Unexplained bitcoin investment addition remitted for fresh verification of disclosed investment, settlement receipt and claimed loss.

Addition under section 69 for alleged unexplained bitcoin investment was not sustained on the existing record because the assessee had shown the original investment through banking channels and stated that the settlement receipt reflected a loss rather than undisclosed gain. The authorities treated the balance as unexplained, but the appellate record indicated disclosure of both the investment and the compensatory receipt. The matter was remitted to the Assessing Officer for fresh verification of the loss claim and transaction details, with the addition not finally upheld.

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Issues: Whether the addition made under section 69 of the Income-tax Act, 1961, treating the bitcoin investment as unexplained, was sustainable where the assessee claimed that the investment was disclosed and the transaction resulted in a loss.

Analysis: The record showed that the assessee had made an investment of Rs. 12.50 lakhs through banking channels and later received only compensatory amount under the settlement arrangement, while the material also indicated bitcoin transactions of a higher aggregate value. The authorities below treated the balance as unexplained investment, but the appellate record indicated that the original investment and the receipt of compensation were both disclosed. In these circumstances, the addition could not be sustained without proper verification of the loss claim and the transaction details. The matter required fresh examination by the Assessing Officer on the evidentiary basis of the alleged loss and the absence of taxable gain.

Conclusion: The addition was not finally upheld and the issue was remitted for verification by the Assessing Officer, resulting in relief to the assessee in part.

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