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Facts
A search and seizure operation conducted on the Atibir Group, extended to the assessee's bank locker, where 300 grams of gold (₹14,64,600) and 2000 grams of silver (₹1,46,000) were found. The Assessing Officer treated these as unexplained investments, adding their value to the assessee's income, a decision subsequently sustained by the CIT(A). The assessee contended that the gold was within permissible limits for a married woman, and other substantial jewellery had been previously disclosed.
Held
The Tribunal ruled that the 300 grams of gold found was within the 400-gram limit allowed for a married woman under CBDT Instruction No. 1916, regardless of its form. It further found the quantity of silver to be reasonable and acknowledged that substantial jewellery had been disclosed in prior returns. Consequently, the Tribunal held that the additions made by the lower authorities for both gold and silver were unsustainable and ordered their deletion.
Key Issues
Whether the value of gold and silver found during a search operation, which is within the prescribed limits for a married woman and previously disclosed, can be treated as unexplained investment under the Income Tax Act.
Sections Cited
Section 250, Section 132(1), Section 133A, Section 131(1A), Section 143(2), Section 142(1)
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Income Tax Appellate Tribunal, BENCH-RANCHI
Before: Shri Sonjoy Sarma & Shri Ratnesh Nandan Sahay
Assessment Year: 2021-22 Kuruganti Srivalli….. …………….…….…............................……….……Appellant S3 & S4 Vasudha Enclave, Vinayak Nagar, Neredmet, Hyderabad, Telengana-500056. [PAN: ASIPK8246J] vs. ACIT, Central Circle, Dhanbad....….…..….........……........……...…..…..Respondent Appearances by: Shri Devesh Poddar, AR, appeared on behalf of the appellant. Shri Sumit Dasgupta, Sr. DR, appeared on behalf of the Respondent. Date of concluding the hearing : December 11, 2025 Date of pronouncing the order : December 18, 2025 ORDER
Per Sonjoy Sarma, Judicial Member:
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 250 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”).
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 Kuruganti Srivalli 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.
Aggrieved, the assessee preferred appeal before the ld CIT(A) and the ld. CIT(A) sustained the addition.
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 Kuruganti Srivalli 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.
On the other hand, the learned DR supported the orders of the lower authorities.
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 Kuruganti Srivalli 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.
In the result, the appeal filed by the assessee is allowed. Kolkata, the 18th December, 2025.