The Income Tax Appellate Tribunal (ITAT) has provided partial relief to taxpayer Anjani Ashok Parikh. In an order dated September 1, 2026, the tribunal cancelled a tax demand on ancestral jewellery worth Rs 67.39 lakh, while upholding a Rs 12 lakh disallowance for brokerage payments made to a Hindu Undivided Family (HUF). The ruling highlights the importance of maintaining historical documentation for assets and substantiating business expenses.
The Income Tax Appellate Tribunal (ITAT) in Mumbai has issued a significant ruling regarding the taxation of personal assets and the validity of business expenses. The case of Anjani Ashok Parikh serves as a reminder for taxpayers about the necessity of maintaining robust records to support their financial claims.
Relief on Ancestral Jewellery
The tax department had previously attempted to treat jewellery worth Rs 67.39 lakh as unexplained money. The department’s assessment was based on the inference that the taxpayer must have sold these assets because she had stopped filing wealth-tax returns after the 1997-98 assessment year. However, the ITAT rejected this line of reasoning. The tribunal noted that the cessation of wealth-tax filings does not automatically imply the sale of assets; it often simply means an individual’s wealth has fallen below the taxable limit.
The taxpayer successfully defended her position by providing a long-term audit trail of the assets. This included historical wealth-tax records, valuation reports, and a 2015 family distribution declaration. Because she was able to prove the lineage and continued possession of the jewellery through these documents, the ITAT deleted the addition, providing relief to the taxpayer.
Scrutiny of Brokerage Payments
While the ruling on the jewellery was favourable, the tribunal took a different stance on the taxpayer’s expense claims. The taxpayer had claimed a deduction for Rs 30 lakh in total brokerage fees linked to a property transaction. This amount included a payment of Rs 12 lakh to an individual and an identical payment of Rs 12 lakh to a Hindu Undivided Family (HUF), which is a family-owned business entity.
Upon review, the ITAT found no evidence that the HUF had provided any services separate from those rendered by the individual. The tribunal clarified that identifying properties and negotiating terms are standard personal services, and since the individual had already been compensated for this work, the secondary payment to the HUF appeared to be an attempt to artificially inflate deductions. Despite the HUF having declared the income for tax purposes, the court ruled that simply declaring income does not make an unsubstantiated payment a genuine business expense. The disallowance of Rs 12 lakh was therefore upheld.
Key Takeaways for Taxpayers
This order underscores two critical areas for individuals and investors. First, having a clear documentary history—such as valuation reports or declarations—is essential when defending the possession of long-held personal assets against tax department queries. Second, payments made to family entities like an HUF are subject to strict scrutiny. Taxpayers must be prepared to prove that such entities are providing distinct, valuable services if they intend to claim those payments as legitimate business deductions.