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Facts
During a search operation, 1810 grams of gold jewellery valued at Rs. 99,59,900/- was found in the assessee's premises, of which 690 grams were seized. The assessee claimed the jewellery belonged to family members and was acquired over time.
Held
The Tribunal held that the CIT(A) correctly allowed relief for 1700gms of jewellery based on CBDT Circular No. 1916/1994 and customary practices. However, the remaining 110gms remained unexplained.
Key Issues
Whether the addition sustained by the CIT(A) for unexplained 110gms of jewellery is justified, despite the assessee explaining 1700gms based on CBDT circulars and customary practices.
Sections Cited
132, 1916/1994
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Income Tax Appellate Tribunal, Hyderabad ‘ DB-A ‘ Bench, Hyderabad
Before: Shri Manjunatha, G. & Shri Ravish Sood
(िनधा�रण वष�/Assessment Year: 2021-22) Shri Kiran Kumr Reddy Vs. Dy.CIT Kataru, Hyderabad Central Circle 1(1) PAN:ATPPK6672A Hyderabad (Appellant) (Respondent) िनधा��रती �ारा/Assessee by: Shri K.C. Devadas, CA राज� व �ारा/Revenue by:: Shri Gurpreet Singh, Sr. AR सुनवाई की तारीख/Date of hearing: 25/06/2025 घोषणा की तारीख/Pronouncement: 30/06/2025 आदेश/ORDER Per Manjunatha, G. A.M This appeal filed by the assessee is directed against the order dated, 10/01/2025 of the learned CIT (A)-12, Hyderabad, relating to A.Y.2021-22.
The brief facts of the case are that, the assessee is an individual and is Managing Director of M/s.Axis Energy Venture India Pvt. Ltd, filed his return of income for the A.Y 2021-22 on 28/01/2022 by declaring total income of Rs.50,80,000/-. A search and seizure operation u/s 132 of the I.T. Act, 1961 was conducted in the case of M/s.Axis Energy Venture India Pvt. Ltd on 10/12/2020 and as a part of the search operation, the Page 1 of 6 assessee was also covered. During the course of search in the premise of the assessee, gold jewellery to the extent of 1810 gram valued at Rs.99,59,900/- was found and out of which, jewellery to the extent of 690g worth Rs.32,68,200/- were seized. During the course of assessement proceedings, the Assessing Officer called upon the assessee to explain the source for gold jewellery. In response, the assessee submitted that, the entire jewellery found during the course of search, belongs to his family members and acquired on various occasions. Further, as per the CBDT Circular No.1916/1994, dated 11/05/1994, jewellery held by an individual to certain extent cannot be seized. If we consider the entire family members, jewellery to the extent of 1700gms is belongs to various family members on which the source need not be explained in view of the above CBDT circular. The Assessing Officer after considering the relevant submissions of the assessee and also taking note of the jewellery found during the course of search held that, although, 1810gms of jewellery was found during the course of search, but the assessee could explain jewellery to the extent of 1100gms only. The remaining 690gms worth of Rs.32,68,200/- could not be explained with relevant source, therefore, made addition of Rs.32,68,200/- towards 690gms of gold jewellery found during the course of search.
Aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT (A). Before the learned CIT (A), the assessee has filed details of family members and jewellery quantity held by each family members, in accordance with the CBDT Circular No.1916/1994. Therefore, considering the number of family members, the assessee can have 1700gms of Page 2 of 6 jewellery and the source to that extent of said jewellery was explained. The remaining 110 of jewellery was acquired by various family members, on various occasions. from various persons and therefore, considering the seized assets of the family, the Assessing Officer ought to have allowed the explanation of the assessee. The learned CIT (A) after considering the submissions of the assessee and also by following the decision of the Coordinate Bench of the Tribunal in the case of ACIT vs. Ramesh Chandra R. Patel (2004) observed that the specified limit of jewellery could not be seized by the Department during the course of search in view of the CBDT Circular No.1916/1994 is that, a married women can have 500gms of jewellery and unmarried women can have 250gms of jewellery. Similarly, 100gms of jewellery in the case of men should not be seized. If we consider the above limit in the light of the CBDT Circular and the size of the family, the assessee could be able to explain the jewellery to the tune of 1700gms. Therefore, directed the Assessing Officer to accept the explanation to the extent of 1700gms of jewellery. So far as the remaining 110gms of jewellery, the assessee could not explain the source with relevant details, therefore, directed the Assessing Officer to sustain the addition towards the value of jewellery to the extent of 110gms only.
Aggrieved by the order of the learned CIT (A), the assessee is in appeal before the Tribunal.
The learned Counsel for the assessee submitted that, the learned CIT (A) having accepted the fact that, the assessee family having jewellery to the tune of 1700gms stands explained,
Page 3 of 6 ought not to have confirmed the balance quantity of 110gms of jewellery for not filing the relevant details to prove the source. The learned Counsel for the assessee referring to various judicial decisions including the decision of the Coordinate Bench of the ITAT in the case of ACIT vs. Ramesh Chandra R Patil (Supra) submitted that, the learned CIT (A) has sustained very nominal quantity of jewellery, even though the assessee explained that the said jewellery was acquired very long back by his family members and also received from various persons as gift on various occasions. Therefore, he submitted that the additions sustained by the learned CIT (A) should be deleted.
The learned Sr. AR, on the other hand, supporting the order of the learned CIT (A) submitted that, the learned CIT (A) has given relief to the appellant to the extent of 1700gms by taking into account the CBDT Circular No.1916/1994 dated, 11/05/1994 which covers the value of the jewellery claimed to have been received by the appellant and his family members as “Sthridhan” or gifts on the occasion of marriage and other functions. The remaining 110gms was still unexplained. Therefore, the learned CIT (A) sustained the additions made by the Assessing Officer and thus, the order of the learned CIT (A) should be upheld.
We have heard both the parties, perused the material available on record and gone through the orders of the authorities below. There is no dispute with regard to the fact that, the Department found 1810gms of jewellery during the course of search, out of which 690gms was seized valuing Rs.32,68,200/-.
Page 4 of 6 The Assessing Officer made addition of Rs.32,68,200/- being the value of 690gms of jewellery on the ground that, the assessee could not explain source. The learned CIT (A) allowed relief to the assessee to the extent of 1700gms of jewellery and held that, in view of the CBDT Circular No.1916/1994 dated 11/05/1994, the family members can possess jewellery to the extent of specified quantity and to that extent, there is no need to explain the source because, going by the Indian Customary practices, the family members will receive jewellery on the occasion of marriage as gift and gift from various people on certain occasions. The remaining 110gms jewellery was unexplained by the assessee and thus, the learned CIT (A) directed the Assessing Officer to sustain the addition to the extent of value of jewellery remains unexplained. It is the argument of the assessee that the learned CIT (A) having accepted the explanation of the assessee to the extent of 1700gms, ought to have accepted the explanation with regard to remaining 110gms also going by the customary practice in India and explanation of the assessee. In our considered view, there is no merit in the argument of the learned Counsel for the assessee for the simple reason that, the CBDT issued Circular No.1916/1994 dated 11/05/1994 considering various aspects including customary practices in India to give jewellery to the ladies on various occasions and directed the Field Officers to not to seize the jewellery to the extent of 500gms in case of married women, 250gms in case of unmarried women and 100gms in case of men. Therefore, in our considered view, the jewellery has been received on the occasion of marriage as Sthridhan and other occasions covered within the limit allowed by the CBDT Circular No.1916/1994. Therefore, we are of the considered view that, the Page 5 of 6 learned CIT (A) after considering the relevant explanation of the assessee and also taken note of the circular of the CBDT has allowed relief to the extent of 1700gms of jewellery. The remaining 110gms of jewellery was still unexplained and the assessee could not file any evidence, even before us, to explain the source for the said jewellery. Therefore, we are of the considered view that there is no error in the order of the learned CIT (A) to sustain the addition to the extent of 110gms of jewellery. Thus, we are inclined to uphold the order of the learned CIT (A) and dismiss the appeal filed by the assessee. We order accordingly.