Law:

Section:

Section 69 of the income-tax act, 1961-Unexplained investments-Certain wrist watches seized by custom authorities from custody of assessee-though assessee admitted ownership of said watches before custom authorities, he tried in vain before ito that he was not owner of the said watches-assessee ultimately got acquittal under section 135 of customs act-Whether value of said watches could be added to assessee's income-Held, on facts, yes Facts Certain wrist watches, estimated value being Rs. 10,060, were seized by the customs authorities from the custody and possession of the assessee. The ITO required the assessee to explain the source of investment of Rs. 10,060 for purchasing those watches. The assessee tried in vain to show that he was not the owner of the watches. He could not prove that fact. He could not produce any evidence to lend credence to his contention. On the contrary, he had admitted before the customs authorities at the time of seizure of the watches that he was the owner of it. So the ITO added the impugned sum to the income of the assessee under section 69. The assessee's appeals were dismissed by the AAC as well as the Tribunal. The assessee was also prosecuted by the customs authorities before the criminal court for contravention of the provisions of section 135 of the Customs Act. But that prosecution resulted in the acquittal of the assessee on the ground that the prosecution had failed to prove the offence under section 135(1)(b ) of the Customs Act. On reference under section 256(2), the assessee contended, inter alia, that since there was an acquittal under the Customs Act, the impugned addition was not justified: Held The acquittal by the criminal court for not proving the offence under section 135(1)(b) of the Customs Act is irrelevant for the purpose of the Income-tax Act. In the instant case, the assessee had conceded at the earliest that he had purchased the watches seized by the authorities. In the absence of any other acceptable evidence, it must be held that he was the real owner of the watches. Since the assessee was the owner of the watches found in his possession, he must explain the source with which the watches were…

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