CBDT Instruction 1916 Protects Only Prescribed Jewellery Quantity: Bangalore ITAT

By CA Vijayakumar Shetty Income Tax Judiciary August 3, 2026

Case Name: DCIT Vs Chickkahanumappa Harishbabu (ITAT Bangalore)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Related Assessment Year: 2020-21
Courts: All ITAT, ITAT Bangalore

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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.

Before the Commissioner of Income Tax (Appeals), the assessee submitted that the jewellery had been acquired from rental and agricultural income and that evidence showing ownership for over fifty years had been furnished. The assessee also produced income-tax returns of himself, his wife, his mother and his late father. The CIT(A) noted that the family had disclosed aggregate income of ₹3,34,92,787, mainly from agricultural and rental income, during the relevant years. The CIT(A) accepted that the disclosed income exceeded the value of the seized jewellery and was sufficient to explain its source. The appellate authority also referred to CBDT Instruction No. 1916 dated 11 May 1994, allowing 500 grams each for the wife and mother, 250 grams for the daughter and 100 grams each for the assessee and his two sons, aggregating to 1,550 grams, and relied upon certain High Court decisions before deleting the addition of ₹1,02,76,362 relating to 3,211.24 grams of jewellery.

The Revenue challenged the deletion, contending that the CIT(A) had deleted the addition without examining receipt of income in cash, drawings by the assessee, or verification of the application of the alleged agricultural income of the assessee and his family members. Detailed written submissions were filed by both parties before the Tribunal. The Revenue argued that section 69A required the assessee to satisfactorily explain the nature and source of acquisition of the jewellery, that the CBDT instruction only governed seizure during search and did not confer immunity from assessment, that photographs and general claims regarding inheritance or customs were insufficient evidence, and that aggregation of disclosed income over several years could not establish acquisition of the jewellery. The assessee maintained that the jewellery belonged to various family members, represented ancestral and streedhan property, was supported by customary practices, contemporaneous marriage photographs, agricultural and rental income disclosed over the years, and that the findings of the CIT(A) were factual and reasoned.

After considering the rival submissions and the record, the Tribunal observed that although jewellery weighing 6,120.70 grams was found during the search, only 3,211.24 grams had been seized and made the subject matter of the addition. It noted that before the Assessing Officer the assessee had failed to produce cogent evidence such as purchase invoices or documentary material establishing the source of acquisition and had relied only on photographs, which did not establish when the jewellery had been acquired. The Tribunal found that the CIT(A) deleted the addition solely because the family had earned substantial agricultural and rental income over a period of ten years but had not examined whether that income had been invested elsewhere, whether it remained available for purchasing jewellery, whether books of account were maintained, or whether the same income had already been capitalised in other assets. According to the Tribunal, merely aggregating income over ten years could not explain acquisition of the jewellery.

The Tribunal referred to section 69A and held that where jewellery is found in the possession of an assessee and is not recorded in the books of account, the assessee must satisfactorily explain both its nature and source. It observed that while CBDT Instruction No. 1916 entitled the assessee to benefit for jewellery to the prescribed extent, the assessee himself claimed that jewellery weighing 2,050 grams stood explained under the instruction and that any jewellery beyond that quantity had to be explained through evidence of its acquisition. The Tribunal noted that the assessee had neither produced invoices nor evidence of payment through bank accounts nor claimed before the Assessing Officer or the CIT(A) that the jewellery had been purchased out of disclosed income.

The Tribunal further held that since the jewellery was found in the assessee’s possession during the search, the assessee was treated as its owner unless he proved otherwise. It rejected the contention that the jewellery belonged to various family members, observing that no such statement had been made during the search. It also held that the social status of the family, customary practices, or substantial wealth could not shield unexplained jewellery from taxation where the assessee had failed to establish its nature and source through documentary evidence. Photographs, without supporting purchase invoices and evidence of legitimate acquisition, were held insufficient.

Accordingly, the Tribunal reversed the order of the CIT(A), restored the assessment order, upheld the addition of ₹1,02,76,362 representing the value of jewellery weighing 3,211.24 grams seized during the search as unexplained money under section 69A of the Income-tax Act, and allowed the Revenue’s appeal. The order was pronounced on 30 July 2026.

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