ITAT deleted addition u/s 69A towards jewellery found in search in view of Indian traditions, CBDT Instruction and High Court decisions
In a recent judgment, ITAT held that the 2000 gram jewellery found in the case of assessee, and his family was very much reasonable, keeping in mind the riches and status and more customary practices.
ABCAUS Case Law Citation:
5233 (2026) (09) abacus.in ITAT
A search under section 132 of the Income Tax Act, 1961 (the Act) was conducted. During the search more than 2000 gms jewellery was found form the locker of the assessee.
Rejecting the valuation reports furnished by the assessee, the Assessing Officer (AO) held that they did not prove that the said jewellery was acquired out of disclosed sources. The Assessing Officer completed the assessment proceedings after making the addition under section 69 of the Act.
Aggrieved with the additions, the assessee preferred the appeal before the CIT(A), who dismissed the appeal of the assessee.
The CIT(A) observed that in the instant case, the assessee was found to be the owner of jewellery from the locker owned by him is his personal capacity and thus the jewellery represent was unexplained as per provisions of Section 69A of the Act.
The CIT(A) further observed that the CBDT Instruction No. 1916 dated 11-05-1994 pertains to guidelines for seizure during search under wealth tax provisions and is not applicable to the facts of this case, where the additions is made u/s 69A for unexplained jewellery founded during search requiring satisfactory explanation of source, which the appellant failed to provide despite opportunities. Further, the old valuation reports did not substantiate acquisition or and the jewellery was found in the assessee’s sole locker.
Before the Tribunal the assessee submitted that the jewellery found from the locker belonged to the assessee and his family members. He also submitted that as per CBDT Instruction, the jewellery to the extent of 500 gms for married lady, 250 gms for unmarried lady and 100 gms for male member will not be seized, even if prima facie it does not seem to be matching with the income record of the assessee. He also submitted that he had filed the valuation report of the jewellery of family member in which the jewellery held by them was disclosed. However, valuation reports were not accepted and without rejecting the valuation report the AO made the addition. The valuation reports proved that the jewellery were the old jewellery of the assessee and his family members.
The assessee placed reliance on the Mumbai ITAT which held that the old jewellery valuation report proves that these jewelleries are old and belonging to the assessee and his family.
The assessee further submitted that as per the social custom and practices in India, whereby jewellery is gifted by the family members on the occasion of marriage, birthday, and auspicious occasion and such acquisition of jewellery cannot be supported by the bills and vouchers. He placed reliance on the decision of the Delhi High Court judgment in this regard wherein the High Court had held that held that it is a normal custom for woman to receive jewellery in the form of “stree dhan” or on other occasions such as birth of child etc. Collecting jewellery of 906.900 grams by a woman in married life of 25-30 years in not abnormal.
On the other hand the Revenue submitted that the assessee had failed to prove that the seized jewellery belonged to his and his family members and did not file any bill vouchers in support of claim the appeal was rightly rejected by the CIT(A).
The Tribunal observed that CIT(A) had rejected the Government approved valuer reports submitted by the assessee in the name of of family members on the ground that these reports were old. These valuation reports, proved that these, jewellery were 20-22 years old belonging to the family members. The assessee also filed the valuation report of the Government approved valuer, in the name of two other members and reports proved that the jewellery was old. Thus, the jewellery which was found in the locker of the assessee during the search, was old jewelleries and ancestral inheritance and also gifted 20-30 years ago.
The Tribunal observed that apart from the above, the CBDT instruction No.1916 was subject matter of interpretation by the Allahabad Court and held that CBDT instruction should be taken as guiding factor of presuming assessee to the extent of limit prescribed for the family members should be treated as explained looking to the Indian Customs and traditions where jewelleries were given to the ladies at the time of marriage and other occasions.
The Tribunal further observed that in the instant case the assessee’s family belonged two males, two male children and two females total six members. The Assessing Officer did not give the benefit of the circular no 1916 to the assessee and added the total seized jewellery valuation in the income of the assessee. The circular No. 1916 of the CBDT provides exemption to the extent, of 1400 grams of gold jewellery to the assessee based on the family members. Further, the CBDT Instruction No.1916 vide para no. (iii) stipulates that the authorized officer may having, regard to the status of the family and the custom and practices of the community to which the family belongs and other circumstances of the case, decide to exclude a larger quantity of jewellery and ornaments from seizure.
The Tribunal opined the excess jewellery found in the case of assessee, his parents, his wife, his children and assessee were nominal, and was very much reasonable, keeping in mind the riches and status and more customary practices.
The Tribunal placed reliance on the judgement of the Hon’ble High Cort of Delhi wherein it was held that it is a normal custom for woman to receive jewellery in the form of “stree dhan” or on other occasions such as birth of a child etc. Collecting jewellery of 906.900 grams by a woman in a married life of 25-30 years is not abnormal.
Keeping in view of the facts and circumstances of the case as well as the status of the family and on the anvil judgement of the Hon’ble Courts, the Tribunal accepted the explanation given by the assessee and the impugned additions were deleted.
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