Unexplained possession of precious stones can support ownership inference under section 69A when no satisfactory source is shown.

Section 69A can apply where an assessee is found in possession of valuable articles not recorded in the books of account and offers no satisfactory explanation of their source. Ownership is a factual question to be determined from surrounding circumstances, and possession is a significant indicator; section 110 of the Evidence Act supports an inference of ownership as prima facie proof. On the stated facts, the assessee was a dealer in precious stones, was found with the seized articles, and the explanation for their receipt and custody was rejected, so the finding of ownership was supported by material and was not perverse or erroneous in law.

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Issues: Whether the assessee's possession of precious stones, coupled with an unsatisfactory explanation of their source, justified the application of section 69A of the Income-tax Act, 1961, and whether there was material to support the finding that the assessee was the owner of the seized precious stones.

Analysis: Section 69A applies only where the assessee is found to be the owner of money, bullion, jewellery or other valuable article and such asset is not recorded in the books of account. Ownership is a question of fact to be determined from the surrounding circumstances, and possession is an important factor. The statutory presumption reflected in section 110 of the Evidence Act, 1872 supports a conclusion of ownership where the assessee is found in possession and offers no satisfactory explanation. On the facts, the assessee was a dealer in precious stones, was found in possession of the seized articles, and the Tribunal rejected the explanation offered regarding their receipt and custody. The finding that the assessee was the owner was therefore supported by material and was not perverse or erroneous in law.

Conclusion: Section 69A was rightly held applicable, and there was material on which the Tribunal could conclude that the assessee was the owner of the precious stones. The questions were answered in the affirmative and against the assessee.

Ratio Decidendi: For the purposes of section 69A, possession of unexplained valuable articles may justify an inference of ownership where the assessee offers no satisfactory explanation, and section 110 of the Evidence Act, 1872 supports that inference as prima facie proof of ownership.

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