Co-ownership of Property with Parents without Investment: ITAT Orders Fresh Examination of S. 69 Addition [Read Order]

In a recent ruling, the Income TaxAppellate Tribunal (ITAT), Mumbai Bench, has remanded the addition under Section 69 in a matter involving co-ownership of property with parents, observing that mere inclusion of a name in the purchase document does not, by itself, establish investment.

The assessee, Parveen Parvez Motlekar, along with her parents, purchased a residential flat for ₹75.77 lakh, while the stamp duty value was ₹1.83 crore. The difference between the two values led the Assessing Officer (AO) to question the transaction and examine the source of funds.

During assessment, the AO treated one-third of the difference in value, along with part of the purchase consideration, as the assessee’s unexplained investment. Additions were accordingly made under Section 69, and provisions of Section 56(2)(vii)(b) were also invoked, resulting in a total addition of ₹64.19 lakh, which was treated as income chargeable to tax in the hands of the assessee.

The assessee contended that she had not contributed any funds towards the purchase and that the entire consideration had been paid by her parents through banking channels. It was submitted that her inclusion in the sale agreement was only for convenience and did not reflect any financial contribution. The assessee further argued that the property had been allotted in 2012 and, therefore, the stamp duty value as on 2015 could not be adopted.

The Revenue, however, pointed out that the assessee’s name appeared as a co-purchaser in the registered agreement, implying beneficial ownership and financial interest in the property. On this basis, it was submitted that the addition under Section 69 was justified. It was further stated that the registered transaction took place in 2015 and, therefore, the stamp duty value as on that date had been rightly adopted.

Before the Tribunal, the assessee reiterated that co-ownership, by itself, cannot lead to a presumption of investment. She relied on payment details and documentary material to show that the funds had originated entirely from her parents. It was also argued that the Assessing Officer had not properly examined these materials before making the additions.

The two-member bench comprising Sandeep Gosain (Judicial Member) and Jagadish (Accountant Member) found merit in the contention that the source of investment had not been adequately verified. It also noted that the adoption of the stamp duty value as of 2015 required reconsideration in light of the earlier allotment.

The Tribunal observed that a finding under Section 69 must be based on clear evidence of actual contribution.

Accordingly, the ITAT set aside the orders of the lower authorities and directed fresh examination by the Assessing Officer after verifying the source of funds and granting adequate opportunity of hearing.

The appeal was allowed for statistical purposes.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates