Why Keeping Jewellery Bills Matters: A Bengaluru Tax Case Every Credit Card User Should Know

A recent case from Bengaluru has sent a strong message to taxpayers across India — buying jewellery with a credit card isn’t enough; proper documentation is essential. A missing bill can invite unwanted scrutiny from the Income Tax Department, even if the purchase was made through legitimate banking channels.

The Case That Sparked Attention

The incident dates back to 2019, when the Income Tax Department conducted a raid at the home of a Bengaluru resident (name changed to Suresh). During the search, officials seized gold and silver jewellery worth around ₹1.65 crore. The department claimed that the jewellery was not supported by proper purchase documents and classified it as “unexplained investment.”

Suresh explained that the ornaments belonged to his wife and had been purchased through credit card and online payments, indicating transparent transactions. However, during the verification process, the bills presented by him did not match the specific items seized by the department. Consequently, the authorities treated the jewellery as undeclared assets and added its value to his taxable income — triggering a significant tax liability.

The Legal Battle

Unwilling to accept this decision, Suresh appealed before the Commissioner of Income Tax (Appeals), who ruled in his favor. However, the tax department challenged this verdict and escalated the matter to the Income Tax Appellate Tribunal (ITAT).

After reviewing the evidence, the ITAT ruled once again in favor of the taxpayer, observing that the jewellery had already been declared in Suresh’s wife’s income tax returns. Therefore, treating the same assets as undisclosed investment and taxing them again was both unjustified and unlawful.

The tribunal emphasized that taxing the same asset twice violates the principles of fairness and legality. This judgment not only brought relief to the taxpayer but also set a precedent for similar cases, offering clarity to countless individuals facing similar scrutiny.

What This Means for Taxpayers

The ruling serves as an important reminder that maintaining accurate records and purchase documents is as critical as making digital payments. Even when jewellery or other high-value items are purchased through legitimate financial channels like credit cards, online transfers, or bank cheques, the invoice, receipt, and payment proof remain vital.

Without supporting documents, the Income Tax Department can classify such assets as “unexplained,” potentially resulting in penalties, tax additions, and lengthy investigations.

Expert Advice

Commenting on the case, chartered accountant Suresh Surana noted that every taxpayer should retain detailed documentation for all expensive purchases — especially gold, diamonds, art, or other luxury assets. According to him, “Proper billing and transparent payment records are your best defense during an income tax assessment or investigation.”

He added that taxpayers should also ensure that high-value purchases are accurately reported in their income tax returns, particularly when such assets belong to family members or have been inherited. Clear documentation prevents misinterpretation and safeguards against future disputes.

The Takeaway

This Bengaluru case highlights a simple yet powerful lesson — digital payment alone does not prove ownership or legitimacy. Keeping purchase bills, payment confirmations, and even product valuation certificates can protect taxpayers from unnecessary tax complications.

In today’s era of strict financial compliance and digital transparency, a missing bill can cost you dearly, while a well-documented record can save you from legal and financial stress. For every taxpayer, this case reinforces one golden rule: when you buy gold, never lose the bill.