Section 69A additions fail where jewellery evidence is credible and third-party diary entries lack independent corroboration.

Addition under section 69A for unexplained jewellery was deleted because the assessee produced valuation reports, purchase bills, remaking bills and payment details, while the Assessing Officer relied only on suspicion and failed to establish any cogent discrepancy. Addition under section 69A for unexplained money based on diary entries was also deleted because the diary belonged to a third person, who stated that the notings related to his own dealings, and the Revenue produced no independent corroboration against the assessee. The appellate relief was sustained on both issues.

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Issues: (i) Whether the addition made under section 69A on account of unexplained jewellery was rightly deleted, and (ii) whether the addition made under section 69A on account of unexplained money based on diary entries was rightly deleted.

Issue (i): Whether the addition made under section 69A on account of unexplained jewellery was rightly deleted.

Analysis: The assessee produced valuation reports, purchase bills, remaking bills, and payment details showing acquisition and conversion of diamonds into jewellery. The Assessing Officer did not bring any cogent material to establish discrepancies and proceeded on suspicion that the purchases were made on credit shortly before the search. The rejection of the assessee's explanation rested only on presumption, which could not substitute proof. The invocation of section 69A was therefore not justified on the facts established.

Conclusion: The deletion of the addition on account of unexplained jewellery was upheld, and the issue was decided against the Revenue.

Issue (ii): Whether the addition made under section 69A on account of unexplained money based on diary entries was rightly deleted.

Analysis: The diary entries were found to belong to a third person, who clarified that the notings represented his personal dealings and were considered in his settlement proceedings. The material relied upon by the Revenue was not corroborated by independent evidence against the assessee. In these circumstances, the diary entries could not be treated as sufficient evidence against the assessee, and the addition under section 69A could not stand.

Conclusion: The deletion of the addition on account of unexplained money was upheld, and the issue was decided against the Revenue.

Final Conclusion: The appellate order granting relief to the assessee on both disputed additions was sustained, and the Revenue's appeal failed in full.

Ratio Decidendi: An addition under section 69A cannot be sustained merely on suspicion, conjecture, or uncorroborated third-party material when the assessee has produced credible supporting evidence and no independent discrepancy is shown.

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