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2023 (5) TMI 954 - AT - Income TaxLTCG on deemed sale of jewellery - Shortage in Jewellery detected during search and quantity declared in wealth tax return - whether the AO can resort to determination of notional LTCG or not? - HELD THAT:- The shortage of jewellery could have been questioned at the time of search and any evidence with regard to the sale of jewellery should be collected during the search or post search enquiry. Nothing of such investigation has been made by the revenue authorities. The revenue authorities have been failed to invoke the provisions of the Act with regard to search & seizure and finding of the jewellery kept in any other premises, have come to presumption of “sale” of such jewellery and determined capital gains. Absolutely no material to prove that there has been such sale which led to Long Term Capital Gains. There is no provision in the Income Tax Act to deem the difference between value of the jewellery declared (in the Wealth Tax Return) and the value of the jewellery found in the search, in case the jewellery falls short of the amount/quantity declared in the WTR. Hence, we direct that the addition made on account of Long Term Capital Gains on the purported, notional, fictitious sale of jewellery be deleted. Addition u/s 69A - loose diamond as per the WTR and the jewellery seized which has been subsequently treated as unexplained investments - submission of the assessee that the loose diamonds which were part of the Wealth Tax Return were studded in the jewellery subsequently and that was the reason that the description of the jewellery was different - HELD THAT:- These three issues need to be examined holistically. Jewellery seized is intra polated in the jewellery found - Hence, entire disclosed jewellery as per the WTR and as found in the premises, we hold that no addition can be made on this account. Appeal of the assessee is allowed.
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