CBDT Instruction on exclusion of jewellery confined only to seizure not assessment

CBDT Instruction 1916 on exclusion of jewellery confined only to the stage of seizure during search

In a recent judgment, Hon’ble Madras High Court has held that CBDT Instruction 1916 on exclusion of jewellery is confined only at the stage of seizure during search and not to the stage of assessment.

ABCAUS Case Law Citation:
ABCAUS 4043 (2024) (05) HC

In the instant case, the assessee had filed Writ Petition for issuance of Writ of Certiorari, to quash the assessment order passed under Section 143(3) r/w 254 of the Income Tax Act, 1961 (the Act).

By the impugned order, the Assessing Officer (AO) had confirmed the tax inter alia on 1099.96 gms of gold jewellery found during the search at the residence of the petitioner. The source for purchase of said gold jewellery had remained unexplained.

During the assessment proceedings, regarding the source for purchase of gold jewellery of 1099.96 grams, the assessee had requested the AO to consider the CBDT Instruction No. 1916 in F. No. 286/63/93-IT (Inv.II) dated 11/05/1994. The said Instruction provides that in the case of a person not assessed to wealth-tax gold jewellery and ornaments to the extent of 500 gms. per married lady 250 gms per unmarried lady and 100 gms. per male member of the family, need not be seized. It further provides that having regard to the status of the family and the customs and practices of the community to which the family belongs and other circumstances of the case, authorised person decide to exclude a larger quantity of jewellery and ornaments from seizure.

The Hon’ble High Court observed that the said CBDT Instruction/circular makes it clear that the exclusion has been provided with respect to the seizure only. However, the Instruction further provides that a detailed inventory of the jewellery and ornaments found must be prepared to be used for assessment purposes.

The Hon’ble High Court opined that the purport of the CBDT Instruction is confined only at the stage of investigation of seizure and not to the stage of assessment. Therefore, the complaint of the petitioner that the circular had not been followed could not be countenanced.

Accordingly, the Writ was dismissed. However, liberty was given to the petitioner to pursue the alternate remedy before the Appellate Commissioner in terms of Section 246A of the Act.

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