Pratibha Singh Vs ACIT (ITAT Chandigarh)
The appeal before the Income Tax Appellate Tribunal, Chandigarh Bench, arose from reassessment proceedings for Assessment Year 2009–10 framed under Sections 143(3) read with 147 of the Income-tax Act, 1961. The assessee had originally declared income of ₹4,81,340/-. Information from LIC revealed an investment of ₹50,00,000/- in a life insurance policy during the relevant year, which was not commensurate with the returned income. The reopening was upheld by the High Court, and the jurisdictional issue attained finality.
During assessment, the assessee contended that the investment was made by the HUF of Virbhadra Singh through an LIC agent under an alleged Memorandum of Understanding relating to orchard income. The Assessing Officer found that transactions in the agent’s bank account occurred prior to the date of the alleged MOU and that no documentary evidence of HUF funds, agricultural income, cash flow, or source of ₹50,00,000/- was produced. The MOU was not furnished, and agricultural income claims were unsupported. The policy stood in the assessee’s name, and she was the life assured and beneficiary. The Assessing Officer held the amount as unexplained investment under Section 69 and made substantive addition. The CIT(A) confirmed the addition.
Before the Tribunal, the assessee argued that the investment belonged to the HUF and that addition should be deleted or treated as protective. The Tribunal held that mere assertion of HUF ownership without cogent evidence cannot displace the statutory presumption under Section 69. It observed that ownership of orchard land does not establish availability of liquid funds and that routing cash through a third party without proving its source weakens the explanation. The Tribunal further held that protective assessment applies only where the Assessing Officer is uncertain about ownership, which was not the case here. Since the investment stood in the assessee’s name and the source remained unexplained, the substantive addition was upheld. The appeal was dismissed.
