Jewellery within permissible family limits cannot be treated as unexplained income when supported by customary and family-use explanations.

Jewellery found during search at the residence of an assessee and her family members was explained as family-owned ornaments accumulated over time through customary occasions and gifts. Where the quantity attributable to each family member fell within the limits recognised in the CBDT circular, judicial precedents accepted that such jewellery should not be treated as unexplained. On that basis, the addition for unexplained jewellery was deleted and the matter was decided in favour of the assessee.

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Issues: Whether jewellery found during search, to the extent covered by the CBDT circular for family members, could be treated as unexplained and added as income.

Analysis: Jewellery was found during search at the residence of the assessee and her family members. The assessee explained that the jewellery belonged to the family, had accumulated over time through customary occasions and gifts, and that the quantity attributable to each family member fell within the limits recognised in the CBDT circular. The decision notes that judicial precedents have accepted that jewellery within such permissible limits, having regard to Indian customary practice, should not be treated as unexplained.

Conclusion: The addition made towards unexplained jewellery was deleted and the issue was decided in favour of the assessee.

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