Ignored Evidence and Incorrect Loan Amount: ITAT Quashes ₹74 Lakh Unexplained Investment Addition [Read Order]
Observing that the assessee submitted various documents before lower authorities which were not considered, the tribunal deleted the addition and remitted the matter.
![Ignored Evidence and Incorrect Loan Amount: ITAT Quashes ₹74 Lakh Unexplained Investment Addition [Read Order]](https://images.taxscan.in/h-upload/2025/10/15/2096887-itat-mumbai-unexplained-investment-addition.webp "Ignored Evidence and Incorrect Loan Amount: ITAT Quashes ₹74 Lakh Unexplained Investment Addition [Read Order]")
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) remitted the matter back to the Assessing Officer (AO) for fresh examination, noting that the AO passed the order without considering documentary evidence submitted by the assessee and may have added an incorrect loan amount as unexplained investment.
Gangady Venkatram Reddy (assessee), an individual declared a total income of Rs. 20,39,650. The AO reopened the assessment under section 148 because the assessee had purchased immovable properties and pledged them with HDFC Bank to take a loan of Rs. 74,00,000/-.
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The AO, after the assessee failed to respond to notices, completed the assessment ex-parte, making an addition of Rs. 74,00,000 as unexplained investment under Section 69 of the Income Tax Act.
Aggrieved by the AO’s order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) confirmed the addition in an ex-parte order as the assessee did not respond to various notices. Aggrieved by the CIT(A)’s order, the assessee filed an appeal before ITAT.
The counsel for the assessee submitted that the assessee had filed a response with relevant documents to one of the notices issued by the AO, and the AO failed to consider these submissions.
The counsel argued that the properties the AO mentioned as purchased during the year were actually acquired in 2004-05, and the assessee only pledged them with HDFC Bank to take a loan of Rs. 37,00,000. The counsel contended that the AO added an incorrect loan amount as unexplained investment.
The two-member bench, comprising Justice (Retd.) C V Bhadang (President) and Padmavathy S (Accountant Member), noted that the AO’s order was passed after the assessee had submitted various details and documentary evidence, such as the Loan Sanction letter and Advocate’s report, which were not considered.
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The Tribunal held that the assessee's claim regarding the properties being acquired earlier, and the incorrect loan amount being added, needed to be factually examined based on the documentary evidence.
In the interest of natural justice and fair play, the tribunal remitted the appeal back to the AO with a direction to examine the issue on merits, considering all details furnished and calling for any further required details. The appeal of the assessee was allowed for statistical purposes.
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