Loading judgment…
Facts
During an assessment following a search under Section 132, the Assessing Officer added Rs. 18,14,412/- as unexplained investment in gold and jewellery. The CIT(A) partially deleted Rs. 10 lakhs as Stridhan but confirmed the remaining Rs. 8,14,412/-, leading the assessee to appeal.
Held
The Tribunal observed that the assessee had declared substantial income over several years, which was sufficient to explain the source of the gold and jewellery. Citing judicial precedent and CBDT instructions for high-net-worth individuals, the Tribunal held that the addition was not sustainable and directed the Assessing Officer to delete it.
Key Issues
Whether the CIT(A) was correct in confirming the addition of unexplained investment in gold and jewellery when the assessee had substantial declared income to justify the source.
Sections Cited
132, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH, BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER WASEEM AHMED, ACCOUNTANT MEMBER:
This appeal has been filed by the assessee against the order passed by the ld. CIT(A)-15, Bengaluru, dated 27/01/2025 in DIN No. ITBA/APL/M/250/2024-25/1072572231(1) for the assessment year 2018- 19.
The issue raised by the assessee is that the ld. CIT(A) erred in confirming the addition of Rs. 8,14,412/- representing unexplained assets in the form of gold and jewellery.
Briefly stated, the facts are that the assessee, an individual, was subject to a search under section 132 of the Act on 19/07/2017. He filed the return of income for the year under consideration, declaring total income of Rs. 1,63,33,620/- under the heads ‘Salary’ and ‘Other Sources’.
3.1 During the assessment proceedings, the AO found that the assessee was in possession of gold/jewellery worth Rs. 18,14,412/-, for which the source was not explained. Accordingly, the AO treated the amount of Rs. 18,14,412.00 as unexplained assets and added it to the total income of the assessee.
On appeal, the ld. CIT(A) deleted an amount of Rs. 10 lakhs, treating it as Stridhan of the assessee’s wife, Ms. Suvarna Naik. Thus, the addition for the remaining amount of Rs. 8,14,412/- was confirmed by the ld. CIT(A), and thus, the appeal of the assessee was partly allowed by the ld. CIT-A.
Aggrieved by the order of the ld. CIT(A), the assessee is now in appeal before us.
The ld. AR before us filed a paper book running from pages 1 to 47 and a case law compilation containing pages from 1 to 226. The ld. AR fairly agreed that no direct correlation between the gold/jewellery and its source was available. However, he submitted that the assessee had been filing returns for several years, declaring substantial income. He referred to page 44, which shows income declared by the assessee from AY 2001 to AY 2018-19, totalling Rs. 15,48,65,230/- only. According to the ld. AR, this aggregate income justifies the source of the disputed .
Page 3 of 4 gold. He therefore prayed for deletion of the addition made by the lower authorities. 7. On the contrary, the ld. DR contended that the onus lies on the assessee to justify the source of investment in gold, which he failed to do. Hence, the value of gold at Rs. 8,14,412/- was rightly treated as unexplained investment. The ld. DR vehemently supported the orders of the authorities below.
We have heard the rival contentions of both the parties and perused the materials available on record. It is an admitted fact that the assessee declared income falling under the higher tax bracket. The income declared over the years is sufficient to justify the impugned investment in gold. In this context, reference is made to the order of the Delhi Tribunal in the case of Kirti Singh Vs. ACIT (ITA No. 1067/Del/2023), which observed: “We observe that the income reported, as tabulated above, clearly shows that the assessee and her family members are high-net-worth individuals. Given their high status, holding such jewellery cannot be considered abnormal or unexplained. Paragraph 3 of the CBDT instruction also permits larger quantities of jewellery depending on the status and customs of the family. Thus, the jewellery should be considered explained. The assessee has also explained that some jewellery belonged to other family members. Hence, all jewellery found during the search should be treated as explained.”
8.1 In view of the above, we hold that the addition made by the lower authorities is not sustainable. The revenue has not brought any contrary evidence regarding the assessee’s declared income, except for the impugned investment in gold. Therefore, the value of the unexplained gold is insignificant compared to the declared income. Accordingly, we set aside the findings of the ld. CIT(A) and direct the AO to delete the addition. The assessee’s ground of appeal is allowed.
Page 4 of 4 8.2 Regarding the ground challenging the validity of the assessment under section 143(3) of the Act, the ld. AR stated that he was instructed not to press this ground. Therefore, it is dismissed as infructuous.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on day of 9th May, 2025.