Unexplained jewellery addition under section 69A failed where the Tribunal accepted the assessee's custody explanation.

The Tribunal accepted the assessee's explanation that the jewellery belonged to her mother, remained with her brother after the mother's death, and was omitted from wealth-tax returns because of that custody arrangement. On those facts, it held that the explanation was reasonable and that no addition could be made under section 69A of the Income-tax Act, 1961. The High Court found no error in that factual conclusion and held that no referable question of law arose for directing a reference under section 256(2).

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Issues: Whether the Tribunal was right in holding that the value of jewellery found at the time of search could not be added under section 69A of the Income-tax Act, 1961 and whether any referable question of law arose for directing a reference under section 256(2) of the Income-tax Act, 1961.

Analysis: The Tribunal had accepted the assessee's explanation that the jewellery belonged to her mother, that it had remained in the custody of the assessee's brother after the mother's death, and that the omission to include it in wealth-tax returns was attributable to that custody arrangement. On those facts, the Tribunal treated the explanation as reasonable and acceptable and found no justification for the addition under section 69A. The High Court found no error giving rise to a referable question of law from that factual conclusion.

Conclusion: No referable question of law arose, and the request to direct a reference was rejected.

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