Inherited Gold Sale Accepted: 2001 Valuation Report & Mother’s Affidavit Sufficient Proof
Issue
Whether the sale proceeds of gold jewellery can be treated as “Unexplained Cash Credit” (Section 68) if the assessee cannot produce the original purchase bills of her deceased father or a registered Will, despite having a valuation report from 2001.
Facts
The Transaction: The assessee sold gold jewellery and declared the transaction in her return, claiming a Long Term Capital Loss (LTCL) after indexation.
The Source: She claimed the jewellery was inherited from her father upon his death. To support this, she furnished a Valuation Report dated 31-03-2001 issued by a Government Approved Valuer in her father’s name.
AO’s Addition: The Assessing Officer (AO) treated the entire sale consideration as unexplained cash credit (Section 68).
Reasoning: The assessee could not produce her father’s original purchase bills (to prove he owned it) nor a formal Gift Deed/Will proving it was bequeathed to her.
Assessee’s Defense:
The sale was via proper banking channels.
The items in the sale bill (gross/net weight) matched the items listed in the 2001 Valuation Report.
A notarized affidavit from her mother confirmed the bequest.
The quantity was within the limits of CBDT Instruction No. 1916, which recognizes customary holdings of gold by Indian families.
Decision
Valuation Report is Key: The Tribunal held that a Government Approved Valuation Report from 2001 in the father’s name is credible evidence that the jewellery existed and belonged to the family long before the sale.
Matching Details: The specific matching of items (weight/description) between the 2001 report and the 2014 sale bill proved the identity of the assets.
CBDT Instruction 1916: The Tribunal noted that the quantity of gold was within the “reasonable” limits prescribed by the CBDT (generally 500g for married women, 100g for men, etc.), which courts accept as family holding even without strict proof of purchase.
Outcome: The explanation was deemed satisfactory. The addition under Section 68 was deleted. In favour of assessee.
Key Takeaways
Documenting Inheritance: You don’t always need a Will. A Valuation Report from the past or a Wealth Tax Return of the deceased parent is powerful evidence to prove the “source” of the jewellery.
Affidavits Matter: In the absence of a Will, a confirmed affidavit from surviving elders (like the mother) can bridge the legal gap regarding the “transfer” of the asset.
Sale Transparency: Always sell high-value jewellery through banking channels (cheque/RTGS) to reputable jewellers to establish the genuineness of the transaction.
IN THE ITAT MUMBAI BENCH ‘C’
Priyanka Lalitkumar Raizada
v.
Deputy Commissioner of Income-tax*
Sandeep Gosain, Judicial Member
and Girish Agrawal, Accountant Member
and Girish Agrawal, Accountant Member
IT Appeal No. 4379 (MUM) OF 2025
[Assessment year 2014-15]
[Assessment year 2014-15]
DECEMBER 18, 2025
Himanshu Gandhi, CA for the Appellant. Virabhadra Mahajan, Sr. DR for the Respondent.
ORDER
Girish Agrawal, Accountant Member. – This appeal filed by the assessee is against the order of CIT(A), National Faceless Appeal Centre (NFAC), Delhi vide Order No. ITBA/NFAC/S/250/2023-24/1058479077(1) dated 05.12.2023 passed against assessment order u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 26.12.2016 for AY 2014-15.
2. Grounds taken by the assessee are reproduced as under:
“1. On the facts and circumstances of the case and law, the Ld. CTI (A) erred in confirming addition of Rs. 21,50,540/-being sale proceeds of inherited jewellery as unexplained cash credits u/s 68 of the Income Tax Act, 1961.
2. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in not considering the fact that the gold jewellery is inherited by her father. Hence, the existence of gold jewellery has been proved by the appellant
3. On the facts and circumstances of the case and law, the Ld CIT(A) erred in denying the cost of acquisition of the previous owner and indexation benefit to the appellant and rejecting the computation of long-term capital gain shown by the appellant.
4. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming charging of interest under section 234B of Income Tax Act, 1961.
5. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming initiation of Penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961.
6. Appellant craves leave to add further grounds OR to amend OR alter the existing grounds of appeal on OR before the date of hearing.”
3. There is a delay of 490 days noted by the registry in filing the present appeal before the Tribunal, for which petition for condonation of delay along with affidavit by the assessee is placed on record. From the perusal of the same, it is noted that during the time when the appeal was due for filing, mother of the assessee was afflicted with cancer which ultimately resulted into her death on 21.01.2024, after multiple hospitalisations. This had profound emotional impact and distress including financial stress on the assessee to take care of her day to day business affairs which included filling of present appeal. Her tax professional, CA Shailesh Navnitlal Doshi, took care of the Income-tax matters and was entrusted with filing of the present appeal. However, his health was also compromised, culminating into his unfortunate passing away on 06.06.2025. Assessee then, approached another professional for handling the appeal matter, who then took all the necessary steps for the compliance of filing the present appeal with the stated delay. Assessee has furnished death certificates of her mother as well as CA Shailesh Navnitlal Doshi, in support of her submission. We have gone through the petition seeking condonation of delay, wherein all the details which led to the said delay are explained and narrated briefly in the above paragraph. Considering the compelling reasons at the end of the assessee as stated above and explained in the petition, we find it appropriate to condone the delay and take up the matter for adjudication.
4. The sole issue involved in the present appeal is in respect of addition made of Rs. 21,50,540/- u/s. 68 for the sale proceeds of jewellery. Brief facts of the case are that assessee filed her return of income on 28.03.2016 reporting total income at Rs. 56,48,144/-. In her return, assessee reported Long Term Capital Loss (LTCL) of Rs. 53,575/- on account of sale of jewellery. In this respect, the sale consideration realised by her is of Rs.21,50,540/- against which a deduction of cost of acquisition was claimed after indexation by taking into account by valuation as on 01.10.2001, amounting to Rs.22,04,115/-. Ld. AO asked the assessee to explain the transaction of sale of jewellery resulting into a Long Term Capital Loss and furnish corroborative documentary evidences to prove the genuineness of sale consideration.
4.1. Claim of the assessee is that she had received this gold ornaments bequeath on death of her father, she being the only child of her parents. Since she received the jewellery as bequeath on death of her father and therefore, was not in possession of any purchase bills thereof. However, she furnished a valuation report which was got prepared by her father during his life time for wealth-tax purposes which is dated 15.05.2001, issued by Government Approved Valuer M/s. Bhavi Jewellers. The said valuation report is in the name of his deceased father which valued various items of gold and diamond jewellery as on 31.03.2001. Thus, for the purpose of calculating capital gain, assessee took the value of jewellery contained in this valuation report to arrive at Indexed Cost of Acquisition. Assessee also furnished copies of sales invoices which reflected items sold by her and matched with the items listed in the valuation report. She also submitted the copies of bank statement to demonstrate that sales receipts are duly reflected in the bank statement. Assessee also contended that she is a person of repute and means and has been filing her Income-tax return regularly. In this respect, details of preceding 3 years returns were furnished which is tabulated as under:
| Sr. No. | A.Y. | Gross Income | Tax Paid |
| 1 | 2011-12 | Rs. 22,00,820/- | Rs.4,95,683/- |
| 2 | 2012-13 | Rs. 54,27,900/- | Rs.14,92,857/- |
| 3 | 2013-14 | Rs. 53,97,259/- | Rs. 14,55,104/- |
| 4 | 2014-15 | Rs. 57,37,853/- | Rs. 15,70,175/- |
4.2. To further corroborate her submissions an affidavit duly notarised by an attorney as deposed by her mother Smt. Sunila Raizada, the widow of late Shri Lalit Kumar Raizada was also furnished by which it was confirmed that the transfer of gold ornaments took place as bequeath on the death of the father of assessee. The mother of the assessee confirmed in affidavit that all the gold ornaments that her husband used to possess were bequeath to their one and only daughter i.e. the assessee and that she does not have any claim or right of whatsoever nature on the said gold ornaments. Therefore, daughter was free to do whatever she would like to, with these gold ornaments.
5. Ld. AO after considering all the submissions concluded to treat the amount of sale consideration of Rs.21,50,540/- as unexplained cash credit u/s. 68 by observing that assessee could not produce documentary evidences in support of purchase of gold jewellery by his father as well as could not produce any gift deed/will to confirm that the gold ornament where bequeath of her father. However, he acknowledged the submissions of all the documentary evidences as aforesaid, made by the assessee.
6. Aggrieved, assessee went in appeal before the ld. CIT(A) who confirmed the decision of ld. AO to upheld the addition so made. Aggrieved, assessee is in appeal before the Tribunal.
7. Ld. Counsel for the assessee reiterated the above stated facts. He pointed out that the observations of the authorities below, more particularly, by the ld. CIT(A) are grossly incorrect which mentions that sale bills do not contain gross weight or net weight of the gold jewellery and to hold adversely that the sale bills are only a makeover bills obtained for the purpose of present proceedings. To rebute this, he categorically pointed out that the items listed in the valuation report which is dated 15.05.2001, got prepared by the father of the assessee during his lifetime matched exactly with the jewellery items which have been sold by the assessee and mentioned in the sale bill which are placed on record. This very fact proves that the jewellery mentioned in the valuation report by her deceased father was received by her and was existing on the date of sale. This fact is also confirmed by the mother of the assessee by way of notarised affidavit which ld. AO has nowhere cross-examined to negate the same. Also, the valuation report in the name of the deceased father of the assessee prepared in the year 2001 is by a Government Approved Valuer which supports the jewellery sold by the assessee. Mother of the assessee has deposed that jewellery which belonged to her husband was given to the assessee, being their only child. Affidavit by the mother cannot be ignored and rejected without cross-examining her or the assessee.
7.1. Ld. Counsel also placed strong reliance on the Instruction No.1916 dated 11.05.1994, issued by CBDT to submit that the quantum of gold jewellery is well within the limits prescribed in the said instruction which is 250 grams per unmarried lady. Ld. Counsel thus, strongly asserted that all the documentary evidences and explanations furnished by the assessee before the authorities below have not been discredited or disproved. No discrepancy whatsoever, has been pointed out or anything cogent brought on record to controvert the factual position claimed by the assessee which are all verifiable in nature. Ld. AO has grossly failed in making adequate enquiries in this respect. Thus, the addition made by the assessee are arbitrary in nature, liable to be deleted and claim of the assessee as Long Term Capital Loss is to be allowed.
7.2. Per contra, ld. Sr. DR referred to the findings of the ld. CIT(A) and placed reliance thereon.
8. We have heard both the parties and perused the material on record. We have given our thoughtful consideration to the corroborative material forming part of the paper book. Admittedly, it is a fact on record that sale proceeds of gold ornaments sold by the assessee in her name are through proper banking channel. The sale bills contain list of items and there gross/net weight and the same matches with the items of jewellery listed in the valuation report as contended by the assessee. Further, the valuation report issued by Government Approved Valuer in the name of deceased father of the assessee is a good evidence which supports the contention of the assessee about gold jewellery having bequeath to her on the death of her father which in turn is supported by a duly notarised affidavit of her mother. Furthermore, the quantum of gold ornaments are well within the limits mentioned in the CBDT instruction (supra). It is also worth noting a fact that assessee is an individual of repute and means which is evidenced by her returns of income filed for the preceding years and is a regular tax paying assessee. Considering all these factual positions which remain uncontroverted and nothing cogent brought on record to rebute the same, we find that assessee has adequately and satisfactorily explained the sale transaction under taken by her for the gold ornaments for which addition has been made by the ld. AO. Accordingly, we delete the addition made in respect of sale consideration of the gold ornaments u/s. 68 of the Act. Grounds raised by the assessee in this respect are allowed.
9. In the result, appeal of the assessee is allowed.