PA-Mediated Transaction No Defence in Jewellery Purchase: ITAT Upholds ₹23.53 Lakh addition u/s 69B on Proven Nexus [Read Order]

The Income Tax Appellate Tribunal (ITAT), Hyderabad Bench, upheld an addition under Section 69B of the Income Tax Act, 1961, holding that routing a transaction through a Personal Assistant (PA) does not sever the nexus with the assessee where the financial link is clearly established.

The assessee, Jayakrishna Nandamuri, had filed his return for Assessment Year 1996-97 declaring a total income of ₹1.02 lakh. Based on information received, the Assessing Officer (AO) reopened the assessment after finding that a sum of ₹23.53 lakh had been paid in cash for purchase of jewellery from a Coimbatore-based jeweller. The amount was treated as unexplained investment under Section 69B.

The assessee maintained that the transaction was carried out by his Personal Assistant and that the jewellery was in fact purchased by his daughter. It was further submitted that the source of funds was explained as arising from gifts and withdrawals, and that he had no direct involvement in the transaction.

The Revenue, however, contended that the assessee had failed to satisfactorily explain both the source of investment and his connection with the transaction.

On examining the material on record, the tribunal comprising Ravish Sood (Judicial Member) and Madhusudan Sawdia (Accountant Member) noted that the cash payment for the jewellery was made through the assessee’s PA and that the jewellery was also received by the PA.

More importantly, a portion of the payment was refunded by the jeweller through a cheque issued in the name of the assessee, which was deposited in his bank account. This, in the Tribunal’s view, decisively linked the assessee to the transaction.

The Tribunal held that this established a clear and direct nexus between the assessee and the transaction. Once the refund arising from the same transaction was credited to the assessee’s account, the plea of non-involvement could not be sustained. The use of a PA did not dilute the connection or shift the burden.

Accordingly, the Tribunal upheld the addition of ₹23.53 lakh under Section 69B and dismissed the appeal.

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