ITAT Deletes Addition Made On Streedhan Based On Social Status

The two-member bench of Sandeep Gosain (Judicial Member) and Rathod Kamlesh Jayantbhai (Accountant Member) has observed that the AO failed to verify that the assessee was living with his parents and belonged to a Rajput family where the fact of having jewellery as Streedhan by the assessee's mother and wife cannot be ignored. Keeping in view of high status, family tradition, deduction on account of purity and the deduction towards Streedhan, the excess jewellery found was nominal.

The appellant/assessee is an individual and is an architect by profession. A search action was conducted. The assessee was treated as a member of the Kiran Fine Jewellers Group, whereas the assessee, from the very beginning, had taken a firm stand that, except for professional relations, the assessee had no other business connections with the Fine Jewellers Group. However, the addition of Rs.24,03,035 was made on account of jewellery found during the course of search by treating it as an unexplained investment. The CIT (A), while partly allowing the appeal of the assessee, restricted the addition to Rs.17,55,262.

During the course of search, total jewellery comprising gold jewellery weighing 1921.800 grams valued at Rs.47,97,013 (studded with precious and semi-precious stones valued at Rs.6,47,773) and silver jewellery valued at Rs.2,02,628 was found. During the course of assessment proceedings, the AO allowed the benefit in respect of gold jewellery worth 1300 gms in terms of CBDT Instruction No. 1916 dated 11.05.1994 and made the addition which was restricted to Rs. 17,55,262 by the CIT(A).

The assessee contended that the assessee belongs to Rajput Community of Rajasthan. As per customs of the Community, some of the Gold/Silver Jewellery is passed on to the subsequent generations and some of the jewellery was received on various festivals and ceremonies. The assessee had furnished photographs of functions and marriages to show that ladies of his family wearing heavy gold jewellery which according to him is a part of Stridhan and deserves to be treated as explained. The assessee highlights the cash withdrawn from his bank account for purchasing some jewellery from time to time in the past many years out of his own savings. Therefore, the acquisition of jewellery is not excessive looking at the social status of the assessee.

The ITAT held that ​​there was no point granting the discretion to the Income Tax Authorities to decide as to what can be a reasonable quantity of jewellery held by an assessee in view of community practices and social status.

Case Title: Gyanendra Singh Shekhawat Versus The ACIT

Citation: ITA No. 49/JP/2022

Dated: 27 /07/2022

Counsel For Appellant: CA Manish Agarwal

Counsel For Respondent: CIT Sanajy Dhariwal

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