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Facts
The assessee filed a return of income which was processed. A search was conducted, leading to additions for seized jewellery and cash. The CIT(A) partly allowed the appeal.
Held
The Tribunal held that the addition regarding jewellery was not justified based on family customs and CBDT guidelines, and thus set aside that addition. Regarding the cash addition, the Tribunal confirmed 50% of the addition, treating the remaining 50% as explained savings.
Key Issues
Whether additions made on account of seized jewellery and cash are justified, considering the assessee's claims of family tradition, gifts, and savings against CBDT guidelines and evidence presented.
Sections Cited
250, 69, 69A, 143(1)
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Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI SOUNDARARAJAN K.
ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee challenging the order of the Ld.CIT(A)-15, Bengaluru dated 19/03/2025 in respect of the A.Y. 2019-20 and raised the following grounds: “1. The order passed by the learned Commissioner of Income Tax (Appeals)-15, Bengaluru, ("CIT(A)"), under section 250 of the Income Tax Act, 1961 ("the Act"), insofar as it is prejudicial to the Appellant, is contrary to law, the weight of evidence, principles of natural justice and preponderance of probabilities on the facts and circumstances of the case.
2. The learned CIT(A) erred in confirming the addition made in respect of the seized jewellery to the extent of 352 gram of gold and 53.43 carat diamond, aggregating to Rs. 30,12,068/-under section 69 of the Act on the facts and circumstances of the case.
3. The learned CIT(A) failed to appreciate that the rigours of section 69 of the Act are not attracted to the impugned addition on the facts and circumstances of the case.
The learned CIT(A) erred in confirming the addition in respect of seized cash amounting to Rs. 5,00,000/- under section 69A of the Act on the facts and circumstances of the case.
5. The learned CIT(A) failed to appreciate that the rigours of section 69A of the Act are not attracted to the impugned addition on the facts and circumstances of the case. The Appellant craves to add, alter, modify, substitute, change and delete any of the grounds before or at the time of hearing the appeal. In the view of the above, the Appellant prays that the appeal may be allowed in entirety in the interest of equity and justice.”
The brief facts of the case are that the assessee is an individual and filed his return of income on 30/08/2019. The said return was processed u/s. 143(1) of the Act. Subsequently, the case was selected for compulsory scrutiny based on the search conducted on 20/07/2018. Based on the result of the search, the AO had made an addition u/s. 69A in respect of the cash found at the time of search. Similarly, an addition u/s. 69 was made based on the gold jewellery and diamond jewellery found and seized at the time of search. As against the said additions, the assessee filed an appeal before the Ld.CIT(A) and raised the legal grounds against the search and also raised grounds on merits. The Ld.CIT(A) had rejected the legal grounds whereas partly allowed the grounds raised by the assessee on merits.
As against the said order, the present appeal has been filed before this Tribunal.
4. At the time of hearing, the Ld.AR submitted that the Ld.CIT(A) had not considered the gold jewellery given by his mother-in-law to his wife which was given at the time of their marriage. The Ld.AR further submitted that the assessee is an affluent Sindhi business family and therefore gifting the jewellery on several occasions is their customary practice and therefore the 352 grams of gold and 53 carats of diamond for a family of four could not be treated as unexplained. The Ld. also relied on the CBDT Guidelines/Instructions dated 11/05/1994 in No.1916 about the seizure of the jewelleries. Insofar as the addition of Rs. 5 Lakhs, the Ld.AR submitted that the cash seized was out of their savings and it only constitutes about 2% of the aggregating returned income of Rs. 2,43,92,690/- offered by their family members during the preceding 5 years. The Ld.AR also filed a synopsis and also a paper book in support of this contention and prayed to allow the appeals.
The Ld.DR relied on the orders of the lower authorities and prayed to dismiss the appeal.
We have heard the arguments of both sides and perused the materials available on record.
We have considered the various documents filed in the paper book which includes the sworn affidavit of the assessee’s mother-in-law which was also duly notorised to the effect that she had given the gold jewellery of 650 grams and diamond jewellery of 80 carats at the time of her daughter’s marriage with the assessee. In the said affidavit, she also averred that the said jewelleries are family jewelleries which are passed on from one generation to another. We have also perused the order of the Ld.CIT(A) in which the Ld.CIT(A) had mentioned about the affidavit but not granted any deduction while calculating the unexplained source of seized jewellery. The Ld.CIT(A) in paragraph 6.7.3 had observed that out of the total jewellery seized, 1050 grams were given as allowance because it belongs to the mother-in-law of the assessee. The Ld.CIT(A) had not considered the assessee’s wife’s jewellery which was stated to be given by way of gift to her by her mother while the marriage took place between her and the assessee. Further, we have seen that in the assessee’s family, there are five members and out of the 5 members, as per the CBDT Circular, necessary deduction has to be granted for the 5 family members. As per the CBDT Circular dated 11/05/1994 in Instruction 1916, wherein it was clearly stated that the searching officers need not seize the excess gold jewellery and ornaments if the same are within the limits prescribed in the said instructions. In the said instruction, it was stated that the married lady would get 500 grams and unmarried lady would get 250 grams and male members would get 100 grams while taking the quantity of the seized jewelleries. In the present case, the Ld.CIT(A) as well as the AO had not applied the CBDT instructions to the facts of the case, had held that 350 grams gold jewellery and 53.43 carats of diamond are to be added to the total income of the assessee. We do not find any yardstick for arriving the said additions. In fact there is no method given by the Ld.CIT(A) for arriving the said figures in his order. Further, the Ld.CIT(A) had not taken into consideration the affidavit filed by the assessee’s mother-in-law while deciding the appeal even though in paragraph 6.7.3 he has stated that an affidavit has been filed by the mother-in-law. The said fact was not disputed by the Ld.CIT(A) in his order. When the assessee filed an evidence that too in the form of a notarised affidavit to substantiate their claim that substantial weight of gold jewels were given by way of gift at the time of marriage, it cannot be simply brushed aside without citing any other contra evidences. If the assessee was able to explain the source for the jewelleries, it could be rebutted by the department by producing some contra evidences. No such evidences were placed before us to disbelieve the statement given in the notarised affidavit by the mother-in-law of the assessee.
Further, in the said instruction, the CBDT had granted discretionary powers to the authorised officer to exclude the larger quantity of jewellery and ornaments from seizure, having regard to the status of the family and the custom and practice of the community to which the family belongs. In Sindhi family and came from an affluent business family and therefore there is no prohibition from excluding larger quantity from the seizure. This is the view of the CBDT. Before us, the assessee had demonstrated that they are affluent business family and receives gold jewelleries on several functions and also the assessee’s mother-in-law filed an affidavit to the effect that 650 grams of gold were given to her daughter at the time of marriage and therefore it cannot be presumed that the gold jewellery weighing 352 grams and 53.43 carats of diamond jewellery are from unexplained sources.
Further while the search and seizure was made the jewelleries seized from the assessee’s mother and his wife were returned and finally the gold of 1249 gms and diamond of 182.93 carats were seized. If we applied the CBDT instructions and the affidavit given by the mother in law of the assessee there would not be any excess jewellery as alleged by the authorities. Even though the AO alleged that benefit of the CBDT instruction was granted we do not find any such benefit has been granted. Considering the facts we agree that there is no excess of jewelleries as alleged by the authorities and delete the addition made by the Ld CIT (A).
The next dispute involved in this appeal is against the addition of Rs. 5 Lakhs u/s. 69 of the Act. The assessee had submitted in the synopsis that for the previous five years, there are five assessments in their family and in total they declared an income of Rs. 2,43,92,690/-. The main contention of the assessee is that the addition of Rs. 5 Lakhs would be about 2% of the declared income which was from the savings in order to meet the exigencies since the assessee is having aged parents. We have considered the findings given by the AO as well as the Ld.CIT(A). The AO had made the addition since the same amount was seized at the time of search conducted in the residence of the assessee. The AO had not assessed the entire cash seized at the time of search but restricted it to Rs. 5 Lakhs since no proper explanation with supporting documents were filed by the assessee. The Ld.CIT(A) had not accepted the plea raised by the assessee that it is the family’s past savings since the assessee had not produced any evidence in support of his claim. We have considered the facts and the assessee’s explanations offered at the time of search and at the time of assessment proceedings and also before the Ld.CIT(A). The assessee had changed his line of submission from the assessing officer to the Ld.CIT(A). Further, as rightly stated by the Ld.CIT(A), no supportive documents were also produced in support of their case. But considering the facts and circumstances of the case, we cannot presume that the assessee could not have any source for keeping the amount as savings. In such circumstances, in the interest of justice, we are inclined to grant 50% of the seized cash as from the explained source and the balance 50% from the unexplained sources. We, therefore upheld the addition of Rs. 2,50,000/- u/s. 69A of the Act and delete the balance amount of Rs. 2,50,000/- from the addition.
In the result, we are inclined to set aside the addition in respect of the jewelleries made and confirm the addition of Rs. 2,50,000/- of cash seized at the time of search u/s. 69A of the Act.
In the result, the appeal filed by the assessee is partly allowed.
Order pronounced in the open court on 07th November, 2025.