Absence of bills and Invoices of wrist watches found during search not a reason for addition u/s 69A of Income Tax Act: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi bench held that the absence of bills and invoices for wristwatches found during the search proceedings should not be a reason for making additions under Section 69A of the Income Tax Act, 1961.

The assessee, Narinder Singh Punihani, is a resident individual. A search and seizure operation under section 132/133A of the Act was conducted on the assessee, other family members, and the entire group. In the course of these operations, jewelries and three watches were sent for valuation to a registered Valuer, who determined the value of the three watches at Rs. 21 lakhs.

Regarding the watches, the Assessing Officer asked the assessee to explain the source of investment. The assessee claimed the watches were purchased over time from disclosed sources. The Assessing Officer, unconvinced and alleging insufficient evidence, treated the Rs. 21 lakhs as unexplained money under section 69A.

The aggrieved assessee filed an appeal before the CIT(A), who dismissed it. Subsequently, the assessee appealed to the tribunal. R.S. Singhvi, Counsel for the assessee, argued that the watches were purchased before the block period, and neither bills/invoices nor credit card statements were available.

Subhra Jyoti Chakraborty supported the decision of lower authorities. The tribunal observed that during the search and seizure operation, three wristwatches were found. The assessee explained the purchase over time, but the Valuation Report lacked details about the make and year of manufacture.

The bench noted the assessee’s substantial means, demonstrated by the capital account statement. After reviewing the facts, the bench, consisting of Pradip Kumar Kedia (Accountant member) and N. Saktijit Dey (Vice-President), concluded that the assessee had ample means to invest in the wristwatches.

The bench deleted the addition, emphasizing that the absence of bills and invoices at the time of search was not sufficient cause for the addition.

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