Unexplained Investment in Property: ITAT Upholds Sources Proven by Assessee from Family Members [Read Order]

The Ahmedabad Bench of Income Tax Appellate Tribunal(ITAT) upholds sources proven by the assessee for an unexplained investment in property, finding that the ₹40,00,000 used for the property purchase was sourced from family members.

Kshama Sanjay Tripathi, appellant-assessee, was identified as a non-filer for the assessment year 2010-11. The revenue found that she had purchased immovable property worth ₹40,00,000 and made cash deposits of ₹17,58,500 in a bank account. The case was reopened, and a notice under Section 148 of the Act was issued on March 29, 2017, which was duly served.

Since no return was filed, the assessment was completed under Section 144, adding ₹40,00,000 for the property purchase and ₹17,58,500 for the cash deposits. The Commissioner of Income Tax(Appeals)[CIT(A)] deleted the cash deposit addition but enhanced the income by ₹2,10,000, treating it as unexplained expenditure.

The assessee appealed against this order before the tribunal.

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The assessee's counsel argued that the ₹40,00,000 used for the property purchase came from family members and claimed the sources were proven before the CIT(A), but were ignored. The amounts included ₹28,50,000 from the brother, ₹4,90,000 from the husband, ₹1,40,000 from the father, and ₹5,00,000 from the father-in-law.

The revenue argued that the assessee failed to provide confirmations or prove the lenders' creditworthiness.

Read More: ITAT Directs AO to Delete Rs. 41.47 Lakh Addition for Unexplained Property Investment After Verifying Source of Funds

The two member bench comprising Dr.BRR Kumar(Vice President) and Suchitra Kamble(Judicial Member) reviewed the bank statements and found that the funds came from the assessee's family members, with sufficient evidence provided to the revenue. Since the assessee had proven the sources, no adverse inference was drawn, and the appeal on this issue was allowed.

Regarding the unexplained expenditure, the tribunal found no justification for the enhancement, especially since no notice was issued to the assessee.

In short,the appeal filed by the assessee was allowed.

To Read the full text of the Order CLICK HERE

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