During a search in assessee's residential premises, incriminating material including gold jewellery and silver articles were found. On assessee's lack of explanation as to their source, AO added the jewellery found as unexplained investment, and made addition. CIT(A) held that jewellery declared in Voluntary Disclosure of Income Scheme and in wealth-tax return had to be excluded. ITAT confirmed the deletion.
1 There was search in the residential premises of the assessee on 03.08.2005. In the course of search operation, several incriminating material, including gold jewellery and silver articles, were found. During the course of examination, the assessee explained before the Assessing Officer that she has no explanation to offer with regard to investment made in the jewellery and silver articles. Therefore, the Assessing Officer found that 468.05 gms of jewellery belonging to assessee's deceased mother and another 836.98 gms of jewellery found in the safe deposit locker were treated as unexplained investment. In the absence of any details of purchase of jewellery, the Assessing Officer estimated the cost of investment on the basis of the rate provided by Madras Jewellers and Diamond Merchants's Association. Similarly, 20,504.71 gms of silver articles were found. In the wealth-tax return, the assessee has disclosed 14,015 gms of silver articles. The balance of 6489 gms remained unexplained. Therefore, the Assessing Officer made an addition of Rs 33,65,000/- on the basis of the rate provided on the date of search operation.
2 CIT(Appeals) found that the assessee has explained the source of the jewellery. Therefore, the CIT(Appeals) found that the jewellery declared in VDIS and in the wealth-tax return from the assessment years 2003-04 has to be excluded. It deleted the addition.
3 The ITAT held as under”
“It is not in dispute that the assessee has disclosed the gold jewellery and silver
articles in the wealth-tax return. The jewellery was also disclosed under VDIS, 1997. The assesse also claimed that 740 gms of gold jewellery and 3.8 Kgs of silver articles were received from her late father. The jewellery belonged to various members of the family was converted into stock-in-trade on various dates. The CIT(Appeals), after considering the disclosure made by the assessee in the VDIS and in the wealth-tax return, found that the jewellery disclosed under the VDIS and gold redeemed under the Bond Scheme were credited by Rajesh Kumar to his capital account and the same was disclosed in the income-tax return for the assessment year 1998-99. When the assesse has disclosed the jewellery and silver articles in the wealth-tax return and for the jewellery disclosed in the VDIS, this Tribunal is of the considered opinion that there is no need for making any addition.
The claim of the assessee that she received 740 gms of gold jewellery and 3.8Kgs of silver articles from her late father cannot be doubted. In those circumstances, as rightly found by the CIT(Appeals), there is no justification to ignore the jewellery and silver articles disclosed in the wealth-tax return and the jewellery disclosed in the Voluntary Disclosure of Income Scheme. Therefore, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly deleted the addition. Hence, this Tribunal has no reason to interfere with the order of the lower authority and accordingly the same is confirmed.”
Case Reference-BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ITA No.1790/Mds/2008/ Assessment Years : 2006-07 The Deputy Commissioner of Income Tax v Smt. Leelabai