Mohammad Ayub Vs ACIT (ITAT Indore)
Joint Residence Alone Does Not Justify Pooling Jewellery Limits Under CBDT Instruction No. 1916: ITAT Indore
The Income Tax Appellate Tribunal (ITAT), Indore Bench, upheld an addition of Rs. 3,80,000 relating to 79.69 grams of unexplained gold jewellery, holding that joint residence with brothers and their families does not automatically entitle an assessee to aggregate the jewellery limits applicable to all family members under CBDT Instruction No. 1916 dated 11.05.1994.
The Tribunal observed that the instruction primarily provides guidelines for seizure of jewellery during search proceedings and does not, by itself, grant an unconditional exemption from assessment.
Facts of the Case
A search under section 132(1) of the Income-tax Act, 1961 was conducted on 06.11.2020 at the assessee’s residential premises in Bhopal. The assessee resided there with his two brothers and their respective families.
Gold jewellery weighing 1,529.69 grams was found in the assessee’s bedroom. The Assessing Officer allowed the benefit of 1,450 grams under CBDT Instruction No. 1916, considering the assessee and his family members. The balance jewellery of 79.69 grams was treated as unexplained, resulting in an addition of Rs. 3,80,000.
The jewellery found in the bedrooms of the assessee’s brothers was considered separately in their respective assessments.
The CIT(A) confirmed the addition, observing that the benefit applicable to the assessee’s family had already been allowed. Further benefit in respect of the brothers’ family members was held to be unjustified.
Submissions Before the Tribunal
The assessee contended that all three brothers lived jointly with their families in the same premises. Accordingly, the jewellery found during the search should have been considered collectively, and the permissible benefit under CBDT Instruction No. 1916 should have been determined with reference to all eligible family members residing there.
It was argued that the Assessing Officer had incorrectly confined the calculation to jewellery found in the assessee’s bedroom.
The Revenue submitted that the Assessing Officer had already allowed the appropriate benefit for the assessee and his family. Since jewellery belonging to the brothers and their families had been considered separately in their assessments, no additional benefit was available to the assessee on their account.
Observations of the Tribunal
The Tribunal noted that the dispute was confined to 79.69 grams of gold jewellery, after allowing the benefit of 1,450 grams for the assessee and his family members.
It explained that CBDT Instruction No. 1916 primarily deals with seizure during searches. The nature, ownership and source of acquisition of jewellery must still be examined on the facts of each case.
The Tribunal held that merely residing in the same premises did not establish that all jewellery belonged to a common family pool. Nor did it establish that the limits attributable to the brothers’ family members remained available for adjustment against jewellery found in the assessee’s bedroom.
In the present case, the jewellery had been separately identified and considered in the assessments of the respective family units. There was no material establishing common ownership or demonstrating that the eligible benefit attributable to other family members remained unutilised.
The Tribunal also distinguished the decisions relied upon by the assessee in light of the separate identification and assessment of jewellery belonging to different family units.
Decision
The ITAT upheld the CIT(A)’s order and sustained the addition of Rs. 3,80,000 for unexplained gold jewellery weighing 79.69 grams. The assessee’s appeal was dismissed.
The ruling turns on the absence of evidence supporting common ownership or availability of unutilised limits for other family members. Joint residence alone was held insufficient to justify further adjustment.
Cases Discussed
- Sureshchand Agrawal vs. DCIT, 23 ITJ 46 (Indore Tribunal) — cited by assessee; exact TaxGuru case URL not verified.
- V.G.P. Ravidas v. ACIT, 370 ITR 364 (Madras High Court) — cited by Revenue.
FULL TEXT OF THE ORDER OF ITAT INDORE
The assessee has preferred the present appeal against the order dated 24.03.2025 passed by the learned Commissioner of Income Tax (Appeals) (CIT(A)) for A.Y. 2021-22, confirming the addition of Rs.3,80,000/- made by the Ld. Assessing Officer (AO) on account of unexplained gold jewellery found during the course of search.
2. A search and seizure operation under section 132(1) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) was conducted on 06.11.2020 at the residential premises of the assessee, D-32, BDA Colony, Kohefiza, Bhopal where he was residing along with his two brothers with Mohd. Ismail Khan & Nazneen Khan their respective families.
3. The assessee filed his return of income in response to notice under section 153A of the Act on 13.03.2022, declaring total income of Rs. 56,99,710/-. The Ld AO completed the assessment under section 153A read with section 143(3) of the Act on 24.05.2022, determining total income at Rs. 60,79,710/- after making an addition of Rs. 3,80,000/- on account of unexplained gold jewellery.
4. During the course of search, gold jewellery weighing approximately 4,610.59 grams was found at the residential premises. Out of the same, 1,529.69 grams was found in the bedroom of the assessee, 1,138.90 grams was stated to belong to other relatives, which was accepted by the Ld.AO, and 1,933.00 grams was found in the respective bedrooms of the assessee’s two brothers Mohd. Ismail Khan & Nazneen Khan.
5. The Ld. AO considered the gold jewellery weighing 1,529.69 grams found in the assessee’s bedroom and allowed the benefit of 1,450 grams in accordance with CBDT Instruction No. 1916 dated 11.05.1994, considering the family members of the assessee only. The balance jewellery weighing 79.69 grams was treated as unexplained, resulting in an addition of Rs. 3,80,000/-.
6. Aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). The learned CIT(A), vide order dated 24.03.2025, upheld the addition, observing that the Ld AO had already allowed the permissible benefit in respect of the assessee and his family members. The learned CIT(A) further observed that the jewellery found in the respective bedrooms of the assessee’s two brothers had been considered separately in their assessments and no addition on account of jewellery had been made in their cases. Accordingly, the learned CIT(A) held that allowing further benefit in respect of the family members of the brothers in the hands of the assessee was not justified and dismissed the appeal.
7. Being aggrieved by the order dated 24.03.2025 passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)], the assessee preferred the present appeal before the Tribunal on 02.05.2025. During the pendency of the appeal, the assessee Mohammad Ayub expired on 24.08.2025. Subsequently, the learned Authorised Representative (AR), on 11.11.2025, filed a revised Form No. 36 along with the revised grounds of appeal on behalf of the legal representative Mohammad Zaid Khan son of the deceased assessee. The learned AR also furnished an affidavit dated 06.11.2025 in support of the substitution of the legal representative in place of the deceased assessee. The grounds of appeal raised in the revised Form No. 36 are reproduced
“1. The Ld. CIT(A) has erred in upholding the addition of Rs.3,80,000/-.
2. The Ld. CIT(A) has erred in upholding the addition of Rs. 3,80,000/- on account of unexplained jewellery. The Ld. CIT(A)- 3, Bhopal did not consider the detail submissions filed before him. The addition may please be deleted. The jewellery is pertain to the entire family and as such there was no unexplained jewellery.
3. The addition of Rs. 3,80,000/- may please be deleted.
4. The assessee craves to amend, alter or delete any of the ground of appeal.”
8. The learned Authorised Representative (AR) submitted that the assessee and his two brothers were residing jointly in the same residential premises along with their respective families. It was contended that the jewellery found during the search ought to have been considered collectively, and the permissible benefit under CBDT Instruction No. 1916 dated 11.05.1994 should have been determined with reference to all eligible family members residing in the premises.
9. The learned AR further submitted that the AO had incorrectly restricted the benefit to the jewellery found in the assessee’s bedroom without considering the total jewellery found in the joint residential premises. Reliance was placed upon the judicial decisions cited in the paper book, including the decision stated to be in Sureshchand Agrawal vs. DCIT 23 ITJ 46 (Indore Tribunal).
10. Per contra, the learned Departmental Representative (DR) supported the orders of the lower authorities and submitted that the AO had correctly allowed the benefit under CBDT Instruction No. 1916 in respect of the assessee and his family members. It was further submitted that the jewellery belonging to the assessee’s brothers and their respective families had already been considered separately in their assessments. Therefore, the assessee was not entitled to claim any additional benefit in respect of those family members. Reliance was placed upon the judgment of Hon’ble Madras High Court in the case of V.G.P. Ravidas v. ACIT 370 ITR 364 (High Court of Madras)
11. We have heard the rival submissions and perused the material available on record, including the orders of the lower authorities and observe that the dispute is confined to the addition of Rs. 3,80,000/- representing 79.69 grams of gold jewellery found in the bedroom of the assessee during the course of search conducted on 06.11.2020. It is an admitted position that the AO has allowed the benefit of 1,450 grams of gold jewellery in respect of the assessee and his family members in accordance with CBDT Instruction No. 1916 dated 11.05.1994.
12. We further observe that the jewellery found in the respective bedrooms of the assessee’s two brothers was considered separately in their assessments, wherein no addition on account of unexplained jewellery was made. The principal contention of the learned AR is that the entire jewellery found in the residential premises should be aggregated and the benefit under the aforesaid CBDT Instruction should be allowed collectively with reference to all eligible family members residing therein. In this regard, we observe that CBDT Instruction No. 1916 primarily provides guidelines regarding the seizure of jewellery during search proceedings. The said Instruction does not, by itself, provide an unconditional exemption from assessment in respect of jewellery found during a search. The explanation regarding the nature, ownership and source of acquisition of jewellery is required to be examined in the light of the facts and circumstances of each case.
13. Merely because the assessee and his brothers were residing in the same residential premises, it cannot automatically be inferred that the entire jewellery belonged to a common family pool or that the permissible limits applicable to the family members of the brothers remained available for adjustment against the jewellery found in the assessee’s bedroom.
14. We find that the Ld. AO has separately identified the jewellery found in the respective bedrooms and has allowed the benefit in relation to the assessee and his family members. The jewellery found in the bedrooms of the brothers has also been considered in their respective assessments. In the absence of any material establishing common ownership of the jewellery or demonstrating that the eligible benefit attributable to the other family members remained unutilised, the assessee’s claim for further adjustment cannot be accepted merely on the ground of joint residence.
15. The judicial decisions relied upon by the learned AR are distinguishable to the extent that the present case involves separate identification and consideration of jewellery belonging to different family units. The applicability of those decisions must be examined with reference to their verified facts and ratio. Accordingly, having regard to the facts and circumstances of the case, we find no infirmity in the order of the learned CIT(A) confirming the addition of Rs. 3,80,000/- on account of unexplained gold jewellery weighing 79.69 grams. In view of the foregoing discussion, we uphold the order of the learned CIT(A) and sustain the addition of Rs 3,80,000/- made by the AO. Accordingly, the grounds raised by the assessee are dismissed.
16. In the result, the appeal filed by the assessee is dismissed.
Order pronounced in the open court on 22/10/2026.
