CH.CHANDRASEKHAR NAIDU ,PRODDATUR vs. DY. COMMISSIONER OF INCOME TAX , CENTRAL CIRCLE-(2), HYDERABAD

प्रनत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M.

The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals)-1,
Hyderabad, which in turn arises from the order passed by the Assessing
Officer (for short, “AO”) under Section 143(3) of the Income-tax Act,

1961 (in short ‘the Act’) dated 25/03/2013 for the assessment year
2011-12. 2. The assessee has assailed the impugned order on the following grounds of appeal before us:
“1. The order of the CIT(A) is erroneous both on facts and in law to the extent the order is erroneous both on facts and in law to the extent of the order is prejudicial to the interest of assessee.
2. (a)
The Ld. CIT(A) erred in partly upholding the addition made by the AO in respect of Long Term Capital Gains of Rs.
6,86,651/-.
(b)
The Ld. CIT(A) ought to have appreciated that if the cost of acquisition as adopted in the assessment year 2008-09 is adopted for the computation of LTCG, no LTCG would arise, much less Rs. 6,86,651/- in the hands of the assessee for the assessment year under consideration.
(c)
The Ld. CIT(A) ought to have straight away deleted the addition made of Rs. 6,86,651/- instead of holding that the computation of capital gains is to be made with regard to the cost of acquisition as adopted in the A.Y 2008-09. 3. The Ld. CIT(A) in not adjudicating the Ground No. 11 taken before him.
4. The Ld. CIT(A) erred in sustaining the addition of Rs.
10,00,000/- towards unexplained credit.
5. The Ld. CIT(A) ought to have appreciated that the assessee has proved the identity, genuineness, creditworthiness of the party from whom the loan was taken.
6. (a)
The Ld. CIT(A) erred in confirming the addition of Rs.
2,35,000/- in respect of cash found during the search, without analyzing the submissions made.
(b)
The Ld. CIT(A) ought to have appreciated that the impugned cash of Rs. 2,35,000/- represents the cash accumulation of day to day collections entered regularly in the books of account maintained.
(c)
The Ld. CIT(A) ought to have appreciated that the impugned cash of Rs. 2,35,000/- tallies with the entries in the books of account maintained by the assessee.
7. (a)
The Ld CIT(A) erred in confirming the addition of Rs.
24,34,486/- made on presumption, without any evidence towards unexplained investment by the assessee.

(b)
The Ld CIT(A) ought to have appreciated that the impugned jewellery belongs to the assessee’s family members and that it had been received by the family members on various occasions of the family as gifts.
8. The Ld CIT(A) erred in sustaining the addition of Rs.
11,33,000/- towards cash deposits made in savings bank account, without properly examining the evidence and explanations submitted.
9. Without prejudice to the above grounds, the CIT(A) ought to have provided an opportunity for curing the defects done for raising additional grounds.
10. The appellant may add, alter or modify any other points to the grounds of appeal at any time before or at the time of hearing of the appeal.”

Apart from that, the assessee has raised before us additional grounds of appeal which read as under:
11. The Ld.CIT(A) ought to have appreciated the fact that the Ld.AO erred in disallowing the interest expenditure of Rs.2,34,547/- without appreciating the facts and circumstances of the case.
12. The Ld.CIT(A) ought to have appreciated the fact that the interest expenditure is incurred wholly and exclusively for the purpose of the business which is allowable u/s.37. 13. TheAppellant may add or alter or amend or modify or substitute or delete and/or rescind all or any of the grounds of appeal at any time before or at the time of appeal.
14. As per the ratio laid down by the Hon’ble Supreme Court of India in the case of National Thermal Power Co. Ltd. Vs. CIT (1998) 229 ITR 383
(SC), the Hon’ble ITAT has juri iction to examine the question of law which has been taken before the Hon’ble ITAT for the first time though not taken before the first appellate authority.
15. The Ld. CIT(A) has erred in not considering the factual matrix that the assessee had filed a revised return of income electronically on 07.01.2013 and that the AO has erred in not taking into consideration the same ROI and erred in not issuing notice u/s 143(2) of the Act in accordance with the revised ROI filed by the assessee.
16. The Ld. CIT(A) has erred in not considering the legal position that the AO had assessed the income of the assessee without considering the revised return of income filed by the assessee electronically on 07.01.2013 well before the assessment is made which are within the time prescribed u/s 139 of the Act.

As the assessee by raising the additional grounds of appeal nos. 14 to 16 has sought our indulgence for adjudicating certain legal issues which would not require looking any further beyond the facts available on record, therefore, to the said extent we have no hesitation in admitting the same. Our aforesaid view is fortified by the judgment of the Hon’ble Supreme Court in the case of National Thermal Power
3. Search and seizure proceedings under Section 132 of the Act were carried out at the residential premises of the assessee on 25/11/2010. Subsequently, the assessee filed his return of income for A.Y 2011-12
on 07/03/2012, declaring an income of Rs. 2,85,940/- a/w agriculture income of Rs. 1,95,400/-. Thereafter, the assessee e-filed a revised return of income on 07/01/2013, declaring an income of Rs.
2,01,790/- a/w agriculture income of Rs. 1,70,405/-. The case of the assessee was selected for scrutiny assessment and a notice under Section 143(2) of the Act, dated 29/06/2012 was issued to him.
4. The A.O. framed the assessment vide his order passed under Section 143(3) of the Act, dated 25/03/2013 determining the assessee’s income at Rs. 60,09,624/- after making multi-facet additions/
disallowances, as under:

Sl No Particulars
Amount (Rs.)
1. Addition of Long Term Capital Gains on sale of property situated at D.No. 5/19-2 and 5/19-3 at Gandhi Road, Proddatur to the extent of 2059 sq yds (out of 3241.78 sq yds)
6,86,651
2. Addition of the loan claimed by the assessee to have been received from Ms. P. Geetha by treating the same as unexplained cash credit
U/s. 69 of the Act.
10,00,000
3. Disallowance of interest expenditure claimed by the assessee to have been paid on loans that were raised from Sri K V Subbaiah, Ms. P
Geetha and C. Sridevi.
2,34,547
4. Addition of the unexplained cash found during the course of the search proceedings conducted U/s. 132 of the Act at the residential premises of the assessee on 25/11/2010. 2,35,000
5. Addition towards unexplained investment in jewellery1569.5 gms (gross weight) found in the course of the search proceedings conducted at the residential premises of the assessee on 25/11/2010. 24,34,486
6. Addition of the unexplained cash deposits in the assessee’s SB account No. 10558466198,
SBI, Branch-Proddatur on 27/05/2010. 11,33,000

Representatives of both the parties to drive home their respective contentions.
8. As the assessee has based on his “additional grounds of appeal”
assailed the validity of the juri iction assumed by the AO for framing the assessment vide his order passed under Section 143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 25/03/2013 for the assessment year 2011-12, therefore, we shall first deal with the same.
9. Shri. P. Murali Mohan Rao, the Ld. Authorized Representative
(“AR”, for short) for the assessee, at the very threshold of hearing of the appeal, submitted that the AO had grossly erred in law and facts of the case in framing the impugned assessment under Section 143(3), dated
25/03/2013 without issuing a valid notice under Sec. 143(2) of the Act.
Elaborating on his contention, the Ld. AR submitted that though the assessee had e-filed a revised return of income on 07/01/2013, declaring an income of Rs. 2,01,790/- a/w agricultural income of Rs.
1,70,405/-, but the AO dispensing with the statutory obligation of issuing a notice under Section 143(2) of the Act, had thereafter proceeded with and framed the assessment vide his order passed under Section 143(3) of the Act, dated 25/03/2013. The Ld. AR submitted that the AO had framed the impugned assessment based on the notice under 143(2) of the Act, dated 29/06/2012 that was issued regarding the original return of income filed by the assessee on 07/03/2012. 7

Carrying his contention further, the Ld. AR submitted that as the revised return of income e-filed by the assessee on 07/01/2013 (supra) had superseded the original return of income, therefore, the AO was statutorily obligated to have issued a notice under Section 143(2) qua the said revised return of income. The Ld. AR to fortify his claim had drawn support from the judgment of the Hon’ble Apex Court in the case of CIT Vs. Laxman Das Khandelwal (2019) 108 taxmann.com
183 (SC). It was, thus, the Ld. AR’s claim that as the AO had framed the impugned assessment without issuing the statutory notice under Section 143(2) of the Act regarding the revised return of income filed by the assessee, therefore, he had invalidly assumed juri iction and framed the impugned assessment.
10. Per Contra, the Ld. Departmental Representative (“DR”, for short) submitted that as the assessee had failed to file his original return of income within the stipulated period contemplated under sub-section (1) of Section 139 of the Act; therefore, he was divested of his right to file a revised return of income. The Ld. DR to buttress his contention had taken us through the assessment order which revealed that the original return of income was belatedly filed by the assesssee on 07/03/2012. Carrying his contention further, the Ld. DR submitted that as the assessee had failed to file his original return of income for the subject year within the prescribed period as provided in sub-section (1) of Section 139, therefore, the AO had rightly refrained from considering the impugned revised return of income that was filed by the assessee as the same was non-est in the eyes of law.
11. We have thoughtfully considered the contentions advanced by the Ld. Authorized Representatives of both the parties in the backdrop of the orders of the lower authorities.
12. Admittedly, the assessee had belatedly filed his original return of income on 07/01/2013, i.e., beyond the period prescribed under sub- section (1) of Section 139 of the Act. As per sub-section (5) of Section 139 of the Act, as was available on the statute for the subject year, i.e.,
AY 2011-12, if any person, having furnished a return of income under sub-section (1), or in pursuance of a notice issued under sub-section (1) of section 142, discovered any omission or any wrong statement thern, he was vested with a right to furnish a revised return of income at any time before he expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever was earlier.
13. Ostensibly, the return of income filed by the assessee for the subject year was neither furnished under sub-section (1) of Section 139; nor in pursuance of any notice issued under sub-section (1) of Section 142, but rather was a belated return filed by him under sub- section (4) of Section 139. Accordingly, as stated by the Ld. DR, and rightly so, as the assessee had failed to furnish his return of income within the prescribed period contemplated under sub-section (1) of Section 139, therefore, as per the law available on the statute for the subject year, i.e., AY 2011-12, he was divested of his right to file a revised return of income under sub-section (5) of Section 139. We, thus, are of the firm conviction that as the revised return of income filed by the assessee was in itself non-est, therefore, the AO had justifiably not taken cognizance of the same and framed the assessment based on the original return of income. Accordingly, we are unable to concur with the Ld. AR that the AO had grossly erred in the law and facts of the case in assuming juri iction and framing the impugned assessment without issuing notice under Section 143(2) qua the impugned revised return of income filed by the assessee. The additional ground of appeal nos. 14
to 16 raised by the assessee being devoid and bereft of any substance is dismissed.
14. On merits, as multi-facet additions/disallowances are involved in the present appeal, therefore, we shall deal with the same in a chronological manner, as under:
(A): Additiona of Long Term Capital Gains (in short “LTCG") on sale of immovable property: Rs. 6,86,651/-

Ostensibly, Sri C. Satyanarayan, i.e. assessee’s elder brother, had in the course of his assessment proceedings produced a copy of the registered sale deed, dated 05/02/2011, which revealed that the assessee a/w his three brothers had on 05/02/2011 i.e. during the subject year sold 2059 sq yds (out of 3241.78 sq. yards of the subject property) for a consideration of Rs. 92.66 lacs. The A.O. noticed that the assessee a/w his three brothers had purchased the subject property vide a Registered Sale Deed No. 92/2008, dated 19/11/2007. 16. As the assessee had failed to disclose his share of “capital gain”
arising from the aforesaid transaction of sale of property in his return of income, therefore, the A.O. called upon him to put forth an explanation regarding the same. In reply, it was, inter alia, stated by the assessee that the share in the subject property was held by his HUF.
The assessee to fortify his claim placed on record a copy of the return of income of his HUF for A.Y 2011-12, wherein the Long Term Capital
Gain (LTCG) on the sale of the share in the aforesaid property was disclosed.
17. Although, the assessee claimed that the aforementioned property was held by him in his HUF capacity but the same did not find favor with the A.O. The A.O., observed that his predecessor, while framing the assessment in the case of the assessee for the A.Y 2008-09, had assessed the investment made in the subject property in the hands of 11

the assessee in his individual capacity. Accordingly, the A.O., based on his aforesaid deliberations brought the LTCG of Rs. 6,86,651/- to tax in the hands of the assessee though on a protective basis.
18. We have given thoughtful consideration to the aforesaid issue in the backdrop of the contentions advanced by the Learned Authorized
Representatives of both parties. As stated by the Ld.AR, and rightly so, the observations of the A.O. that his predecessor while framing the assessment in the case of the assessee for the A.Y 2008-09 had brought the investment made in the subject property i.e., D.Nos. 5/19-2 and 5/19-3 at Gandhi Road, Proddatur town in the hands of the assessee in his individual capacity, had thereafter been vacated by the Tribunal while disposing off the assessee’s appeal for AY 2008-09, vide its order passed in ITA No. 835/Hyd/2019, dated 13/09/2021. The Tribunal, while vacating the addition qua the investment in the subject property, had observed, that it was the HUF that had disclosed the said property, viz. “Posina Complex” as an investment in its “balance sheet” on 31/03/2008 at a value of Rs. 43,75,352/-. For the sake of clarity, the observations of the Tribunal are culled out as under:
“9. We have given our thoughtful consideration to the forgoing rival stands against the impugned and undisclosed investment addition made in these three assessees’ hands.
We find no reason to sustain the same. This is because of the fact that it is not these three members / individuas of the HUF but the latter “person” himself who had disclosed the relevant investment in its Balance Sheet as on 31/03/2008 (Pg. No. 130) involving “Posina Complex”

having value of Rs. 43,75,352/- way back on 31/03/2008. This clinching fact has gone unrebutted from Revenue side…….”

A.O. directed the assessee to furnish a copy of the bank statement of the lender. As the assessee both failed to place on record the copy of the bank statement of the lender, as well as did not produce her for examination before the A.O on the ground that she was not available, therefore, the A.O doubted the authenticity of the loan transaction and held the same as an unexplained cash credit in the hands of the assessee.
21. On appeal, the CIT(A) finding no infirmity in the view taken by the A.O, upheld the same.
22. We have thoughtfully considered the aforesaid issue in the backdrop of the contentions advanced by the Learned Authorized
Representatives of both parties.
23. Admittedly, it is a matter of fact borne from the record that the assessee in order to discharge the onus that was cast upon him to substantiate the authenticity of the subject loan which was received through banking channel, had placed on record, viz. confirmation letter, copy of PAN, and Identity Card of the lender, Page 9 to 11 of the APB.
Also, a copy of the ledger account of the aforementioned lender as appearing in the books of account of the assessee for the subject year was filed with the A.O, Page 12 of the APB. However, as the assessee had failed to comply with the specific directions of the A.O., viz., (i) place on record a copy of the bank statement of the lender; and (ii) produce the lender for examination before him, therefore, the A.O. doubted the authenticity of the subject loan transaction and held the same as an unexplained cash credit.
24. We have thoughtfully considered the issue in hand in the backdrop of the contentions of the Ld. Authorized Representatives of both parties, and are unable to persuade ourselves to summarily approve the view taken by the A.O. Although, we cannot remain oblivion of the fact that the assessee had failed to comply with the aforesaid specific directions of the A.O. and substantiate the authenticity of the loan transaction to his satisfaction, but it is also a fact that the lenders confirmation a/w income tax credentials and complete address was filed by the assessee in the course of the assessment proceedings.
Considering the aforesaid facts, we are of the view, that as the assessee had filed the confirmation of the lender in the course of the assessment proceedings, then, in case the AO had any doubt as regards the authenticity of the subject loan transaction, he instead of hushing through the matter and summarily dubbing the same as sham should have exercised the powers vested with him under Section 133(6) or Section 131 of the Act and, thus, brought the issue to a logical end.
25. Be that as it may, we are of the view that not only the assessee had failed in his duty to discharge the onus cast upon him as regards proving the authenticity of the subject loan transaction, i.e. by 15

complying with the specific directions of the AO; but also the A.O had failed to carry out the necessary verifications/examination in exercise of the powers that were vested with him under Section 133(6) and Section 131 of the Act. We thus, are of the view, that the matter in all fairness, requires to be restored to the file of the A.O. with a direction to re-adjudicate the same. Needless to say, the assessee shall in the course of the set-aside proceedings remain at liberty to substantiate the authenticity of the loan transaction based on fresh documentary evidence, if any. The Grounds of appeal Nos. 4 & 5 are allowed for statistical purposes in terms of our aforesaid observations.
(C): Disallowance of interest paid on loans: Rs. 2,34,547/-
26. Ostensibly, the A.O. while framing the assessment, observed, that the assessee had claimed the deduction of interest of Rs. 2,34,547/- paid on the unsecured loans raised by him from three parties, viz. (i).
Sri K V Subbauiah; (ii). Ms. P. Geetha; and (iii). C. Sridevi. Observing, that as the respective unsecured loans had been held as unexplained credits, therefore, the A.O. disallowed the same.
27. On appeal, it transpires that the CIT(A) finding no infirmity in the view taken by the A.O. upheld the disallowance of the assessee’s claim for deduction of interest expenditure.
28. We have heard the Learned Authorized Representatives of both parties on the aforesaid issue in the backdrop of the orders of the lower authorities. As the assessee’s claim of having raised a genuine loan Of Rs. 10 lac from Ms. P. Geetha (supra) has been restored by us to the file of the A.O for fresh adjudication, therefore, his claim for deduction of the corresponding interest expenditure on the said loan will be dependent on the outcome of the view taken by the A.O. in the course of the set-aside proceedings.
29. Apropos the disallowance of the assessee’s claim for deduction of interest expenditure regarding the remaining two lenders, viz., (i) Sri K
V Subbaiah; and (ii) Smt. C. Sridevi, we find that neither the Ld. AR has raised any contention on the said issue nor produced any material before us that would reveal that the said respective loans had been held by any of the appellate forums as genuine. We thus, uphold the disallowance of the assessee’s claim for deduction of interest expenditure on the loans claimed by the assessee to have been raised from the aforementioned two lenders, viz. (i) Sri K V Subbaiah; and (ii)
Smt. C. Sridevi. The Ground of appeal No. 3 is partly allowed in terms of our aforesaid observations.
(C): Addition of unexplained cash found in the course of the search:
:Rs. 2.35 lac

132(4) of the Act stated that the cash found in the course of the search proceedings was sourced out of his past savings accumulated over the years. The assessee, in the course of the assessment proceedings, on being queried about the source of the cash of Rs. 2.35 lacs (supra), vide his reply dated 05/03/2013 had claimed that the same was sourced out of his cash accumulation generated from his day-to-day collections which were regularly entered by him in his books of account. However, the A.O. taking cognizance of the fact that the assessee had for the subject year not maintained any regular books of account, thus, held the same as his unexplained money.
31. On appeal, the CIT(A) finding no infirmity in the view taken by the A.O. upheld the addition of Rs. 2.35 lacs (supra) made by him.
32. We have heard the Learned Authorized Representatives of both the parties on the aforesaid issue, i.e., sustainability of the view taken by the lower authorities that the cash of Rs. 2.35 lacs (supra) found during the search proceedings from the residential premises of the assessee was sourced out of his unexplained sources.
33. We have thoughtfully considered the observations of the lower authorities and are unable to persuade ourselves to fully concur with the same. Ostensibly, the assessee is engaged in the business of a contractor and is also deriving agricultural income. We are of a firm conviction that considering the streams of income of the assessee, his explanation, that the cash of Rs. 2.35 lacs (supra) found from his residential premises during the course of the search proceedings was sourced out of his accumulated savings and day-to-day business collections, could not have been summarily discarded by the lower authorities. Considering the totality of the facts involved in the present case, we are of the view that cash amounting to Rs. 1.50 lacs (out of Rs.
2.35 lacs) can safely be estimated to have been sourced out of the aforesaid sources of income/accumulated savings of the assessee. We, thus, in terms of our aforesaid observations vacate an addition of Rs.
1.50 lac (out of Rs. 2.35 lac) made by the AO. The Ground of Appeal
No. 6 is partly allowed.

(E): Addition of unexplained investment in jewellery: Rs.
24,34,486/-
34. As is discernible from the assessment order, the assessee during the course of the search proceedings conducted at his residential premises on 25/11/2010 was found in possession of 1569.50 gms jewellery (net weight: 1198 gms) valued at Rs. 24,34,486/- (including silver articles valued at Rs. 90,000/-).
35. During the course of the assessment proceedings, the A.O.
queried the assessee as regards the source of the investment made in the aforesaid jewellery and silver articles. In reply, it was claimed by the assessee that the jewellery belonged to him and his family members.
Elaborating further, it was stated by him that the jewellery included that which was received by his wife and his other family members by way of gifts on various occasions. Also, the assessee had drawn support from the CBDT Instruction No. 1916, dated 11/05/1994. 36. The A.O., after deliberating on the aforesaid explanation of the assessee did not find favor with the same. It was observed by him that as the assessee had not come forth with the complete details as to when and how much of the gold jewellery was received as gifts by him and his family members, therefore, his explanation could not be accepted.
Further, the AO observed that the CBDT Instruction No. 1916, dated
11/05/1994 was applicable only for considering the gold jewellery that could be seized during the course of the search proceedings and could not be carried any further to dispense with an explanation as regards the source of the same during the course of the assessment proceedings. Accordingly, the A.O. based on his aforesaid deliberations made an addition of the value of the subject gold jewellery amounting to Rs. 24.34 lacs (supra) under Section 69A of the Act.
37. On appeal, the CIT(A), found no infirmity in the view taken by the A.O. and upheld the addition.
38. We have thoughtfully considered the contentions advanced by the Learned Authorized Representatives of both parties on the aforesaid issue i.e., sustainability of the addition made by the lower authorities by treating the value of the subject gold jewellery as an unexplained investment in the hands of the assessee under Section 69A of the Act.
39. As is discernible from the record, it has been the claim of the assessee, since inception, that the gold jewelry i.e., 1198 gms (net weight) found from his residential premises during the course of search proceedings belonged to him, his wife and two unmarried daughters.
Although the assessee had claimed that the subject gold jewellery was received over the years by his wife and the other family members as gifts on various occasions and, thus, as the same was well within the limits prescribed by the CBDT Instruction No. 1916, dated 11/05/1994, therefore, no adverse inferences as regards the source of investment in the same were liable to be drawn, but the same did not find favor with both the lower authorities. Ostensibly, the A.O had observed that though the CBDT Instruction No. 1916, dated 11/05/1994 could be pressed into service only for considering the quantum of gold jewellery that is to be seized in the course of the search proceedings, but the same cannot be projected as an explanation as regards the source of the same during the course of the assessment proceedings.
40. We have thoughtfully considered the contentions advanced by the Ld. Authorized Representatives (“AR”s, for short) for both the parties and are unable to concur with the same. We may herein observe, that the scope of the aforesaid CBDT Instruction No. 1916 (supra) cannot be 21

circumscribed by limiting the applicability of the same only for determining the weight of jewellery that is to be seized during the course of the search proceedings, but would also be a guiding factor while framing of the assessment. Our aforesaid view is fortified by a host of pronouncements wherein the Courts/Tribunals after referring to the CBDT Instruction No. 1916 (supra), had held, that the weight of the jewellery therein contemplated is to be construed as that acquired by the assessee and his family members from explained sources. Our aforesaid view is fortified by the order of the ITAT, Raipur in the case of Asha Daga vs. CIT in ITA No. 408/RPR/2024, dated 12/12/2024. For the sake of clarity, the observations of the tribunal in the case of Asha
Daga Vs. CIT (supra) are culled out as under:
“16. Apropos, the addition regarding the source of balance gold jewellery
(Wt. 437.700 grams) (supra), we are unable to fully persuade ourselves to subscribe to the view taken by the lower authorities. Before proceeding any further, we may herein observe that the CBDT vide its instruction No. 1916
dated 11.05.1994 had, inter alia, held that search parties shall not seize the gold jewellery/ornaments to the extent of, viz. (i) 500 grams per married lady;
(ii) 250 grams per unmarried lady; and (iii) 100 grams per male member of the family. The aforesaid CBDT Instruction No. 1916 (supra) had thereafter been looked into by the co-ordinate benches of the Tribunal, viz., ITAT, Jodhpur
(supra) is not to be treated as having been acquired by the assessee out of unexplained sources. For the sake of clarity, we herein deem it fit to cull out the extracts of the aforesaid orders (relevant extracts):
“A). DCIT vs. Arjun Dass Kalwani (supra)
“6……………………………….We are reminded of the order passed by the Chandigarh Bench of the Tribunal in the case of Smt. Neena Syal vs.
Asstt. CIT(2000) 69 TTJ (Chd) 516 : (1999) 70 ITD 62 (Chd) in 22

which it was held that CBDT Instruction No. F.288/632/93-IT (Inv.)-II dt.
11th May, 1994 containing guidelines for seizure of jewellery and ornaments in the course of search, was relevant with reference to the deeming provision of s. 69A as well. In this instruction, the possession of gold jewellery by married ladies upto 500 gms. has been held to be immune from seizure. The Chandigarh Bench in this case held that the possession of gold jewellery by married ladies to the extent of 500 gms. should be considered as explained. Several orders have been passed all over India by different Benches of the Tribunal accepting the possession of gold jewellery to the extent of 500 gms. per married lady. Since Smt. Indra had claimed jewellery of 350.5 gms in her possession, which is much below the prescribed limit of 500 gms. We are of the considered opinion that no addition can be held to be sustainable on this count and the learned CIT(A), was justified in deleting it…………..”
“35. We have considered the rival submissions. The Board vide its Circular No. 1916, dt. 11th May, 1994, has prescribed the limit of 500 gms.
for gold jewellery which is not to be seized. In other words, the Board has considered the issue and felt that gold jewellery to the extent of 500 gms, could be possessed by an ordinary family. The intention behind such circular was, therefore, very clear. As the unexplained jewellery found during the course of search was much less than 500 gms., we have no hesitation in holding that the addition on account of unexplained investment in jewellery is not justified and the same is deleted.”

आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:-

आदेशधिुसधर / BY ORDER

Sr. Private Secretary
ITAT, Hyderabad