Tax dept seized wife’s Rs 1.65 crore worth of gold and silver jewellery, issued notice for unexplained investment, husband filed case; wins in ITAT Bengaluru
Oct 21, 2025
Synopsis
The Income Tax Department seized Rs 1.65 crore worth of gold and silver jewellery from Suresh's residence. The department claimed it was unexplained investment. Suresh appealed, and the ITAT Bengaluru agreed that the jewellery belonged to his wife. The tribunal found the tax officer had already accepted the wife's explanation in her assessment.
On November 14, 2019, the Income Tax Department executed a search and seizure operation under Section 132(1) at Mr. Suresh‘s (name withheld) residence. As a result of this search, some jewellery items discovered at Suresh’s premises were seized. The jewellery found and seized was duly inventorized and documented.
Following the search and the assessment that took place, an order was issued under Section 144(3) in conjunction with Section 153D by the DCIT, Central Circle – 1(1), Bangalore, on March 28, 2022. In this order, the tax assessing officer (AO) added Rs 1.65 crore (1,65,45,323) as unexplained investment in jewellery under Section 69.
During the course of search, various types of jewellery were found and seized. Statements were recorded under Section 132(4) and several statutory notices were sent to him.
While the assessment proceedings were ongoing, Suresh submitted a response to the tax department, claiming that all the jewellery items seized were purchased legitimately, with payments made through banking channels and credit cards.
The tax officet reviewed Suresh’s explanation and noted discrepancies between the jewellery items mentioned in Suresh’s reply and those for which payments were made from his bank account and credit card.
Additionally, Suresh submitted invoice details to support his bank account and credit card purchases. However, after the tax officer compared the inventory created during the search and seizure with the bank account and credit card payments, it was found that the invoices did not match with any of the items purchased or even with the inventory list of the items found during search.
Moreover, during the course of search, the valuation of jewellery was made for an amount of Rs 1.65 crore (1,65,45,321) and Suresh in sworn statement under section 132 had stated that in the absence of documentary evidence, the unexplained investment in jewellery will be offered to tax.
However, Suresh did not file any income tax return disclosing this wealth and the invoices produced did not match or identify with the items mentioned in the inventory list. The tax officer also noted that Suresh did not produce any supporting evidence(s) to prove beyond doubt that the inventory items as found during the search proceedings pertain to the said invoices and the bank account payments.
Furthermore, the income tax officer pointed out that some payments for the seized jewellery occurred after the date of search. The tax officer said that in such a situation, Suresh cannot claim that there are purchase proofs for jewellery acquird after the search date when the jewellery was inventorised as per Annexures prepared by the income tax search team.
The tax officer also noted that although Suresh claimed that some of the jewellery was ancestral and some he got by way of gifts from family, relatives and friends, he has not provides any documentary evidence confirming this from the family members Who supposedly gave him gifts.
Thus the income tax officer concluded that since Suresh has not given any documentary evidence to prove the source of his jewellery investments, the explanation furnished is not satisfactory. Furthermore, Suresh has submitted an income tax return (ITR) declaring jewellery worth Rs 5 lakh (5,20,140) in his name and a total of Rs 98 lakh (98,52,400) in jewellery in his spouse’s name, as detailed in the schedule of assets and liabilities.
Moreover, Suresh failed to provide the balance sheet for the Assessment Year 2020-21, along with the statement of affairs. The tax officer said that Suresh was given plenty of chances, but couldn’t prove the source of investments in jewellery totalling Rs 1.65 crore (1,65,45,323). Therefore, the income tax department added this amount (Rs 1.65 crore) as unexplained investment under Section 69 of the IT Act.
Dissatified with the tax department’s decision, Suresh appealed to the Commissioner of Appeals (CIT A). He won the case in CIT (A), prompting the income tax department to take the case to the Income Tax Appellate Tribunal (ITAT) Bangalore bench.
On September 11, 2025, Suresh won the case in ITAT Bangalore. Check out the story to know why and how Suresh won this case.
Mihir Tanna, associate director, S.K Patodia LLP, says that it is important that even if you receive jewellery ancestral or by way of gifts from family, relatives and friends, everyone should have documentary proof of such confirmation from the list of family members from whom gifts are received. During any occasions, the list of persons who gave gifts should be maintained.
"If the explanation furnished is not satisfactory, it will be deemed as unexplained investment and be subjected to tax @60% without providing benefit of minimum exemption limit + 25% surcharge + 4% cess in all cases. In addition to that 10% penalty is imposed on the tax calculated @60%," says Tanna.
Inventory of the jewellery items seized
ITAT Bangalore in its judgement (ITA No.2168/Bang/2024) dated September 11, 2025 said that as part of the income tax search action, the residential premises of the assessee (Suresh) was also searched and jewellery weighing 2487.100 gms were found and seized and silver articles and ornaments weighing 3.00 kgs were found valuing Rs 1,75,45,323 noted from the Assessment Order (AO) before issuing notice under Section 143(2).
ITAT Bangalore says this
ITAT Bangalore said that during the course of hearing, the learned Counsel representing Suresh drew their attention to the wife's case of assessment that was completed on March 28, 2022 under Section 143(3) read with Section 153D, with a notice was issued under Section 143(2) observing as under:
[The Economic Times]
