The Income Tax Appellate Tribunal (ITAT), Bangalore Bench quashed the income tax addition on wife’s gold & silver jewellery worth Rs. 1.65 Crore.
The bench of Soundararajan K (Judicial Member) and Laxmi Prasad Sahu, )Accountant Member) has observed, “Once the same issue has been accepted by the same AO in the hands of the wife, then the AO cannot assume that the jewellery mentioned in the annexures is unexplained and belongs to the assessee (Suresh). The kinds of jewellery are related to the lady too. The satisfaction note recorded by the very same AO is identical, and the seized documents referred are also identical.”
The Tribunal noted that the same Assessing Officer (AO) had accepted the explanation and returned income in the hands of the assessee’s wife regarding similar jewellery, based on the same satisfaction note and identical annexures prepared during the search.
The case originated from a search and seizure operation conducted by the Income Tax Department under Section 132(1) at the residence of Mr. Suresh (name withheld) on November 14, 2019. During the operation, jewellery and silver ornaments valued at ₹1.75 crore were inventorised and seized.
Following the search, the Deputy Commissioner of Income Tax (DCIT), Central Circle–1(1), Bangalore, passed an assessment order on March 28, 2022, under Section 144(3) read with Section 153D, adding ₹1.65 crore as unexplained investment under Section 69 of the Income Tax Act, 1961.
The Assessing Officer observed that although Suresh claimed the seized jewellery was purchased through legitimate means — using bank transfers and credit cards — the invoices furnished did not correspond with the items listed in the search inventory. Some of the alleged payments were also made after the date of the search, raising further doubts.
Suresh also claimed that parts of the jewellery were ancestral or received as gifts from family and friends. However, the AO noted that no documentary confirmations were produced to substantiate these claims.
The officer further pointed out that Suresh had disclosed only ₹5.2 lakh worth of jewellery in his own name and ₹98.5 lakh in his spouse’s name in his income tax return, and failed to produce the balance sheet and statement of affairs for the relevant assessment year.
Concluding that the source of investment remained unexplained, the AO invoked Section 69 and taxed the entire ₹1.65 crore as unexplained investment.
Aggrieved by the addition, Suresh appealed before the Commissioner of Income Tax (Appeals), who ruled in his favour. The CIT(A) found merit in Suresh’s explanation, particularly since the same jewellery had been considered explained in his wife’s assessment, completed by the same AO on the same date, based on the same documents.
The Income Tax Department subsequently appealed to the ITAT, Bangalore Bench (ITA No. 2168/Bang/2024).
After detailed hearings, the ITAT reaffirmed the CIT(A)’s view, noting that the Revenue’s stand was internally inconsistent, as the jewellery accepted in one spouse’s case could not simultaneously be treated as unexplained in the other’s.
Finding no infirmity in the order of the CIT(A), the Tribunal concluded, “We uphold the order of the CIT(A). In the result, the appeal filed by the Revenue is dismissed.”
Case Details
Case Title: ACIT Versus Sunil Suresh
Case No.: ITA No.2168/Bang/2024
Date: 11/09/2025
Counsel For Appellant: V. Srinivasan, Advocate
Counsel For Respondent: Sankar Ganesh D, Addl. CIT(DR)(ITAT)
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