Section 69A timing rules prevent jewellery found in a later financial year from being taxed in an earlier assessment year.

Section 69A of the Income-tax Act, 1961 applies to unexplained jewellery found during the relevant assessment year. Jewellery seized on 10 April 2018 was found in the financial year relevant to Assessment Year 2019-20, not Assessment Year 2018-19; accordingly, the analysis treats an addition for the earlier year as unsustainable. Income from brokerage and commission had already been disclosed in the returns under Sections 139(1) and 153A, with taxes and interest paid, and was stated to have funded the jewellery acquisition. Re-characterising that disclosed income under Section 69A and applying Section 115BBE for Assessment Year 2018-19 was therefore considered impermissible, and the stated conclusion was deletion of the addition and consequential taxation.

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Issues: Whether the addition under Section 69A of the Income-tax Act, 1961, and consequential taxation under Section 115BBE of the Income-tax Act, 1961, could be made in Assessment Year 2018-19 in respect of jewellery found and seized during a search conducted on 10 April 2018.

Analysis: Section 69A of the Income-tax Act, 1961, applies to unexplained money, bullion, jewellery or other valuable articles found in the relevant assessment year. Since the search and seizure occurred on 10 April 2018, the jewellery was found in the financial year relevant to Assessment Year 2019-20, not Assessment Year 2018-19. The income of Rs. 1.40 crore from brokerage and commission had already been disclosed in the return under Section 139(1) of the Income-tax Act, 1961 and again in the return filed under Section 153A of the Income-tax Act, 1961, with applicable taxes and interest paid. The disclosed income exceeded the value of the seized jewellery and was stated to be the source of its acquisition. Re-characterising that disclosed income as deemed income under Section 69A of the Income-tax Act, 1961 for Assessment Year 2018-19 and applying Section 115BBE of the Income-tax Act, 1961 was therefore unsustainable.

Conclusion: The addition under Section 69A of the Income-tax Act, 1961 for Assessment Year 2018-19 and the consequential application of Section 115BBE of the Income-tax Act, 1961 were deleted.

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