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2021 (1) TMI 1079 - AT - Income TaxUnexplained jewelery - Search and seizure operations u/s 132 - gold ornaments weighing 7442.30 grams was found, which included bullion of 1500 grams - HELD THAT:- Since there was variation between the copy of stock register taken during the course of search and the copy submitted during the course of search, the AO has rejected the above said explanations. In our view, before rejecting the explanations of the assessee, the AO should have conducted necessary with regard to the veracity of the suspected entries made in the stock register. However, the AO did not conduct any enquiry to find out the veracity of alleged modifications made in the stock register. Accordingly, we are of the view that the AO was not justified in making this addition and the Ld CIT(A) was also not justified in confirming the same. If the stock register of M/s B & B Jewellers and Finance Ltd has been accepted in its assessment by the concerned assessing officer and further, in the absence of any other credible material to support the view of the AO, we are of the opinion that there is no reason to take a different view in the hands of the assessee. Since this fact requires verification, we restore this issue to the file of the AO for the limited purpose of examining the view taken by the AO in the hands of M/s B & B Jewellers and Finance Ltd. If the AO of the above said company has accepted the stock register, then we direct that the present addition should be deleted. Addition relating to 2668.390 grams of jewellery found during the course of search - assessee explained that they belong to his wife Smt. Teena Bethala and they were purchased in 2004 - HELD THAT:- In the instant case, the jewelleries have been found during the course of search. Hence it cannot be considered as a case of accommodation entry, as presumed by the AO. In any case, as rightly pointed out by Ld A.R, the AO has entertained this presumption only on surmises and conjectures. The evidence furnished by the assessee proves the factum of purchase of jewellery. Absence of description of jewelleries, in our view, cannot be ground to suspect the nature of transaction, since the bill could have been prepared on the basis of understanding of the parties and further other factors support the genuineness of the transactions. We notice that the AO has not conducted any enquiry with Smt Teena Bethala and hence he could not have drawn any conclusion on the basis of return of income filed by her. AO has not brought on record any credible material to disprove the explanations of the assessee and accordingly we are of the view that this addition could not be made in the hands of the assessee. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete this addition Addition relating to 2308 grams relating to undisclosed investment in jewellery - assessee submitted that these jewelleries belong to various members of the family - HELD THAT:- When the assessee, his parents and brother are living in joint family, in our view, the credit should be given for all the members of the joint family. CIT(A) should have given credit for all the family members (including parents and brother’s family) as per the CBDT instructions. Accordingly, we direct the AO to give credit for the parents and family members of assessee’s brother also. In case, any jewellery still remains, the AO may consider giving further credit on the basis of family status of the assessee. With these directions, we modify the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO to follow the discussions made supra.
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