Rachit Gupta vs ACIT

1.

The Ld CIT(A) has erred in confirming the part addition made by the AO in the assessment order passed by the Ld AO.

2.

The Ld. CIT(A) has erred in confirming the addition of Rs. 331197 out of Rs. 658056 on account of value of 141.07 gms of jewellery seized at the time of search.

3.

The Ld. CIT(A) accepted that the part jewellery found also belongs to the married sister of the appellant living at London as per her confirmation of 300 gms but accepted only 70 gms belongs to her without any basis.

4.

The order of Ld CIT is against law, facts and circumstances of the case.

5.

The appellant craves leave to add, alter, amend, modify or delete all or any of the Grounds of appeal on or before the date of hearing of appeal.

“4.1

Grounds of Appeal Nos. 1 to 3: In these grounds, the AR has contested the addition of Rs. 6,58,056/-u/s 69 made by the AO. A search u/s 132 was carried out in the Sharda Group of cases on 08.03.2022. The premises of the assessee was also covered during the search. Assessment in this case has been completed u/s 143(3) of the Income Tax Act, 1961. During the course of assessment proceedings, the AO has stated that gold jewellery of 1341.70 gram was found during the course of search, from the assessee. During the assessment proceedings, the assessee attributed the jewellery to himself (100 grams), to his father (100 grams), to his mother (500 grams) to his wife (500 grams) and to his sister (300 grams). The AO acknowledged the ownership of jewellery amongst various f amily members barring the sister of the assessee by stating that she is settled in London and it is unusual to consider the jewellery of married sister as part of jewellery of the family of the assessee. The AQ accordingly allowed benefit of 1200 grams keeping in view of the CBDT Instruction No. 1916 dated 11.05.1994 and considered the balance jewellery of 141.07 grams as unexplained. The AO accordingly made addition of Rs. 6,58,056/- to the income of the assessee u/s 69 of the Income Tax Act, 1961.

During the appellate proceedings, the appellant reiterated the submissions filed before the AO. The appellant stated that the sister of the assessee though living in London, used to keep valuable jewellery with relatives (parents) so that unnecessary hardship of carrying the jewellery back home time and again can be avoided. The appellant filed confirmation of sister of the assessee i.e. Nikita Gupta before the AO with respect to ownership of 300 grams of Jewellery out of jewellery seized during the course of search. The appellant has also relied upon the decision of jurisdictional Bench of Ld. ITAT Delhi In the case of Kirti Singh vs. ACIT [2023] reported at 157 taxmann.com 298 wherein, the Ld. Bench while adjudicating on a similar issue has held as under:

"The additions on account of unexplained jewellery being 1179.10 gms valued at Rs. 44,32,030/- is subject matter of controversy. As pointed out on behalf of the assessee,total jewellery found during the search stands at 2479.10 gms. The Assessing Officer has accepted 1300 gms as attributable to different family. However, the remaining jewellery being 1179.10 gms has been treated as unexplained on the ground that 514 gms and 250.400 gms stated to be relatable to sisters-in-law was not accepted by the Assessing Officer. Likewise, out of 914.70 gms relatable to the assessee has been accepted partly to the extent of 500 gms as explained and remaining 414.70 gms has been treated as unexplained.

The assessee thus submits that the Assessing Officer has ignored the normal practices customs of Indian Society where the women, for variety of reasons, have beenkeeping their jewellery in maternal house. The sisters of husband of the assessee have kept a part of their jewellery in the custody of the assessee family which ore the Uncommon in Indian f amilies and therefore, there was no justif ication to ignore the explanation offered at the threshold in the course of the assessment proceedings. The assessee also submits that the CBDT Instruction No. 1994 dated 11-5-1994 does not bar the retention of gold jewellery and ornaments above 500 per lady. The assessee has affluent status and customs and practices of the community also permits for holding greater quantity of jewellery. The Assessee and her spouse has declared substantial taxable income year after year and therefore the status of the assessee cannot be doubted and thus retention of high jewellery is plausible and a valid explanation for such keeping of gold ornaments accumulated over years and received by way of gif ts from other f amily members and relatives at the time of their marriage and several occasions thereaf ter”.

From the reading of the above judgment of the Ld. Jurisdictional Tribunal Bench, it is clear that the Ld. Bench has held that it is a normal practice in Indian Society that married women keep jewellery with their parents/maternal home for safe keeping. In the case of the assessee, His sister is staying in London and not in the country itself. Keeping In view of the circumstances of the case and the traditional Indian values, benefit to the extent of 70 gram of gold jewellery is allowed to the assessee in light of confirmation of the sister of the assessee towards the ownership of the jewellery seized during the course of search. Accordingly, the addition made by the AO is sustained to the extent of Rs. 3,31,197/- and the balance amount of Rs. 3,26,858/- is deleted. Accordingly, these grounds of appeal are partly allowed.”