DCIT Vs Chickkahanumappa Harishbabu (ITAT Bangalore)
Bangalore ITAT: CBDT Instruction No. 1916 Protects Only Prescribed Quantity of Jewellery; Excess Must Be Explained
The Income Tax Appellate Tribunal, Bangalore Bench ‘A’, decided the Revenue’s appeal for Assessment Year 2020-21 against the order of the Commissioner of Income Tax (Appeals)-15, Bengaluru, dated 23 August 2025, which had deleted an addition of ₹1,02,76,362 made under section 69A of the Income-tax Act, 1961 in respect of gold jewellery seized during a search.
The assessee, an individual deriving income from house property, other sources and agriculture, filed a return declaring total income of ₹11,68,380. A search under section 132 was conducted on 9 January 2020. During the search, jewellery weighing 6,120.70 grams, valued at ₹2,28,09,093, was found and inventorised. The assessee explained that part of the jewellery had been inherited from family members, part was received at the time of marriage, and part had been gifted to his children. He also stated that some jewellery had been disclosed by his wife and mother in their income-tax returns. The Assessing Officer found that neither the assessee nor his family members had disclosed the jewellery in their income-tax returns or filed wealth-tax returns. Applying CBDT Instruction No. 1916 dated 11 May 1994, jewellery weighing 3,211.24 grams was seized. During assessment proceedings, the assessee reiterated that the jewellery was decades old, belonged to a large agricultural family, and had been acquired from agricultural income. He also produced photographs showing family members wearing the jewellery. The Assessing Officer held that the photographs established only possession and not the source or manner of acquisition and treated the value of the seized jewellery, ₹1,02,76,362, as unexplained money under section 69A. The total income was accordingly assessed at ₹1,14,44,739.
