Unexplained jewellery in possession can be taxed as income when ownership and source are not satisfactorily proved.

Possession of jewellery without a satisfactory explanation of ownership or source justified treatment of its value as unexplained income under section 69A. The Kerala HC applied the principle that possession raises an evidentiary burden on the assessee, consistent with section 110 of the Evidence Act, to show that the gold ornaments belonged to the employer and not to him. On the facts, the assessing authority and Tribunal found material inconsistencies in the employer's version and the surrounding records, and those concurrent findings were not shown to be perverse. The addition was therefore upheld.

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Issues: Whether the addition of the value of seized gold ornaments as unexplained income under section 69A was sustainable, and whether the assessee had discharged the burden of proving that the ornaments belonged to the employer and not to him.

Analysis: Section 69A deems the value of jewellery to be income where the assessee is found in possession of the article, it is not recorded in the books, and no satisfactory explanation of its nature and source is offered. The burden, therefore, lay on the assessee to establish that the gold ornaments in his possession were not his own. The principle reflected in section 110 of the Evidence Act, 1872 was applied to the question of ownership based on possession. On the facts, the assessing authority and the Tribunal found serious inconsistencies in the employer's version, the contemporaneous records, and the explanation regarding transfer and possession of the gold ornaments. Those findings were based on appreciation of evidence and were not shown to be perverse.

Conclusion: The assessee failed to discharge the burden under section 69A, and the addition of the value of the gold ornaments in his hands was upheld.

Ratio Decidendi: Where an assessee is found in possession of jewellery and fails to give a satisfactory explanation of its ownership and source, the value may be assessed as income under section 69A, and concurrent factual findings on possession and ownership based on evidence do not give rise to a substantial question of law.

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