The Delhi ITAT deletes addition was made on account of the fact that items do not partake the character of jewelry.
A search and seizure operation was carried out u/s 132 of the Income-tax Act, 1961 in the case of M/s Super Cassettes Industries Pvt. Ltd. on 28.11.2018. The assessee’s case was also covered in operation u/s 132 of the Act. Thereafter, the assessee filed its return of income u/s 139 of the Act on 15.10.2019, thereby declaring total income of INR 1,97,57,870/-, which was processed u/s 143(1) of the Act. A notice u/s 143(2) of the Act was issued.
In response the assessee attended the proceedings. While framing the assessment u/s 143(3) of the Act the AO made an addition of Rs. 3,92,151/- on account of unexplained investment in jewelry. Aggrieved against this the assessee preferred appeal before CIT(A), who sustained the addition. Now the assessee is in appeal before this Tribunal.
The assessee vehemently argued that the authorities below failed to give benefit of CBDT Instruction No. 1916. As per the Revenue itself the total jewellery valuing was found out of which jewellery was seized. Out of total jewellery worth Rs. 6,27,00,968/- the AO found purchases of jewellery worth Rs. 3,92,151 as unexplained. He contended that the authorities below ought to have give benefit of CBDT Instruction No. 1916.
The AO made addition on account of non-explanation of source of acquisition/purchase of jewelry items worth Rs. 3,92,151 and the learned CIT(A) in the appellate order states about gold coins and 17 gold ginnies.
The CIT(A) was of the view that gold coins and ginnies are not jewelry, which is contrary to the finding of the AO, who in unequivocal terms states that the source of acquisition/purchase of jewelry worth Rs. 3,92,151/- was without any documentary evidence. CIT(A) failed to take note of the fact that the assessee is having high social status and duly declared jewelry of more than 6.27 crores.
“Looking at the peculiarity of facts of the present case where there is no finding by AO that addition was made on account of the fact that items do not partake the character of jewellery, we direct the AO to delete the impugned addition. Grounds of appeal are allowed,” the ITAT said.
Tulsi Kumar Ralhan V/s ACIT