Case Number: ITA 1511/DEL/2020
Appellant: Nirmal Minda, New Delhi
Respondent: ACIT Central Circle-13, New Delhi
Assessment Year: 2018-19
Result: Jewelry and Paintings Valuation Challenged
Case Filed On: 2020-08-28
Order Type: Final Tribunal Order
Date of Order: 2023-05-03
Pronounced On: 2023-05-03
The case of Nirmal Minda vs. ACIT revolves around the challenge to the valuation of jewelry and paintings for the assessment year 2018-19. This appeal was brought before the Income Tax Appellate Tribunal (ITAT) Delhi Benches ‘E’, where the appeal by Nirmal Minda was heard and the Tribunal provided specific directions for further proceedings.
Nirmal Minda, the appellant, faced a search and seizure operation under section 132 of the Income Tax Act, conducted on June 8, 2017. During the search, jewelry and silver articles amounting to Rs. 2,64,35,029/- were found and seized from the appellant’s residence. During the assessment proceedings, the appellant was asked to explain the source of the jewelry acquisition with documentary evidence.
The appellant explained that the jewelry found was part of the Wealth Tax return and the books of accounts, providing a detailed reconciliation. However, the Assessing Officer (A.O.) was not satisfied with the explanation and made an addition of Rs. 2,64,35,029/- under section 69B read with section 115BE of the Income Tax Act. The appellant challenged this addition before the Commissioner of Income Tax (Appeals) [CIT(A)], who provided partial relief but sustained an addition of Rs. 3,31,778/- for unreconciled color stones and pearls.
Both the appellant and the Revenue appealed to the ITAT. The appeals were heard together and disposed of by a common order for convenience. The ITAT comprised Sh. N. K. Billaiya (Accountant Member) and Sh. Anubhav Sharma (Judicial Member).
The Counsel for the appellant reiterated the explanations provided before the lower authorities, emphasizing that the jewelry found during the search was duly declared in the Wealth Tax returns and books of accounts. The Counsel for the Revenue supported the findings of the A.O.
The ITAT considered the overall jewelry found during the search and declared in the Wealth Tax returns. It was noted that the total jewelry declared by the family unit was more than the jewelry found during the search. The ITAT referenced the judgment of the Delhi High Court in the case of Ashok Chaddha vs. ITO, highlighting that it is customary for families to acquire and hold jewelry over time, which should not be considered unexplained without substantial evidence to the contrary.
The ITAT found that the A.O. did not point out specific defects in the reconciliation provided by the appellant and made general remarks about the non-matching items. Considering the family’s status and the declared income, the ITAT concluded that there was no merit in the addition made by the A.O. and directed the deletion of the entire addition of Rs. 2,64,35,029/-.
The ITAT also considered the addition of Rs. 37.50 lakhs under section 69B for six paintings found at the appellant’s residence. The A.O. adopted a higher valuation, while the CIT(A) directed the adoption of a lower valuation. The appellant provided independent valuations, and the ITAT noted discrepancies in the departmental valuations, particularly regarding the year of purchase.
The ITAT emphasized the importance of considering the family’s status and overall financial situation, finding no merit in the addition of Rs. 37.50 lakhs and directing its deletion.
The ITAT also addressed the addition of Rs. 1.50 lakhs for seized wrist watches, considering the family’s status, income, and household withdrawals. The ITAT found no merit in this addition and directed its deletion as well.
The ITAT’s decision underscores the importance of considering the overall financial situation and status of the family when assessing the valuation of assets. By granting Nirmal Minda relief on all contested additions, the Tribunal reinforced the principles of fairness and the necessity of substantial evidence to support additions during assessments.
Order:
In the result, the appeal of the assessee is allowed and that of the Revenue is dismissed.
Order pronounced in the open Court on May 3, 2023.
Sd/- Anubhav Sharma, Judicial Member
Sd/- N. K. Billaiya, Accountant Member
Copy to:
// By Order //
Assistant Registrar, ITAT Delhi Benches, Delhi
Nirmal Minda vs. ACIT: Challenge on Jewelry and Paintings Valuation for Assessment Year 2018-19
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