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

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.

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 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.

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

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 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/-.

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.

Aggrieved with the above order, assessee preferred an appeal before the ld. CIT (A)-27, New Delhi.

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. Watch brand Estimated International Price Oct 2016 USD No. value adopted (chrono 24) Price 66.39 by the learned Assessing Officer i) Rolex Oyster Perfetual 15,00,000 2975$ 1,97,510 (page 243 of paper book ii) Rolex Oyster Perfetual 8,00,000 2690$ 1,78,500 (page 244 of paper book 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$ 1,52,695 (page 245 of paper book) vii) Lotus Arden 5,000 NA 5,000 viii) Titan 2,000 NA 2,000 ix) ChoparGeneve 3,00,000 2450$ 1,62,655 (page 246 of paper book) x) ASSESSMENT 6,00,000 4028$ 2,67,420 PROCEEDINGS (page 247 of paper book) AudemarsPiguet xi) AP Audemars Piguet/off 35,00,000 7530$ 4,99,916 (page 248 of paper book) 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$ 1,83,370 (page 242 of paper book) Total 92,37,000 22,13,142

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.

Aggrieved with the above order, assessee is in appeal before us.

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 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.

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.

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.

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 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.

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.