ITAT Mumbai Deletes Addition on Gold Jewellery; Holds Possession Within CBDT Instruction 1916 Limits as Reasonable for Assessee’s Wife and Mother
Pranav B Prem
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has held that gold jewellery belonging to an assessee’s wife and mother, found during a search, could not be treated as unexplained investment when the quantity fell within the reasonable limits prescribed under CBDT Instruction No. 1916. The Bench of Amit Shukla (Judicial Member) and Arun Khodpia (Accountant Member) upheld the order of the Commissioner of Income Tax (Appeals), which had deleted an addition of ₹11.32 lakh made under Section 69B of the Income Tax Act, 1961.
During a search conducted on September 23, 2021, the Income Tax Department inventoried various gold ornaments found at the assessee’s residence in Pune. The Assessing Officer (AO) treated part of this jewellery as unexplained investment on the ground that there was no documentary proof to show that the ornaments were obtained through disclosed sources or inherited over time. The assessee explained that the jewellery belonged to his wife and 67-year-old mother and represented customary, traditional ornaments accumulated over the years.
The CIT(A) noted that the AO had ignored CBDT Instruction No. 1916, dated May 11, 1994, which prescribes limits for non-seizure of jewellery—500 grams for a married woman, 250 grams for an unmarried woman, and 100 grams for a male member. On examining the inventory, the CIT(A) found that the gold ornaments of the assessee’s wife were well within the permissible 500-gram limit. The jewellery belonging to the mother, weighing approximately 263.83 grams, was also found to be reasonable for a 67-year-old woman and aligned with customary Indian family practices.
Relying on the Delhi High Court judgment in Ashok Chadha v. ITO (337 ITR 399), the CIT(A) held that possession of such jewellery is normal in Indian households and cannot, in the absence of contrary evidence, be treated as unexplained investment. The Tribunal endorsed these findings, observing that the jewellery was neither excessive nor disproportionate to the family’s social or financial status. It emphasised that CBDT Instruction No. 1916, though administrative, has been consistently recognised by courts as a reasonable benchmark for assessing the legitimacy of gold possession in Indian families.
The ITAT further held that the mother’s age, length of marriage, and cultural background must be considered before making an adverse inference under Section 69B. It stated that the department had failed to bring any material to show that the jewellery represented recent, undisclosed purchases. “Possession of gold ornaments accumulated over years through marriage, gifts, or inheritance is natural and cannot, without corroborative evidence, be treated as unexplained,” the Bench observed.
Apart from jewellery, the ITAT also deleted other major additions made by the AO. These included ₹5.23 crore under Section 69C based on entries from a seized “black diary,” which were found to be already accounted for in the books of Rucha Group LLP; ₹54.29 lakh of cash found during the search, explained as belonging to the LLP and the assessee’s late father; and ₹5.61 lakh of foreign currency supported by valid purchase bills and travel documents. The Tribunal reiterated that strong suspicion cannot replace evidence in making tax additions.
In conclusion, the ITAT upheld the relief granted by the CIT(A), holding that the seized gold represented customary family jewellery within reasonable limits and did not warrant an addition under Section 69B.
Appearance
Counsel For Appellant: Nishit Gandhi a/w. Ms. Adnya Bhandari
Counsel For Respondent: R.A. Dhyani
Cause Title: Prashant Prakash Nilawar vs DCIT, Circle-6(1), Mumbai
Case No: ITA No.2318/Mum/2025
Coram: Amit Shukla (Judicial Member), Arun Khodpia (Accountant Member)
