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Smart Summary

Factual and Procedural Background

This opinion arises from appeals against additions made by the Assessing Officer (AO) and partly confirmed by the Commissioner (Appeals) in respect of unexplained gold jewellery found during search and seizure operations. A search under section 132 of the Income Tax Act, 1961 was conducted on 23.11.2012 at the business premises of M/s CHD Developers and at residential premises of its directors. During the search a total of 3,299.83 grams of jewellery was seized from the two assessees (Radha Mittal and Ruchie Mittal) — specific break-ups in the record show 673.46 gms from Radha Mittal's bedroom, 491.67 gms from Ruchie Mittal's bedroom and 2,134.70 gms from lockers.

The AO made additions under section 69A of the Income Tax Act treating part of the jewellery as unexplained. The Commissioner (Appeals) granted partial relief by excluding 1,100 grams in Radha Mittal’s case and 700 grams in Ruchie Mittal’s case pursuant to CBDT Instruction No. 1916 dated 11.5.1994; the Revenue did not appeal against the specific quantities accepted by the CIT(A). The assessees filed appeals to the Income Tax Appellate Tribunal (ITAT) challenging the remaining additions. The Tribunal heard both parties, considered the seized documents (including Annexures A-2 and A-4), and referred to various precedents and statutory provisions. The order was pronounced on 09-07-2018 by Accountant Member L.P. Sahu and Judicial Member H.S. Sidhu.

Legal Issues Presented

  1. Whether the additions made by the AO under section 69A of the Income Tax Act in respect of the seized gold jewellery were sustainable, having regard to the assessees' explanation that the jewellery comprised streedhan and gifts acquired over many years and to the documents seized (Annexure A-2/A-4).
  2. Whether the CBDT Instruction No. 1916 (11.5.1994) and the family status, customs and practices justify exclusion of a larger quantity of jewellery from seizure/explanation.
  3. Whether statements recorded under section 132(4) (for example statements attributed to R.K. Mittal) amounted to a surrender or otherwise obligated the assessees to treat amounts as income, and whether such statements could sustain additions against the assessees.
  4. Whether precedents relied upon by Revenue (including decisions on additions under section 69C and on the validity of statements recorded under section 132(4)) were applicable to the facts of the present case.
  5. Whether the method/rate applied for valuation of jewellery in computing additions (including the rate applied by the CIT(A)) was correct in the facts of the case.

Arguments of the Parties

Assessees' (Appellants') Arguments

  • The jewellery belongs to the assessees and was received as streedhan at the time of marriage and subsequently on customary occasions (birth of a child etc.), as per family custom and tradition.
  • Seized documents (Annexure A-4) reflect expenses incurred at the time of marriage (for Ruchie Mittal, expenditure of Rs. 70,12,000 in 2005) which, when valued at past rates and adjusted to current rates, explain the source of the jewellery (the opinion records an explanation that this would explain jewellery valued at Rs. 2.51 crores when compared against the rate on the date of search).
  • CIT(A) and AO did not refute these documentary claims; Revenue’s counsel did not deny the factual claims regarding the seized documents.
  • Family composition and long duration of marriages (Radha Mittal married 35 years; Ruchie Mittal married 8 years at the time of search; presence of mother-in-law married for about 65 years and other family members) provide contextual explanation for holding substantial jewellery.
  • Reliance was placed on several authorities (including Ashok Chaddha v. ITO and other tribunal/high court decisions) to support the proposition that accumulation of jewellery over years as streedhan/customary gifts may explain holdings and that additions based on conjecture should be set aside.

Revenue's (Respondent's) Arguments

  • The quantity of jewellery (3,299.83 gms collectively) is substantial; while CIT(A) allowed specific exclusions (1,100 gms for Radha and 700 gms for Ruchie), a significant quantity remained unexplained.
  • The assessees were not filing wealth tax returns despite possessing wealth beyond wealth-tax limits, which, the Revenue contended, indicated unexplained investment in gold jewellery.
  • The statement recorded of Sh. R.K. Mittal under section 132(4) disclosed amounts (Rs. 0.79 crore each and further Rs. 1.31 crore from locker) — Revenue pointed to these admissions in support of additions, and noted that a surrender had earlier been recorded and then retracted after a gap of two years.
  • The Revenue relied upon a number of precedents (including authorities on additions under section 69C and on the validity of statements recorded under section 132(4)) to contend that additions should be sustained.

Table of Precedents Cited

Precedent Rule or Principle Cited For (as stated in the opinion) Application by the Court (how the opinion treated or used the precedent)
Ashok Chaddha v. Income Tax Officer (Delhi High Court) — (202 Taxman 395 / 57 (Delhi) / 14 taxmann) Accepted substantial quantity of jewellery as explained (streedhan/accumulation over years); criticized arbitrary ad hoc additions; supports using average rate of jewellery found for valuation. The Tribunal treated this Delhi High Court judgment as directly applicable and persuasive; it relied on it to accept the assessees' explanation and to criticize the method/rate applied by the CIT(A). The Tribunal considered Ashok Chaddha to support deletion of additions.
Suneela Soni vs. DCIT — ITA No. 5259/DEL/2017 dated 16.03.2018 (ITAT Delhi) Tribunal decision accepting jewellery in excess of CBDT Instruction No.1916 limits by following Ashok Chaddha. The Tribunal relied on this ITAT decision (which followed Ashok Chaddha) as supportive authority and cited it in concluding that the present facts were similar and warranted acceptance of the assessees' explanation.
Sh. Vibhu Agarwal vs. DCIT — ITA No. 1540/DEL/2015 dated 04.05.2018 (ITAT Delhi) Acceptance of jewellery value of 2,531.3 gms following CBDT Instruction No. 1916; emphasis on family status, customs and reasonableness. The Tribunal relied on this decision to demonstrate similar fact-situations where larger quantities were accepted; it considered the decision supportive of the assessees' position.
Naveen Bansal (HUF) v. ITO — 146 TTJ 207 Listed among authorities relating to quantities of gold accepted/excluded. Cited in the opinion as part of background authorities acknowledging accepted quantities of jewellery in comparable cases; used to support the assessees' contention on reasonable exclusion.
Smt. Shankutala Somani v. ITO — 50 SOT 629 (Indore) Cited by the assessees in support of their position regarding explanation of jewellery holdings. Referenced as an authority relied upon by the assessees; the Court considered it among the precedents reinforcing the reasonableness of assessees' explanations.
CIT v. Mohinder Lal Haryani — 307 ITR 348 (Del) Relied upon by the assessees; cited in context of jewellery/explanation issues. Placed on record as a precedent cited by the appellants; the Tribunal considered it in the body of authorities supporting acceptance of long-accumulated jewellery as explained.
Dr. (Mrs.) Kamlesh Datta v. ACIT — 69 ITD 218 (Chd) (TM) Relied upon by the assessees for the proposition that jewellery accumulation can be explained by family circumstances and custom. Included among the precedents the Tribunal noted for context; treated as supportive of the appellants' explanation.
ACIT vs. P.C. Mundra — 80 TTJ 945 (Pune) Cited by the assessees in support of explanation of jewellery holdings. Recorded as a precedent relied upon by the appellants; considered part of the supporting jurisprudence.
R. Mallika v. CIT — (Madras / Supreme Court citations included in the record) Listed by Revenue among authorities to be considered regarding additions under section 69C (and related principles). Cited by the Revenue; the Tribunal noted the precedent but treated the suite of s.69C decisions as distinguishable on facts (many concern cash seizures) and did not follow them to sustain additions against these assessees.
Sukh Ram v. ACIT — 285 ITR 256 (Del) Cited by Revenue with reference to additions under section 69C. Cited by Revenue; Tribunal considered it but found the judgments on s.69C distinguishable on facts and not applicable to the seized jewellery in the present case.
Kahan Udyog v. CIT — 219 Taxman 23 (Del) (Mag) Cited by Revenue for additions principles under s.69C. Cited by Revenue; Tribunal found s.69C authorities not directly applicable to the facts (distinguishable) and did not rely on them to uphold additions.
S. Rudramuniyappa v. CIT — (75 taxmann.com 241 (SC)) Cited by Revenue in the context of addition jurisprudence. Cited by Revenue; Tribunal recorded the reliance but treated s.69C/cash-related precedents as distinguishable on facts.
Karun Dutt Singh v. CIT — 85 taxmann.com 177 (Ker) Authority where addition was made in relation to gold ornaments after employer denied giving ornaments; cited by Revenue. The Tribunal observed that Karun Dutt Singh was factually distinguishable because here there was no denial by any alleged donor; thus the Tribunal did not apply it to sustain additions.
CIT v. Kuwer Fibers (P) Ltd. — 77 taxmann.com 345 (Del) Cited by Revenue in support of additions principles. Cited by Revenue; Tribunal noted the reliance but did not derive from it a sustaining rule for the additions in this case (treating such precedents as distinguishable).
Ashokbhai H. Jariwala v. ACIT — 80 taxmann.com 175 (Guj) Cited by Revenue in context of additions jurisprudence. Cited by Revenue; the Tribunal treated it among the authorities which were not applicable on the specific facts relating to streedhan and family circumstances.
Mahabeer Prasad Jain v. CIT — 88 taxmann.com 9 (All) Cited by Revenue concerning additions under the Act. Cited by Revenue; Tribunal recorded it but did not rely on it to uphold additions in the present facts.
Kishore Kumar v. CIT (B. Kishore Kumar v. CIT) — 234 Taxman 771 (SC) / 52 taxmann.com 449 (Mad) Cited by Revenue and noted in the opinion among authorities on validity/evidentiary value of statements recorded under section 132(4). Cited by Revenue; Tribunal observed that the judgments on validity of statements recorded u/s 132(4) were inapplicable on facts where no surrender was made by the assessees and the alleged disclosures were tentative/estimated; thus the Tribunal did not rely on such statements to sustain additions.
Bhagirath Aggarwal v. CIT — 351 ITR 143 (Del) Cited by Revenue in support of validity of recorded statements under section 132(4). Cited by Revenue; Tribunal concluded that judgments relied upon regarding statements u/s 132(4) were inapplicable to the present facts (no surrender, no tax paid, tentative figures).
Smt. Dayawanti v. CIT — 390 ITR 496 (Del) Cited by Revenue as authority on admissibility/validity of statements under section 132(4). Cited by Revenue; Tribunal found such authorities not applicable to the facts before it and did not sustain additions on that basis.
M/s Pebble Investment & Finance Ltd. v. ITO — 2017 TIOL 238 (SC) and 2017 TIOL 188 (Bom) Cited by Revenue regarding admissibility/weight of statements recorded during search. Cited by Revenue; Tribunal recorded these authorities but held the statements and alleged disclosures did not operate as a surrender or compel additions where no taxes were paid and the disclosures were described as tentative.
Raj Hans Towers (P) Ltd. v. CIT — 373 ITR 9 (Del) Cited by Revenue in relation to validity of statements/other procedural aspects. Cited by Revenue; Tribunal did not treat it as determinative in the facts of the present case, observing the absence of effective surrender or tax payment in respect of the alleged disclosures.
PCIT v. Avinash Kumar Setia — 81 taxmann.com 476 (Del) Cited by Revenue on matters relating to recorded statements or additions. Cited by Revenue; Tribunal recorded it among the authorities but did not rely on it to sustain additions against the assessees.
Sushila Devi — Writ Petition No. 7620 of 2011 (Delhi High Court) (decision dated 21.10.2016) High Court held that the assessee's explanation (long-accumulated jewellery/gifts) was reasonable; refusal to release jewellery was deprivation in contravention of Article 300A in that case. The Tribunal treated this High Court decision as supportive of the assessees' explanation and as reinforcing that inflexible refusal to accept customary accumulation of jewellery is not justified; it was relied upon in allowing the appeals.
Roshan Di Hatti v. CIT — 107 ITR 938 (SC) Cited for the proposition that non-filing of wealth tax returns alone is not a proper ground for making additions. The Tribunal relied upon the principle in Roshan Di Hatti to hold that failure to file wealth tax returns could not, by itself, justify additions to income in the present facts.

Court's Reasoning and Analysis

The Tribunal's analysis proceeded in stages, applying the factual record and relevant precedents cited by the parties:

  1. The Tribunal noted the factual matrix: a search and seizure on 23.11.2012 resulted in seizure of 3,299.83 grams of jewellery across the two assessees. The AO called for explanations during assessment proceedings.
  2. The assessees explained that the jewellery represented streedhan and gifts received at marriage and on other customary occasions over many years. The seized documents (Annexure A-4) were highlighted as evidencing expenditure at the time of marriage (for Ruchie Mittal: Rs. 70,12,000 in 2005). The assessees' reasoning (as recorded) converted past expenditure at an earlier gold rate into contemporary value at the rate on the date of search to explain the jewellery holdings. The Tribunal explicitly recorded that neither the AO nor the CIT(A) refuted this documentary claim and that the Revenue's counsel did not deny the factual claim.
  3. The Tribunal observed that the CIT(A) had already granted benefit/exclusion under CBDT Instruction No. 1916 (1,100 gms for Radha; 700 gms for Ruchie) and that the Revenue had not appealed against the specific quantities accepted. The Tribunal calculated the remaining disputed quantity (3,299.83 - (1,100 + 700) = 1,499.83 gms) and noted family circumstances (long marriages, joint residence with an elderly mother-in-law, presence of husbands and children) as relevant contextual factors.
  4. The Tribunal relied on CBDT Instruction No. 1916, which permits an authorised officer to decide on excluding a larger quantity of jewellery having regard to family status, customs and other circumstances. The Tribunal also relied on the Delhi High Court decision in Ashok Chaddha and subsequent ITAT/HC decisions (including Suneela Soni, Vibhu Agarwal and Sushila Devi) which it regarded as being squarely on point and supportive of accepting explanations of accumulated jewellery.
  5. Applying those precedents and the facts, the Tribunal concluded that the explanation given by the assessees was acceptable. It cancelled the orders of the authorities below insofar as they sustained additions in respect of the remaining jewellery and specifically deleted the additions that had been upheld by the AO and partly confirmed by the CIT(A) — the order records deletion of the addition in respect of “balance jewellery weighing 1050 gms” (the impugned addition held by the authorities below was deleted).
  6. The Tribunal criticized the method/rate applied by the CIT(A): the CIT(A) had applied a rate of Rs. 2,100 per gram whereas the average rate of jewellery found was recorded at Rs. 8,758.83 per gram; the Tribunal pointed out that Ashok Chaddha accepted application of average rate methodology adopted by the AO in that case, supporting the Tribunal’s observations on valuation methodology.
  7. As regards statements recorded under section 132(4) (notably statements attributed to R.K. Mittal), the Tribunal noted that there was no surrender by the assessees, no taxes were paid by the assessees or R.K. Mittal in respect of the purported disclosures, and some letters indicated that the declarations were estimated and tentative. On this basis the Tribunal held that the judgments relied upon by the Revenue on the validity of statements recorded under section 132(4) were inapplicable to the facts of this case.
  8. The Tribunal also found that the judgments relied upon by the Revenue under section 69C (which largely concerned cash seizures) were distinguishable on the facts and therefore not applicable to the jewellery seizures in the present matters.
  9. Having regard to the above, the Tribunal concluded that the additions made in the hands of the assessees were not in accordance with law and were accordingly deleted.

Holding and Implications

Holding: ITA No. 2810/Del/2016 (AY 2013-14) in Radha Mittal's case stands partly allowed and ITA No. 2811/Del/2011 (AY 2013-14) in Ruchie Mittal's case is allowed.

Direct consequences and implications (as set out in the opinion):

  • The Tribunal accepted the assessees' explanation that the seized jewellery represented streedhan and gifts accumulated over the years and deleted the additions made by the AO and partly confirmed by the CIT(A) in respect of the disputed jewellery (the order specifically records deletion in respect of the balance jewellery previously treated as unexplained).
  • The Tribunal applied CBDT Instruction No. 1916 and followed relevant decisions of the Delhi High Court and ITAT (notably Ashok Chaddha, Suneela Soni and Vibhu Agarwal), treating them as directly applicable to the facts and persuasive to allow the appeals.
  • The Tribunal rejected the Revenue's reliance on statements recorded under section 132(4) and on s.69C precedents as inapplicable/distinguishable on the facts of these cases; it also held that non-filing of wealth tax returns alone could not justify additions (relying on Roshan Di Hatti).
  • No broader novel legal principle or fresh precedent was announced by the Tribunal; the decision was founded on applying existing CBDT instruction and the line of authorities referred to in the opinion to the facts of these appeals. The immediate effect is deletion of the impugned additions and allowance of the appeals to the extent recorded above.

Order pronounced on: 09-07-2018. Panel: [L.P. SAHU] (Accountant Member) and [H.S. SIDHU] (Judicial Member). Copies forwarded to the appellants, respondent, CIT, CIT(A) New Delhi and CIT(ITAT), New Delhi as per the order record.

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    Smt. Radha Mital, New Delhi v. DCIT, Faridabad

    Gold Allowed (Gms)

    i) 202 Taxman 395 (Delhi High Court) (2011) Ashok Chaddha v. Income Tax Officer 906.90 ii) ITA No. 5259/DEL/2017 dated 16.03.2018 (Delhi) Suneela Soni vs DCIT 1225.2 iii) ITA No. 1540/DEL/2015 dated 04.05.2018 (Delhi) Sh. Vibhu Agarwal vs DCIT 2531.3 iv) 146 TTJ 207 (Del) Naveen Bansal (HUF) v. ITO 1000 6.2 It was further submitted that Ld. CIT(A) not granted benefit of material seized in the course of search in the shape of Annexure A-2 and Annexure A-4 showing that expenses were incurred at the time of marriage of son of Radha Mittal Shri Gaurav Mittal. It was also submitted that there is no material much less incriminating material to arrive at a reasonable conclusion much less a conclusive finding that jewellery acquired had held to be income from undisclosed sources was out of a specific sources not declared by the appellants to revenue. Reliance was placed on the following judgments:

    i) 50 SOT 629 (Indore) Smt. Shankutala Somani vs. ITO) ii) 307 ITR 348 (Del) CIT v. Mohinder Lal Haryani iii) 69 ITD 218 (Chd) (TM) Dr. (Mrs.) Kamlesh Datta v. ACIT iv) 80 TTJ 945 (Pune) ACIT vs. P.C. Mundra

    7. On the other hand, the ld. DR had relied upon the orders of the authorities below and requested that contention of the assessees be rejected in view of the following facts:

    i) Jewellery weighing 3299.83 grams were found altogether from both the assessees (Smt. Radha Mittal bedroom 673.46 grams, Smt. Ruchi Mittal bedroom 491.67 grams and from locker of Radha and Ruchie Mittal 2134.70 grams). This quantum of jewellery is certainly substantial. Moreover the Ld. CIT(A) gave a very reasonable relief of 1100 grams of gold jewellery in the case of Radha Mittal and 700 grams in the case of Ruchie Mittal. ii) Smt. Radha Mittal was married for 35 years and Smt. Ruchie MIttal was married for 8 years only at the time of search. iii) Though both the assessee have possessed wealth beyond the wealth tax limit they were not filing wealth tax return. This indicates that the investment in gold jewellery is unexplained. iv) The admission made by Sh. R.K. Mittal husband of Radha Mittal u/s 132(4) of Rs. 0.79 crore each and further Rs. 1.31 crore from locker was not honoured by the assessees while filing the return of income. The surrender was retracted after two years of gap. 7.1 Further reliance was placed on the following judgments to contend that following decisions may kindly be considered with regard to addition u/s 69C of the Act:

    i) R. Mallika v. CIT 79 taxmann.com 117 (SC) CIT v. R. Mallika 219 Taxman 244 (Mad) ii) Sukh Ram v. ACIT 285 ITR 256 (Del) iii) Kahan Udyog v. CIT 219 Taxman 23 (Del) (Mag) iv) S. Rudramuniyappa v. CIT 75 taxmann.com 241 (SC)

    v) Karun Dutt Singh v. CIT 85 taxmann.com 177 (Ker) vi) CIT v. Kuwer Fibers (P) Ltd. 77 taxmann.com 345 (Del) vii) Ashokbhai H. Jariwala v. ACIT 80 taxmann.com 175 (Guj) viii) Mahabeer Prasad Jain v. CIT 88 taxmann.com 9 (All) 7.2 Further reliance was also placed on the following judgments to contend that following decisions may ALSO kindly be considered with regard to validity of statement recorded u/s 132(4) of the Act:

    i) Kishore Kumar v. CIT 234 Taxman 771 (SC) B. Kishore Kumar v. CIT 52 taxmann.com 449 (Mad) ii) Bhagirath Aggarwal v. CIT 351 ITR 143 (Del) iii) Smt. Dayawanti v. CIT 390 ITR 496 (Del) iv) M/s Pebble Investment and Finance Ltd. v. ITO 2017 TIOL 238 (SC)

    v) M/s Pebble Investment and Finance Ltd. v. ITO 2017 TIOL 188 (Bom) vi) Raj Hans Towers (P) Ltd. v. CIT 373 ITR 9 (Del) vii) PCIT v. Avinash Kumar Setia 81 taxmann.com 476 (Del)

    8. For the sake of convenience, we first adjudicate the issues raised in the ground nos. 2 to 4 in the case of Radha Mittal and Ground nos. 1 to 3 in the case of Ruchie Mittal challenging the addition sustained on account of unexplained jewellery under section 69A of the Income Tax Act, 1961 in the foregoing paragraphs. 8.1 We have heard both the parties and perused the records, especially the orders of the authorities below and the case laws referred by both the parties. We find that in this case a search & seizure operation under section 132 of the I.T. Act was conducted at the business premises of M/s CHD Developers group of cases and as well as in the residential premises of the directors on 23.11.2012, in consequence to which the case of assessees were taken up for scrutiny. The AO called for an explanation during the assessment proceedings explaining the jewellery found during the course of search. In response to the same, the assessee explained that jewellery belongs to the assessees having received as streedhan on the occasion of marriage and also received subsequently on occasions like birth of child etc. in pursuant to customs/tradition of family. According to the assessees the seized documents in the shape of Annexure A-4 shows that expenses were incurred at the time of marriage of Ruchie Mittal (assessee). The said documents reflects expenditure of Rs. 70,12,000/- was incurred in year 2005 and if the rate then prevailing of Rs. 8,000/- per gram and as against the rate on date of search of Rs. 30,000/- per grams is applied, the source of jewellery sustained of Rs. 2.51 crores stands explained. Thus investment in jewellery is explained from the seized documents that same was not acquired in the instant year. Neither the Ld. CIT(A) and, nor the AO have refuted the above claim. The ld. DR in his submissions has also not denied the above factual claim of the assessee. Even otherwise, in quantity terms, the total jewellery found during the course of search was 3299.83 gms. The ld. CIT(A) has allowed the benefit of 1100 gms in the case of Radha Mittal and 700 gms in the case of Ruchie Mittal as per CBDT Instruction No. 1916 dated 11.5.1994. No appeal has been preferred by the Revenue in respective of the quantity accepted in the impugned orders. Thus the quantity in dispute is Rs. 1499.83 gms (3299.83-(1100+700). The said jewellery has been held to be unexplained without appreciating the fact that assessees had been married for 35 years and 8 years respectively. Moreover they were jointly residing with their mother in law Shanti Mittal who had been married for about 65 years. Apart from the above the family comprised of husband of both the assesses and one son of Radha Mittal, which explains the possession of jewellery. We also observe that CBDT Instruction No. 1916 dated 11.5.1994 vide para no. (iii) stipulates as under: 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. 8.2 We find that the Delhi Bench of Tribunal in the case of Vibhu Agarwal v. DCIT in ITA No. 1540/D/2015 dated 4.5.2018 AY 2011-12 has accepted the jewellery value of 2531.3 gms following the instruction no. 1916 dated 11.5.1994 by holding as under: 6.1 In view of above instructions, the excess jewellery found in the case of assessee, his parents, his wife, their children and the HUF was very nominal, and was very much reasonable, keeping in mind the riches and high status and more customary practices. Our aforesaid view is fortified by following decisions/judgments:-

    i) Judgment of the Honble High Court of Delhi in the case of Ashok Chadha vs. ITO reported in 14 taxmann.com

    57 (Delhi)/202 Taxman 395 wherein the Honble High Court has accepted the jewellery of 906.60 grams in the case of married lady even without documentary evidence as the denying the explanation would tantamount to overlooking the realities of life by holding as under:- "As far as addition qua jewellery is concerned, during the course of search, jewellery weighing 906.900 grams of the value amounting to Rs. 6,93,582 was found. The appellant's explanation was that he was married about 25 years back and the jewellery comprised "streedhan" of Smt. Jyoti Chadha, his wife and other small items jewellery subsequently purchased and accumulated over the years. However, the Assessing Officer did not accept the above explanation on the ground that documentary evidence regarding family status and their financial position was not furnished by the appellant. The Assessing Officer accepted 400 grams of jewellery as explained and treated jewellery amounting to 506.900 grams as unexplained and made an ad hoc addition of Rs. 3,87,364 under section 69A of the Act working on unexplained jewellery, by applying average rate of the total jewellery found. The relevant portion of the assessment order reads as follows:- "a very reasonable allowance of ownership of gold jewellery to the extent of 400 grams is considered reasonable and the balance quantity of 506 grams by applying average rate, the unexplained gold jewellery is considered at Rs. 3,87,364 (506/900 x 6,93,582) u/s 69A of the Act." The CIT (A) confirmed this addition stating that the Assessing Officer had been fair in accepting the part of jewellery as unexplained. The ITAT has also endorsed the aforesaid view. Learned counsel for appellant Ms. Kapila submitted that there was no basis for the Assessing Officer to accept the ownership of the gold jewellery to the extent of

    400 grams only as "reasonable allowance" and treat the remaining jewellery of Rs. 506.900 as unexplained. She also submitted that another glaring fact ignored by the Assessing Officer as well as other authorities was that as the department had conducted a search of all the financial dealings which were within his knowledge and no paper or document was found to indicate that this jewellery belonged to the appellant and that it was undisclosed income of the assessment year 2006-07. In a search operation, no scope is left with the tax department to make addition on subjective guess work, conjectures and surmises. It was also argued that jewellery is "streedhan" of the assessee's wife, evidenced in the form of declaration which was furnished by mother-in- law of the assessee stating that she had given the jewellery in question to her daughter. She argued that it is a normal custom for a woman to receive jewellery in the form of marriage and other occasions such as birth of a child. The assessee had been married more than 25-30 years and acquisition of the jewellery of 906.900 grams could not be treated as excessive.

    3. Learned Counsel for the respondent on the other hand relied upon the reasoning given by the authorities below. After considering the aforesaid submissions we are of the view that addition made is totally arbitrary and is not founded on any cogent basis or evidence. We have to keep in mind that the assessee was married for more than 25-30 years. The jewellery in question is not very substantial. 'The learned counsel for the appellant/assessee is correct in her submission that it is a normal custom for woman to receive jewellery in the form of "streedhan" or on other occasions such as birth of a child etc. Collecting jewellery of 906.900 grams by a woman in a married life of 25-30 years is not abnormal. Furthermore, there was no valid and/or proper yardstick adopted by the Assessing Officer to treat only 400 grams as "reasonable allowance" and treat the other as "unexplained". Matter would have been different if the quantum and value of the jewellery found was substantial.

    4. We are, therefore, of the opinion that the findings of the Tribunal are totally perverse and far from the realities of life. In the peculiar facts of this case we answer the question in favour of the assessee and against the revenue thereby deleting the aforesaid addition of Rs. 3,87,364.

    5. Appeal is allowed in the aforesaid terms." ii) Honble Jurisdictional High Court in the case of Sushila Devi in Writ Petition No. 7620 of 2011 dated 21.10.2016 has held as under:- The income tax authorities rationale or justification is entirely insubstantial. The assessee says that she was married in mid 1960s and her daughters were born in 1967. She was 70 when these proceedings were started. The income tax authorities do not deny this. In the circumstances, the further explanation that the jewellery belonged to her and represented accumulations of gifts received from family members over a period of time, and also acquired during the subsistence of her marriage is reasonable and logical [para 9]. The assessees explanation is justified and reasonable. Her contention that the gold jewellery was acquired through gifts made by relatives and other family members over a long period of time, is in keeping with prevailing customs and habits. The obdurate refusal of the respondents to release the jewellery constitutes deprivation of property without lawful authority and is contrary to article 300A of the Constitution of India. The petition has to succeed; a direction is issued to the income tax authority to release the jewellery within two weeks and in that regard intimate to the assessee the time and place where she (or he representative) can received it [para 10]. iii) ITAT, Delhi decision in the case of Suneela Soni vs. DCIT passed in ITA No. 5259/Del/2017 dated 16.3.2018 wherein the Tribunal has accepted the jewellery in excess of limits specified in the CBDT Instruction No. 1916, by following the decision of the Honble Delhi High Court in the case of Ashok Chadha vs. ITO (Supra). 6.2 After perusing the aforesaid decisions of the Honble Delhi High Court as well as the ITAT, Delhi, we are of the considered view that facts and circumstances of the present case are similar to the aforesaid decision of the Honble Delhi High Court and Tribunal, hence, the issue in dispute is squarely covered by the aforesaid decisions. 6.3 Keeping in view of the aforesaid facts and circumstances of the case as well as the status of the family and on the anvil of the judgement of the High Court of Delhi in the case of Ashok Chadha vs. ITO (Supra) & of Sushila Devi in Writ Petition No. 7620 of 2011 dated 21.10.2016 and the ITAT Delhi decision in the case of Suneela Soni vs. DCIT passed in ITA No. 5259/Del/2017 dated 16.3.2018, the explanation given by the assessees counsel is accepted. Accordingly the orders of the authorities below are cancelled and addition made by the AO and partly confirmed by the Ld. CIT(A) on account of balance jewellery weithting 1050 gms of gold as unexplained is hereby deleted. 8.3 Moreover it is germane to mention here that the Ld. CIT(A) while granting the benefit of jewellery of 1100 gms in the case of Radha Mittal and 700 gms in the case of Ruchie Mittal and 700 gms in the case of Ruchie Mittal has incorrectly applied the rate of 2100 per gram as against the average rate of jewellery found @ 8758.83 per gms. The judgment of Jurisdictional High Court in the case of Ashok Chaddha 202 Taxman 395 directly applies here wherein the Assessing Officer himself accepted the aforesaid method and was also accepted by the Honble High Court as would be evident from the following observations: As far as addition qua jewellery is concerned, during the course of search, jewellery weighing 906.900 grams of the value amounting to Rs.6,93,582 was found. The appellant's explanation was that he was married about 25 years back and the jewellery comprised "stree dhan" of Smt. Jyoti Chadha, his wife and other small items jewellery subsequently purchased and accumulated over the years. However, the Assessing Officer did not accept the above explanation on the ground that documentary evidence regarding family status and their financial position was not furnished by the appellant. The Assessing Officer accepted 400 grams of jewellery as explained and treated jewellery amounting to 506.900 grams as unexplained and made an ad hoc addition of Rs. 3,87,364 under section 69A of the Act working on unexplained jewellery, by applying average rate of the total jewellery found. The relevant portion of the assessment order reads as follows:- "a very reasonable allowance of ownership of gold jewellery to the extent of 400 grams is considered reasonable and the balance quantity of 506 grams by applying average rate, the unexplained gold jewellery is considered at Rs. 3,87,364 (506/900 6,93,582) u/s 69A of the Act." 8.4 The ld. DR has relied on the statement recorded of Sh. R. K. Mittal u/s 132(4) of the Act. It is however not denied that there was no surrender made by any of the assessees. Further even as per the statement of Sh. R.K. Mittal (husband of Radha Mittal) disclosure was made of Rs. .79 lacs in the hands of Radha Mittal, Rs. .79 lacs in the hands of Ruchie Mittal and Rs. 1.31 crores in the hands of R.K. Mittal husband of Radha Mittal. Contrary to the above additions were made on account of unexplained jewellery u/s 69A of the Act in the hands of assessees and no addition has been made in the hands of R.K. Mittal. Moreover Ld. CIT(A) granted benefit of Rs. 23,10,000/- in the case of Radha Mittal and Rs. 14,20,000/- in the case of Ruchie Mittal which has also not been disputed by revenue. In any case even otherwise it is a matter of record that no taxes were paid by the assessees or R.K. Mittal in respect of the above statement and such a statement were never acted upon either by the assessees or by R. K. Mittal. Also letters had been furnished on 24.1.2013 and 5.7.2013 i.e. within 2 months of search that declaration by R.K. Mittal was merely estimated and tentative figures. Having regard to the above each of the judgments relied upon by the ld. DR on the validity of statements recorded are inapplicable to the facts of the assessee. In absence of any surrender made by the assessees u/s 132(4) of the Act, no obligation was imposed upon them to offer the impugned sums as income. Also judgments u/s 69C of the Act are distinguishable on the facts of the assessees. These judgments essentially relate to cash seized which were held to be unexplained which is not the case of the assessee. In the case of Karun Dutt Singh v. CIT 85 taxmann.com 177 (Ker) it was noted that AO made addition to assessees income in respect of gold ornaments recovered from him after rejecting explanation that it belonged to his employer company since Director of employer company denied to have given ornaments to assessee for sale or as samples. There is no denial in the instant case either by the assesses or R.K.Mittal or any other person. The consistent explanation has been that acquisition of jewellery is as streedhan on marriage or other occasions and same could not be said to be unexplained jewellery. The basis that assessees have not filed wealth tax returns cannot be a ground to make an addition in view of the judgment of Roshan Di Hatti v. CIT 107 ITR 938 (SC). Having regard to the foregoing we hold that additions were made in the hands of assessee are not in accordance with law and therefore the same are deleted and accordingly, the ground no. 2 to 4 raised in Radha Mittals case and ground no. 1 to 3 in Ruchie Mittals case stand allowed.

    9. However, the ground No. 1 was not pressed in the case of Radha Mittals case and therefore the same is dismissed as such and Ground 5 in the case of Radha Mittals case and Ground 4 in the case of Ruchie Mittals case are relating to levy of interest which are consequential in nature.

    10. In the result, the ITA No. 2810/Del/2016 (AY 2013-14) in Radha Mittals case stands partly allowed and ITA No. 2811/Del/2011 (AY 2013-14) in Ruchie Mittals case is allowed. Order pronounced on 09-07-2018. Sd/- Sd/- [L.P. SAHU] (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 09-07-2018 SR BHATANGAR Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT(A), New Delhi. 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.

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