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Facts
A search operation revealed a cash memo for an iPhone purchase of Rs. 70,000/- made by the assessee. The assessee claimed the amount was from family savings, citing his substantial income and unmarried status living with parents. The Assessing Officer and CIT(A) had treated this amount as unexplained expenditure under Section 69C read with Section 115BBE.
Held
The Tribunal considered the assessee's significant income and living situation, concluding that Rs. 70,000/- for an iPhone was a reasonable expenditure explainable from family savings. Therefore, the addition confirmed by the CIT(A) was deleted.
Key Issues
Whether the addition of Rs. 70,000/- as unexplained expenditure under Section 69C read with Section 115BBE for an iPhone purchase was justified, given the assessee's financial standing and explanation of family savings.
Sections Cited
69, 69C, 115BBE, 132, 139, 153A
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िनधा"रती की ओर से/Assessee by : Shri Sudhir Sehgal, Advocate राज" की ओर से/ Revenue by : Shri Manav Bansal, CIT, DR सुनवाई की तारीख/Date of Hearing : 15/12/2025 उदघोषणा की तारीख/Date of Pronouncement : 30.12.2025 आदेश/Order PER KRINWANT SAHAY, A.M: This is an appeal filed by the Assessee against the order of the Ld. CIT(A)-3, Gurgaon dt. 27/02/2025 pertaining to Assessment Year 2017-18. 2. In the present appeal Assessee has raised the following grounds:
1. That the Ld. CIT(A) has erred in confirming the addition of Rs. 70,000/- towards the taxable income of the assessee and also invoking the provisions of section 69 r.w. section 115BBE of the Act.
2. Notwithstanding the above said ground of appeal, the addition of Rs.70,000/- u/s 69C was not required to be made having been purchased out of the family savings/self and, as such, the addition of Rs. 70,000/- is highly unjustified.
3. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.
The facts, in brief, are that there was search and seizure operation at the residential and business premises of assessee on 21.01.2021 and the assessee had filed his return of income for the Assessment year under consideration u/s 139 of the Income Tax Act 1961 on 29.01.2017 on total income of Rs. 13,34,840/-.
2 3.1 Consequent upon the search u/s 132, the notice u/s 153A of the Act was issued to the assessee on 24.01.2022 and in response to that, the assessee filed his return of income on 01.02.2022 at the same income as disclosed in the return u/s 139. 3.2 During the course of search, there was one cash memo, which was found from his residential premises of the assessee, as per copy of the seized 'cash memo' reproduced at page 3 of the order of the Assessing Officer, which depicted that the assessee had purchased a Mobile for Rs. 70,000/- on 09.12.2016 and the assessee, when confronted with such 'cash memo' during assessment proceedings, stated that the said amount was utilized for purchase of 'i-phone' out of the regular savings and withdrawals.
3.3 The Assessing Officer, however, did not agree with the same and held that the onus is upon the assessee to prove the source of expenditure incurred for the purchase of Mobile and it was held by the Assessing officer that the assessee failed to explain the source of nature of expenditure and, as such, the same was treated as unexplained expenditure and added to the income of the assessee within the meaning of unexplained expenditure as per provisions of section section 69C r.w. section 115BBE of the Act.
Against the order of the AO the assessee went in appeal before the CIT(A), who confirmed the addition vide order, dated 27.02.2025. The assessee submitted before the CIT(A) that he is unmarried and living with his parents and, this much of amount of Rs.70,000/-is well explained out of the savings and that he is unmarried and, as such, the addition deserves to be deleted.
4.1 However, the CIT(A) held that since no source of purchase of 'i-phone' have been explained by the assessee, he held that the AO has rightly invoked the provisions of section 69C r.w. section 115BBE of the Act.
Against the order of the Ld. CIT(A) the assessee preferred in appeal before the Tribunal.
During the course of hearing, it was vehemently argued by the assessee's counsel that the assessee had filed his return of income at Rs. 13,34,840/- and has been living with his parents and is unmarried and further argued that this much of savings of the family can be considered to be very much nominal and explainable. Further, it was argued that even during the demonetization period, there were guidelines from the Government, that savings to the tune of Rs. 2.50 lacs per person of the family can be considered as explainable for depositing old currency notes in the bank account and also considering that the fact that there was substantial income having been disclosed by the assessee for the year under consideration and his parents, the savings of Rs. 70,000/- are very much reasonable and should have been considered as the source for purchase of i-phone . It was further argued that no other savings of the family have been utilized anywhere during the year under consideration and, as such, there was no justification by the authorities below to make and confirm the addition of Rs. 70,000/- and this is a very petty amount and argued that the order of the CIT(A) be set aside.
Per contra, the Ld. DR relied upon the order of the Assessing Officer and Ld. CIT (A) and sought the confirmation of addition.
We have considered the rival submissions and gone through the order of Assessing Officer and Ld. CIT(A), confirming the addition of Rs. 70,000/- and invoking the section 69C r.w. section 115BBE. The facts are not disputed that the 'cash memo' was found, from which, it transpired that the assessee had purchased i-phone for Rs. 70,000/- on 09.12.2016. There has been consistent stand of the assessee that the source of purchase of i-phone for Rs. 70,000/- are out of the savings of the family and withdrawals and there has been no change of stand of the assessee. The assessee belongs to 'Saraf di Jewellers' group of cases and had filed his return of income for Rs. 13,34,840/-. Considering the above fact and also the fact that the assessee has substantial income, which is evident from the return filed by the assessee 4 during the year under consideration and is unmarried, living with his parents, savings of Rs. 70,000/- can be said to be very much reasonable for purchasing of i-phone during the year under consideration and, as such, on the basis of the facts and circumstances of the case, we hereby delete the addition of Rs. 70,000/-as confirmed by the CIT(A).
In the result, appeal of the assessee is allowed.