CBDT Instruction No. 1916 Covers Only Prescribed Jewellery Limits — Excess Must Be Substantiated: Bangalore ITAT Ruling in DCIT Vs Chickkahanumappa Harishbabu
Overview of the Case
The Bangalore Bench 'A' of the Income Tax Appellate Tribunal delivered a significant ruling in the case of DCIT Vs Chickkahanumappa Harishbabu for Assessment Year 2020-21, reversing the appellate relief granted by the Commissioner of Income Tax (Appeals)-15, Bengaluru. The CIT(A) had, vide its order dated 23 August 2025, deleted an addition of ₹1,02,76,362 made under Section 69A of the Income-tax Act, 1961 pertaining to gold jewellery seized in the course of a search operation. The Tribunal, upon detailed scrutiny, restored the original assessment order and upheld the said addition, ruling in favour of the Revenue.
Background: Search, Seizure, and the Assessee's Profile
The assessee, an individual, derived income from house property, other sources, and agricultural activities. A return of income was filed for Assessment Year 2020-21 declaring a total income of ₹11,68,380.
A search and seizure operation under Section 132 of the Income-tax Act, 1961 was carried out at the assessee's premises on 9 January 2020. During this operation, gold jewellery with a total weight of 6,120.70 grams, valued at ₹2,28,09,093, was discovered and inventorised by the Revenue authorities.
Assessee's Explanation Before the Assessing Officer
The assessee furnished the following explanations during search and assessment proceedings:
- A portion of the jewellery had been inherited from deceased family members
- Another portion was received at the time of the assessee's marriage
- Some pieces had been gifted to the assessee's children
- Certain jewellery items had already been disclosed by the assessee's wife and mother in their respective income-tax returns
Despite these claims, the Assessing Officer noted that neither the assessee nor any of his family members had reflected the jewellery in their income-tax returns or filed any wealth-tax returns. Relying on CBDT Instruction No. 1916 dated 11 May 1994, the Assessing Officer excluded jewellery to the prescribed limit and seized jewellery weighing 3,211.24 grams.
Photographs and Their Evidentiary Value
During assessment proceedings, the assessee reiterated that the jewellery was several decades old, belonged to a large agricultural family, and had been acquired using agricultural income over many years. He also produced photographs showing family members adorning the jewellery as evidence of ownership.
The Assessing Officer, however, held that photographs could only establish physical possession — they did not, and could not, establish the source or manner of acquisition of the jewellery. Accordingly, the value of the seized jewellery amounting to ₹1,02,76,362 was treated as unexplained money under Section 69A, and the total income was assessed at ₹1,14,44,739.
First Appellate Stage: CIT(A) Deletes the Addition
Assessee's Submissions Before CIT(A)
Before the Commissioner of Income Tax (Appeals), the assessee strengthened his case with additional documentary evidence:
- Income-tax returns of himself, his wife, his mother, and his late father were produced
- The jewellery was claimed to have been acquired from rental and agricultural income spanning decades
- Evidence was furnished to demonstrate that the family had been in possession of the jewellery for over fifty years