This case involves Ankur Sharma, a resident of Ghaziabad, challenging an addition of Rs. 20,44,870 to his income. This amount represents one-third of Rs. 61,34,610, attributed to unexplained gold ornaments discovered during a search operation by the Income Tax authorities.
During the search at Sharma’s residence, 3877.5 grams of gold jewellery valued at Rs. 1,46,15,635 were found. The Income Tax Department questioned the source of a portion of this jewellery, which Sharma claimed was inherited and received during family marriages. Despite these claims, the Assessing Officer deemed Rs. 61,34,610 of the jewellery as unexplained, invoking sections 69A and 115BBE of the Income Tax Act. The case was escalated after the Commissioner of Income Tax (Appeals) upheld the addition, leading Sharma to appeal to the ITAT.
The ITAT examined the case, considering Sharma’s familial background, the customary practices of receiving gold during significant occasions, and his financial capacity demonstrated by the family’s income. Despite the authorities’ stance, ITAT found the addition of the unexplained jewellery to be excessive and not substantiated by adequate evidence. They highlighted the absence of any incriminating material specifically linking the discovered jewellery to undisclosed income.
The tribunal’s decision to delete the addition was influenced by previous case law and the principle that mere possession of jewellery, without clear evidence of its purchase with undisclosed income, does not automatically imply tax evasion. This case underscores the complexities involved in assessing unexplained assets and the importance of contextual family practices in such evaluations.
Exploration of Unexplained Jewellery in ITA 1843/DEL/2022: Ankur Sharma vs. DCIT, Ghaziabad
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