ITAT Jaipur Deletes ₹3,51,000 Addition Under Section 69A: Section 292C Presumption Cannot Bridge Gaps in Loose Handwritten Slips

Case Background

Case Name: Jadau Jewellers & MFG Private Limited Vs ACIT (ITAT Jaipur)
Appeal Number: ITA No: 1688/JPR/2025
Date of Order: 08/10/2026
Assessment Year: 2020-21

Overview of the Dispute

Jadau Jewellers & MFG Private Limited, a company engaged in jewellery manufacturing and trading, had filed its income tax return for Assessment Year 2020-21 declaring a loss of ₹81,61,434. The matter took a different turn when a survey under Section 133A of the Income Tax Act, 1961 was conducted on 09.12.2020. During this survey, the authorities extracted data from the backup of an Apple iPhone 6 belonging to Shri Prateek Kothari, a director of the company. Within this extracted data, investigators came across images of two handwritten slips, which formed the sole basis for what followed.

Relying entirely on these two slip images, the Assessing Officer initiated reassessment proceedings. A show cause notice under Section 148A(b) was issued on 18.03.2024, followed by an order under Section 148A(d) on 28.03.2024 and a notice under Section 148 on 30.03.2024. The AO concluded that the slips demonstrated that the assessee had received ₹3,51,000 during F.Y. 2019–20, treated this as unexplained money under Section 69A, applied tax under Section 115BBE, and determined the total income at ₹3,51,000.

The assessee challenged this throughout, questioning the connection between the slips and the company, and the assessment year attributed to those entries.

What the Two Slips Actually Contained

Before examining the legal reasoning, it is important to understand what the two slips actually recorded, as the Tribunal's analysis was anchored entirely in their actual contents:

Neither slip named the payer, the recipient, the purpose of the transaction, or the entity involved. These omissions, as the Tribunal would ultimately hold, proved fatal to the Revenue's case.

Position of the AO and CIT(A)

The AO anchored his addition on three circumstances:

1. The slip images were discovered in the mobile backup of the company's director
2. Both slips carried initials of an unidentified person
3. Slip B bore the heading "Trimurti Circle," the locality where the assessee's showroom was situated

Invoking the presumption under Section 292C of the Income Tax Act, 1961, the AO treated these as sufficient proof that the amounts were received by the assessee company in F.Y. 2019–20.

The CIT(A) upheld the addition. He reasoned that the reopening was based on tangible material from the survey, that Section 65B of the Indian Evidence Act, 1872 does not govern income tax proceedings, and that the digital integrity of the data — confirmed through cloning and hash values — validated the presumption under Section 292C. He further observed that the assessee had not reconciled the entries against its books of account.

ITAT's Analysis: Foundational Facts Under Section 69A Must First Be Established

The Tribunal addressed Ground No. 4 — the merits of the ₹3,51,000 addition — as the threshold issue, since its resolution would render the other grounds either academic or infructuous.

The Tribunal began with a textual and purposive reading of Section 69A:

"69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year."

The Tribunal identified two conditions as foundational and non-negotiable before Section 69A can be activated: