ITAT Grants Relief to Assessee as Jewellery found during Search was within the limit prescribed in CBDT Circular [Read Order]

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) in the case of Shri Ashok Jain v. ACIT, Mumbai held that where jewellery was found with the assessee within the limit prescribed by the CBDT circular, the same cannot be added to the income.

The sole issue in the present appeal was with regard to the addition made to the returned income on account of unexplained value of jewellery.

The assessee is engaged in the activity of trading in shares, derivatives and securities and a search action under Section 132 of the Income Tax Act. During the search, certain jewellery and valuable articles were found for which the assessee was show caused to explain the source of acquisition for which no cogent reply was furnished. Before the Commissioner of Income Tax (CIT(A)) it was contended that the jewellery belonged mainly to two ladies, i.e. assessee’s wife and assessee’s daughter. The assessee further claimed that the jewellery found at the time of search was within the permissible limits brought out in the CBDT circular dates 11.05.1994. The CIT, however, rejected the contention of the assessee and hence the present appeal.

The assessee submitted that the jewellery found during the search was permissible within the permissible limits stipulated by the CBDT circular.

While allowing the appeal, The Tribunal bench comprising of Judicial Member G.S Pannu and Accountant Member Ravish Sood after considering the arguments of both the parties which stood the same as were before the previous authorities went on to hold that the assertion made by the assessee relying upon the circular is justified. The Tribunal setting aside the order of CIT was hence of the opinion that the appeal be allowed and directed the AO to allow appropriate relief and recomputed the income on this aspect afresh.