Gold Jewellery Belongs to Wife and Mother and within Permissible Limits Set by CBDT: ITAT Deletes Addition [Read Order]

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) deleted additions of Unexplained Gold jewellery belonging to the Assessee’s wife and mother, where the quantity was within the prescribed Central Board of Direct Taxes (CBDT) Guidelines.

The Tribunal heard cross-appeals filed by the assessee and by the Revenue arising from a common order dated 26.02.2025 passed by the Commissioner of Income Tax (Appeals) [CIT(A)].

The assessee, Prashant Prakash Nilawar, an individual engaged in rendering consultancy services in matters of land aggregation and acquisition, had filed his return of income tax on 05.11.2022 for the assessment year 2022-23, declaring total income of ₹3,87,39,970/-.

A Search and Seizure operation was conducted under section 132 of the Income TaxAct, 1961 on 23.09.2021. The Assessing Officer completed the assessment under section 143(3) of the Income Tax Act, 1961 vide order dated 24.03.2024, determining the total income of the assessee at ₹11,11,29,155/- as against the returned income of ₹3,87,39,970/-.

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Aggrieved, the assessee appealed to the CIT(A), who partly allowed the appeal through the impugned order dated 26.02.2025. Both the revenue and the assessee then filed cross-appeals before the Tribunal.

The assessee was represented by Nishit Gandhi and the Revenue was represented by R.A. Dhyani before the Tribunal.

During the course of the search, firstly, a spiral-bound black pocket diary was found and seized from the residence of the assessee. The Assessing Officer treated the total amount of ₹5,35,15,187/- recorded therein as “unexplained expenditure” under Section 69C of the Income Tax Act, 1961. On appeal, the CIT(A) deleted ₹5,23,95,187/- of the addition but sustained ₹11,20,000/-.

Secondly, the Assessing Officer seized another pocket diary written in the handwriting of the assessee's wife, Seema Prashant Nilawar, from the residence of the assessee. The Assessing Officer under Section 69C had added ₹31,80,000/- but CIT(A) deleted this addition finding the noting to be random scribblings without proof of actual expenditure.

Thirdly, during the course of the search, the Assessing Officer seized cash aggregating to ₹54,29,800, which was treated as unexplained money by the AO. The addition was made on account of cash under Section 69A found during the search and seizure.

The assessee explained that the sum of ₹53,02,027 belonged to Rucha Group LLP and his Late father, Prakash Nilawar, sum of ₹1,13,90,318, both duly recorded as cash balance in the regular books of account. On appeal, CIT(A) sustained an addition of ₹1,27,773.

The Assessing Officer had added ₹5,61,261 of Foreign Currency found during the search under section 69A, which the assessee explained as a legitimate accumulation from foreign trips, supported by proper documentation but CIT(A) deleted the addition.

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Lastly, the Assessing Officer found Gold Jewellery during the course of search, where the addition was treated under Section 69B. The assessee explained that the Jewellery belonged to various family members including his mother, wife, and children and was within the reasonable limits as per CBDT Instruction No.1916 dated 11 May, 1994, which lays down standard guidelines for seizure.

CIT(A) examined the matter and allowed relief to certain family members to extend the permissible limit of 500 grams and 263.83 grams in respect of the jewellery belonging to the assessee’s wife and mother, deleting the addition of ₹11,32,420 which comprised of ₹4,39,320 for the wife and ₹6,93,100 for the mother.

After examining and reviewing all the submissions, the Tribunal upheld the order of CIT(A) deleting the additions under sections 69A, 69B and 69C and the grounds raised by the Revenue on these issues were dismissed.

The Tribunal allowed assessee’s cross appeals in all entirety, deleting all the residual amount sustained. Thus, the appeal filed by Revenue failed on all grounds and stands to be dismissed. The order was pronounced on 28th October, 2025.

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