Date of Order: June 13, 2023
Case Number: ITA 2831/DEL/2022
Assessment Year: 2019-20
This case involves an appeal filed by DC IT Central Circle-19, New Delhi, challenging the order of CIT(A)-27, New Delhi, which addressed the disallowance under Section 69A of the Income Tax Act, 1961, for the assessment year 2019-20. The respondent in this case is Rekha Khaitan, a resident of New Delhi.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench ‘F’, consisting of Accountant Member Shri Shamim Yahya and Judicial Member Shri Anubhav Sharma, reviewed the case. The case arose from search and seizure operations conducted on January 19, 2019, in the Gautam Khaitan Group of cases. Rekha Khaitan, widow of Late O.P. Khaitan and mother of Gautam Khaitan, filed a return of income declaring a total income of Rs. 1,57,590.
During the search, jewelry worth Rs. 7,64,46,500 was found at the residence and bank locker of Rekha Khaitan. The Assessing Officer (AO) sought an explanation for the jewelry, considering wealth tax returns and invoices. The AO concluded that jewelry worth Rs. 1,14,15,054 remained unexplained and made an addition under Section 69A.
The appellant, represented by Anand Chaudhari, Adv., Sh. Mahesh Kumar, CA, and Sh. Saurabh Nandy, Adv., argued that the jewelry should be considered explained based on wealth tax returns, bills, and customary practices. The appellant claimed that the unexplained jewelry could be attributed to gifts received on various occasions.
The respondent, represented by Sh. Sanjay Tripathi, Sr. DR, contended that the jewelry remained unexplained due to insufficient documentary evidence to support the source of the money used for purchasing the jewelry.
The tribunal considered the submissions and noted discrepancies in the explanations provided by the appellant. The tribunal found that the benefit extended by the CIT(A) under Circular No. 1916 was not justified and that the excess jewelry should be considered unexplained.
The tribunal also observed that the CIT(A) had incorrectly applied Section 69A instead of Section 69B and noted that the jewelry shown in wealth tax returns need not match item-wise but should be considered in total weight. The tribunal concluded that the appellant failed to provide a specific explanation for the excess jewelry beyond what was declared in the wealth tax returns.
The ITAT allowed the appeal of the revenue and dismissed the appeal of the assessee. The tribunal upheld the addition of Rs. 1,14,15,054 as unexplained jewelry under Section 69A of the Act.
This case highlights the importance of providing specific and detailed explanations for unexplained assets in tax matters. The tribunal’s decision emphasizes the need for thorough documentation and substantiation of claims regarding the source of funds for acquiring assets.
Order pronounced in the open court on June 13, 2023.
Accountant Member: Shri Shamim Yahya
Judicial Member: Shri Anubhav Sharma
Assessee Representation: Anand Chaudhari, Adv., Sh. Mahesh Kumar, CA, and Sh. Saurabh Nandy, Adv.
Department Representation: Sh. Sanjay Tripathi, Sr. DR
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