Income Tax Dept Seized Gold, Diamonds and Silver From Woman's House and Bank Locker; ITAT Mumbai Rules in Her Favour

Mumbai: A woman from Vashi, Navi Mumbai, has won a tax dispute at the Income Tax Appellate Tribunal (ITAT), Mumbai, after the Income Tax Department seized gold, diamond and silver items from her residence and bank lockers and treated part of the holdings as unexplained.

The case involved Mrs Kelkar, who had been married for around 35 years. The Income Tax Department conducted searches at her residence and bank lockers after obtaining information about her possession of high-value jewellery and other precious-metal assets.

The tribunal ultimately ruled in her favour on July 14, 2026, deleting surviving additions amounting to Rs 11.23 lakh.

What Did the Income Tax Department Seize?

During the search of Mrs Kelkar's residence, Income Tax officials found:

• 392.71 grams of gold jewellery

• 92 grams of pure gold

• Diamond jewellery weighing 27.4 carats, containing around 161.33 grams of gold

• Around 800 grams of silver items and coins

Searches of her bank lockers maintained with Saraswat Sahakari Bank resulted in the seizure of:

• 166 grams of pure gold

• Around 10.4 kg of silver articles

• 35 grams of gold jewellery

The department asked Mrs Kelkar to provide supporting documents and purchase bills for the assets.

Woman Cited Marriage, Inheritance and Streedhan

Mrs Kelkar explained that she had been married for 35 years and that the jewellery had accumulated over several decades.

She said some of the jewellery was received as marriage gifts from relatives, while other items came through inheritance and streedhan. Her husband also stated that he had reported income of around Rs 4 crore in his income-tax returns and had occasionally gifted jewellery to his wife.

However, the Assessing Officer was not fully convinced by the explanation.

The officer relied on CBDT Instruction No. 1916 and treated 700 grams as the permissible family benchmark in this particular assessment—500 grams for the married woman and 100 grams each for her husband and son. The remaining amount was treated as unexplained under Section 69A of the Income Tax Act.

The Assessing Officer assessed unexplained income at approximately Rs 19.4 lakh and imposed tax and penalty.

ITAT Mumbai Deletes Rs 11.23 Lakh Additions

Mrs Kelkar challenged the assessment and subsequently approached the ITAT Mumbai.

The tribunal deleted additions of approximately:

• Rs 8.10 lakh relating to pure gold

• Rs 3.12 lakh relating to silver articles

Together, the deleted additions amounted to Rs 11,23,190.

According to chartered accountant Suresh Surana, who explained the ruling to ET Wealth Online, the tribunal accepted that Mrs Kelkar had provided a reasonable explanation for the source and nature of the assets.

The tribunal noted that the Income Tax Department had not produced material establishing that the disputed assets represented fresh purchases made during the relevant assessment year from undisclosed income.

What ITAT Said About Gold Holdings

A significant aspect of the ruling concerned pure gold.

The tribunal clarified that CBDT Instruction No. 1916 does not automatically grant immunity to all quantities of pure gold or bullion. However, the quantities mentioned in the instruction can serve as a practical benchmark when assessing whether jewellery holdings in a family are reasonably explained.

After excluding around 195.996 grams of gold jewellery supported by purchase bills, the remaining gold components—including ordinary jewellery, the gold contained in diamond jewellery and pure gold—were calculated at approximately 651.044 grams.

This was within the 700-gram family benchmark that had itself been recognised by the Assessing Officer under the CBDT instruction.

The tribunal also found it difficult to treat the pure gold differently merely because of its physical form when other gold jewellery and diamond-studded jewellery belonging to the same family holding had been considered.

Silver Articles Also Accepted as Explained

The tribunal separately considered the silver articles.

According to the explanation cited by ET Wealth Online, ITAT Mumbai considered the family's circumstances, including the woman's long marriage, customary receipt of silver articles during marriage and other family occasions, inheritance and the family's financial standing.

The tribunal also relied on an earlier Indore ITAT ruling involving Shri Dinkar Laxman Mujumdar v. DCIT, where the benefit of CBDT Instruction No. 1916 had been considered in relation to silver articles.

On these facts, the silver holdings were considered reasonably explained.

CBDT Gold Jewellery Rule Is Not a Blanket Exemption

The case is significant because it highlights an important distinction regarding CBDT Instruction No. 1916.

The instruction does not establish a statutory tax-free ceiling allowing every taxpayer to possess a fixed quantity of gold without explanation. Instead, the quantities can act as a reasonable benchmark while examining jewellery holdings in appropriate circumstances.

Factors such as the taxpayer's length of marriage, family customs, inheritance, streedhan, social and financial status and the circumstances surrounding acquisition can be relevant.

The ITAT ruling therefore does not mean that all gold or silver above or below a particular quantity will automatically be accepted by the tax authorities.

Why the Woman Won the ITAT Case

A key factor in Mrs Kelkar's favour was the absence of evidence showing that the disputed assets were recently acquired from undisclosed income.

The tribunal found that simply not having decades-old purchase invoices was not sufficient, on these facts, to establish that the jewellery and precious-metal holdings represented undisclosed income.

Her explanation that the assets were accumulated through marriage gifts, inheritance, streedhan and family accumulation was considered alongside the family's financial circumstances.

The ITAT consequently allowed her appeal and deleted the surviving additions.

Key Takeaway for Taxpayers

The ruling reinforces that possession of jewellery is not necessarily enough, by itself, to establish unexplained income. At the same time, taxpayers should not interpret the decision as an automatic exemption for a particular quantity of gold.

The ITAT's decision was based on the specific facts and evidence in Mrs Kelkar's case. The tribunal itself clarified that its finding regarding pure gold should not be treated as a general rule that all bullion or pure gold automatically receives protection under CBDT Instruction No. 1916.

The case therefore highlights the importance of maintaining evidence relating to inheritance, gifts, marriage-related jewellery and other sources of long-held family assets, particularly when questioned during a tax search or assessment.