Case Number: ITA 1060/DEL/2021
Appellant: DCIT Central Circle-13, New Delhi
Respondent: Nirmal Kumar Minda, New Delhi
Assessment Year: 2018-19
Case Filed On: 2021-09-07
Order Type: Final Tribunal Order
Date of Order: 2023-05-03
Pronounced On: 2023-05-03
The case involves cross appeals by the assessee, Nirmal Kumar Minda, and the revenue, represented by the DCIT Central Circle-13, New Delhi. The core of the dispute revolves around the addition of unexplained jewellery and paintings discovered during a search operation conducted on June 8, 2017, at the residence of Nirmal Kumar Minda.
A search and seizure operation under Section 132 of the Income Tax Act was conducted on June 8, 2017. During the search, jewellery valued at Rs. 2,64,35,029/- and six paintings were found at the residence of the assessee. The assessing officer (AO) added Rs. 2,64,35,029/- under Section 69B read with Section 115BE of the Income Tax Act, claiming the source of acquisition was unexplained.
The assessee explained that the jewellery was part of his Wealth Tax Return and provided a detailed reconciliation of the jewellery with the Wealth Tax Return and books of accounts. The AO was not convinced, leading to the addition of Rs. 2,64,35,029/-. However, the Commissioner of Income Tax (Appeals) [CIT(A)] provided partial relief, reducing the addition to Rs. 3,31,778/- due to discrepancies in the reconciliation of certain items like colored stones and pearls.
Regarding the six paintings, the AO valued them based on reports from two different valuers. The CIT(A) directed the AO to adopt the valuation from the Delhi Art Gallery. Both the assessee and the revenue challenged this valuation in their appeals.
The AO also added Rs. 1.50 lakhs for wrist watches found during the search, citing an unexplained source of acquisition. The assessee argued that the source was justified by household withdrawals and the returned income, which the AO dismissed.
The tribunal, comprising Sh. N. K. Billaiya (Accountant Member) and Sh. Anubhav Sharma (Judicial Member), considered the evidence and arguments presented by both sides.
The tribunal noted that the total jewellery declared by the family unit exceeded the jewellery found during the search. Referencing the case of Ashok Chaddha vs. ITO, the tribunal emphasized the importance of considering family customs and the regular acquisition of jewellery over time. Consequently, the tribunal directed the AO to delete the entire addition of Rs. 2,64,35,029/- related to jewellery.
The tribunal observed discrepancies in the valuation reports and noted the absence of specific defects in the assessee’s valuation report. Considering the paintings’ purchase years and the lack of evidence against the assessee’s claims, the tribunal directed the AO to delete the addition of Rs. 37.50 lakhs.
For the wrist watches, the tribunal, referencing the status and richness of the family, found the addition of Rs. 1.50 lakhs to be without merit and directed the AO to delete it.
The tribunal allowed the appeal of the assessee and dismissed the appeal of the revenue, directing the AO to delete the additions related to jewellery, paintings, and wrist watches.
The final judgment reflects a comprehensive consideration of the assessee’s explanations, family customs, and precedents set by higher courts, leading to a favorable outcome for Nirmal Kumar Minda.
Order Pronounced: May 3, 2023
By: Sh. N. K. Billaiya (Accountant Member) and Sh. Anubhav Sharma (Judicial Member)
Source: Income Tax Appellate Tribunal, Delhi Bench ‘E’, New Delhi
Unexplained Jewellery and Paintings Dispute: Nirmal Kumar Minda vs DCIT Central Circle-13
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