Tax Court Overturns Seizure of Gold, Diamond and Silver Holdings for Mumbai Taxpayer

The Income Tax Department, suspecting undisclosed wealth, searched Mrs Kelkar’s residence and Saraswat Sahakari Bank locker, seizing 392.71 g of gold jewellery, 92 g of pure gold, 27.4 carats of diamond jewellery containing 161.33 g of gold, 800 g of silver items, and additional pure gold and silver totaling over 10 kg. Relying on CBDT Instruction 1916, the Assessing Officer allowed a 700-gram family benchmark and classified the excess as unexplained, assessing Rs 19.4 lakh in tax plus penalties.

Mrs Kelkar appealed, receiving partial relief from the Commissioner of Appeals, and then took the case to ITAT Mumbai. Represented by chartered accountants Punit Shah and Suresh Surana, she proved the assets were accumulated over decades through marriage gifts, inheritance and customary family customs. The tribunal deleted Rs 8.1 lakh for pure gold and Rs 3.12 lakh for silver, ruling that lack of recent purchase invoices does not automatically imply undisclosed income. The decision clarifies that CBDT Instruction 1916 serves as a benchmark, not an absolute exemption, and that family customs and long-term accumulation are relevant factors.