Section 69A addition on seized jewellery required verification of company books before ownership could be fixed.

Addition under section 69A for seized jewellery could not be sustained solely on the basis of the assessee's physical possession. The assessee claimed the jewellery belonged to his company, and the record showed the company had asserted ownership, but the decisive question was whether the jewellery was accounted for in the company's books. As the lower authorities had not verified the company's books, ownership could not be conclusively determined. The addition was therefore set aside for limited fresh verification and the matter restored to the Assessing Officer.

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Issues: (i) Whether the addition made under section 69A of the Income-tax Act, 1961, in respect of the seized jewellery was sustainable in the assessee's hands.

Analysis: The assessee contended that the jewellery belonged to the company of which he was a director and that the ownership issue could not be decided merely on the basis of his physical possession at the time of seizure. The record indicated that the company had asserted ownership before the sales tax authorities and that the seized goods were released against bank guarantee pursuant to proceedings before the High Court. The crucial aspect, however, was whether the jewellery had been accounted for in the books of the company. The lower authorities had not carried out that verification. Since ownership could not be conclusively determined without examining the company's books, the addition could not be finally sustained without such inquiry.

Conclusion: The addition under section 69A was set aside for limited fresh verification and the matter was restored to the Assessing Officer.

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