A woman from Mumbai received help after The Income Tax department has considered some of the gold and silver found in her house and bank lockers as unexplained income.
In its ITA No. 3073/Mum/2026 passed on July 14, 2026, the Mumbai Division Bench of the Income Tax Appellate Tribunal removed tax additions totaling ₹11.23 lakhs after considering her explanation that the precious assets were accumulated through marriage gifts, inheritances and family acquisitions over several decades.
According to the ITAT order, the case involved Smita Kelkar, a resident of Vashi, Navi Mumbai, whose residence and two bank lockers were searched during the Income Tax Department’s proceedings.
Income Tax Department confiscated gold, diamonds and silver
During a search of her home, officials found 392.71 grams of gold jewelry, 92 grams of pure gold, diamond jewelry totaling 27.4 carats, 161.33 grams of gold, and 800 grams of silver items and coins.
The two bank lockers contained another 35 grams of gold ornaments, 166 grams of pure gold and 10.4 kg of silver articles, the court order said. The valuables found during the search were worth approx. ₹29.49 lakhs.
Why did the tax office question the jewelry?
According to the tribunal order, Kelkar explained that the jewelery and other valuable items were accumulated over a long period. She had been married since 1983 and said that during her marriage, she received about 250 grams of jewelry from her mother and other relatives.
She also laid claim to gold through inheritances following the deaths of her mother and mother-in-law, in addition to acquisitions made on family occasions over the years.
The ITAT order also noted that Kelkar and her husband reported a combined gross income of approx. ₹4.55 crores for five years of assessment.
The Assessing Officer accepted the bills for the purchase of 195.996 grams of gold ornaments and applied CBDT Instruction No. 1916 to another 231.714 grams. The AO considers the family norm to be 700 grams, which includes 500 grams for a married woman and 100 grams each for her husband and son.
However, the AO found some gold and silver items to be unexplained and added ₹18.05 lakhs under Section 69A of the Income Tax Act.
The Commissioner of Income Tax (Appeals) later removed the addition regarding diamond jewelery but upheld ₹8.10 lakh for 258 grams of pure gold and ₹3.12 lakhs for silver items.
Why did ITAT Mumbai remove the add-ons?
The Tribunal considered the silverware in the context of Kelkar’s long family life, inheritance and traditional family acquisitions. He noted that the taxpayer explained that the silver had accumulated over several decades.
The ITAT also referred to an earlier decision of the Indore ITAT in the case of Dinkar Laxman Mujumdar v. DCIT relating to silver articles. It was held that the Income Tax Department had not produced sufficient material to establish that Kelkar’s silver was a recent acquisition from undisclosed income.
Thus, the court excluded ₹Addition of Rs 3.12 lakh for silver.
Regarding 258 grams of pure gold, ITAT clarified that CBDT Instruction No. 1916 does not automatically exempt all pure gold or bullion from tax. However, the quantities specified in the instructions can serve as a reasonable guideline when examining family holdings.
After deducting 195.996 grams supported by purchase invoices, the remaining ordinary jewellery, gold in diamond jewelery and pure gold stood at 651.044 grams, which is below the benchmark of 700 grams recognized by the AO.
The Tribunal also noted that the tax authorities did not provide evidence that the pure gold was purchased during the relevant year out of undisclosed income. The absence of old purchase invoices alone was not enough to establish unexplained income when the explanation included marriage gifts, inheritances, and savings over decades.
Therefore ITAT removed ₹8.10 lakh net adding gold and allowed Kelkar’s appeal by removing survivors ₹Additional tax of 11.23 lakhs.
The Tribunal specifically clarified that its decision was based on the facts of the case and does not mean that all pure gold or bullion automatically falls within the purview of CBDT Regulation No. 1916.