2024 (1) TMI 354 - AT - Income Tax

Tribunal Deletes Rs. 21 Lakhs Addition Under Sec 69A, Accepts Assessee's Explanation on Wristwatch Investments.

Sh. Narinder Singh Punihani Versus DCIT, Central Circle-19, New Delhi

Sh. Narinder Singh Punihani Versus DCIT, Central Circle-19, New Delhi - TMI Issues Involved:- Addition of an amount under section 69A of the Income Tax Act, 1961 based on unexplained money found during a search and seizure operation.Summary:The dispute in the present appeal revolves around the addition of Rs. 21 lakhs under section 69A of the Income Tax Act, 1961. The assessee, a resident individual, had three wrist watches valued at Rs. 21 lakhs seized during a search and seizure operation. The Assessing Officer treated this amount as unexplained money and added it to the assessee's income, which was upheld by the first appellate authority.Upon review, it was found that the Valuation Report did not provide detailed information about the watches, such as the make and year of manufacture, and no bills or invoices were found during the operation. The assessee explained that the watches were purchased over a period of time from disclosed sources of income, supported by cash flow statements and credit card transactions. The assessee's financial statements demonstrated significant assets and funds available in various assessment years.The Tribunal observed that the assessee's explanation regarding the source of investment in the watches was satisfactory, considering the lack of evidence indicating the purchase in the relevant assessment year. Relying on precedent and the plausible explanation provided by the assessee, the addition under section 69A was deemed unsustainable, and the Tribunal allowed the appeal.In conclusion, the Tribunal ruled in favor of the assessee, deleting the addition of Rs. 21 lakhs under section 69A of the Income Tax Act, 1961.