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Facts
A search and seizure action was initiated against the assessee, and during the proceedings, undisclosed gold and diamond jewelry valued at Rs. 83,90,734/- was found and seized. The assessee failed to provide satisfactory details regarding the purchase invoices and source of acquisition for a significant portion of this jewelry.
Held
The Tribunal held that the CBDT Instruction No. 1916, which provides guidelines for the seizure of jewelry, recognizes Indian customs and traditions regarding gifts of jewelry during social functions. It was concluded that the source of jewelry within the specified limits should be considered explained, and the addition made by the Assessing Officer was not justified.
Key Issues
Whether the addition of unexplained jewelry amounting to Rs. 18,22,115/- made by the Assessing Officer and confirmed by the CIT(A) is justified, considering the provisions of CBDT Instruction No. 1916 and prevailing customs regarding gifts of jewelry.
Sections Cited
69A, 234A, 234B, 234C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI SANDEEP SINGH KARHAIL
PER SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER
This is an appeal filed by the assessee against the order passed by the CIT(A), Bangalore on 31/10/2023 in DIN No. ITBA/APL/M/250/2023-24/1057555596(1) for the assessment year 2018-19 on the following grounds:
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“The appella0074e order passed by the learned Commissioner of Income-tax [Appeals]-11, Bengaluru, passed under Section 250 of the Act dated 31 /10/2023, in so far as it is against the Appellant is opposed to law, weight of evidence, probabilities, facts and circumstances of the Appellant's case, may be quashed.
The appellant denies himself liable to be assessed over and the total income declared and retuned by the appellant of Rs. 94,87,730%- in the return of income filed by the appellant, on the facts and circumstances of the case.
The learned Commissioner of Income-tax [Appeals] is not justified ii confirming the addition made by the learned assessing officer on account of jewelleries to the extent of 568.45 grams valuing Rs. 18,22,115/- as unexplained jewellery under section 69A of the Act, on the facts and circumstances of the case.
The learned Commissioner of Income-tax Appeals] and the learned Assessing Officer, were not justified in not granting benefit of 450 grams as per the Notification issued by the Hon'ble CBDT vide its Instruction No. 1916 dated 1994, about 250 grams in the case of unmarried daughter i.e" Miss. Ishani Chetan and 100 grams each for the appellant himself and his son i.e Mr. Devank C Gowda, on the facts and circumstances of the case.
The learned Commissioner of Income-tax [Appeals] and the learned assessing officer were not justified in not considering the family status of the appellant in the society and the creditworthiness of the appellant and ought to have allowed the balance jewellery of about 118.45 grams [i.e. 568.45 grams minus 450 grams] as per clause [iii] of the CBDT instruction No, 1916 dated 11/05/1994, which stipulates that the status of the family cannot! be ignored at the tire of giving benefit of jewellery, on the facts and circumstances of the case.
Without prejudice though not conceding, the valuation adopted by the learned assessing officer and confirmed by the learned Commissioner of Income-tax [Appeals] is not in accordance with the facts and the valuation arrived is substantially higher and the same has to be reduced substantially, on the facts and circumstances of the case.
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Without prejudice, to the right to seek waiver, as per the parity of reasoning of the decision of the Hon'ble Apex Court in the case of Karanvir Singh 349 ITR 692, the Appellant denies himself liable to be charged to interest under section 234 A, 234 B E. 234 C of the Income Tax Act on the facts and circumstances of the case. The appellant contends that the levy of interest under section 234 A, 234 B Et 234 C of the Act is also bad in law as the period, rate, quantum and method of calculation adopted by the learned assessing officer on which interest is levied are not discernible and are wrong on the facts of the case. 8. The appellant craves leave to add, alter, amend, substitute or delete any or all of the grounds of appeal urged above.
The brief facts of the case are that a search and seizure action u/s 132 of the Act was initiated in the case of Shri Doddahalahalli Kempegowda Shivakumar and others on 02/08/2017 and the assessee was also covered under the search and certain incriminating documents were found and seized. The assessee filed return of income u/s 139 of the Act on 27/10/2018. Accordingly, the statutory notices were issued to the assessee. The copy of satisfaction note was also given to the assessee vide letter dated 03/12/2019. During the search proceedings, the undisclosed gold and diamond jewellary were found and seized as per inventories J/HNC, J/HNC/1 and J/HNC/2 and the total valuation of the jewellery as per authorized valuer was Rs.83,90,734/-. Accordingly, the details were asked from the assessee viz., the details of purchase invoice of each of the items of jewellery, source of purchase
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along with the statement of affairs cash flow statement and copy of the Wealth Tax return filed earlier to prove that Wealth Tax has been paid on such jwellary. The assessee did not provide the same, therefore, show cause notice was issued to the assessee. The assessee filed submission which is incorporated in the assessment order which as under:-
“3. Statutory Notice and compliance: 3.1. The assessee filed his Return of Income for AY 2018- 19 u/s 139 of the Income-tax Act, 1961 on 27.10.2018 declaring total income of Rs, 94,87,730/-. 3.2. Subsequently, a notice u/s. 143(2) of the Income-tax Act, 1961 was issued to the assessee on 21.08.2019 requiring the assessee to produce or cause to be produced any documents, accounts and any other evidence on which it may rely in support of the return of income filed by it for AY 2018-19 and the same was duly served. 3.3 Further a notice u/s 142(1) of the Income-tax Act, 1961 was issued to the assessee on 29.10.2019 to furnish certain details as per notice sent. 3.4 Further, during the course of assessment proceedings, the assessee had sought a copy of the satisfaction note recorded before issue of Notice under Section 153C. The same has been given to assessee vide letter dated 03.12.2019. 3.5 In response to the aforesaid notices, the assessee through his Authorized Representative Mr. Girish Hoyasala, CA appeared on different days and was heard. The submissions made by the assessee has been examined and discussed below: 4. Unexplained jewellery : 4.1 During the course of search in the case of Sri. D.K. Shivakumar, the residential premise of the assessee at tf64/65, Gangadhareshwara Nilaya, B.M. Road, Hassan was also subjected to search and seizure action u/s 132 of Income-tax Act, 1961 on 02-08-2017.
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4.2 During the course of search proceedings, the undisclosed Gold and Diamond jewellery were found and seized as per inventories J/HNC, J/I-INC/1 and J/HNC/2. The total valuation of these jewelry as per authorized valuer is Rs.83,90,734/-. 4.3 In this regard, a show-cause was issued to the assessee requesting him to provide the following details in this office on or before 05.11.2019: a) The details of purchase invoices of each of the items of jewellery. b) The source for purchase of the same along with statement of affairs and cash flow statement. c) The Copies of wealth tax return that have been filed earlier to prove that wealth tax has been paid. Further, in the absence of the above details, the assessee was asked to show cause why the same should not be taxed as unexplained jewellery under Section 69A of the Act for AY 2018-19. Submission of the assessee:- 4.4 In response to the aforementioned notices, the authorised representative appeared before the undersigned and was heard. Submissions made by the assessee in response to said notices were examined carefully and placed on record. The assessee made the following submissions: " it is submitted that the mother of the assessee Smt. Sujatha Narayana had filed her Return of net wealth as at 31 March, 2007 and 31e March, 2008 on 02/12/2008 and 04/09/2009 respectively wherein total of 2,984.20 grams of gold was declared and accordingly paid wealth tax on total taxable value. It is further submitted that Snit. Rachitha Chetan, wife of the assessee has shown Jewellery valuing about 40,36,613/- in her balance sheet, which comprise of gold weighing 1,247.25 Grams and diamond weighing 12.19 Carat. The some has been accounted and shown in her Balance Sheet for the assessment year 2016-17. Thus, the total accounted and available jewellery put together of the family of the assessee is around 4,231.45 grams of gold. Out of the total gold jewellery found 4,799.67 grams a total of
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2404.03 grams were not seized and whereas the balance 2,395.04 grams are seized, which are all explained as mentioned above. As submitted in earlier paragraphs the total Jewellery in the possession of the family members of the assessee are about 4,231.45 Grams of Gold Jewellery. Thus, the total Gold Jewellery found in the residential premises of the assessee and inventorised is about 4,799.67 Grams. Thus, the jewellery found and seized at the time of search have all been disclosed to the department which fact may kindly be appreciated by your goodself. It is further submitted that as per the Circular issued by the Board 250 Grams is allowed in the case of unmarried lady and per male member of the family 100 Grams of Gold need not be seized. In the instant case the assessee has a unmarried daughter for which 250 Grams have to be allowed and similarly he has a son being a male member for which 100 Grams has to be allowed and another 100 grams have to be allowed for the assessee. Thus, the total extent of gold which requires to be allowed is 450 grams. it is submitted that circular issued by the board are binding on the department and it is humbly requested your goodself to kindly consider 450 grams of gold for the purpose of calculating the extent of possession of gold by the family of the assessee. It is also relevant to bring to your goodself's kind notice that on the occasion of birth of his son and daughter and also on various occasions the other family members of the assessee and nearer and dearer ones have mode gifts on important occasions i.e. naming ceremony, birthdays, etc., which fact may kindly be considered by your goodself. " 43 Further, the assessee had requested for a copy of the valuation report. As per the re nest of the assessee, the copy of the valuation report also has been provided to the assessee vide letter dated 7,12.2019. Observations: 4.6 The submissions of the assessee has been perused and the same are not acceptable in view of the discussion in following lines:
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The assessee has in his reply stated that the wife of the assessee has shown Rs.40,36,613in her balance sheet comprising of 1,247.25 Grams and diamond weighing 12.19 Carat. 2. Further, the assessee has stated that the mother of the assessee has filed wealth tax return on 02/12/2008 and 04/09/2009 respectively wherein total of 2,984.20 grams of gold was declared. With regard to this, the assessee was asked to furnish an original copy of the wealth tax return and also the accompanying valuation report in order to verify the manner in which valuation had been done. With respect to the same, the assessee has stated that the valuation was adopted based on the rate of gold and silver declared in the Finance Act of the respective years. 3. The assessee has stated that no valuation report was filed along with copies of the wealth tax return. Therefore, there is no means to verify the veracity of the quantum/valuation of the jewellery shown by the assessee. 4.7 Further, the assessee hasnot provided any bills/vouchers with respect to the jewellery to explain the source of the same. 4.8 The assessee has not provided any details of how much of jewellery was received as gift, how much of it was ancestral jewellery, how much of it belonged to different family members so on. 4.9 The assessee has not provided details of item-wise details of additions and deletions of gold jewellery in the books of the assessee and the family members 4.10 Further, the assessee has largely placed reliance on CBDT Instruction 1994 dated 1105-1994 which is given as follows: Instances of seizure of jewellery of small quantity in the course of operation under section 132 have come to the notice of the Board. The question of a common approach to situation where search parties come across items of jewellery has been examined by the Board and following guidelines are issued for strict compliance. i) In the case of a wealth-tax assessee, gold jewellery and ornaments found in excess of the gross weight declared in the wealth-tax return only need to be seized.
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ii) In the case of a person not assessed to wealth-tax gold jewellery and ornaments to the extent of 500 Gms. per married lady 250 Gms per unmarried lady and 100 Gms. per male member of the family, need not be seized. iii) The authorized officer may having regard to the status of the family and the customs and practices of the community to which the family belongs and other circumstances of the case, decide to exclude a larger quantity of jewellery and ornaments from seizure. This should be reported to the Director of Incometax/Commissioner authorising the search all the time of furnishing the search report. iv) In all cases, a detailed inventory of the jewellery and ornaments found must be prepared to be used for assessment purposes. 4.11 From the above, it is clearly seen that the scope of the instruction is limited only to seizure and does not extend to assessment proceedings. In fact, the instruction clearly states that for purposes of assessment, an inventory of jewellery is to be prepared. This shows that a distinction is made between the two phases — 1) seizure and 2) assessment. This shows that the entire Jewellery found is to be considered (Or the purpose of assessment, for the purpose of explaining, source of the same and so on. S. Conclusion : 5.1 In view of the above discussion the assessee has provided explanation for sources of the jewellery to the extent Of 1, 17.25 gm of jewellery. However, the rest of the jewellery to the extent of 3,552.4; gm of jewellery is treated as unexplained jewellery as the assessee has failed to explain the sources of the jewellery to the quantum of 3552.42 Grams and stands unexplained in his hands, 'Therefore, the balance quantity of jewellery is hereby brought to tax during the Al' 2018-19, The amount taxed is as below: Valuation of total jewellery X weight of jewellery that remains unexplained ------------------------------------------------------------------------ Total jewellery found during the course of search = 1,53,85,625 X 3552.42 --------------------------------- = Rs. 1,13,86,946/-
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This sum of Rs.1,13,86,946/- is brought to tax as unexplained investment under Section 69A of the Act.”
From the above submission, the AO noted that the wife of the assessee has shown Rs.40,36,613/- in her balance sheet comprising of Rs.1,247.25 grams of gold and diamond weighing 12.19 carat and the mother of the assessee has filed Wealth Tax return on 02/12/2008 and on 04/09/2009, wherein the total of 2984.20 grams of gold was declared. The AO also asked for valuation report and copy of the Wealth Tax return but the assessee was not unable to file the same, therefore, the AO noted that bills and vouchers were not filed with respect to the purchase of the jewellery and there was no details of any gift received and how much ancestral jewellery and how much belongs to different family members. The assessee relied on the CBDT Instruction No.1994 dated 11/05/1994. Accordingly, the AO concluded that the assessee has provided explanation for the source of the jewellery to the extent of 1,247.25 grams of jewellary and rest of the jewellery to the extent of Rs.3,552.42 grams of jewellary was treated as unexplained jewellery as the assessee has failed to explain the sources of jewellery to the quantum of 3,552.42 grams. Accordingly, the AO calculated by applying the following formula and completed the assessment, which is as under:-
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5.1 In view of the above discussion the assessee has provided explanation for sources of the jewellery to the extent Of 1,17.25 gm of jewellery. However, the rest of the jewellery to the extent of 3,552.4; gm of jewellery is treated as unexplained jewellery as the assessee has failed to explain the sources of the jewellery to the quantum of 3552.42 Grams and stands unexplained in his hands, 'Therefore, the balance quantity of jewellery is hereby brought to tax during the Al' 2018-19, The amount taxed is as below: Valuation of total jewellery X weight of jewellery that remains unexplained ------------------------------------------------------------------------ Total jewellery found during the course of search = 1,53,85,625 X 3552.42 --------------------------------- = Rs. 1,13,86,946/-
This sum of Rs.1,13,86,946/- is brought to tax as unexplained investment under Section 69A of the Act.”
Aggrieved from the order of the AO, the assessee filed appeal before the CIT(A).
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Before the CIT(A), the assessee filed detailed submissions. During the appellate proceedings, the assessee in support of his mother’s jewellery, submitted wealth tax assessment orders for the assessment years 2005-06, 2006-07 and 2007-08 dated 26/12/2007 26/12/2008 and 26/12/2008 respectively. It was noted that the mother of the assessee has been showing the jewellery in her financial statement, therefore, the jewellery to the extent of 2984.20 grams cannot treated as unexplained jewellery. Now there was a balance of 568.45 grams ( 3552.24 - 2984.20 grams). The assessee strongly relied on the CBDT Instruction No.1916 dated 11/05/1994 and stated that there are two male members and one unmarried daughter in his family, therefore, the assessee is eligible for deduction of 450 grams of the gold jewellery even in absence of bills. He further submitted that each female married member is eligible for deduction upto 500 grams, over and above declared jewellery. However, this contention was not accepted by the CIT(A) and the also referred to the press release dated 01/12/2016 issued by Government of India, Ministry of Finance, Department of Revenue, Central Board of Direct Taxes. He also relied on the judgment quoted in his order. Accordingly, 568.45 grams of
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Rs.18,22,115/- remained unexplained, hence he partly allowed the appeal of the assessee.
The ld.AR reiterated the submission made before the lower authorities and submitted that the CIT(A) has wrongly interpreted the Instruction issued by the CBDT No.1916 dated 11/05/1994 as well as the press release issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Direct Taxes dated 16/12/2016. As per Bullet No.3, it is very much clear when even if the searched person is unable to match with the income returned, the jewellery is not to be seized, it clearly show that it is not required to explain further with the documentary evidence commensurating with the income. He also submitted that the assessee is filing return of income since long back and declaring handsome income during the impugned assessment year at Rs.94,87,730/-. The subject income included in the year is because of the search and the assessee is also filing return regularly, the status of the same may be verified from the return. The assessee and their family members belong to high society and, therefore, gift from the relatives time to time on various occasions like birth day, marriage
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anniversary, festivals and family functions cannot be denied. He relied on the following judgments:- 1) CIT VS. Ghanshyam Das Johri [TS-5770-HC- 2013 (All) 2) CIT Vs. Satya Narain Patni [TS-5349-HC-2014 (Rajasthan) [2014] 366 ITR 0325 3) Rakesh Bansal Vs. ACIT [TS-7811-ITAT-2019 (Chandigarh)-O] 4) CIT Vs. Vegetable Products Ltd. [1973] 88 ITR 192 (SC) 5) Shri M Sunil Kumar Vs. DCIT [TS-5328-ITAT- 2017(Bangalore)-O], ITA No. 1144/Bang/2016
The ld. DR strongly supported the order of the CIT(A) and she submitted that the CIT(A) has considered the entire submissions of the assessee and also referring to press release dated 01/12/2016 is clearly stated that it is not to be seized during the course of search and seizure proceedings. However, it is not demonstrated that while making the assessment, this should not be considered. Therefore, the CIT(A) has rightly upheld the 568.45 grams and also relied on the judgment of co-ordinate bench in the case of M Sushil Kumarvide ITA No.644/Bang/2015 dated 30/12/2015. She further submitted that in the
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judgment relied by the ld.AR of the assessee, the press release issued on 01/12/2016 has not been considered, therefore, the case law cited by the ld.AR of the assessee is not applicable in the present facts of the case.
Considering the rival submissions here the dispute raised by the assessee is only for 568.45 gms of jewellery which were not accepted by the revenue authorities out of total gold/ornaments about 4,799.67 Grams found during the course of search & seizure operation u/s 132 of the Act.. The AO accepted in the hands of wife to the extent of gold of 1247.25 gms. during the assessment proceedings, and CIT (A) accepted during the appellate proceedings in the hands of mother to the extent of 2984.20 gms. as explained jewellery. Both the authorities below have not accepted the plea of the assessee regarding benefit of Circular No.1916 of 11/05/1994 for allowing the 500 grams for married female members, 250 grams for unmarried female members and 100 grams for male members of the assessee’s family and not accepted the judgements cited by the ld. AR of the assessee on the reason that Press Release dated 1.12.2016 was not referred in
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those decisions. The ld.DR vehemently relied on the Press release dated 01/12/2016.
We note that the assessee belongs to high society and declaring income of approximately Rs.90 lakhs. The source of 568.45 grams of the jewellery explalined by the assessee as being held by the family is with the general practice in Hindu families whereby jewellery is gifted by the relatives and friends at the time of social functions, viz., marriages, birthdays, marriage anniversary and other festivals is in consonance with the general customs. These gifts are customary and customs prevailing in a society cannot be ignored. Thus although the instruction/press release dated 1.12.2016 strongly relied on by the ld. DR had been issued as clarifications for the purpose of non-seizure of jewellery during the course of search, the basis for the same recognizes customs prevailing in Hindu society. In the circumstances, unless the revenue shows anything to the contrary, it can safely be presumed that the source to the extent of 568.45 grams of jewellery explained by the assessee as belonging to family members as stated in the instruction/press release stands explained. In the case of assessee there are two female married members and one unmarried female member and
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two male members, in the case of lady female married female member they are eligible for extra benefit of 500 grams each over and above the explained jewellery as allowed the revenue authorities. Accordingly 568.45 grams is less than the specified limits as per the above Instructions/press release. Therefore, 568.45 grams of jewellery is treated as explained jewellery in the hands of the assessee.
To support our above view, reliance is placed on the decision of Hon'ble Rajasthan High Court in the case of CIT v. Satya Narain Patni [2014] 46 taxmann.com 440/224 Taxman 312/336 ITR 325 (Raj.), in which it has been held as under:-
“10. Therefore, in our view, the Tribunal has rightly considered the said issue and we are also in conformity with the order passed by the Tribunal. We are also of the view that the Central Board of Direct Taxes keeping in view the status of the family, customs and practice of the community, came down with the said circular and one has to go with the weight and not with the value as the value may fluctuate over the years. The Tribunal has also appreciated the fact on record that the marriage of three sons were performed in the year 1996, 2000 and 2003 and all the marriages including the assessee and three sons were performed prior to 2003. It is also on record that the statement of various family members were recorded and none has stated that these are not personal wearing jewellery and same were received by the respective ladies/daughter-in-law on/or at the time of their marriages either from the parental side or in-laws side and even subsequently at the time of birth of their children. 11. On perusal of the circular of the Board, quoted supra, it is clear that in the case of wealth tax assessee, whatever gold jewellery and ornaments have been found and declared in the wealth tax return,
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need not be seized. However, sub-clause (ii) prescribes that in case of a person not assessed to wealth tax gold jewellery and ornaments to the extent of 500 gms per married lady, 250 gms per unmarried lady and 100 gms per male member of the family need not be seized. Sub- clause (iii) also prescribes that the authorised officer may, having regard to the status of the family, and the custom and practices of the community to which the family belongs and other circumstances of the case, decide to exclude a larger quantity of jewellery and ornaments from seizure. 12. It is true that the circular of the CBDT, referred to supra dt. 11/05/1994 only refers to the jewellery to the extent of 500 gms per married lady, 250 gms per unmarried lady and 100 gms per male member of the family, need not be seized and it does not speak about the questioning of the said jewellery from the person who has been found with possession of the said jewellery. However, the Board, looking to the Indian customs and traditions, has fairly expressed that jewellery to the said extent will not be seized and once the Board is also of the express opinion that the said jewellery cannot be seized, it should normally mean that any jewellery, found in possesion of a married lady to the extent of 500 gms, 250 gms per unmarried lady and 100 gms per male member of the family will also not be questioned about its source and acquisation. We can take notice of the fact that at the time of wedding, the daughter/daughter-in-law receives gold ornaments jewellery and other goods not only from parental side but in-laws side as well at the time of 'Vidai' (farewell) or/and at the time when the daughter-in-law enters the house of her husband. We can also take notice of the fact that thereafter also, she continues to receive some small items by various other close friends and relatives of both the sides as well as on the auspicious occasion of birth of a child whether male or female and the CBDT, looking to such cutoms prevailing throughout India, in one way or the another, came out with this Circular and we accordingly are of the firm opinion that it should also mean that to the extent of the aforesaid jewellery, found in possession of the varoius persons, even source cannot be questioned. It is certainly 'Stridhan' of the woman and normally no question at least to the said extent can be made. However, if the authorized officers or/and the Assessing Officers, find jewellery beyond the said weight, then certainly they can question the source of acquisation of the jewellery and also in appropriate cases, if no proper explanation has been offered, can treat the jewellery beyond the said limit as unexplained investment of the person with whom the said jewellery has been found. 13. Admittedly, looking to the status of the family and the jewellery found in possesssion of four ladies, was held to be reasonable and therefore, the authorized officers, in the first instance, did not seize
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the said jewellery as the same being within the tolerable limit or the limits prescribed by the Board and thus, in our view, subsequent addition is also not justificable on the part of the Assessing Officer and rightly deleted by both the two appellate authorities namely' CIT(A) as well as the Tribunal. 14. It can also be observed here that prior to 1992, when the exemption limit under the Wealth Tax Act was about Rs.1,00,000/- or Rs.1,50,000/-, then in most of the cases, returns were filed under the Wealth Tax Act because even in case of possession of 500 gms per lady and the other assets namely; capital, investments in firms/shares, landed property etc. etc. being taxable return of wealth were invariably filed by the assessees. However, by the Finance Act, 1992 w.e.f. 01/04/1993 drastic change was introduced under the Wealth Tax Act where only some assets u/s 2(ea) came within the perview of the definition of an "Asset" under the wealth tax and by and large, the other assets namely; liquid, capital investments in firms/shares, one house property, commercial assets were exempt and even the limit of other assets was raised to 15 lacs (for the Assessment Year 1993-94 to 2009-10) and thereafter, by and large, even the assessees, who were furnishing returns prior to 01/04/1992, in view of the drastic amendment made under the Wealth Tax Act, chose not to file wealth tax return as there was no liability for furnishing wealth tax returns. That does not mean that whatever assets were there in their possession, not disclosed under the Wealth Tax Act, remained undisclosed. May be, later on, on account of increase in the gold/silver prices, value of gems/ stones, value of jewellery may have exceeded but that does not mean that if a person has not filed wealth tax return, then jewellery even to the said extent of 500 gms prescribed by the aforesaid circular, became undisclosed. Admittedly, it is not the case of the revenue that the jewellery, so found, which has been prescribed hereinabove, was not admitted by the family members at the time of search. All the ladies in the family admitted that the jewellery found were all their own and some of the jewellery was lying in custody and control of their mother-in-law and in Indian conditions, it happens that the daughter-in-law keeps her jewellery with her mother-in-law or/and head of the family and takes the same whenever required for some occasion in the family. Even otherwise, the jewellery is personal wearing in nature and the revenue has not placed any material on record to show that the items, which were found, were not personal wearing of the ladies. 15. Considering the above facts and circumstances, in our view, the Tribunal has correctly analyzed the Circular of the Board and we do not find any infirmity or perversity in the order of the ITAT so as to call for any interference of this Court. In our view, no substantial question of law arise out of the order passed by the ITAT.”
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Further in the case of CIT Vs. Ratanlal Vyaparilal Jain reported in [2010] 2 taxmann.com 997 (Guj) it is held as under:-
“8. Mr. M. R. Bhatt, learned Senior Advocate for the appellant revenue invited attention to the impugned order of the Tribunal to submit that the Tribunal has deleted the entire addition by placing reliance upon the CBDT circular No. 1916 dated 11-5-1992. It was urged that the said circular merely lays down guidelines for seizure of jewellery and ornaments in the course of search and the same does not lay down that the quantity of jewellery mentioned therein is deemed to be explained. 9. As can be seen from the impugned order of the Tribunal, the Tribunal has referred to the CBDT circular No. 1916 and observed that in an earlier decision of the Tribunal, the Tribunal has accepted the applicability of the circular and has held that having regard to the circular and size of the family, the ornaments to the extent specified in the circular should be accepted as reasonable. The Tribunal, accordingly, found that the jewellery held by the assessee and his family members was well within the limit laid down under the CBDT circular and accordingly, deleted the whole addition on the ground that the jewellery held by each of the family members was below the limits specified in the said circular. 10. Though it is true that the CBDT circular No. 1916 dated 11-5-1994 lays down guidelines for seizure of jewellery and ornaments in the course of search, the same takes into account the quantity of jewellery which would generally be held by family members of an assessee belonging to an ordinary Hindu household. The approach adopted by the Tribunal in following the said circular and giving benefit to the assessee, even for explaining the source in respect of the jewellery being held by the family is in consonance with the general practice in Hindu families whereby jewellery is gifted by the relatives and friends at the time of social functions, viz., marriages, birthdays, marriage anniversary and other festivals. These gifts are customary and customs prevailing in a society cannot be ignored. Thus although the circular had been issued for the purpose of non-seizure of jewellery during the course of search, the basis for the same recognizes customs prevailing in Hindu society. In the circumstances, unless the revenue shows anything to the contrary, it can safely be presumed that the source to the extent of the jewellery stated in the circular stands explained. Thus, the approach adopted by the Tribunal in considering the extent of jewellery specified under the said circular to be a reasonable quantity, cannot be faulted with. In the
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circumstances, it is not possible to state that the Tribunal has committed any legal error so as to give rise to a question of law.” 12. Further in the decision of the Delhi Bench of the Tribunal in the case of Mrs. Divya Devi v. ACIT in [IT Appeal No. 6397 (Delhi) of 2012, dated 16-5-2014], wherein it is observed that it is true that the CBDT Instruction No. 1916, dt. 11th may, 1994 lays down guidelines for seizure of jewellery and ornaments. In the course of search, the same takes into account the quantity of jewellery which would generally be held by family members of an assessee belonging to an ordinary Hindu household. In the circumstances, unless the Revenue shows anything to the contrary, it can safely be presumed that the source to the extent of the jewellery stated in the circular stands explained.
Further in the case of Shri Jerambhai B. Khokharia in ITA No. 2613/Ahd/2009, the Ahmedabad Tribunal vide order dated 5-11-2015, has held that it is ample clear that gold jewellery found to the extent of limit mentioned in the circular is treated as explained and this can be clearly applied in the assessee's case, wherein no specific deduction of gold jewellery possessed by family members and grand children was given by the Assessing Officer from the total gold jewellery found at the time of search and seizure operation and differential gold jewellery
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of 1924.22 gr. is the gold jewellery possessed by the female members and minor children of the assessee's joint family and this quantity of 1924.22 gm. is well within the total limit of jewellery at 2100 grms. as per the CBDT instruction no. 1916 dated 11-5-1994.
The ld.DR has relied on the judgment of M Susheela Kumar, KGF Vs. DCIT reported in ITA No.644/Bang/2015 for the assessment year 2012-13 is not applicable since in the judgmenets cited by us Supra, is the judgment of higher forum and higher forum judgment will prevail . We noted that ld. AR of assessee has also relied on the judgment of CIT Vs. Vegetable Producdts Ltd., [1973] 88 ITR 192 (SC). Accordingly, considering the above judgments we allow the appeal of the assessee.
In the result, appeal of the assessee is allowed. Order pronounced in court on 18th day of April, 2024 as per the Income Tax Appellate Tribunal Rule 34.
Sd/- Sd/- (SANDEEP SINGH KARHAIL) (LAXMI PRASAD SAHU) Judicial Member Accountant Member Bangalore, Dated : 18.04.2024. Vms
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Copy to:
The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. By order
Assessment Registrar, ITAT, Bangalore