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Facts
During a search operation, jewellery worth Rs. 2,06,70,635 was found, out of which the Income Tax Department seized jewellery valued at Rs. 1,21,59,164. The assessee provided an explanation for the source of this jewellery, but it was rejected by the AO, who made an addition. The CIT(A) partly deleted the addition. Separately, a receipt of Rs. 10 lacs was found from a third party, which the AO treated as an unexplained expenditure by the assessee.
Held
The Tribunal held that the Department failed to provide incriminating material to suggest the jewellery was purchased during the search period from unexplained resources, allowing the assessee's appeal and deleting the addition of Rs. 46,96,225. Regarding the Rs. 10 lacs receipt, the Tribunal agreed with the CIT(A) that it was not found from the assessee's premises and lacked corroborative evidence, thus rejecting the Revenue's appeal on this ground.
Key Issues
1. Whether the addition made on account of unexplained jewellery found during search is justified, considering the explanation and evidence provided by the assessee. 2. Whether the addition made on account of a loose slip found from a third party, indicating an expenditure of Rs. 10 lacs, is sustainable without corroborative evidence and link to the assessee.
Sections Cited
143(3), 147, 148
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Income Tax Appellate Tribunal, DIVISION BENCH, ‘A’ CHANDIGARH
Before: SHRI RAJPAL YADAV & SHRI MANOJ KUMAR AGGARWAL
Assessee by : Shri Sudhir Sehgal, Advocate Revenue by : Shri Manav Bansal, CIT DR Date of Hearing : 21.08.2025 Date of Pronouncement : 17.11.2025 PHYSICAL HEARING O R D E R PER RAJPAL YADAV, VP
The assessee and Revenue are in cross-appeals against the order of the ld. Commissioner of Income Tax & ITA 357/CHD/2025 A.Y.2022-23 2 (Appeals) [in short ‘the CIT (A)’] dated 14.12.2024 passed for assessment year 2022-23. The issues agitated in both the appeals are inter-connected with each other, therefore, we take both the appeals together.
The grievance of the assessee is that ld.CIT (Appeals) has erred in partially retaining the addition on account of unexplained investment in jewellery whereas in ground No. 1 and 2, the Revenue has also pleaded that ld.CIT (Appeals) has erred in partially deleting the addition made by the AO on account of unexplained jewellery found during the course of search.
The brief facts of the case are that assessee is an individual. He has filed his return of income on 17.10.2022 declaring an income of Rs.75,04,710/-. There was a search in Home Life Buildcon Pvt. Ltd. Group. The assessee is a member of this group and the search was caried out on 16.11.2021. During the course of search, jewellery having weight of 4137.07 grams was found. The value of this jewellery was worked out at Rs.2,06,70,635/-. The Income & ITA 357/CHD/2025 A.Y.2022-23 3 Tax Department has seized jewellery to the extent of 2443.91 grams. The value of this jewellery was determined at Rs.1,21,59,164/-.During the course of assessment proceedings, assessee has given explanation qua the source of this jewellery but this was rejected by the AO and he made an addition of Rs.1,21,59,164/-.
Dissatisfied with the finding of the AO, assessee carried the matter in appeal before the ld.CIT (Appeals). The ld.CIT (Appeals) has partly deleted the addition. According to the finding of the CIT (Appeals), the AO has allowed the benefit of CBDT Circular No. 1916 dated 11.05.1994 to the extent of 1690.16 grams. The AO was of the view that there were two ladies in the family, namely, Smt. Balwinder Kaur, mother of the assessee and Smt. Jaswinder Kaur, wife of the assessee. He has further granted benefit of the jewellery according to the Circular qua two minor daughters of Shri Jagjit Singh. He granted benefit of this Circular qua the limit could be retained by a male member, Shri Jagjit Singh and Shri Samir Singh, son of the assessee. The ld.CIT (Appeals) further observed that there were two more ladies whose jewellery was available & ITA 357/CHD/2025 A.Y.2022-23 4 in the family, namely, Smt. Jasmine Kaur, wife of Shri Interjeet Singh, brother of the assessee Shri Jagjit Singh and Smt. Jaspreet Kaur, wife of Shri Mandeep Singh, second brother of the assessee. Hence, out of the total seizure, he has granted benefit6 of 3190.16 grams out of total jewellery of 4134.07 grams, found at the time of search. The ld.CIT (Appeals) confirmed the addition on account of unexplained jewellery to the extent of 943.91 grams and the value was determined at Rs.46,96,225/-. The addition deleted is being challenged by the Revenue in its appeal and the addition retained above is being challenged by the assessee in its cross-appeals.
With the assistance of the ld. Representative, we have gone through the record carefully. The ld. counsel for the assessee has filed details in tabular form exhibiting the family members in the family vis-à-vis how much jewellery allocated by the assessee according to the CBDT Circular 1916. Such details read as under : Sr. No. Name of Member Relation with Gold allowed as per assessee CBDT circular (in Gms) 1. Sh. Surjit Singh Father 100 2. Smt. Balwinder Kaur Mother 500 3. Jagjit Singh Grewal Assessee 100 4. Jaswinder Kaur Wife 500 & ITA 357/CHD/2025 A.Y.2022-23 5 5. Sameer Singh Son 100 6. Amrita Kaur Daughter 250 7. Amroz Daughter 250 8 Sh. Inderjit Singh Brother 100 9. Smt. Jasmeen Kaur Sister in Law 500 (bhabi) 10. Sehaj Singh Nephew 100 11. Anureet Kaur Niece 250 12. Mandeep Singh Brother 100 13 Jaspreet Kaur Sister in Law 500 (bhabi) 14. Aarav Nephew 100 15. Smt. Gurjit Kaur Sister 500 Total 3950 6. The ld. First Appellate Authority has recognized the factum that family of Shri Gurjit Singh is closely associated with each other. The two sons, Shri Interjit Singh and Shri Mandeep Singh are residing abroad, namely, U.S. and Canada but there was a family bondage between them. They use to pay visits twice a year and attend all the social functions. It was claimed by the assessee that some of the jewellery pertains to wives of his brother, namely, Smt. Jasmine Kaur, wife of Shri Inderjit Singh and Smt. Jaspreet Kaur, wife of Shri Mandeep Singh. This factum has been accepted by the ld.
First Appellate Authority. We are also of the view that if it is being discerned from the corroborative evidence available on the record that there was a close association between the brothers and all family members, then possibility of some & ITA 357/CHD/2025 A.Y.2022-23 6 jewellery being kept in India for attending social functions and for avoiding risk of loosing them in travelling as well as obligation of custom duties. It is not such a huge jewellery which cannot be inferred from the material that it was explained one. The simple reason is Department itself giving the benefit of CBDT Circular because it is quite difficult in day-today life to keep the track of bills and the payments made. Some of the jewellery must have been received at social occasions like marriage, birthday, anniversary from the parents and other relatives. According to the assessee, some of the jewellery has been redesigned from the old one. Photo copies of such items have also been placed on the record. It has been demonstrated that the ladies did wear this jewellery on earlier social occasions. Photographs are available on page Nos. 81 and 82 of the Paper Book. With the help of the social function’s photographs, it has been demonstrated that a particular jewellery was purchased long time back which has been discovered during the search. Therefore, it has been demonstrated by the assessee that jewellery was acquired in the past many years before, which is not even the scope of the & ITA 357/CHD/2025 A.Y.2022-23 7 search period. They were being wore by the family members on the occasions of marriage and other social functions. Their photographs are being produced from the albums which has been compared with the photographs of the jewellery taken during the time of search. Thus, we are of the view that Department was unable to lay its hands on any incriminating material which can suggest that jewellery in question was purchased during the period of search out of unexplained resources. Accordingly, we allow the appeal of the assessee and delete the alleged unexplained investment of Rs.46,96,225/-. Consequently, ground Nos. 1 and 2 of the Revenue’s appeal are rejected.
The next ground in the Revenue’s appeal is that ld.CIT (Appeals) has erred in deleting the unexplained expenditure of Rs.10 lacs. A perusal of the record would suggest that during the course of search, a handwritten receipt of Rs.10 lacs was found from the residence of Shri Kuldeep Singh, i.e. third party, where ‘Jagjit Singh Grewal’ has been mentioned. The AO was of the view that assessee has incurred expenditure of Rs.10 lacs, hence, an addition of Rs.10 lacs deserves to be & ITA 357/CHD/2025 A.Y.2022-23 8 added in the hands of the assessee. The ld.CIT (Appeals) has deleted the addition. The facts noticed by the ld.CIT (Appeals) read as under : From the above stated facts & circumstances submitted, following facts emerges: (a) There was search and seizure operations at the residence of Sh. Kuldeep Singh Grewal and one loose slip was found from the residence of Sh. Kuldeep Singh i.e. third party, where the name of Sh. Jagjit Singh Grewal have been mentioned but there are no signatures of Sh. Jagjit Singh (b) There are only signatures of one Sh. Gagandeep Singh and the Ld. Assessing Officer has treated the same as the amount advanced by Sh. Jagjit Singh to Sh. Gagandeep Singh which is not found sustainable. (c) The receipt was not found from the premises of assessee and heavy onus lies upon the department to prove that such document belongs to assessee. d) There is no statement of Sh. Kuldeep Singh, and neither Sh. Kuldeep Singh during search or later on, stated that such slip belongs to Sh. Jagjit Singh and neither he had stated that Sh. Jagjit Singh had advanced any sum to Sh. Gagandeep Singh (e) Further, no corroborative evidence has been found from the premises of Sh. Jagjit Singh. There is no evidentiary value of such loose slip and which cannot be made the basis to make the addition in the hands of the assessee. (f) Further, there is no link or any evidence, whatsoever, that Sh. Jagjit Singh Grewal had advanced any sum to one Sh. Gagandeep Singh and no efforts had been made by the department to establish the identity of the Gagandeep Singh and neither Sh. Jagjit Singh-or Shri Kuldeep Singh has been confronted during search, or thereafter and, thus, since no corroborative evidence had been found during the course of search, the addition as made by the Assessing Officer is not justified. (g) It is also a well settled principle under the law that suspicion howsoever strong cannot take the shape of evidence. The contention of the AO stands rebutted by the appellant and thus the addition has been made only on the presumptions by the AO. Above view is also supported by the following judgments:…”
With the assistance of the ld. Representative, we have gone through the record carefully. The ld.CIT (Appeals) has categorically observed that this receipt was not found from the & ITA 357/CHD/2025 A.Y.2022-23 9 premises of the assessee, hence, it was for the Revenue to demonstrate that it belongs to the assessee. The Department did not record the statement of Shri Kuldeep Singh who has admitted that it belongs to Shri Jagjit Singh nor he has stated that Shri Jagjit Singh had ever given this money to him or to Shri Gagandeep Singh as advance. In view of the categoric finding of the ld.CIT (Appeals), we are of the view that no interference is called for. Accordingly, this ground of appeal is also rejected.
In the result, appeal of the assessee is allowed and that of the Revenue is dismissed.
Order pronounced on 17 th November, 2025.