Facts of the Case

A search and seizure operation under Section 132 of the Income-tax Act was conducted at the premises of the assessee. During the search, jewellery was found and seized. In the assessment proceedings pursuant to the search, the Assessing Officer treated the jewellery as unexplained and made additions to the income of the assessee.

The additions were partly confirmed by the Commissioner of Income Tax (Appeals). The assessee challenged the additions before the Income Tax Appellate Tribunal.

The Tribunal delivered its order on the appeal. Subsequently, a separate concurring order was issued by the Accountant Member, agreeing with the ultimate conclusion but providing different reasoning with respect to the addition relating to jewellery found during the search.

Issues Involved

  1. Whether the jewellery found during search constituted unexplained assets liable to addition.
  2. Whether the additions made by the Assessing Officer were justified under the Act.
  3. Whether the findings of the lower authorities regarding ownership and explanation of jewellery were sustainable.
  4. Whether separate reasoning could be adopted while concurring with the final result.

Petitioner’s Arguments (Assessee)

  • The jewellery found during the search belonged to the assessee and family members and was duly explained.
  • The quantity and nature of jewellery were consistent with normal household holdings.
  • The additions were excessive and not supported by evidence.
  • The Assessing Officer failed to properly consider explanations and supporting material.
  • Relief granted by the Tribunal should extend to deletion of additions relating to jewellery.

Respondent’s Arguments (Revenue)

  • Jewellery found during search represented unexplained assets.
  • The assessee failed to satisfactorily establish the source of acquisition.
  • The additions made by the Assessing Officer were justified under the law governing unexplained assets.
  • The findings of the CIT(A) were correct and required no interference.

Court Order / Findings (ITAT — Concurring Order)

The Accountant Member agreed with the final outcome of the Tribunal’s decision but differed in reasoning regarding the addition related to jewellery.

It was observed that while the conclusions reached by the Judicial Member were acceptable, the analysis supporting deletion of additions required independent elaboration. Accordingly, a separate concurring order was issued addressing the treatment of jewellery found during search.

The Tribunal ultimately granted partial relief to the assessee, modifying the additions made by the lower authorities.

Important Clarification

This order highlights that:

  • Members of the Tribunal may concur with the final decision while recording separate reasoning.
  • Additions relating to assets found during search must be evaluated on facts and explanations provided.
  • Treatment of jewellery in search cases requires consideration of ownership, customary holdings, and evidentiary support.
  • Appellate adjudication may result in modification rather than complete deletion of additions.

Link to download the order - 

https://itat.gov.in/public/files/upload/1672910180-New%20ITA%20No.%20573%20Alld%202014%20Concurring%20Order.pdf

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