MANGILAL BACHRAJ SANGHVI,MUMBAI vs. DCIT CC-2(2), MUMBAI

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ITA 4500/MUM/2018Status: DisposedITAT Mumbai20 August 2019AY 2016-172 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CBDT Instruction provides for certain amounts of jewellery to be considered as held by family members due to custom. Therefore, credit to this extent should be granted and not dismissed as done by the lower authorities.

What were the facts?

Following a search and seizure action, the Assessing Officer made an addition of Rs. 15,40,432 on account of unaccounted gold jewellery. The assessee was given credit for purchases supported by vouchers, but the CIT(A) rejected the plea for credit based on a CBDT Instruction regarding customary jewellery.

What were the issues?

Whether the CIT(A) erred in confirming the addition on account of unaccounted jewellery without considering the benefit of customary jewellery as per CBDT Instruction.

Which sections of the Income-tax Act were involved?

Section 69

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” Bench, Mumbai

Before: Shri Shamim Yahya (AM)

For Appellant: Ms. Pooja Chhawachharia
For Respondent: Shri Chaitanya Anjaria
Hearing: 8.7.2019Pronounced: 20.8.2019

This appeal by the assessee is directed against the order of learned CIT(A) dated 25.4.2018 and pertains to A.Y. 2016-17.

2.

Grounds of appeal

read as under :-

1. That the Ld. CIT(A) has erred in confirming the order of the Assessing Officer in sustaining an addition of Rs. 15,40,4327- on account of investment U/s 69 in Gold Jewellery.

2. That the Ld. CIT(A) has failed to give any benefit of Jewellery acquired at the time of marriage and later on different occasions.

3. That the finding of the Ld. CIT(A) that Board Circular is only for the purposes of seizure is contrary to the finding in various Judgments of different Hon'ble High Courts and the Hon'ble Benches of ITAT.

4. That the Ld. CIT(A) has failed to appreciate that as per Hindu Customs the Jewellery is acquired by the family at the time of marriage and later on different occasions and, as such, the confirmation of addition is against the facts and circumstances of the case.

3. Brief facts of the case are that pursuant to search and seizure action, addition on account of unaccounted jewellery was done. To the extent the 2 Mangilal Bachraj Sanghvi assessee could produce purchase vouchers credit was given. However, assessee’s plea that the assessee should also be given credit in terms of CBDT Instruction 1994 dated 11.5.1994 was not accepted by learned CIT(A). Learned CIT(A) held that values mentioned in the said circular was only for seizure purpose and their verifiability is governed by regular law and such jewellery cannot be held explained automatically.

3.

Upon hearing learned both the counsel and perusing records, I find that the above CBDT Instruction provides certain amount of jewellery as understood to have been held by family members on account of custom prevalent in the country. Hence, in my considered opinion credit to this extent deserves to be granted. The same cannot be brushed aside as has been done by the authorities below. I remit this issue to the file of the Assessing Officer to examine the issue with respect to facts on record regarding family member of the assessee. Accordingly, this issue is remitted to the file of the Assessing Officer. Needless to add the assessee should be granted adequate opportunity of being heard.

4.

In the result, assessee’s appeal is allowed for statistical purposes.

Order has been pronounced in the Court on 20.8.2019.

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