Case Law Details
Ramnath Gupta Bysani Vs JCIT (ITAT Bangalore)
The Bangalore ITAT in the case of Shri Ramnath Gupta Bysani dealt with addition of ₹1.03 crore as unexplained jewellery u/s 69B arising from a search, where the assessee relied on CBDT Instruction No. 1916 (11.05.1994).
The AO and CIT(A) rejected the claim, holding that the instruction applies only to seizure during search and not for taxation. However, the Tribunal disagreed and held that the instruction provides a reasonable benchmark for explaining jewellery holdings, especially when supported by customary and family factors.
The ITAT relied on multiple High Court rulings (including Satya Narain Patni and Ratanlal Jain) to hold that:
- Jewellery within prescribed limits (500g married lady, 250g unmarried lady, 100g male) should be treated as explained,
- The instruction, though framed for seizure, has evidentiary value for determining unexplained investment,
- Where the assessee provides plausible explanations (stree dhan, family gifts, disclosed assets, etc.), additions cannot be made mechanically.
In this case, since the assessee had:
- Explained jewellery as family holdings and gifts,
- Produced some supporting evidence (wealth-tax records, purchase by son),
the Tribunal directed deletion of addition to the extent covered by Instruction 1916, granting substantial relief.
Accordingly, the appeal was partly allowed, reaffirming that CBDT Instruction 1916 is not merely procedural but also relevant for taxation of jewellery found in search.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
1. ITA No. 1763/Bang/2025 is filed by Shri Ramnath Gupta Bysani for Assessment Year 2019-20 against the Appellate Order passed by the Commissioner of Income Tax (Appeals) – 11, Bangalore (the Ld. CIT(A)) wherein the Appeal filed by the Assessee against the Assessment Order passed by the Joint Commissioner of Income tax (OSD),Central Circle – 1(3), Bangalore (the Ld. Assessing Officer) u/s. 143(3) of the Income Tax Act, 1961 (the Act) dated 18.06.2021 was partly allowed.
2. The only grievance of the Assessee is that Assessee has not been granted the benefit of Board Circular no. 1916 dated 11.05.1994 for the purpose of Income Tax Assessment.
3. The briefly stated fact shows that the Assessee is an individual partner in M/s. Raghuram Enterprises carrying on the business of wholesale trading of rice and wheat. The return of income was filed on 24.10.2019 at a total income of Rs. 34,42,920/-.
4. The search took place on 20.02.2019 on the basis of warrant in case of some persons and the residence of the Assessee at Wilson Garden, Bangalore was also covered in connection with the search at M/s. Sri Bhagyalakshmi Group. Consequent to the search the notices were issued to the Assessee and Assessment got concluded.
5. During the course of search, the Assessee was found with jewelry of net worth 2532.46 grams. The above jewelry was found and seized at the time of search, the Assessee explained that he does not have the bills of the purchase of the jewelry, but this belongs to him and his family. Further, he also stated that gold jewelry of approximately Rs. 7.5 lakhs belong to his son and further he has got the bills for 60 grams. With respect to the source of the jewelry, he submitted that his wife, daughter-in-law, granddaughters, daughter and son along with himself have received the various jewelries during the course of their marriages, as stree dhan, as gift on various occasions and therefore the sources of these jewelries are explained. He further submitted that his son Samruth has purchased 300 grams of gold.
6. The Ld. Assessing Officer held that Assessee has not given a satisfactory explanation and therefore the above jewelry stands unexplained and accordingly he found that a sum of Rs. 1,03,63,669/- is required to be added to the total income of the Assessee u/s. 69B as unexplained investment in jewelry. The Ld. Assessing Officer further rejected the reliance on instruction no. 1916 issued by CBDT stating that the same applies only for the purpose of seizure and not for taxing of the income. Accordingly, the Assessment Order was passed u/s. 143(3) of the Act on 18.06.2021 determining the total income of the Assessee at Rs. 1,38,06,590/-.
7. Aggrieved with the same, the Assessee preferred an Appeal before the Ld. CIT(A). The main argument of the Assessee is that instruction no. 1916 dated 11.05.1994 also applies to the taxation of jewelry found in the course of search. He submits that if the jewelry is found in the limits prescribed under that instruction, should not have been added to the total income of the Assessee.
8. Ld. CIT(A) rejected the same. Therefore, Assessee is in appeal.
9. We have heard the Ld. Counsel Shri V. Srinivasan; Advocate vehemently supported that instruction no. 1916 applies with respect to the jewelry found during the course of search for seizure as well as for the purpose of computation of unexplained investment in jewelry. He submitted that several judicial precedents of the coordinate benches held so. He further submitted that whatever the jewelry that has been disclosed in the wealth tax return of HUF of the Assessee is also required to be allowed and further the jewelry purchased by the son of the Assessee could also not have been added as the income. In the end, he stated that instruction no. 1916 binds the income tax authorities.
10. The Ld. Departmental Representative Shri Subramanian, Joint Commissioner of Income Tax, vehemently supported the orders of the Ld. Lower Authorities and stated that instruction no. 1916 was related to the non-seizure of jewelry found during the course of search. It has nothing to do with the taxation of unaccounted jewelry.
11. We have carefully considered the rival contentions and perused the orders of the Ld. Lower Authorities. We find that this issue has arisen in many of the cases of search whereas it is contested that instruction no. 1916 dated 11.05.1994 should be applied wherein if jewelry is found as prescribed therein, no addition could be made in the hands of the Assessee. According to that instruction, it was noted by the Board that there are incidents of seizure of jewelry of small quantity during the course of search have come to the notice of the CBDT and based on that guidelines were issued. It was stated that in case of a person not assessed to wealth tax, jewelry and ornaments to the extent of 500 grams for married lady and 250 grams for unmarried lady and 100 grams for male member of the family need not be seized. It is further provided that the Authorized Officer, having regard to the status of the family, customs and practices of the community to which the family belong, and other circumstances of the case may decide to exclude larger quantity of jewelry from seizure. Therefore, the above instructions give a standard deduction irrespective of the status of the family, customs and practices of the community to the extent of above jewelry. Further, relief from seizure can also be provided looking to the other factors. Thus, 1916 instruction provides a basic guideline of non-seizure of the jewelry.
12. This issue has arisen before the Hon’ble Rajasthan High Court in case of CIT v/s. Satya Narain Patni [2014] 46 com440 wherein it was held that though the CBDT circular speaks about the seizure, even source of such jewelry could not have been questioned. Further, in case of stree dhan of the women, no question at least to the said extent can be made. Therefore, the jewelry to the extent of instruction no. 1916 dated 11.05.1994 was not allowed to be added as income of the Assessee.
13. Similar question also raised before the Hon’ble Gujarat High Court in CIT v/s. Ratanlal Vyaparilal Jain in [2010] 2 com997 wherein it is also stated that the tribunal in not considering the extent of jewelry specified by that instruction as unaccounted income of the Assessee could not be found fault with.
14. The Hon’ble Madras High Court in 51 com16 in V.G.P. Ravidas v/s. ACIT holding that Board instructions would be helpful, but, if the Assessee has not offered any such explanation, the instruction does not come to the rescue of the Assessee.
15. In the present case before us, the Assessee has given a detailed explanation about the jewelry showing the wealth tax return of HUF, purchase bills for 300 grams by his son and further giving the explanation during IB24 statement as well as during the course of Assessment Proceedings.
16. The Hon’ble Allahabad High Court in CIT v/s. Ghanshyam Das Johri [2014] 41 com295 relying upon the Smt. Patidevi v/s. ITO [1999] 240 ITR 727 (Karnataka) approving the exemption to the extent of gold jewellery covered by the instructions.
17. In view of the above facts, we allow ground no. 2, 3 and 4 of the Appeal of the Assessee and direct the Ld. Assessing Officer to delete the addition to the extent of jewelry covered by instruction no. 1916. All other grounds of the Appeal are consequential and therefore those are dismissed.
18. In the result, Appeal of the Assessee is partly allowed.
Order pronounced in the open court on 27thApril, 2026.
Author Bio
