SATHYANARAYANA GUPTA BADRIVISHAL,BANGALORE vs. DCIT, CENTRAL CIRCLE-1(3), BANGALORE

PER KESHAV DUBEY, JUDICIAL MEMBER:

This appeal at the instance of the assessee is directed against the order of the ld.CIT(A)-11, Bengaluru dated 4.7.2025 vide DIN: ITBA/APL/M/250/2025-26/1078171611(1) passed u/s 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2019-20.

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ITA No.1710/Bang/2025 Sri Sathyanarayana Gupta Badrivishal, Bengaluru Page 3 of 10 3. Brief facts of the case are that the assessee being an individual is the partner of M/S. Raghuram Enterprises, which is carrying on the business of Wholesale Trading of Rice and Wheat. The assessee had originally filed his return of income for the AY 2019-20 on 22/10/2019 declaring total income of Rs. 34,19,260/- being income from house property, Business and other sources. A search action under Section 132 of the Act was conducted on 20.02.2019 by the strength of warrant issued in the case of Shri. B. A. Nagaraj, Shri. B. A.Srinivas Gupta and Shri. B. A. Ravi Prasad to search the residence premises of the assessee at No.21/l. 3rdCross, Near Popular Hospital, Shankarapuram, Bengaluru in connection with search proceedings in the group case of M/S. Sri Bhagyalakshmi Group.

3.1 In the course of aforesaid search, gold jewellery weighting about 2602..01 gms, diamond jewellery of 43.1 carats and silver articles of 33980 gms was found in the residential premises of the assessee. The entire gold and other valuables found at the time of search was not seized considering the CBDT instruction No. 1916.

3.2 As the search proceeding was initiated during FY 2018-19 and hence assessment proceedings was initiated for AY 2019-20. During the Assessment Proceedings, a notice under Section 143(2) dated 27.11.2020 was issued and served on the assessee. Further a notice under section 142(1) along with questionnaire dated 4.2.2021 was issued and served on the assessee. In response to these notices, the Authorized Representative of the assessee appeared from time to time and provided the required details as called by the Assessing Officer. The information submitted by the assessee was examined by the ld. AO. After careful consideration the Assessing Officer held that that the entire gold jewellery found

ITA No.1710/Bang/2025 Sri Sathyanarayana Gupta Badrivishal, Bengaluru Page 4 of 10 at the time of search of 2602.01 gms has to be treated as unexplained investment mainly for the following reasons:-

(a) The assessee had not declared any jewellery either in wealth tax returns or income tax returns before the date of search; and

(b) The assessee has claimed that the jewellery found was received as gifts but there was no evidence of any gift deeds or other purchase bills etc to explain the source of the investment.

Thus, the AO concluded the Assessment proceedings and passed an order under Section 143(3) of the Act on 18.06.2021 by making an addition of Rs. 1.07,06.104/- as unexplained investment in Jewellery u/s 69 of the Act and determined the assessee's total income to be Rs. 1,41,25,364/-.

5.1 As the assessee had submitted bills to an extent of 670 gms with regards to jewellery purchased by his wife and 742.57 gms purchased by the assessee’s daughter in law, totaling to 1412.57

ITA No.1710/Bang/2025 Sri Sathyanarayana Gupta Badrivishal, Bengaluru Page 5 of 10 gms, the ld. CIT(A) was of the opinion that to the extent the assessee has produced bills, credence can be given to the source for making investment in jewellery and accordingly held that jewellery to an extent of 1412.57 gms stands explained & the balance remains unsubstantiated and hence the addition to that extent was confirmed. Thus, the ld. CIT(A)-11, Bengaluru has partly allowed the appeal of the assessee.

ITA No.1710/Bang/2025 Sri Sathyanarayana Gupta Badrivishal, Bengaluru Page 6 of 10 limits that is considered as reasonable. Further, the ld. AR of the assessee submitted that the assessee had also filed substantial purchase bills for acquiring jewellery and bank statements evidencing payments made. Lastly, it was submitted that the assessee had shown huge income in the hands of the partnership fir, M/s Raghuram Enterprises and there were sufficient drawings also from the said firm to explain the source of the gold jewellery found.

ITA No.1710/Bang/2025 Sri Sathyanarayana Gupta Badrivishal, Bengaluru Page 7 of 10 the same, there was no requirement to make any addition on this score based on the Board Circular No. 1916 dated 11/04/1994 since the extent of jewellery found was within the permissible limits that is considered as reasonable. Further, the ld. AR of the assessee submitted that the assessee had also filed substantial purchase bills for acquiring jewellery and bank statements evidencing payments made. Lastly, it was submitted that the assessee had shown huge income in the hands of the partnership fir, M/s Raghuram Enterprises and there were sufficient drawings also from the said firm to explain the source of the gold jewellery found.

9.1 Undisputedly, during the course of search u/s 132 of the Act on 20/02/2019, gold jewellery weighting about 2602.01 gms, diamond jewellery of 43.1 carats and silver articles of 33980 gms was found in the residential premises of the assessee. The entire gold and other valuables found at the time of search was not seized considering the CBDT instruction No. 1916 dated 11/05/1994. In the course of search, the assessee was examined u/s 132(4) of the Act on 20/02/2019 and he was queried about the extent of jewellery found in the premises vide Q. No. 15 of the statement. The assessee explained that the said gold jewellery belonged to himself and his family members viz. his wife Mrs. Divya, Son Mr. Vishisht and Mr. Vikyath, daughter-in-law Mrs Abhigna and mother in law Mrs Sowbhagya Lakshmi. Further, during the course of the assessment proceedings, in response to show cause notice, the assessee had again categorically stated that the jewellery were received by the family members during various occasions like marriage, namakaran, birthdays and other social and customary occasions as also bought out of the income earned over a period of years. Further, during the course of assessment proceedings, it is stated that mainly the purchases of jewellery

ITA No.1710/Bang/2025 Sri Sathyanarayana Gupta Badrivishal, Bengaluru Page 8 of 10 were made out of the drawings from Raghuram Enterprises. Further, some jewellery was inherited from the parents. The assessee also submitted that since the wealth tax was abolished in the year 2016-17 and the income has not exceeded the limit prescribed for furnishing the details of assets in the income tax return, the assessee and his family members had no occasion to bring the details of the jewellery in the returns filed. Lastly, the assessee submitted that the purchases were made out of drawings over the years from the partnership firm where huge amount of income have been voluntarily offered over the years. The AO did not believe that jewellery belongs to all family members merely by stating that jewellery is not declared in their income tax returns. We are of the considered opinion that merely because the family members had no occasioned to declare the jewellery in their return of income, it cannot be said that all the jewellery are belongs to the assessee only. The Wealth tax Act was abolished in India from April 1, 2016, through the Union Budget of 2015. It was abrogated and discontinued from the FY 2015–2016 relevant for Assessment Year 2016-17. Further, the assessee was required to declare his personal assets & liabilities in the return of Income under schedule AL only whose net taxable income exceeds Rs. 50 lakhs now Rs. 1 Crores which were introduced after the discontinuation of Wealth Tax. Therefore, we accept the contentions of the assessee that the jewellery belongs to all the members of the family.

9.2 Further, we are of the considered opinion that apart from purchase of jewellery to the extent of 1412.57 gms against which the bills & bank statements were submitted by the assessee, we also cannot brush aside the fact of receipt of wedding gift on the occasion of assessee’s son marriage with Mrs Abhigna which took place during the FY 2018-19 in 11/11/2018 i.e. just before the search. The AO also could not brought any adverse material on

ITA No.1710/Bang/2025 Sri Sathyanarayana Gupta Badrivishal, Bengaluru Page 9 of 10 record to refute the contentions of the assessee that huge income in the hands of the partnership firm M/s Raghuram Enterprises had been declared and there was sufficient drawings from the said firm to explain the source of the gold jewellery found. We also cannot ruled out the contentions of the assessee to have inherited certain jewellery from their parents. Further, in the absence of any adverse material we also cannot ruled out the contention of the assessee that the jewellery were received by the family members during various occasions like marriage, namakaran, birthdays and other social and customary occasions. The AO merely in the absence of documentary proof towards the receipt of gift did not accept the contention of the assessee.

9.3 In view of the above, we are of the considered opinion that entire jewellery found at the time of search did not belong to the assessee alone especially when the assessee’s wife, sons and daughter in law were residing in the premises of the assessee is not in dispute. Therefore, we have no hesitation to hold that the balance of 1189.44 gms also stands explained and accordingly directed the AO to delete the entire addition made u/s 69 of the Act. It is ordered accordingly.

Order pronounced in the open court on 19th June, 2026

Sd/- Sd/- (Prashant Maharishi) (Keshav Dubey) Vice President Judicial Member

Bangalore, Dated 19th June, 2026. VG/SPS

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Copy to:

By order

Asst. Registrar, ITAT, Bangalore.