Auradha Seth Vs DCIT (ITAT Chandigarh)
Ad-hoc Household Expense Theory Cut Down: Chandigarh ITAT Restricts Jewellery Addition to 100 Grams in Search Case
Chandigarh ITAT, Bench ‘A’, in Auradha Seth Vs DCIT (ITA No.259/Chd/2025; AY 2022-23; order dated 18-12-2025), partly allowed the assessee’s appeal and substantially reduced the addition made u/s 69B r.w.s. 115BBE on account of jewellery found during search.
During search u/s 132 conducted on 21-10-2021 to 23-10-2021 in the Seth Cycle Group, gold jewellery weighing 3326.2 grams was found. The AO treated 1937.2 grams as unexplained and made an addition of ₹94.73 lakh. The CIT(A) granted partial relief by accepting jewellery belonging to the mother-in-law (521 gms) and family allowance under CBDT Instruction No.1916 (450 gms), but restricted benefit of cash-withdrawal explanation to only 50%, sustaining addition of 420 grams (₹20.53 lakh) on the presumption that the balance cash must have been spent on household expenses.
The Tribunal held that once cash withdrawals of ₹21.23 lakh (Oct–Nov 2014) were admitted and sufficient to cover the jewellery purchase of 840 grams, the 50% ad-hoc estimation for household expenses was arbitrary and conjectural, especially considering the assessee belonged to an affluent business family where household expenses are normally met from other sources. While noting absence of purchase bills and time gap between withdrawal and search, the Tribunal granted substantial benefit of doubt to the assessee.
Balancing probabilities, the ITAT restricted the addition to only 100 grams of gold, directing the AO to recompute addition at ₹4.89 lakh and delete the balance ₹15.65 lakh. The appeal was thus partly allowed, reiterating that suspicion or ad-hoc estimates cannot replace evidence, even in search cases
