TARA KABRA, MUMBAI V. DY CIT -CC-1(3), MUMBAI

ITA 1319/MUM/2021

AI Insights

The case involves Tara Kabra, who was subjected to a search and seizure operation under section 132 of the Income Tax Act, 1961. During the operation, jewellery valued at Rs.8,15,796 and cash amounting to Rs.21,200 were found but not seized. The Assessing Officer added these amounts as unexplained income, which was upheld by the CIT(A). Tara Kabra appealed to the Income Tax Appellate Tribunal, which reconsidered the matter in light of CBDT Instruction No.1916 and relevant High Court judgments, leading to the deletion of the additions made by the AO.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 125954 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 02-04-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 18-07-2021
• Other Referred Cases: CIT vs. Ratanlal Vyaprilal Jain (2011) 339 ITR 351 (Guj. HC), CIT vs. M. S. Agarwal (HUF) (2008) 11 DTR 169 (MP HC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift
• Section: 132; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JM & SHRI PRASHANT MAHARISHI, AM आयकरअपीलसं./ I.T.A. No.1319/Mum/2021 (निर्धारणवर्ा / Assessment Year 2017-18) TARA KABRA 2202, Aspean Mahindra Eminente, S V Road near Patekar College, Goregaon West, Mumbai-400 062 बिधम/ Vs. DCIT, CC-1(3) RoomNo.905, 9 th Floor, Old CGO Building, Annexe M. K. Road, Mumbai-400 020 स्थायीलेखासं./जीआइआरसं./PAN No. ACBPK7381F (अपीलाथी/Appellant) : (प्रत्यथी / Respondent) अपीलाथीकीओरसे/ Appellant by : Shri Ajay Singh प्रत्यथीकीओरसे/Respondent by : Shri Ankush Kapoor, CIT सुनवाईकीतारीख/ Date of Hearing : 03.05.2023 घोषणाकीतारीख / Date of Pronouncement : 31.05.2023 आदेश / O R D E R PER AMIT SHUKLA, JUDICIAL MEMBER: Earlier, this appeal was heard and order was passed vide order dated 28.04.2022. However, in Miscellaneous Application No.211/Mum/2022 vide order dated 17.02.2023, the matter has 2 I . T . A . N o .1319/ M u m / 2 021 TARA KABRA been recalled for adjudication of Ground no. 2 raised in the appeal which reads as under: “5.4. However, we note that in paragraph 16 of the Order it has been recorded by the Tribunal that the reliance has been placed on behalf of the Applicant on the decision of the Tribunal wherein relief on the basis of the CBDT Circular (i.e. instruction no. 1916 dated 11.05.1994) has been granted. Further, on perusal of record we find that the Applicant had placed on record the decision of Hon’ble Gujrat High Court in the case of CIT vs. Ratanlal Vyaprilal Jain (2011) 339 ITR 351 (Guj. HC) and Hon’ble Madhya Pradesh High Court in the case of M. S. Agarwal (HUF) (2008) 11 DTR 169 (MP) (HC) dealing with the applicability of Instruction No.1916 dated 11.05.1994. Therefore, we agree with the contention of the Applicant that a mistake apparent on record, arising from non-consideration of the aforesaid order/judgments, has crept into the order. Accordingly, the consolidated order, dated 18.04.2022, is recalled for the limited purpose of adjudication of Ground No.2 raised in appeal for the Assessment Year 2017-18 after taking into consideration the aforesaid judgments already placed on record.” 2. Ground no. 2 reads as under: “On the facts and circumstances of the case, Hon’ble CIT(A) has erred in considering the cash found of Rs.21,200/- and jewellery found of Rs.8,15,796/- as seized however as mentioned in assessment order, both cash and jewellery were found but were not seized and was released by Search team after getting explanation from appellant in the statement recorded during search. The Hon’ble CIT(A) has erred in not considering the explanation provided during the appellant proceedings without giving any reason for non-acceptance of such explanations. The addition made by learned assessing officer for Cash found of Rs.21,200/-and Jewellery of Rs.8,15,796/- was confirmed by considering the same as seized one which is factually incorrect. It is therefore prayed that such addition made of Rs.8,36,996/- should be deleted. 3. The brief facts qua the issue raised in aforesaid ground are that: during the Search and Seizure action u/s 132 of the Income 3 I . T . A . N o .1319/ M u m / 2 021 TARA KABRA Tax Act, 1961 (hereinafter referred to as “the Act”) on 25.10.2016, jewellery valuing Rs.8,15,796/- and cash of Rs.21,200/- were found but not seized. The gold jewellery of 281.200 gms was found along with one diamond jewellery and silver 2.51 kg., all aggregating to Rs.8,15,796/-. In the course of search during the statement recorded, assessee stated that jewellery belongs to her and family members which has been received on various occasions including marriage. However, the ld. Assessing Officer (AO) has added the same stating that assessee has failed to comply with the show cause notice. The ld. CIT (A) held that assessee failed to furnish any credible explanation or evidence in support of cash and jewellery found. Accordingly, he has confirmed the addition. 4. Before us, the ld. Counsel for the assessee had relied upon Instruction No.1916 dated 11.05.1994 issued by CBDT during guidelines for seizure of jewellery and ornaments in course of search which reads as under: “Instances of seizure of jewellery of small quantity in course of operations under section 132 have come to the notice of the Board. The question of a common approach to situations where search parties come across items of jewellery has been examined by the Board and following are issued for strict compliance. 4 I . T . A . N o .1319/ M u m / 2 021 TARA KABRA (i) In the case of a wealth-tax assessee, gold jewellery and ornaments found in excess of the gross weight declared in the wealth-tax return only need be seized. (ii) In the 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. (iii) The authorized 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. This should be the search at the time of furnishing the search report. (iv) In all cases, a detailed inventory of the jewellery and ornaments found must be prepared to be used for assessment purposes.” He further relied upon various judgments of Tribunal as well as judgment of Hon’ble Gujarat High Court in the case of CIT vs. Ratanlal Vyaprilal Jain (2011) 339 ITR 351 (Guj.) (HC) and the decision of Madhya Pradesh High Court in the case of CIT vs. M. S. Agarwal (HUF) (2008) 11 DTR 169 (MP) (HC). 5. We find that, in these judgments, the Hon’ble High Courts have held that the CBDT Instruction No.1916 which lays down the guidelines for seizure of jewellery taken into account the quantity of jewellery which would generally be held by the family members of an assessee and therefore, unless anything contrary is shown it can 5 I . T . A . N o .1319/ M u m / 2 021 TARA KABRA safely be presumed at the source. The extent of the jewellery stated in the Circular stands explained. 6. On the other hand, the ld. Departmental Representative (DR) submitted that assessee has not given any explanation or evidence before the AO and CIT (A). Further, CBDT Instruction is only meant for the seizure and not for explaining the source/onus is on the assessee. 7. After hearing both the parties on perusal of the relevant material placed on record, we find that during the course of search itself in the statement, assessee had said that jewellery belongs to her and family members received on a marriage and on various occasions. The gold jewellery found was only 281.200 gms and one small diamond jewellery. Though, the CBDT Circular lays guidelines for seizure of jewellery and ornaments, however, it has categorically specified that if a person is 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. The Hon’ble Gujarat High Court and Madhya Pradesh High Court as referred by the ld. Counsel for the 6 I . T . A . N o .1319/ M u m / 2 021 TARA KABRA assessee, have clearly held that even for the purpose of explaining the source, to the extent of quantity mentioned in the CBDT Circular should be treated as unexplained. This is relevant especially in light of customary practices in India where ladies are gifted with the jewellery at the time of marriage and on various occasions. Thus, the benefit of the limit prescribed in the CBDT Circular No.1916 (supra) should be given in such cases. Accordingly, we hold that the gold jewellery and one diamond jewellery cannot be added as income from other sources. Similarly, Siler items and cash of Rs.21,200/- is of very small amount. Therefore, looking to the overall status of the assessee and the family cannot be treated as unexplained. The additions made by the AO are deleted. Consequently, the Ground no.2 is allowed. Orders pronounced in the open court on 31 st May, 2023. Sd/- Sd/- SHRI PRASHANT MAHARISHI, (AMIT SHUKLA) Accountant Member Judicial Member मुंबई Mumbai; ददनांक Dated : 31.05.2023 Mahesh 7 I . T . A . N o .1319/ M u m / 2 021 TARA KABRA आदेश की प्रनिनिनि अग्रेनर्ि/Copy of the Order forwarded to: 1. अपीलाथी/ The Appellant 2. प्रत्यथी/ The Respondent 3. आयकरआयुक्त/ CIT- concerned 4. दवभागीयप्रदतदनदध, आयकरअपीलीयअदधकरण, मुंबई/ DR, ITAT, Mumbai 5. गार्डफाईल / Guard File आदेशधिुसधर/ BY ORDER, .उि/सहधयकिंजीकधर (Dy./Asstt.Registrar) आयकरअिीिीयअनर्करण, मुंबई/ ITAT, Mumbai