Source of Investment Sufficiently Explained: ITAT Deletes Rs. 70.13 Lakh Addition [Read Order]
The tribunal observed that the assessee explained the source of funds, which necessitates the deletion of the addition made by the Assessing Officer
![Source of Investment Sufficiently Explained: ITAT Deletes Rs. 70.13 Lakh Addition [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/03/Source-of-Investment-Investment-Source-of-Investment-Sufficiently-Explained-Sufficiently-Explained-ITAT-Addition-taxscan.jpg "Source of Investment Sufficiently Explained: ITAT Deletes Rs. 70.13 Lakh Addition [Read Order]")
The Indore Bench of the Income Tax Appellate Tribunal (ITAT) deleted the addition of Rs. 70.13 lakh made under Section 69 for unexplained investment citing that the assessee had adequately explained the source of funds. Shoukat Mohd. Khan (assessee), an individual, had filed his income tax return for the Assessment Year (AY) 2012-13, declaring a total income of Rs. 1,740. The case...
The Indore Bench of the Income Tax Appellate Tribunal (ITAT) deleted the addition of Rs. 70.13 lakh made under Section 69 for unexplained investment citing that the assessee had adequately explained the source of funds.
Shoukat Mohd. Khan (assessee), an individual, had filed his income tax return for the Assessment Year (AY) 2012-13, declaring a total income of Rs. 1,740. The case was selected for scrutiny, and notices under Sections 143(2) and 142(1) were issued.
The Assessing Officer (AO) completed the assessment under Section 144 and made an addition of Rs. 1,20,47,000 under Section 69, treating it as an unexplained investment in a residential property purchased by the property.
Read More: Failure to Receive Valid Notice Leads to Ex-Parte Order: ITAT Remands Matter to CIT(A) [Read Order]
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Aggrieved by the AO’s order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) enhanced the total investment amount to Rs. 1,30,13,980, considering additional costs such as stamp duty and documentation charges.
The CIT(A) accepted Rs. 60,00,000 as a valid source of funds and sustained an addition of Rs. 70,13,980 under Section 69. The CIT(A) also allowed the exemption of Rs. 38,41,924 under Sections 54/54F, claimed by the assessee against long-term capital gains.
Aggrieved by the CIT(A)’s order, the assessee filed an appeal before ITAT. The counsel for the assessee submitted that the two sources which were not accepted by the CIT(A) including a loan taken from Mr. Zafar Mohd. Khan and direct payment of Rs. 23,00,000 made by Mrs. Shama Mohd.
The two-member bench comprising B.M. Biyani (Accountant Member) and Udayan Das Gupta (Judicial Member) observed the two sources of funds, which were loans of Rs. 80,00,000 from Zafar Mohd. Khan (Elder Brother) and direct Payment of Rs. 23,00,000 by Mrs. Shama Mohd. (Wife).
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The tribunal observed that the assessee submitted an affidavit from his brother confirming the transaction, along with the PAN details. The tribunal also observed that the registered sale deed confirmed that Mrs. Shama Mohd. was a joint owner of the property.
The tribunal observed that Payments of Rs. 15,00,000 and Rs. 8,00,000 were made through cheques for property purchase and stamp duty. The tribunal held that the identity, creditworthiness, and genuineness of the transaction were satisfactorily established. The tribunal held that payments made by a co-owner could not be treated as unexplained investments in the hands of the assessee. Therefore, the tribunal deleted Rs. 70.13 lakh the addition upheld by the AO. Thereby the appeal of the assessee was allowed.
To Read the full text of the Order CLICK HERE
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