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Income Tax Appellate Tribunal, DELHI BENCH ‘C’: NEW DELHI
Order
: 09.07.2025 O R D E R
PER S.RIFAUR RAHMAN, ACCOUNTANT MEMBER :
This appeal is filed by the assessee against the order of ld. Commissioner of Income-tax (Appeals)-27, New Delhi [hereinafter referred to as ‘ld. CIT (A)] dated 05.10.2023 for Assessment Year 2017-18 raising following grounds of appeal :-
1. The Ld.CIT(A) has erred in not appreciating the fact that the assessee failed to provide any evidence which shows that the items of jewellery which found during search is declared in the WTR. Further no evidence of gift made by other person and bills or evidence with regard to the source of investment provided by the assessee during the search operation which is on the spot proceedings and even not provided the same during the assessment proceedings.
2. The Ld.CIT(A) has erred in not appreciating the fact the addition was made after allowing the benefit of stridhan (500 gm jewellery in the hand of assessee) and 100 gms jewellery in the hands of husband of assessee.
3. The Ld.CIT(A) has erred in not appreciating the fact the question of segregation of jewellery and studded diamonds only arise when assessee given any evidence to investment made therein but in this case no documentary evidence provided by the assessee during search operation as well during the assessment proceedings.
4. The Ld.CIT(A) has erred in entertaining additional evidence in violation of Rule 46(A) of the Income Tax since there is nothing mention in the CIT(A) order of calling any remand report from the AO.
The Ld. CIT(A) has erred in not appreciating the fact that the cash deposit during demonetization period is only allowable when the same are [duly explained by the assessee but as per the assessment order the assessee failed to explain the same.”
Brief facts of the case are, a search and seizure operation under section 132 of the Income-tax Act, 1961 (for short ‘the Act’) was conducted by the Investigation Wing on 22.10.2016 in Sukhija Group of cases at various residential and business premises including the premises of the assessee. The cases were centralized. The assessee had filed her original return of income on 01.08.2017 declaring an income of Rs.4,94,920/-. Notices u/s 143(1) and 142(1) were issued and served on the assessee. In response, ld. AR of the assessee attended and submitted relevant information. During the course of search at the residential premises, jewellery worth Rs.9,15,56,838/- was found out of which jewellery valued at Rs.5,79,57,842/- was seized. Out of the jewellery found, jewellery worth Rs.1,94,11,279/- was found in the case of the assessee as per panchnama dated 02.12.2016. During post enquiry, it was submitted that jewellery belongs to whole family and valuation of the same was done. It was submitted that assessee is living in joint family of other three families, namely, Shri Bhupinder Singh Kochar, Shri Virender Singh Kochar and Shri Kuljeet Singh Kochar along with mother, Mrs. Mohinder Kaur. The jewellery seized from the assessee and other members are jointly owned by different members, therefore, the details of ownership of jewellery are given and sometimes the same are kept in locker which is held by the members other than the owner of the jewellery lying in the locker. Further assessee has filed a wealth tax return wherein assessee has declared jewellery worth of Rs.69,15,418/- as on 31.03.2013 in her wealth tax return. Therefore, the jewellery of Rs.1,94,11,279/- was found from the possession of the assessee and the other jewellery belongs to other family members. It was explained that jewellery worth Rs.27,86,218/- pertains to the husband of the assessee, Shri Harshit Kochar who has made detailed submissions in his reply dated 14.12.2018. Further assessee filed affidavit for the receipt of jewellery of Rs.31,00,000/- as gift from Shri Bhupinder Singh, it was submitted that who has explained the source of this jewellery in his return of income. It was also submitted that other jewellery of other family members i.e. Ms. Aakriti Kochar, Ms. Banni Kochar and Ms. Gavin Kochar was also found in locker and also filed the confirmation from all the above persons before the AO. After considering the above, the AO rejected the same, however he gave a concession of 600 gms. as per CBDT Instruction No.1916 to her and her husband and balance jewellery was brought to tax, accordingly, made an addition of Rs.1,77,73,279/-.
Further during the course of assessment proceedings, assessee furnished a copy of her bank account statement with Punjab National Bank, Gujrawala, New Delhi for the period 01.04.2016 to 31.03.2017. On perusal of the same, AO observed that assessee has deposited cash of Rs.2,50,000/- on 23.11.2016 i.e. during the period of demonetization. Since assessee has not explained source of cash deposited in her account, he proceeded to make the addition under section 69A of the Act.
Aggrieved with the above order, assessee preferred an appeal before the ld. CIT(A) and submitted detailed submissions by the assessee which is reproduced at pages 4 to 23 of the impugned order. After considering the detailed submissions, ld. CIT (A) deleted the additions made by the AO by observing as under :-
“5.1 The main objection of the AO was that the appellant was not able to give one to one reconciliation between the declared jewellery and jewellery found during search and since all the members of the family stay under one roof and exchange of jewellery among the family members is a common practice therefore total jewellery found should be considered as jewellery of the family. 5.2 Regarding first contention, ideally speaking each item of jewellery should match by description & weight of metal/stones/diamonds. However, considering the social set up & culture of India where the jewellery alterations are very common and prevalent in the society, as per the standard methodology, the next best possible methodology of comparing the jewellery items would be i. to compare the Gross Weight of gold jewellery including gold jewellery studded with precious stones found during the search with declared jewellery ii Loose diamonds to be considered separately.
5.3 The second contention of the appellant is found to be correct as all the Panchnamas have same address of 5. KG Marg, New Delhi.
Analysis and Findings 5.4 It is well settled law hat when the gold jewellery in which the diamonds are studded has been accepted by the department as the jewellery received at the time of marriage or other occasion, then, it cannot be said that the diamond studded in the said jewellery were out of the undisclosed income of the appellant. It is also well settled law that where gross weight of jewellery disclosed in regular returns was in excess of gross weight of jewellery found in search, no seizure/addition is permissible. However, the value of diamond studded in gold jewellery is determined only by estimation and actual value of demand studded cannot be determined. ……………. 5.6 It is observed that the jewellery declared/acquired by the appellant or his family members residing with him at the time of search, in any of the following manner can be considered as source of declared jewellery, in the absence of any specific detect pointed by the AO.
5.11 On the basis of above discussion, It is observed that the declared jewellery is more than the jewellery found during search operation. 5.122 Therefore, addition of Rs.1,70,73,279/- made by the A.O. under section 69A on account of unexplained jewellery, is deleted and these grounds of appeal are hereby allowed.”
5. With regard to cash deposit of Rs.2,50,000/-, ld. CIT (A) deleted the addition by referring to the Instruction No.3/2017 dated 21.02.2017, as per which in the case of an individual not having business income, no further verification is required if cash deposited is upto Rs.2,50,000/-. Accordingly, he deleted the above addition.
6. Aggrieved with the above order, Revenue is in appeal before us.
7. At the time of hearing, ld. DR of the Revenue brought to our notice detailed findings of the AO and also page 24 of the order of ld. CIT (A). He submitted that ld. CIT (A) has given benefit to the assessee based on the wealth tax return. He submitted that ld. CIT(A) has erred in not appreciating the additions made by the AO and the relevant jewellery was found at the possession of the assessee. He submitted that ld. CIT (A) has given benefit to the assessee on the question of segregation of jewellery and studded diamonds in absence of any documentary evidences provided by the assessee. He submitted that assessee has not submitted any additional evidences under Rule 46A still he proceeded to give benefit to the assessee with regard to mismatch of jewellery. Therefore, he objected to the findings of ld. CIT (A) and case law relied by him.
8. On the other hand, ld. AR of the assessee brought to our notice page 27 of the appellate order and brought to our notice various jewellery found during the search from the family of the assessee and as per the statement reproduced by the ld. CIT(A) along with other family members found during the search. Further he brought to our notice the declared jewellery available with the assessee as per wealth tax return are as per the chart as 22498.51 gms. He submitted that the total jewellery found during the search are 13,989 gms. and as per the wealth tax return total jewellery declared are 20,698.51 gms.. He submitted that as per the wealth tax return, assessee has declared more quantity of jewellery than the total jewellery found during the search. Therefore, no addition can be made in the case of the assessee and he supported the findings of the ld. CIT (A).
Considered the rival submissions and material placed on record. We observe that during search proceedings, gross weight of the jewellery found during search are 13,989 gms. as per the chart reproduced at para 5.7 of the ld. CIT (A)’s order also reproduced above at page 6 of this order and similarly jewellery declared by the family members including the assessee in their wealth tax return are 20,698.51 gms., refer chart reproduced at para 5.9 of ld. CIT (A)’s order reproduced above at page 7. From the above, it is clear that the assessee along with her family members had declared more in their wealth tax return and what was found during search is much less. Since the declaration of the jewellery in the wealth tax return is nothing but jewellery declared to the Revenue. Ld. DR submitted that assessee has filed additional evidences under Rule 46A and ld. CIT (A) has not followed the due procedure. We observe that jewellery under wealth tax return cannot be considered as additional evidence, therefore, it is part of the record as far as Revenue is concerned, therefore, ld. CIT(A) has elaborately discussed and brought on record the declared gross quantity of jewellery under wealth tax return and what was found during search is much less. Therefore, there is no room to make any additions. Accordingly, we do not see any reason to disturb the findings of the ld. CIT(A) and Ground Nos. 1 to 4 raised by the Revenue are dismissed.
With regard to Ground No.5, we observe that assessee is an individual and has deposited Rs.2,50,000/- during demonetization period. As per the CBDT Instruction No.3/2017, a person not having business income, no further verification is required if cash deposited is upto Rs.2,50,000//-. Therefore, we do not see any reason to disturb the findings of the ld. CIT (A) and Ground No.5 raised by the Revenue is dismissed.
In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open court on this 9th day of July, 2025.