The Income Tax Appellate Tribunal (ITAT) has ruled that for the gold/silver jewellery belonging to the entire family, additional tax liability cannot be imposed on any one family member.

Once it is accepted that these items belong to all the family members and the assessee has given specific details regarding such items identified to each of the individual members, the remaining items should therefore, be accepted as belonging to respective family members and not just the assessee, the Jaipur bench of the ITAT said in its ruling pronounced on August 3.

The Bench also said that the assessee and her mother have already declared silver jewellery items in their respective wealth tax returns.

During search operations conducted by the Income Tax Department in this case, jewellery including gold and silver items, silver coins, etc. were found in the locker being operated by the mother of the assessee and inventoried by the Department. Net weight of gold, silver and coins was around 7.5 kg, and as per the Department valuer, valued was ₹37.22 lakh.

During the course of assessment, it was said that the jewellery belonged to the family members. The mother of the assessee used to file wealth tax returns. But the Assessment Officer (AO) was not satisfied as there were affidavits from the family members, but no supporting documents. Accordingly, he made an addition to the taxable income of the assessee and also imposed penalty on undisclosed income.

At the first appeal level, Commissioner of Income Tax (Appeal) deleted the addition related to gold, but confirmed about the silver jewellery. Aggrieved by this, the assessee moved the Jaipur bench of ITAT.

The government, in 2016, had clarified that jewellery/gold purchased from disclosed income or out of exempted income like agricultural income or out of reasonable household savings or legally inherited money, which has been acquired out of explained sources, is neither chargeable to tax under the existing provisions nor under the proposed amended provisions. In this connection, a reference to instruction No. 1916 (dated May 11, 1994) is also invited which provides that during the search operations, no seizure to gold jewellery and ornaments to the extent of 500 grams per married lady, 250 grams per unmarried lady and 100 grams per male member of the family shall be made. Further, legitimate holding of jewellery up to any extent is fully protected.

The Bench observed that as against 1.480 kg of silver items belonging to the assessee, he had already declared 0.5 kg of silver in his wealth tax return for Assessment Year 1992-93. The possession of the remaining 0.98 kg of silver items over the period of 24 years and given the societal custom of accepting/buying such items on occasion of birth and other social functions seems reasonable. Accordingly, the bench gave relief to the assesses.

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