The Nagpur ITAT deleted a tax addition on jewellery found during an income-tax search, stressing ownership, source and family circumstances. According to reports from Mint, the ruling came in the case of Nirmal Kumar Agrawal v. ACIT, Central Circle-2(1), Nagpur, ITA No. 530/Nag/2025, pronounced on 10 August 2026. The search was conducted on 26 July 2016 at the premises of a Nagpur-based chartered accountant and partner in S.N.J. & Associates.
During the search, 2,434 grams of jewellery worth ₹90.59 lakh was found, along with cash of ₹7.06 lakh. As reported by Mint, the tax officer seized jewellery weighing 1,314 grams and ₹5 lakh in cash. The Assessing Officer subsequently made a ₹50 lakh addition under Section 69A of the Income-tax Act, treating it as unexplained money. The Commissioner of Income Tax (Appeals) gave substantial relief and sustained an addition of ₹3.86 lakh relating to four jewellery items.
One of the Tribunal's key findings was that jewellery found at a common residence cannot automatically be treated as belonging to the person whose premises are searched. According to the explanation submitted before tax authorities, two disputed items, weighing 55.8 grams and valued at ₹2.58 lakh, were claimed by Agrawal's wife. As reported by Mint, these items were received from her parents on the birth of their two daughters, with the valuation report recording them in her name. The ITAT accepted this explanation, observing that such gifts on important family occasions were customary.
The Tribunal examined jewellery that Agrawal himself owned, with total jewellery stated to be 121.5 grams. According to reports from Mint, 72.6 grams had been purchased through banking channels between 2008 and 2011 and was recorded in his books. This left only 48.9 grams for consideration. The Tribunal found this quantity reasonable, taking into account that Agrawal was 41 years old, had been married for 15 years, had two daughters and was a practising chartered accountant. The 48.9 grams was below the 100-gram limit for a male family member under CBDT Instruction No. 1916.
The ruling does not mean that taxpayers can automatically keep any quantity of gold jewellery at home without questions from the tax department. As reported by Mint, the Tribunal's decision highlights the importance of ownership and source. Jewellery belonging to different family members should be identifiable, while purchases should ideally be supported by invoices, bank records and books of account. Gifts and inherited jewellery may also require a credible explanation of their origin. The Tribunal further held that CBDT Instruction No. 1916 is relevant as a benchmark for reasonable jewellery possession, but the facts and circumstances of each case remain important.
