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TMI Blog2018 (1) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... lver utensils were found at the residence of the assessee. The jewellery found was valued at Rs. 2,38,64,031/-. The only issue in this appeal relates to addition u/s. 69A of the Act, alleged undisclosed jewellery which has been confirmed by CIT(A) to the extent of Rs. 22,57/632/-/ being diamond jewellery. The primary basis for addition is that the items of diamond jewellery found in search do not match with items disclosed in valuation report of year 2000 which forms the basis of Wealth Tax returns of assessee. An item by item tally has been undertaken by the assessing officer to come to this conclusion. In the course of search the entire ornaments and jewellery found were clubbed together ignoring the fact that it belonged to three members, assessee her husband Shri Gautam Hari Singhania, and minor daughter Miss Niharika Singhania. Only one inventory was drawn and no identification of ownership was done. ' 4. From the record, I found that assessee and her husband have been Wealth Tax Assessees. Miss Niharika Singhania being minor, her wealth has been clubbed with Mr Gautam Hari Singhania. The basis of filing the wealth tax return of assessee has been a valuation as on 31/03/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was contended that once on the facts stated above, the jewellery of the assessee could not have been seized in accordance with Instruction No. 1916 dated 11th May 1994, no addition could have been made by the Assessing Officer in respect of such declared jewellery. This contention finds support from the following decisions, which are briefly elaborated in this submission. 1) Decision of Special Bench of Ahmedabad ITAT in the case of Rameshchandra R. Patel reported in 89 ITD 203 : 10. This decision was delivered on 27.02.2004 and in talking about the Instruction No. 1916, the Third Member has explained the intention of the Instruction in following terms : 'Though the Instruction speak of not seizing the same, the extended meaning of the same shows the intention that the jewellery is to be treated as explained one and is not to be treated as unexplained for the purpose of Income Tax Act". 11. As per learned AR, instruction 1916 dated 11/05/1994 dictates jewellery not to be seized in given facts of the case, it has to be treated as explained for the purpose of Income Tax Act and consequently, addition on account of the same cannot be made in assessment. An extended meani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned and deleted the addition made by the A.O. on account of unexplained jewellery." 16. The decision has been delivered in following terms: "The only contention that has been raised by the Ld. DR is that the CBDT Circular 1916 dated 11.05.1994 lays down certain guidelines for seizure of jewellery found during the course of search and the same cannot be relied upon to treat the jewellery found during the course of search as explained, unless there is other evidence to corroborate the explanation of the assessee as regards the source of jewellery found during the course of search. It is however observed that this aspect of the matter has already been consented by Hon'ble Gujrat High Court in the case of CIT vs. Ratanlal Vyaparilal Jain (supra) relied upon by the Ld. CIT(A) wherein it was held that even though the CBDT instruction 1916 dated 11.051994 lays down the guidelines for seizure of jewellery in the course of search, the same takes into account the quantity of jewellery which could generally be held by family members belonging to an ordinary household. Hon'ble Gujrat High Court therefore upheld the approach adopted by the Tribunal in following the said Circular and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "We feel that the submission made by the Learned Counsel that the intention underlying CBDT Instruction issued on 11,05.1994 is also relevant with reference to deeming provisions of Section 69A, has force." 21. As per learned AR it is pertinent here to draw attention to CBDT Circular no. 14(XL-35) dated 11-04-1955, which holds good even today having not been withdrawn or superceded, the relevant portion of which read as under: "Officers of the department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the department, for it would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds and reliefs rests with the assessees on whom it is imposed by law, officers should - (a) draw their attention to any refu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e me. From the record I found that addition has been made with respect to the jewellery found during course of search after comparing the same with the jewellery declared by the assessee in their wealth tax returns. It is clear from the facts narrated above that gross weight of declared jewellery was at Rs. 1876.11 grams more than the gross weight of jewellery found in the course of search at 1650.10 grams (1295.90 + 354.20). This fact has also been accepted by the lower authorities. The Instruction No. 1916 has been issued in connection with effecting seizure of jewellery etc. in the course of search. The power of seizure in the course of search is derived from Clause (iii) of Section 132(1), which reads as under: "(iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search." 27. The power to seizer is only in the respect of "such" jewellery. It is necessary to reflect upon the linkage that the phrase "such" is referring to. The linkage has to be logically available within the section 132 of the Act under consideration, for otherwise phrase "such" shall lose its significance. A reference t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the purpose of non- seizure of jewellery during the course of search, the basis for the same recognizes customs prevailing in Hindu Society." 30. The instruction itself has recognized the need to take into account the social and customary practices into account when clause (iii) of the Circular 1916 dated 11th May 1994 specifies as under: "(iii) The authorized officer may, having regard to the status of the family and the customs 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 reported to the Director of Income-tax/Commissioner authorising the search at the time of furnishing the search report." 31. What is relevant critically includes status of the family, as well as customs and practices of the community to which the assessee belongs. It is keeping in view this philosophy, which is the primary basis for the circular, that for a wealth tax assessee, it is the gross weight which has been prescribed as the basis of decision making. The reason is appreciation of the facts that jewellery is frequently converted into different design dependin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jewellery, the assessee had taken the following objections: a. The jewellery found has been tallied with valuation done by the assessee ten years in the past and during the intervening period, several items were remade which has led to several items not tallying b. Items were received as gifts on various occasions c. Manner in which valuation was done by department's valuer during the search, in bathroom devoid of space and adequate light, and under time pressure (which facts have been recorded in statement on oath recorded during the search) have led to mistakes (which have also been acknowledged and credit given by CIT(A) in his order) and to improper description noted down in the report, All this it was claimed, has led to mismatch between jewellery found and those appearing in assessee's valuation report for wealth tax purposes. 36. Perusal of the assessment order clearly reveals that all these objections raised have been acknowledged by assessing officer but while taking the decision, these are dismissed without assigning any reasons whatsoever. The only observation of assessing officer is as under: "The explanation of the assessee has been considered and the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt the status of the family, customs and practices of the community to which the family belongs. Therefore rejection in the manner done by the appellate authority is not justified at all. 39. The CBDT Instruction 1916 dated 11th May 1994, in particular clause (iii) has to be looked into in background perspective of Raymond Group to which assessee belongs. The assessee has to attend social gatherings. The family functions are conducted on large scales and the list of invitees again is the cream of the society. A necessary concomitant is remaking of the jewellery; for repetition of the same items in any Indian society, including that of assessee, is bound to be looked down upon. Another necessary corollary is the spate of gifts that are received and, frequently, these are ornaments and jewellery, often high value items. 40. Keeping the status of assessee's family in mind as well as customs and practices of the community to which the family belongs as detailed in preceding paragraphs/ the benefit of CBDT Instruction 1916 dated 11th May 1994, is warranted for assessee. 41. In view of the above discussion, I do not find any merit for the addition so made on account of Gold and Diamon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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