Mere affidavits of family members not enough claim benefit of CBDT Instruction No. 1916/1994

Mere affidavits of family members not enough claim benefit of CBDT Instruction No. 1916 dated 11.05.1994 in respect of jewellery belonging to family members.

In a recent judgment, the ITAT Delhi has held that by simply filing affidavits of the family members to contend that jewellery belonged them and assessee was entitled benefit of CBDT Instruction No. 1916 dated 11.05.1994 is not enough. Though statement u/s 132(4) of the Act is a rebuttable presumption, the assessee has to prove its case substantially by evidence.

ABCAUS Case Law Citation:
4400 (2025) (02) abcaus.in ITAT

In the instant case, the Revenue had challenged the order passed by the CIT(A)/NFAC in deleting the addition of unexplained jewellery found during the course of search u/s 132 of the Income Tax Act, 1961 (the Act) from the premises of the assessee.

A search and seizure action was conducted on a Business Group u/s 132 of the Act. During the course of search, the assessee was also covered. During the course of search, jewellery worth nearly Rs. two crore was found, out of which jewellery of Rs. approx. one crores was seized from premises of assessee.  Apart from the said jewellery, two bank locker keys was found.

When these lockers were operated under section 132 of the Act, further jewellery worth approx. Rs. one crores forty lakhs was found and accordingly, jewellery of both lockers were seized.

The assessee was asked to explain the source of both jewelleries, which were found and seized from her premises as well as from the bank lockers. The Assessing Officer required the assessee to explain with evidence regarding the ownership of the same and status of Wealth Tax return. The Assessing Officer also issued show-cause notice as to why the total worth of unaccounted jewelleries, found and seized from the above said premises and lockers should not be added back to the total income of the assessee for the relevant Assessment Year.

The assessee submitted that first of all, that a search and seizure action under section132 of the Act was conducted at the assessee’s premises and from where, jewellery was found and consequently assessment u/s 153A of the Act was framed, wherein, such jewellery was added to the taxable income of the assessee for the relevant assessment year.

As regards to the balance jewellery, out of total jewellery found during the course of search, the assessee tried to explain by filing the list of family members and claiming that the individual family members are entitled to keep the prescribed jewellery as per CBDT instruction No.1916 dated 11.05.1994. To support the claim, the assessee filed affidavits of few of the family members.

The CIT(A) has accepted the affidavits and also accepted the claim of the ownership of the assessee. Aggrieved Revenue was in appeal before the Tribunal.

The Tribunal noted that the assessee had admitted the ownership of the jewellery during the course of search while making statement u/s 132(4) of the Act wherein he had claimed that he had a joint family business few lockers are in the name of family members and in lockers she had kept jewellery given by parents, and in laws at the time of marriage.

The Tribunal observed that since, the assessee has given statement u/s 132(4) of the Act, although this is a rebuttable presumption, the assessee has to prove substantially by evidence that the jewellery belongs to family members, which she failed. The assessee simplicitor filed the affidavits of the family members and the AO had not examined these parties, whether the jewellery belongs to them or not, therefore the matter needed reconsideration at the level of the AO for balance jewellery. The AO will examine the claimant of ownership of the jewellery and then decide the issue as per law.

The Tribunal directed that in case, the claimant will be able to prove the ownership of the jewellery, the AO will allow the claim of the assessee. Thus, the appeal of the Revenue was partly allowed.

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