CBDT jewellery allowance guide applied to search findings, with excess locker jewellery treated as unexplained investment.

CBDT Circular No. 1916 was treated as a practical guide for accepting family jewellery found during search as explained up to the reasonable quantity indicated in the circular, even without purchase evidence. Jewellery attributable to the assessee and family members was allowed only to that extent, and the excess remained liable to be treated as unexplained investment. On that basis, the balance jewellery in the lockers was apportioned as unexplained after giving credit for the circular-based allowance and amounts already surrendered, resulting in only partial relief and corresponding sustenance of additions for the remaining unexplained jewellery.

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Issues: Whether the jewellery found in the lockers could be treated as explained to the extent contemplated by CBDT Circular No. 1916 dated 11.05.1994, and whether the balance value remaining after such allowance was liable to be added as unexplained investment.

Analysis: The circular was treated as a practical guideline reflecting the quantity of jewellery ordinarily held in Hindu families and as supporting a reasonable presumption that jewellery up to the specified limits may be accepted as explained even where purchase evidence is not available. Applying that approach, the jewellery attributable to the assessee and family members was allowed only to the extent justified by the circular. In the first locker, after accounting for the amount already surrendered by the husband and the benefit available under the circular, only 139.469 grams remained unexplained. In the second locker, the assessee could claim benefit only up to the reasonable quantity recognised by the circular, leaving 234 grams as unexplained.

Conclusion: The deletion of the entire additions was not sustained. The additions were upheld only to the extent of the unexplained jewellery remaining after giving the benefit of the circular, resulting in a partial relief to the assessee and a corresponding partial allowance of the Revenue's appeal.

Final Conclusion: The order was modified to sustain additions only for the balance jewellery found to be unexplained after applying the CBDT circular-based allowance.

Ratio Decidendi: CBDT Circular No. 1916 can be applied as a reasonable guide for treating jewellery within its specified limits as explained in the context of family jewellery found during search, but any excess beyond that reasonable allowance remains liable to be assessed as unexplained investment.

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