of any of the relevant evidence, simply because an addition was made, it cannot be taken as available for the purchase (in this case) of jewellery. The sale proceeds could have been spent away for n number of purposes and the onus on the assessee to prove the same has not been discharged. Hence, the telescoping claim cannot be accepted. 6.11.9 In view of the above detailed reasons, the contentions of the assessee are rejected and the LTCG on silver is assessed at Rs. 43,04,755 as arrived at above. 6.12 The AO is directed to recompute the income - unexplained investment and LTCG on the above basis, i.e. excess gold jewellery 3451.348 gms (4051.348- 500- 100), excess diamond jewellery 73.23 carats and LTCG on silver Rs. 43,04,755." 6. The ld. Counsel for the assessee, submits that the ld. CIT(A) erred in sustaining additions made by the Assessing Officer towards jewellery found in the bedr....
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....ct that the appellant and his family members had filed wealth tax returns even before the date of search. Therefore, the issue needs to be resolved in the given facts and circumstances of the case that whether the assessee is liable to pay tax on jewellery belonging to his wife and son, even though they are separate and independent assessee's having taxable income. Each person is a separate legal entity for the purpose of taxation, unless he/she is a minor having no source of income. If a person is major and having known source of income and also filing income tax returns, then the assets including jewellery if any belongs to said person needs to be assessed in the hands of the person, who filed return of income even though jewellery found during the course of search is in a common premises. In this case, admittedly jewellery belongs to Shri. Ajeeth Challani, son of the appellant was found in his bedroom, but not in the appellant's bedroom. Similarly, jewellery belongs to Smt. Shobha Challani, wife of the assessee found in the locker belongs to her. Therefore, in our considered view excess jewellery found in the name of Ajeeth Challani and Shobha Challani cannot be assessed in the ....