Jewellery explained by family gifts and disclosed holdings was not treated as unexplained investment within search guideline limits.

CBDT Instruction No. 1916 dated 11.05.1994 was treated as a search guideline fixing ordinary limits for non-seizure of jewellery, with allowance for higher quantities based on family status and customs. The article states that this benchmark can also assist in deciding whether jewellery found during search is an unexplained investment under section 69B. Where the assessee offered a credible explanation, including family ownership, marriage gifts, stree dhan, wealth-tax disclosure and purchase bills, jewellery within the Instruction's benchmark was not to be treated as unexplained. The addition was therefore deleted to that extent.

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Issues: Whether CBDT Instruction No. 1916 dated 11.05.1994, prescribing limits for non-seizure of jewellery during search, could be applied while determining unexplained investment in jewellery and whether the addition made under section 69B was sustainable to the extent of jewellery covered by that instruction.

Analysis: The Instruction was treated as a search guideline fixing standard quantities of jewellery ordinarily not to be seized, with scope for larger quantities depending on family status, customs and other circumstances. The issue was whether that guideline could also govern taxability of jewellery found during search. The explanation offered for the jewellery included family ownership, marriage gifts, stree dhan, wealth-tax disclosure and purchase bills for part of the jewellery. The reasoning accepted that, where the assessee gives a credible explanation and the quantity falls within the benchmark of the Instruction, the corresponding jewellery should not be treated as unexplained investment.

Conclusion: The addition was directed to be deleted to the extent of jewellery covered by CBDT Instruction No. 1916 dated 11.05.1994, and the assessee succeeded on the substantial ground to that extent.

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