Customary Amongst Married Women To Keep On Changing The Jewellery As And When New Designs Come In The Market: ITAT Deletes Income Tax Addition

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has deleted the addition and held that it is customary amongst married women to keep on changing the jewelleryas and when new designs come on the market.

The bench of Anubhav Sharma (Judicial Member) and N. K. Billaiya (Accountant Member) has observed that the assessee has given an item-wise reconciliation of Wealth Tax Return items with the valuation report prepared during the search. The AO has not pointed out any specific defect in the reconciliation but has given general remarks that items are not matching.

During the course of the search operation, jewellery and silver articles were found at the residence of the assessee, amounting to Rs. 2,64,35,029, and were seized from the premises. During the course of the assessment proceedings, the assessee was asked to explain the source of acquisition of the jewellery with documentary evidence. The assessee explained that jewellery found during the course of the search is part of the wealth tax return and books of accounts of the assessee and filed a detailed reconciliation of jewellery with the wealth tax return and books of accounts.

The AO was of the firm belief that the assessee has not submitted the source of the payment made for the purchase of the jewellery item and has not been able to reconcile the various items of jewellery with the valuation report. The AO made an addition of Rs. 26435029 under Section 69B, read with Section 115BE.

The addition was challenged before the CIT (A), and once again a detailed reconciliation statement was furnished explaining the jewellery shown in the wealth tax return and found at the time of the search.

The CIT (A) was satisfied with the reconciliation but was of the opinion that the pearls have not been properly reconciled and sustained the addition to the extent of Rs. 331778 by giving relief of Rs. 2,61,03,251.

The tribunal has held that the weight of the jewellery has more or less remained the same, though the design may change. Sometimes new stones are engraved, and sometimes the engraved stones are taken out of the jewellery. However, the status of the family and the return of income have to be kept in mind.

The ITAT directed the AO to delete the entire addition of Rs. 26435029.

Case Title: Sh. Nirmal Kumar Minda Versus ACIT

Case No.: ITA No.1151/Del/2020

Date: 03/05/2023

Counsel For Appellant: Salil Aggarwal

Counsel For Respondent: Sarita Kumari

Click Here To Read The Order