HARSHIT KOCHAR,NEW DELHI V. ACIT CENTRAL CIRCLE 17 NEW DELHI, JHANDEWALAN NEW DELHI

ITA 5072/DEL/2024

AI Insights

The case involves an appeal by Harshit Kochar against the order of the Commissioner of Income-tax (Appeals)-27, New Delhi, which confirmed an addition of Rs. 21,26,142 under sections 69A and 115BBE of the Income-tax Act, 1961, for unexplained investments in wrist watches during the assessment year 2017-18. A search operation under Section 132 of the Act was conducted at the residence of the assessee, where watches valued at Rs. 92,37,000 were found. The assessee argued that the watches belonged to multiple family members and were gifts, not purchases. The Tribunal found that the watches were within the family's status and deleted the addition, noting the lack of specific identification of the watches to individual family members during the assessment proceedings.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772556 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2017-2018
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DAYAINDER SINGH SIDHU
• Assessee Lawyers: GAUTAM JAIN
• Keywords: Corroborative evidences; Unexplained investment; Gift; Search and seizure
• Section: 142(1); 132

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘C’: NEW DELHI BEFORE SHRIS.RIFAUR RAHMAN, ACCOUNTANT MEMBER and SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No.5072/DEL/2024 (Assessment Year: 2017-18) Harshit Kochar, vs. ACIT, Central Circle 17, 5, Kasturba Gandhi Marg, New Delhi. New Delhi – 110 001. (PAN : AMYPK0228N) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Gautam Jain, Advocate Shri Parth Singhal, Advocate REVENUE BY : Shri Dayainder Singh Sidhu, CIT DR Date of Hearing : 04.06.2025 Date of Order : 29 .08.2025 O R D E R PER S.RIFAUR RAHMAN, ACCOUNTANT MEMBER : 1. This appeal is filed by the assessee against the order of ld. Commissioner of Income-tax (Appeals)-27, New Delhi [hereinafter referred to as ‘ld. CIT (A)] dated 06.10.2023 for Assessment Year 2017-18 raising following grounds of appeal :- “1. That the learned lower authorities have erred in nor appreciating either on the fact or circumstance, of the case and further has erred in upholding the addition of Rs.21,26,142/- u/s 69A r.w.s, 115BBE of the Act which is bad in law. Printed from counselvise.com 2 ITA No.5072/DEL/2024 2. That the learned lower authorities has erred in confirming the addition of Rs.21,26,142/- u/s 69A r.w.s, 115BBE of the Act out of the total addition of INR 92,37,000 made on the alleged unexplained investments in the wrist watches. 2.1 That the learned lower authorities went in appreciating the submissions of the appellant that search operation was carried out at the residential property of the appellant at 5 KG Marg, New Delhi Oil 22.10.2016 wherein the impugned watches were found. The impugned wrist watches belongs to the all members of the Kochar Family residing together at the same address which were given to them by their parents and parents in law at the time of their marriage and other ceremonial occasion. 2.2 That the ld. CIT(A) and ld. Assessing officer did not appreciate that the watches as found at the time of search belong to the assessee and his 20 joint family members which comprises of four brothers and their wives along with their mother as per details given below. The impugned watches have been received on various occasions including birthday, marriage anniversary, newborn babies etc. and in absence of any evidence to suggest that any expenses haw been incurred on purchase of watches. any adverse inference drawn regarding unexplained investment and that too in the hands of the appellant and also for the instant assessment year is not in accordance with law and untenable. 2,3 That the ld. CIT(AJ and Id. Assessing officer did not appreciate that there are 20 members of the family residing together at one residential premises namely 5, KG Marg. New Delhi and the inventory sheet as Annexure III of panchnama also shows that such watches do not in any manner belong to the appellant alone but since appellant received all the watches at the time of search on the behalf of (he family therefore that addition has been made mechanically in the hands of appellant. 2.4 That the ld. CITCA) and Id. Assessing officer did not appreciate the fact that there were at least 20 members residing in the family on the date of search and watches found were 15, therefore, even if one watch is allotted per member of the family then no addition could be made in the hands of the appellant as unexplained investment and that Printed from counselvise.com 3 ITA No.5072/DEL/2024 too for the instant assessment year. Thus the approach of the learned lower authorities in making/confirming the impugned addition is mechanical, theoretical, arbitrary, presumptive, unjustified approach and shows absolute lack of appreciation of the Indian society where family member reside together, own thing together, use them together and therefore, to say that everything found as a result of search is unexplained investment is not only incorrect but also arbitrary. The order of ld. lower authorities being erroneous, illegal and arbitrary, the same may kindly be modified.” 2. At the time of hearing, ld. AR of the assessee only pressed Ground No.1. 3. Brief facts relating to Ground No.1 are, search and seizure operation under Section 132 of the Income-tax Act, 1961 (for short ‘the Act’) was conducted by the Investigation Wing on 22.10.2016 in the case of assessee along with other cases at various residential and business premises. The residential premises of the assessee at No.5, Kasturba Gandhi Marg, New Delhi-110 001 was also covered in the above search. The cases were centralized u/s 127 of the Act. Assessee filed return of income declaring an income of Rs.6,41,300/- on 01.08.2017. This being the searched assessment year notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee. In response, ld. AR of the assessee attended and submitted the information as called for. 4. During the course of search, the Locker No.800E was found in the name of Harshit Kochar, Smt. Gurpreet Kaur Kochar and Smt. Jasmine Kaur Kochar at Delhi Safe Company Limited, 86 Janpath, New Delhi on 05.12.2016 and Printed from counselvise.com 4 ITA No.5072/DEL/2024 found jewellery valued at Rs.59,86,168/- from the locker. To the extent of jewellery of 573 grams valued at Rs.19,17.726/- for which assessee has submitted copies of bills, accordingly the same was adjusted and the difference amount was added to the income of the assessee as undisclosed income and made addition to the extent of Rs40,68,442/- u/s 69A of the Act. 5. Further during the course of search at the residential premises of the assessee, watches valued at Rs.92,37,000/- were found and inventorised. The assessee was asked to furnish all the supporting evidences to prove the source of investment made in the purchases of abovesaid watches found from the residence. In response, vide letter dated 13.12.2018, the assessee has submitted as under :- “2(ii) The assessee has been required to explain the detail of watches found and seized of the value of Rs.92,37,000/- from 5, K.G. Marg, New Delhi. In this connection, it is submitted that in the course of search on 22.10.2016 certain personal wrist watches of the Kochar Family Members were found. The member of the Kochar family has explained that these watches were gifted to them at the time of their marriages and other ceremonial occasions. The department has taken the value of such watches of Rs.92,37,000/- at the estimate given by unapproved valuer and the copy of such estimate has also not been produced to the assessee strongly objects the valuation of such watches and request to get valued from the approved valuer. The valuation charges will be deposited by the assessee as directed by your goodself. Further it is submitted that the watches found belongs to the Kochar Family members as per the Family chart is enclosed with submissions. The impugned watches received by them belonging to assessee of his family members were received at the time of their marriages given from their parents and parents in law as well as other ceremonial Printed from counselvise.com 5 ITA No.5072/DEL/2024 occasion like Birthdays, Marriage Anniversaries, birth of new born baby. In view of the fact, the assessee has not incurred any expenses on the purchase of such watches therefore, it is requested that no undue inference should be drawn on such watches found from the residential premises who have not incurred any expenses on such watches. In view of this fact, the assessee has not incurred any expenses on the purchase of such watches therefore, it is requested that no undue inference should be drawn on such watches found from the residential premises who have not incurred any expenses on such watches. THE KOCHAR FAMILY TREE IS GIVEN HERE BELOW : KOCHAR FAMILY CHART A. MOHINDER KAUR (MOTHER 1. BHUPINDER SINGH (SON) II. LT. GURMEET SINGH (SON) SATINDER KAUR (W/O BHUPINDER SINGH GURPREET KAUR KOCHAR (W/O LT. GURMEET SINGH) MANISHA (DAUGHTER) HARSHIMA (DAUGHTER) HARSHIT KOCHAR (SON) TARUN KOCHAR (SON) PRATEEK KOCHAR (SON) ` JASMIN (W/O HARSHIT) SHAILZA (W/O TARUN) PRABHNOOR (W/O PRATEEK) III. LT. KULJEET SINGH (SON) IV. LT. VIRENDER SINGH (SON) GURMEET KAUR KOCHAR (W/O LT. KULJEET SINGH) HARPREET KAUR KOCHAR (W/O LT. VIRENDER SINGH) ACHIN KOCHAR (SON) AAKRITI (DAUGHTER) GAVIN KOCHAR (SON) BANNI (DAUGHTER) BHAVIKA (DAUGHTER) NAVROZE (W/O ACHIN KOCHAR) 6. Further considering the above submissions of the assessee, the AO found that assessee has not furnished any evidences with regard to receipt of costly watches on the marriage and other ceremonies of different assessees of his family. Therefore, assessee has not been able to explain the source of investment for purchase of abovesaid watches. Accordingly, he proceeded to Printed from counselvise.com 6 ITA No.5072/DEL/2024 make addition u/s 69A of the Act on the undisclosed income of the assessee and also invoked the provisions of section 115BBE to the extent of Rs.92,37,000/-. 7. Also other additions of unexplained cash deposits made by the assessee during demonetization period and other unaccounted cash were also found and additions were made. 8. Aggrieved with the above order, assessee preferred an appeal before the ld. CIT (A)-27, New Delhi. 9. After considering the detailed submissions of the assessee, ld. CIT (A) deleted the additions made by the AO relating to unexplained jewellery. However, with regard to watches, assessee has submitted value of each watch based on the price available on internet which is reproduced by the ld. CIT (A) at page 42 of the impugend order. For the sake of clarity, it is reproduced below :- Sr. No. Watch brand Estimated value adopted by the learned Assessing Officer International Price (chrono 24) Oct 2016 USD Price 66.39 i) Rolex Oyster Perfetual 15,00,000 2975$ (page 243 of paper book 1,97,510 ii) Rolex Oyster Perfetual 8,00,000 2690$ (page 244 of paper book 1,78,500 iii) Emprio 10,000 NA 10,000 iv) Rolex Datejust 4,00,000 2300$ 1,52,697 v) Aqua racer 30,000 NA 30,000 vi) Rolex Datejust 4,00,000 2300$ (page 245 of paper book) 1,52,695 vii) Lotus Arden 5,000 NA 5,000 viii) Titan 2,000 NA 2,000 Printed from counselvise.com 7 ITA No.5072/DEL/2024 ix) ChoparGeneve 3,00,000 2450$ (page 246 of paper book) 1,62,655 x) ASSESSMENT PROCEEDINGS AudemarsPiguet 6,00,000 4028$ (page 247 of paper book) 2,67,420 xi) AP Audemars Piguet/off 35,00,000 7530$ (page 248 of paper book) 4,99,916 xii) Rolex Oyster Perfetual 8,00,000 2690$ 1,78,590 xiii) Omega 40,000 NA 40,000 xiv) Rolex Datejust 6,00,000 2300$ 1,52,697 xv) Rolex Datejust 2,50,000 2762$ (page 242 of paper book) 1,83,370 Total 92,37,000 22,13,142 10. Further assessee also filed screen shots of the watches as well as its value which is reproduced by the ld. CIT (A) at pages 43 to 46 of the order. After considering the above submissions, he restricted the additions to the extetn of Rs.21,26,142/- from estimated addition made by the AO of Rs.92,37,000/-. Accordingly, he partly allowed the addition. Considering the fact that the AO has not valued the abovesaid watches from the expert/trained in this business/line. Based on the valuation submitted by the assessee from the Net or internet, it is restricted to the value of watches at Rs.21,26,142/- of those watches which are more than Rs.1 lakh. 11. Aggrieved with the above order, assessee is in appeal before us. 12. At the time of hearing, ld. AR of the assessee brought to our notice assessment order wherein the AO has made the addition on jewellery and watches which were found during search. However, ld. CIT (A) considered the facts on record and found that jewellery found during the search belongs Printed from counselvise.com 8 ITA No.5072/DEL/2024 to the family and accordingly, he deleted the addition relating to jewellery. Since the Revenue is not in appeal to the aforesaid findings, it reaches finality. 13. With regard to watches, he submitted that these watches were found at the residence of the assessee in which other family members were also living together, these watches belong to the family members of the assessee and the addition was proposed only in the hands of the assessee. Further the valuation was carried out by the AO from the unapproved source and he submitted that the ld. CIT (A) has revalued the value of the watches and determined at Rs.21,26,142/-. But he submitted that after determining the value of the watches, ld. CIT (A) overlooked the fact that these watches were belonged to the whole family. However, he considered the ownership of the watches only upon the assessee and proceeded to make the addition u/s 69A of the Act. He submitted that ld. CIT (A) overlooked the fact that these watches were found not in the possession of the assessee rather at the residence, therefore, presumption as to the assets as per section 292C cannot be applied on the assessee alone. These watches are expected to be of the family members. Therefore, invocation of provisions of section 69A is not proper and he prayed that considering the status of the assessee and his family, the value of the watches is allowable in case, the value is to be distributed to all the family members. Printed from counselvise.com 9 ITA No.5072/DEL/2024 14. On the other hand, ld. DR of the Revenue submitted that these watches were high value and assessee has not declared the same in their wealth-tax return. He further objected to the submissions of the assessee and submitted that this fact was not declared before the AO that these watches belong to common family, also he submitted that it was not identified to the respective members to whom the respective watches belong at the assessment proceedings. Therefore, the submissions of the assessee cannot be accepted. 15. Considered the rival submissions and material placed on record. We observe that there is a search conducted at the 5, Kasturba Gandhi Marg, New Delhi wherein not only assessee but other family members were also living in such address, several jewelries were found along with expensive watches. Considering the status of the assessee and his family members, the jewelries were found within norms and accordingly ld. CIT (A) has deleted the abovesaid additions made relating to jewellery found during search. However, with regard to watches, all the watches found at this address were presumed to be belonged to the assessee alone. Considering the factual matrix on record, several expensive watches were found at the common premises of the family members of the assessee. Considering the fact that Revenue have found 10 watches valued at Rs.21,26,142/- and it is fact, several members of Kochar family were living in the same premises and also several male members of the family are found to be living at the same Printed from counselvise.com 10 ITA No.5072/DEL/2024 address, considering the status of the assessee and his family, the value of watches found during the search seems to be within their status. Since there are no details of date of purchase, we cannot direct the Revenue authorities to make the addition as per the existing price of the abovesaid expensive watches. Therefore, we are inclined to delete the abovesaid addition considering the status of the assessee as well as his family members. Accordingly, the ground is allowed. 16. In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open court on this 29th day of August, 2025. Sd/- sd/- (VIMAL KUMAR) (S.RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 29.08.2025 TS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "