Kuruganti Srivalli Vs ACIT (ITAT Ranchi)
The Income Tax Appellate Tribunal, Ranchi, allowed the appeal of Kuruganti Srivalli against the order of the CIT(A)-3, Patna, dated 23.02.2024, directing deletion of additions of ₹14,64,600 towards 300 grams of gold biscuits and ₹1,46,000 towards 2,000 grams of silver found during search proceedings. The dispute arose from a search under Section 132(1) of the Income-tax Act, 1961, involving the Atibir Group, accompanied by survey proceedings under Section 133A. During the search, the assessee’s Axis Bank locker was opened, and her husband’s statement was recorded under Section 131(1A).
The Assessing Officer treated the gold and silver as unexplained investments, notwithstanding the assessee’s explanation that her jewellery had been converted into solid gold and kept in the bank locker for safety. The assessee also pointed out that jewellery and bullion valued at ₹59,21,500 had already been disclosed in the return and balance sheet for assessment year 2020-21. She explained that the remaining jewellery was kept with her mother-in-law at her native place. The CIT(A) sustained the additions.
Before the Tribunal, the assessee relied upon CBDT Instruction No. 1916 dated 11.05.1994, arguing that the 300 grams of gold found were within the limit of 400 grams claimed to be applicable to a married woman. She further submitted that the silver articles were of reasonable quantity and value, and conversion of jewellery into gold biscuits could not independently justify an adverse inference. The Department supported the assessment and appellate orders.
The Tribunal accepted the assessee’s explanation and held that conversion of jewellery into solid gold did not, by itself, render the holding unexplained. Referring to CBDT Instruction No. 1916, it treated the quantity of gold as falling within the permissible limit discussed in the order and considered the silver valued at ₹1,46,000 reasonable. The Tribunal also relied on the earlier disclosure of jewellery and bullion worth ₹59,21,500 as supporting the assessee’s explanation of ownership.
Accordingly, the Tribunal directed the Assessing Officer to delete both additions aggregating ₹16,10,600 and allowed the assessee’s appeal. The order records its conclusion on the particular facts and its interpretation of CBDT Instruction No. 1916; it should not be read as establishing that every holding of gold biscuits automatically qualifies for relief irrespective of the surrounding evidence.
FULL TEXT OF THE ORDER OF ITAT RANCHI
This appeal filed by the assessee is directed against the order of the CI(A)-3, Patna (hereinafter referred to as “ld. CIT(A)”) dated 23.02.2024 passed under Section 250of the Income-tax Act, 1961 (hereinafter referred to as the “Act”).
2. Brief facts of the case are that a search and seizure operation under section 132(1) of the Income-tax Act, 1961 was conducted on the premises of the Atibir Group of cases. Simultaneously, survey proceedings under section 133A of the Act were also carried out at certain business premises of the group. In the case of the assessee, proceedings were initiated on 17.03.2021. The assessee filed her return of income declaring total income of ₹10,85,410. Thereafter, notices under sections 143(2) and 142(1) of the Act were duly issued and served. In response, the assessee appeared and filed submissions during the course of assessment proceedings. During the search, the locker maintained with Axis Bank was opened and statements of the husband of the assessee were recorded under section 131(1A) of the Act. Jewellery found during the search was inventoried and valued. As per the inventory, 300 grams of gold biscuits valued at ₹14,64,600 and 2000 grams of silver valued at ₹1,46,000 were found. During the course of examination, specific questions were put to the husband of the assessee regarding disclosure of jewellery in the returns of income. It was noted by the Assessing Officer that, as per the returns and balance sheet for A.Y 2020-21, jewellery, bullion etc. was disclosed at Rs.59,21,500/-. Therefore, substantial jewellery was disclosed, whereas only jewellery and bullion valued at about ₹16,10,000/- were found during the search. The assessee explained that the jewellery held by her had been converted into solid gold form and kept in the locker for safety purposes and remaining jewellery, bullion etc. kept with her mother-in-law at her native place. However, the Assessing Officer held that the assessee failed to satisfactorily explain the source of acquisition of the gold biscuits and silver articles and accordingly treated the value of 300 grams of gold amounting to ₹14,64,600 and 2000 grams of silver amounting to ₹1,46,000 as unexplained investment and added the same to the total income of the assessee.
3. Aggrieved, the assessee preferred appeal before the ld CIT(A) and the ld. CIT(A) sustained the addition.
4. Aggrieved by the order of the ld. CIT(A), the assessee is in appeal before the Tribunal. The learned Authorised Representative submitted that, as per the CBDT guidelines and settled legal position, a married woman is permitted to hold up to 400 grams of gold jewellery without any adverse inference. It was submitted that in the present case, the assessee was found in possession of only 300 grams of gold, which is well within the permissible limit. It was further submitted that the silver articles found were also of negligible value and within reasonable limits. Therefore, the addition made by the Assessing Officer and sustained by the learned CIT(A) is bad in law. It was further explained that, for safety and preservation, the assessee had converted her jewellery into solid gold form and kept the same in the bank locker, which cannot be a ground for making an addition.
5. On the other hand, the learned DR supported the orders of the lower authorities.
6. We, after considering the rival submissions and perusing the material available on record, we find that the total gold found in the possession of the assessee during the search was 300 grams, which is within the permissible limit of 400 grams prescribed for a married woman. In the present case of assessee addition was made, merely because the jewellery was converted into solid gold form, no adverse inference can be drawn. Similarly, the quantity of silver found, valued at ₹1,46,000, is also within reasonable limits. After considering the rival submissions and perusing the material available on record, we find that the total gold found in the possession of the assessee during the search was 300 grams, which is within the permissible limit of 400 grams prescribed for a married woman. Merely because the jewellery was converted into solid gold form, no adverse inference can be drawn. Similarly, the quantity of silver found, valued at ₹1,46,000, is also within reasonable limits. CBDT Instruction No. 1916 dated 11.05.1994 provides that a married woman is entitled to possess up to 400 grams of gold without any adverse inference. The said gold may be held either in the form of jewellery or in any other form, including gold biscuits, since the Instruction does not restrict the form in which gold is kept. Merely because the jewellery has been converted into solid gold / gold biscuits, it cannot be presumed to be unexplained or in excess of the permissible limit. So long as the quantity remains within 400 grams, no addition can be made and no adverse view can be taken under the Income-tax Act. Moreover, for A.Y 2020-21, jewellery, bullion etc. was disclosed by the assessee of Rs.59,21,500/-. Out of the said jewellery, jewellery valued at Rs.16,10,000/- which was in the possession of assessee at the time of search operation, while the remaining jewellery was kept with her mother-in-law at her native place for safe custody. This factual position is clearly recorded in the assessment order itself at page no.3 paragraph
9. The said disclosure demonstrates that the assessee was in possession of substantiating jewellery already reflected in the return of income of earlier year. In view of the above facts and the settled legal position, we hold that the assessee did not exceed the prescribed limits under the Act. Accordingly, the addition of ₹14,64,600 on account of gold and ₹1,46,000 on account of silver is unsustainable and liable to be deleted. We therefore direct the Assessing Officer to delete the entire addition made on account of gold and silver. Accordingly, the appeal filed by the assessee is allowed.
7. In the result, the appeal filed by the assessee is allowed.
Kolkata, the 18th December, 2025.
