Disproportionate Assets: Supreme Court Clarifies 500-Gram Gold Guideline Does Not Prove Source

The news

The Supreme Court has ruled that the 500-gram gold jewellery non-seizure guideline for married women does not exempt an accused from explaining the source of assets in a disproportionate-assets case. A bench of Justices K. V. Viswanathan and Arun Palli, on 2 November 2026, reversed the Patna High Court's 14 May 2026 order and restored the special vigilance judge's cognisance order of 28 January 2021. The Court directed that proceedings continue from the stage reached before the High Court's intervention.

The case, Phoolpari Kumari v. State of Bihar, arises from a Bihar Vigilance Police FIR registered on 11 May 2015 against Kumari and her husband under the Prevention of Corruption Act, 1988. After obtaining sanction, a charge sheet was filed against Kumari alone on 29 July 2020. The Patna High Court had quashed the special judge's cognisance order, accepting Kumari's argument that the gold in her possession was within the 500-gram limit set by the CBDT Instruction No. 1916 of 11 May 1994 and the Ministry of Finance press release of 1 December 2016. The Supreme Court held that merely showing a press release or circular that permits holding gold up to a certain limit is not enough to prove the source of the asset. The Court said the High Court's reasoning was incorrect because an accused under the Prevention of Corruption Act must explain how assets disproportionate to known sources of income were acquired.

What is the Prevention of Corruption Act, 1988?

The Prevention of Corruption Act, 1988 is a central law that consolidated and amended earlier anti-corruption statutes in India. It defines offences such as criminal misconduct by a public servant and prescribes penalties for them. The Act also provides for the appointment of special judges to try offences under it. Cases under this Act are investigated by agencies such as vigilance departments and the Central Bureau of Investigation.

What does the gold jewellery guideline say?

The Central Board of Direct Taxes issued Instruction No. 1916 on 11 May 1994. A Ministry of Finance press release dated 1 December 2016 stated that during an income-tax search, jewellery up to 500 grams for a married woman, 250 grams for an unmarried woman and 100 grams for a man would not be seized, even if it does not match the declared income. The Supreme Court has now distinguished this administrative guideline for income-tax searches from the requirement to account for assets in a corruption prosecution.

What did the Supreme Court decide and why?

The Court rejected the proposition that being within the jewellery non-seizure quantities by itself explains the source of assets. It held that the guideline is not sufficient to prove the source of gold in a disproportionate-assets case. The Court restored the special judge's cognisance order of 28 January 2021, allowing the trial to proceed. The ruling does not amount to a finding of guilt; it only means the case can continue from the stage at which the High Court had intervened.