ITAT Relief on Ancestral Jewellery: Tax Dispute Verdict

When ancestral valuables are declared in income tax filings, having a solid paper trail matters significantly. The Income Tax Appellate Tribunal Mumbai recently offered a clear look at how historical records protect assets during tax assessments.

The Ancestral Jewellery Dispute

Questions often arise about what happens when family heirlooms are disclosed for the first time in tax returns. In this case, a taxpayer declared Rs 67,39,949 in ancestral jewellery under Schedule AL, which prompted the tax department to treat it as unexplained money under Section 69A.

• Tax department stance: Assumed the jewellery was sold because wealth-tax returns stopped after 1997-98.
• Taxpayer defense: Provided old wealth-tax returns showing Rs 19.55 lakh, valuation reports, and a 2015 family distribution declaration.
• Tribunal ruling: Deleted the tax addition, noting the department relied on too many assumptions.

Without original purchase bills, old valuation records and family declarations can still serve as a reliable documentary trail. The tribunal confirmed that failing to file wealth-tax returns in later years does not automatically mean inherited items were sold.

The Brokerage Claim Rejection

Not every claim made during a property transaction sails through scrutiny. The tribunal had to look closely at a brokerage fee paid to a Hindu Undivided Family during a property deal.

• Brokerage amount: Rs 12 lakh paid to an HUF.
• Personal capacity payment: An identical Rs 12 lakh was already given to an individual for the same services.
• Tribunal decision: Upheld the disallowance because distinct or additional services by the HUF could not be proven.

Business expense claims require distinct proof of separate services rendered. Keeping documentation clear and separate for every entity involved ensures tax filings remain clean and defensible.