SMT. JYOTI BHALLA,CHANDIGARH vs. ITO, WARD-3(2), CHANDIGARH

In the present appeal, the assessee has raised the following grounds of appeal:

In ground No. 1, the assessee has challenged the sustenance of addition of Rs. 10,00,000/- under section 68 of the Act.

1 In this regard, briefly the facts of the case are that during the course of search operation conducted by the CBI on 12/09/2016, cash to the tune of Rs. 14.15 Lacs was found from the locker maintained by the assessee with Indian Overseas Bank (IOB), Sector-22, Chandigarh.

2 During the course of assessment proceedings, the assessee was asked to justify the source of cash so found in her locker. In her reply, she submitted that an amount of Rs. 10,00,000/- has been received from her husband, Rs. 20,000/- from her niece and Rs. 3,50,000/- from Pine Drive Resorts for land transaction and the remaining amount of Rs. 45,000/- was her own money out of past savings.

3 The AO accepted the assessee’s explanation regarding Rs 4.15 lacs however explanation regarding Rs. 10,00,000/- received by the assessee from her husband was not accepted and the addition was made under section 68 of the Act. In this regard, the relevant findings of the AO are contained at para 3.2 to 3.4 and the contents thereof read as under:

Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A) who has since sustained the said addition. Against the findings and the direction of the Ld. CIT(A), the assessee is in appeal before us.

During the course of hearing, the Ld AR submitted that in respect to Rs. 10,00,000/- found from the locker, the assessee has stated that she has received cash from her husband which was received by him as an advance against his land situated in Himachal Pradesh in respect of which he has entered into an agreement to sell with two other persons. This explanation was submitted by assessee at the time of CBI search too i.e. 12/09/2016 and is part of locker inspection memo dated 12/09/2016 which is placed at Paper Book at Page No. 35-37. 5.1 It was submitted that, in order to substantiate her claim, the assessee had submitted following documentary evidence before the Id. AO: • Affidavits, Income tax Returns and Bank Statements of Sh. R.K. Goel and Sh. Krishan Joshi (intended buyers) • Agreement to sell entered between assessee's husband and above persons • Statement recorded before the Id. AO by both the above mentioned persons

2 It was further submitted that as per the settled law prevailing for the said relevant year under consideration i.e. AY 2017-18, in the instant case, assessee was only required to explain the source of such money and not the source of source and the assessee had duly discharged her onus for explaining her source. Although the initial burden of proof lies on the assessee to explain the source, however the said onus of proof is not a static one. The initial burden of proof to explain the source have duly been explained by the assessee by stating that the same was received by her from her husband who have further received it as advance against land along with relevant documentary evidence.

4 It was further submitted that he said explanation from the assessee has been there since the inspection of locker by CBI Team and thereafter by Income Tax Investigation team. This is not the case where the assessee has come up with an afterthought before the Id. AO during the assessment proceedings.

5 Reliance was placed on the Chandigarh Bench decision in the case of ITO vs. Swaran Fastners (2021) 89ITR(T) 650 wherein the Bench held as under:

We have considered the submissions of both the parties and perused the material available on the record. In the present case it is noticed that the assessee explained the source of the partner Smt. Swaran Kanta for depositing the amount of Rs. 20,50,000/- in the capital account. The said amount was received by the partner from her son Shri Puneet Gupta who is NRI, the transaction through banking channel out of the NRE saving bank account of Shri Puneet Gupta. Therefore the addition made by the AO was not justified. Moreover, the amount was received by the assessee firm from the partner who explained the source for the same and if at all any addition was called for that was required to be made in the hands of the partner and not in the hands of assessee firm. On an identical issue the Hon'ble Juri ictional Punjab & Haryana High Court in the case of Nahar Singh Sadhu Singh (2002) 253ITR 471 held that "the partner had the requisite amount to invest towards the capital account of the firm. Since no evidence has been pointed out against that finding the amount could not be assessed as income from undisclosed sources of the firm"

6 Reliance was also placed on the Chandigarh Bench decision in the case of Nirmal Rani vs. DCIT (2017) 163 ITD 491 wherein the Bench held at Para 19 of the order has held as under: “…by asking the assessee to file copied of the Income Tax Returns and also their bank statements in their country of residence, the revenue is indulging in the exercise of verifying the source of the source which is settled law, cannot be done in this case. The onus to explain the credit being on the assessee, reflects the general rule of law of evidence codified in Section 106 of the Evidence Act, 1872, as per which the source of income is a matter with the exclusive knowledge of the assessee which he has to prove and demonstrate. It is for this reason only that the source of source, which is not within the knowledge of the assessee at all, is not required to be proved by the assessee. The addition has been made merely on the basis of suspicion, without any iota of evidence to even lead to the fact that the amount received as gifts were actually the assessees' income only. This cannot be the basis of making an addition under section 68 in the present case.”

7 It was further submitted that with respect to explanation of source of source in the case of any assessee, first proviso has been inserted under Section 68 only w.e.f 1/4/2023 by the Finance Act, 2023 and no such provisions stood before that.

8 It was further submitted that without prejudice to above, even when the assessee had presented the parties (intended buyers) before the Id. AO with whom her husband have entered into an agreement, the Id. AO presumptively rejected their explanation on the ground that there is a time gap in the cash withdrawal and cash given to assessee's husband by such parties by stating that cash may have been used for any other purposes.

9 It was submitted that both Shri R K Goel as well as Shri Krishan Joshi have got their statements recorded before the Id. AO during the assessment proceedings and stated that they have entered into an agreement to sell (attached at Page No. 50-51 of the Paper Book) with assessee's husband. Even with respect to source of cash for entering into such agreement, both the parties have submitted their banks statements and shown cash withdrawals to justify their claim. Even both the persons i.e. R K Goel and Krishan Joshi have submitted affidavits (attached at Page No. 38-39 and 43-44 of the Paper Book) before the Id. AO.

10 It was submitted that the Id. AO simply rebutted their statements by stating that there is a time gap of one to three months between the withdrawal and entering of agreement and stating that the said cash withdrawal must have been used somewhere else without bringing any evidentiary proof of the same. Thus the said observation of Id. AO is purely on the basis of surmises and presumptions as and when the parties who have given cash to assessee's husband have given statements before the Id. AO that cash was given by them. Merely because there is a time gap does not form the basis of additions.

11 It was further submitted that even the Ld. CIT(A) as per para 5.1.4 of his appellate order has agreed with the assessee’s contention and stated that "the Id. AO had only guessed that the funds may have been used for any other purpose as there was a gap of approx. 03 months between the cash withdrawal and date of agreement to so called purchase of land from Sh. Gaurav Bhalla. There was no such enquiry led proof in possession of Id. AO to conclude like that." It was submitted that the onus was on the AO to bring out the relevant material on record that these persons have used the money so withdrawn for any other purposes.

12 It was submitted that the onus was on the AO to bring out the relevant material on record that these persons have used the money so withdrawn for any other purposes. In support, reliance was placed on following judgments:

13 It was further submitted that during the assessment proceedings, the assessee has categorically stated that as the permission required u/s 118 of the HP Tenancy & Land Reform Act from Government of Himachal Pradesh was pending, the deed could not be registered by her husband in the name of intended buyers who were Non-Agriculturist. Even as per the agreement to sell, both the parties i.e. buyer and seller have agreed that permission u/s 118 will be applied by the buyer and once received, buyer will inform the seller for execution of Sale deed. However, this does not stop any individual for entering into an agreement and the said agreement to sell is as much evidence as the registered sale deed would have been as stated by Hon'ble ITAT, Kolkata Bench in the case of Gautam JhunJhunwala (ITA No. 1356/Kol/2017) 173 ITD 93 (2018) wherein it stated as under: "The Hon'ble Supreme Court has opined that when an unregistered document is tendered in evidence, not as evidence of a completed sale, but as proof of an agreement of sale, the deed can be received in evidence making an endorsement that it is received only as evidence of an oral agreement of sale under the proviso to Section 49 of the Act of 1908. The Hon'ble Apex Court went on to observe that admission of an unregistered sale deed by the Court in such cases would be in consonance with the proviso appended to Section 49 of the Act of 1908. 9. In the light of the discussion, we are of the opinion that though the agreement to sell is not registered, the vendee can seek decree of specific performance on the basis of unregistered agreement to sell in accordance to law as laid by the Hon'ble Delhi High Court in Devinder Singh Vs. Hari Singh (decision on 26.04.2017) and Hon'ble M.P. High Court in Akshay Doogad Vs. Dr. Laxmanrao Dhole (decision on 18.08.2015). So as discussed in para 5 & 6 supra, in the facts and circumstances of the case, we allow the appeal of the assessee and direct grant of exemption u/s. 54 of the Act."

14 Even as per the SLP no. 14884/2022 between R. Hemalatha vs. Kashthuri decided on 10/4/2023, Hon'ble Supreme Court held as under:

15 It was submitted that an agreement made on plain paper is valid and can be used in the Court as evidence, except that the Court would require you to pay the stamp fee with a penalty if the nature of the agreement is such that it requires to be stamped and registered. Section 35 [1] of the Indian Stamp Act, 1899, specifically states that a document that any person relies on to be used as evidence cannot be used as such if it is not duly stamped and unregistered. One may pay the deficit stamp duty, as well as any penalties imposed by the collecting authority, in order for it to be enforceable and valid.

16 It was submitted that when both the intended buyers themselves appeared before the Id. AO, gave their statements that they have entered into an agreement to sell with the assessee's husband, produced relevant documents, the Id. AO and Id. CIT(A) contention that as the agreement not being on judicial stamp paper and not notarised is a mere suspicion on their part without considering the fact that both the parties have confirmed that they have entered into such agreement and money have exchanged hands. As with respect to non-execution of sale deed, as stated above, assessee has stated that as the permission required u/s 118 of the HP Tenancy & Land Reform Act from Government of Himachal Pradesh was pending, the deed could not be registered by her husband in the name of intended buyers who were Non- Agriculturists. Even as per the latest Jamabandi of said land in question, the said restriction is still applicable, and both the parties are in consensus of the said facts.

17 It was accordingly submitted that considering the above provisions of law and judgments, there was nothing on record from the facts and circumstances of the case that the assessee's husband and the intended buyers could not enter into agreement and furthermore such cash withdrawn by the intended buyers was not available for entering into an agreement to sell, with the assessee's husband. Thus the said additions are requested to be deleted and necessary relief be provided to the assessee.

Per contra, the ld DR has vehemently argued the matter and relied on the findings of the lower authorities and our reference was drawn to the relevant findings as contained in para 5.1.3 to 5.1.8 of the impugned order and the contents thereof read as under: “5.1.3 All the facts and circumstances related to the impugned addition of Rs. 10,00,000 are duly considered. The appellant had claimed that out of the total amount of Rs. 14,15,000 cash found in the locker during the CBI Search, the source of Rs. 10,00,000 was cash received from her husband Shri Gourav Bhalla who had taken the amount from two persons viz. Shri R.K. Goel and Shri Krishan Joshi (for purchasing Land) Details & Sources of Cash: Sr. No. Details of Cash Weight (Approx.)

Niece Rs. 20,000/- 4 Cash from Pine Drive Rs.3,50,000/- Resorts for land Total Rs.14,15,000/-

4 During the course of verification both Sh. R.K. Goel and Sh. Krishan Joshi failed to furnish their source of payment of Rs.6,00,000 and Rs.4,00,000 respectively. In the bank account statement furnished by Sh. R.K. Goel it was claimed that Shri Goel withdrew the cash paid to Sh. Gaurav Bhalla. However, the Ld. AO found that claim was not proved by the genuineness of the transaction as the Agreement to Sell was dated 26.07.2016 whereas the statement showed that cash had been withdrawn by Sh. R.K. Goel in piecemeal/routine manner starting from May, 2016 to July, 2016. Similarly, Sh. Krishan Joshi also failed to justify the source of payment made to Sh. Gaurav Bhalla. From the perusal of the bank a/c statement of Sh. Krishan Joshi, it was seen by Ld. A.O. that cash amounting to Rs. 5,00,000 was withdrawn on 28.4.2016 whereas agreement for sale of land was made on 26.7.2016 which is approx. 3 months after the date of cash withdrawal. Though to the wi om of Ld. A.O. these contentions were not acceptable and there was time gap but to my mind, they could not have been rejected only on that ground as it is a matter of common knowledge that mostly the seller tax the contracted value as agreed before and upto the date of 'Agreement to Sell' if subsequently there is not so long-time gap between the date of 'Agreement to Sell' and the date of 'Sale Deed'. Further, the Ld. AO had only guessed that the funds may have been used for any other purpose as there was a gap of approx. 3 months between the cash withdrawal and date of agreement to so called purchase of land from Sh. Gaurav Bhalla. There was no such enquiry led proof in possession of Ld. AO to conclude like that.

5 However, to my mind, more important observation of the Ld. A.O. that led to his objection raised in this regard, was that the so called agreement was dated 26.07.2016 but relevant parties did fail to furnish any 'Sale Deed' even after lapse of two years. This led the Ld. AO to conclude and rightly show that the 'Agreement to Sell' was not genuine. Further from the perusal of the documents/submission put forward by the assessee before the Ld. AO it was revealed that documents put forward by the assessee were self serving documents from related person which was only an afterthought of the assessee and her family members to come out of the difficult situation. 5.1.6 In the background of the above facts and discussion made supra, the Ld. AO had to conclude and rightly so that the so called agreement dated 26.07.2016 (as the relevant parties failed to furnish any 'Sale Deed'even after lapse of two years to prove that the land agreement was genuine) was nothing but cooked up story. It was further observed by the Ld. AO that the husband of the assessee was well aware that he could not enter into an agreement to sell with non-Himachali in view of the prevailing laws in this regard. 5.1.7 In view of Ld. AO it further strengthened the view of the department that the family members of the assessee had manipulated documents to save her from difficult situation. Also, the agreement was not on Judicial Stamp Paper and was also not Notarized. Ld. AO further, observed that had it been notarized the real/actual date of the agreement could have been easily ascertained.

8 Thus, the Ld. AO had to conclude that by creating a sham agreement on plain paper, the assessee only tried to derail the investigation. Thus, to AO it was crystal clear that the claim made by assessee, in this regard, was an afterthought to explain the cash found in the locker of the appellant lady. ln light of the above discussion, it is found that the action of Ld. AO in making the impugned addition of Rs.10,00,000 is sustainable in the facts of the case and in law The action of Ld. AO is , therefore, confirmed and Ground no.1 is , thus, dismissed.”

We have heard the rival contentions and purused the material available on record. The issue under consideration relates to the source of cash found from the locker maintained with Indian Overseas Bank in the name of the assessee as found during the course of search. In her explanation, the assessee has submitted that the cash so found belongs to her husband. It has been further explained that her husband has entered into an agreement to sell his land situated in Himachal Pradesh with Shri R.K. Goel and Shri Krishan Joshi and as part of the said transaction, had received the said amount and which has been kept in the locker maintained by the assessee. In order to support her explanation, she has submitted the copy of the agreement to sell, and copy of the affidavits, income tax returns and bank statements of Shri R.K. Goel and Shri Krishan Joshi. Further, during the course of assessment proceedings, these persons have been called and their statements were recorded wherein they have confirmed before the AO of entering into the agreement to purchase the land with the assessee’s husband and paying the advance amount to him. We therefore find that the assessee has sufficiently explained the source of cash so found belonging to her husband and further, the persons, from whom the cash was initially received by her husband, have personally appeared before the AO and confirmed advancing the money to assessee’s husband duly corroborated

In Ground No. 2, the assessee has challenged the sustenance of addition of Rs. 35.26 Lacs in respect of Jewellery seized from the locker of the assessee.

1 In this regard, briefly the facts of the case are that during the course of assessment proceedings, the assessee was asked to explain the source of jewellery found in her possession during the course of search of her locker maintained with IOB and in her reply the assessee submitted that jewellery

Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A) who has since sustained the said addition. Against the findings and the directions of the Ld. CIT(A), the assessee is in appeal before us.

During the course of hearing, the Ld. AR submitted that 1541 grams of Gold Jewellery was found from the assessee's bank locker and the assessee had submitted that the same belong to her as well as her relatives as per details below:

1 It was submitted that the assessee had duly submitted in her reply filed before the Id. AO that the jewellery found in the locker belongs to her as well as her family members and has submitted the affidavits of each of the family members. The Id. AO at para 4.2 of his order as well as Id. CIT(A) at para 5.2.4 of his order have rebutted the affidavits from relatives merely on the basis of mere surmises and presumptions by stating that it's an attempt to save a close relative without bringing on record any evidentiary proof that such affidavits are false evidence or does not stand good in the eyes of law as and when during the summons, the assessee had submitted that such jewellery belong both to her as well as her family members. Furthermore, no cross examination was done by the Id. AO from the relatives from where he could find that these are false affidavits and put up such kind of rebuttal at para 4.2 of his order that these affidavits are an attempt to save. Thus, taking into consideration the above facts, the Id.

We have heard the learned counsel Mr. Manav Mehta for the Revenue. The first question concerns deletion of addition of Rs. 10,73,550/- made by the Assessing Officer on the ground of undisclosed income in jewellery. When challenged before the CIT (Appeals), it deleted the entire amount by elaborate discussion of the issue. It was during the course of the search that such jewellery has been found at the residence of the assessee. The statements of different family members were recorded. The confirmation/affidavit of the father, mother, wife of the assessee claiming jewellery were also recorded. In such background, the CIT (Appeals) noted that the jewellery belonged to different family members and it also relied on a circular of the CBDT, which permitted customary owning of such jewellery by the ladies. Resultantly, it deleted the entire amount.

2 It was further submitted that with respect to the Id. AO's observations at para 4.4 of his order that "jewellery valuing to Rs. 35,26,000 was seized out of the total jewellery valuing Rs. 49,98,000/- found in the locker. The assessee was already given benefit of CBDT's Guidelines relating to seizure of jewellery in respect of married lady and thus jewellery for the balance amount of Rs. 35,26,000 has been seized. Therefore, keeping in view of the above facts it is held that value of jewellery to tune of Rs. 35,26,000 (seized by CBI Authorities) has been acquired by the assessee from undisclosed sources." and Id. CIT(A) affirming the same at para 5.2.7 on page 15 of his order, it was submitted that the observations raised by Id. AO are factually incorrect as although the Id. AO have stated the figures in rupees, however he hasn't reconciled the said

3 It was further submitted that the Id. AO statement that CBDT guidelines benefit has already been given to the assessee is factually incorrect. It was submitted that the Ld. AO states that as against the jewellery valuing Rs. 49,98,000, only jewellery valuing Rs. 35,26,000 was seized, thus the benefit of CBDT guidelines given. However, the Id. AO ignored the fact that how much weight of jewellery is valued Rs 49,98,732/- and how much weight of jewellery is valued at Rs. 35,26,000. It is pertinent to mention here that the CBDT guidelines speaks about the weight and not the value. Reference was drawn to the locker inspection memo wherein it was stated that 1541 grams of gold items were found in locker, and the valuation report of jewellery is also enclosed herewith at Page No. 33-34 of the Paper Book wherein as against the value of Rs. 49,98,732/- net weight of 1539.284 grams have been mentioned and it was submitted that this 1539.284 grams pertains both to Gold as well as Diamond Jewellery as stated in the valuation report. It was submitted that at page 2 of the valuation

366 grams 14,72,753/- Net weight of items mentioned at S. No. 1 to 6 stood at 1279.918 grams 35,25,979/- Net weight of items mentioned at S. No. 7 to 19 stood at Total 1539.284 grams 49,98,732/-

4 It was submitted that what has been not seized weigh only 259.366 grams and therefore, how can the Id. AO state that the benefit of CBDT guidelines has been given to the assessee. It was submitted that out of the total 1539.284 grams of jewellery found in locker, only 259.366 grams have not been seized by the Investigation Wing. Thus, the Id. AO stating that benefit of CBDT guidelines i.e. 500 grams to the married woman, 250 grams in the case of unmarried woman and 100 grams in the case of male member was already given is totally incorrect statement without looking at the factual position of the case.

5 It was submitted that the Id. AO completely ignored that the total jewellery found in the locker stood at 1539.284 grams net weight as per valuation report (1541 grams as claimed by CBI authorities) and the value of the complete 1539.284 grams stood at Rs. 49,98,732/- and the assessee has been substantiating her claim of ownership on the said complete 1539.284 grams as under:

6 It was submitted that the detail of jewellery owned by each member i.e. Husband & Sons, Father in law of the family as well as her niece as per their affidavits has been duly submitted before the lower authorities.

7 It was further submitted that the assessee was married in Year 1996 and at the time of marriage, the assessee has received jewellery from her parents and as well as parents-in-law. It was submitted that as per the traditions and customs followed in Hindu families, assessee being Hindu by religion and as per the Hindu tradition there are several occasions where stridhan is given to ladies by family, relatives and friends. Gold jewellery has long been used to celebrate marriage and child birth or presented as gifts during religious festivals and accordingly assessee's husband as well sons also received the jewellery during numerous occasions as a gift from close relatives since the past 30 years.

8 It was further held that as per the CBDT guidelines for the 'seizure' of the jewellery found during the course of search, it has been held in various judicial pronouncement that although CBDT instruction is a guideline for not carrying out seizure during the course of search, it inter-alia indicates the intention that the jewellery to the extent specified in instruction should be treated as explained jewellery in the hand of searched person. It was submitted that keeping in mind the high status and customary practices prevailing in one's community, various courts have held that excess jewellery (more than the prescribed limit as per clause (ii) of Board's Instruction no 1916 dated 11/05/1994) found during the course of search will not be considered as unexplained. It has been held that married ladies receiving jewellery in the form of 'streedhan' during her long- married life on various occasion like birth of child, birthdays, marriage anniversaries, etc., and accumulated over a period of years are to be excluded. In support, reliance was placed on the following decisions:

9 It was accordingly submitted that keeping in view the above circular issued by CBDT as well as the case laws justifying the same, the jewellery seized

Per contra, the ld DR has vehemently argued the matter and relied on the findings of the lower authorities and our reference was drawn to the relevant findings as contained in para 5.2.3 to 5.2.8 of the impugned order and the contents thereof read as under:

We have heard the rival submissions and purused the material available on record. As per the valuation report, 1539.284 grams of jewellery valued at Rs 49,98,732/- has been found from the locker in the name of the assessee. The assessee has explained that the jewellery so found weighing 500 grams belongs to her, 300 grams belong to her husband and sons, 300 grams belong to her niece and 441 grams belongs to her father in law and to support her explanation, she has placed on record the affidavits signed by the family members wherein they have confirmed the ownership of the jewellery as belonging to them and the fact that the same was kept with the assessee for safe custody. We have gone through the affidavit of Shri Gaurav Bhalla, husband of the assessee, where he has confirmed having kept the jewellery belonging to him and his two sons weighing 300 grams in the locker of the assessee. Similarly, in the affidavit submitted by Shri Subhash Chander Bhalla , the father-in-law of the assessee, he has confirmed having kept the jewellery belonging to him and his late wife Smt Shanti Bhalla, weighing 300 -400 grams in the locker of the assessee. Similar is the affidavit submitted by the niece of the assessee, Gauri Puri where she has stated that given that she had to travel abroad, she had kept the jewellery belonging to her weighing 280-300 grams in the locker of the assessee. Unlike the earlier situation, where the AO has called the two persons who claimed to have given money to the husband of the assessee and which was also kept in her locker and recorded their statement, the AO didn’t deem it necessary to call the family members and record their statements in the instant case. There is thus nothing on record to rebut the affidavits so submitted by the family members of the assessee. Therefore, to the extent of jewellery so found from the possession of the assessee, the factum

Thus, from the perusal of above chart as well as statements, it is abundantly clear that jewellery which has been found in possession of the family members is in accordance with customs and practice prevalent in the community and in accordance with status of the family.

On perusal of the order of CIT (Appeals) as also the Tribunal, we notice that the Assessing Officer had not given any basis for restricting the claim of jewellery at 1600 gms as reasonable while Mohammed Akhlaq, Jaipur vs. DCIT, Jaipur the Assessing Officer has simply mentioned about there being four ladies, but ignored that in addition to four ladies, there were four male members so also three children and if the male members so also the children are considered, then even factually the claim of respondent-assessee appears to be reasonable in the light of the aforesaid instruction dated 11.5.1994. If the circular is strictly followed, then to the extent of 2700 gms, no jewellery could be seized. (500x4 ladies+100x7 male+ children=2700 gms.). In the aforesaid facts, we fail to understand the basis of 1600 gms held reasonable by the Assessing Officer.

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.

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, 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.

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.

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 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.

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 r 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.

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."

In light of above discussions and in the entirety of facts and circumstances of the case and respectfully following the decision of the Hon'ble Rajasthan High Court (supra), the matter is decided in favour of the assessee and against the Revenue. The order of the lower authorities is set-aside and the appeal of the assessee is allowed.”

Similarly, reference can be drawn to another decision of the Jaipur Benches (again, one of us was a party) in case of Ram Prakash Mahawar vs DCIT (ITA No. 918/JP/2019) wherein it was held as under: “2.6 We have considered the rival submissions as well as the relevant materials available on record. The first issue is regarding the addition sustained by the ld. CIT(A) to the tune of Rs. 4,57,404/- on account of unexplained gold jewellery by rejecting the claim of the assessee being acquisition of the said jewellery by way of purchases made from time to time and also recorded in the books of account of the assessee. There is no dispute regarding the fact that jewellery to the extent 343.328 gms. represents the purchases made by the assessee from time to time which is duly supported by the purchase bills found during the search and seizure action. The said quantity of jewellery is duly recorded in the balance sheet/ books of account of the assessee and his family members. Once the AO has not disputed the purchases made by the assessee of the said quantity of jewellery then the same cannot be treated as unexplained jewellery of the assessee. The AO has denied the benefit of the said quantity of jewellery on the ground that since the benefit of reasonable jewellery to the extent of 850 gms. as per CBDT Instruction No. 1916 dated 11-05-1994 is already granted, therefore, to that extent, no further benefit can be granted. It is pertinent to note that CBDT Instruction No. 1916 dated 11-05-1994 has explained in case of gold jewellery found in the possession of the assessee during the course of search and seizure action and the assessee is not able to explain the same then the quantity prescribed under the said CBDT Instruction No. 1916 in respect of married female member, unmarried female member and male member of the assessee would be treated as a reasonable holding of jewellery on account of acquisition of that much jewellery on various occasions of marriages, other social & customary occasions as prevailing in the society. Therefore, reasonable possession of the jewellery as per the customs prevailing in the society is the basis for allowing the benefit of certain quantity of jewellery explained by the CBDT Instruction No. 1916 dated 11-05-1994 which means that the assessee need not to explain the source of jewellery found in his possession to the extent of specified quantity treated as reasonable possession by family members of the assessee. The said CBDT Instruction No. 1916 allowing the specific quantity as reasonable and need not to be explained, does not include the jewellery which is otherwise explained by proof of documents of acquisition as well as declared/ recorded in the books of account of the assessee. Hence, the quantity of jewellery which is otherwise explained by the assessee by producing the purchase bills as well as recorded in the books of account of the assessee and the AO had not disputed the said explanation then the quantity which is explained otherwise by producing the purchase bills and books of account would not be treated as part of the quantity of reasonable possession as prescribed under the said CBDT Instruction No. 1916 dated 11-05- 1994. Therefore, the benefit of CBDT Instruction No. 1916 dated 11-05-1994 will not take away the benefit of the explained jewellery acquired by the assessee. Accordingly, in the facts and circumstance of the case, the quantity of jewellery to the extent of 343.328 gms. has to be allowed separately as explained jewellery and no addition can be made to that extent. 2.6.1 As regards the valuation of gold jewellery, we find that the AO has valued the entire jewellery by applying the prevailing rate of 2700/- per gram and by ignoring the fact of actual cost of acquisition to the extent of 343.328 gms. at Rs. 4,57,404/- as reflected in the purchase bills as well as in the books of account of the assessee. Therefore, we do not find any error or illegality to the extent of value of said jewellery accepted by the ld. CIT(A). Hence, the addition sustained by the ld. CIT(A) on account of unexplained jewellery is deleted. 2.6.2 As regards 50% of the addition on account of silver items sustained by the ld. CIT(A), we find that silver items of Rs. 1,33,650/- were found at the time of search out of which the ld. CIT(A) has considered 50% of the same as reasonable holding of silver items by the assessee, considering the status and standing of the assessee family. Therefore, in the absence of any other material or facts brought before us, we do not find any error or illegality in the order of the ld. CIT(A) by considering 50% of silver items as reasonable and to the extent the order of the ld. CIT(A) is upheld.”

In light of the aforesaid discussion, we find that the jewellery so found from the locker of the assessee has been duly explained by the assessee as belonging to her family members and as far as her own jewellery is considered, the same is within the permissible limits as so prescribed and thus be treated as reasonable holding and the same cannot be brought to tax. In view of the same, the addition so made and sustained by the ld CIT(A) is hereby directed to be deleted and the ground of appeal is allowed.

In the result, the appeal of the assessee is allowed.

""यथ"/ The Respondent 3. आयकर आयु"/ CIT 4. आयकर आयु" (अपील)/ The CIT(A) 5. िवभागीय "ितिनिध, आयकर अपीलीय आिधकरण, च"डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड" फाईल/ Guard File