No addition can be made u/s 69 if the assets are duly recorded in the books of accounts and no incriminating material is found as to payments made over and above the amount recorded in books:

A search took place at the assessee’s premises during the course of which large no. of works of art were found. AO got certain paintings valued by a person who was H.O.D. (Drawing and Painting) in a School of Arts in Mumbai. AO took the said valuation as base, adjusted and reduced the same at the rate of 25% per year for determining the value for the year under consideration, gave credit or cost shown by the assessee in books and added the difference u/s69. Hon’ble ITAT observed that the assessee had duly recorded that cost of the said paintings in the books and no incriminating material was found during the course of search which could suggest that the assessee had made payments over and above the amounts recorded in the books. The valuer had not given any basis for arriving at such value of paintings. Even AO has not given any basis to arrive at the value of paintings and the method adopted by him in applying 25% discount per year. In light of the aforesaid facts, the said addition was deleted by the Hon’ble ITAT.

[DCIT vs. Shri Praful A. Shah – ITA No.649/Ahd/2011 & CO 34/Ahd/2012]