Case Law Details
Sanobar Ajaz Ahmed Saudagar Vs ITO (ITAT Mumbai)
ITAT Deletes ₹80.10 Lakh Addition: Suspicion Cannot Replace Evidence When Property Investment Is Fully Explained
The Mumbai ITAT deleted an addition of ₹80.10 lakh made under Section 69 in respect of a residential property purchase, holding that once the assessee had established the identity of the contributor, financial capacity, source of funds and actual utilization towards property acquisition, the investment could not be treated as unexplained merely because certain remittance records from a Dubai Exchange Bureau were unavailable after nearly ten years.
The assessee had purchased a property for ₹1.40 crore. While the Assessing Officer accepted payments of ₹58.50 lakh reflected in the assessee’s bank account, he treated the balance ₹80 lakh as unexplained on the ground that direct remittance documents showing transfer of funds by the assessee’s husband, an NRI working in Dubai, were not furnished. An additional ₹10,000 was also added as unexplained investment.
Before the Tribunal, the assessee produced a complete reconciliation of the entire purchase consideration, supported by the husband’s passport and tax records, affidavit confirming payment on behalf of the assessee, Gift Deed, bank confirmation identifying him as the remitter, seller’s bank statement showing receipt of ₹80 lakh, documents relating to sale of the assessee’s earlier property, and evidence of the ₹10,000 pay order. The Tribunal noted that the Revenue had under no circumstances disputed the identity of the husband, his financial capacity, the receipt of funds by the seller, the genuineness of the sale transaction, or the authenticity of the documents produced.
The Tribunal observed that the entire consideration of ₹1.40 crore stood fully reconciled and supported by documentary evidence. It emphasized that the Revenue had not brought any material on record to suggest that the disputed funds represented the assessee’s own undisclosed income or that any accommodation arrangement existed. In such circumstances, the absence of one additional piece of evidence, namely old exchange bureau records, could not justify an addition under Section 69.
Relying on the principle that “suspicion, however strong, cannot substitute evidence”, the ITAT held that the assessee had fully discharged the burden cast upon her under Section 69. Accordingly, it directed deletion of the entire addition of ₹80.10 lakh, including the separate addition of ₹10,000.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal has been preferred by the assessee against the order dated 12.01.2026 passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, for Assessment Year 2016-17, arising out of the assessment completed under section 147 read with sections 143(3) and 144B of the Income Tax Act, 1961. The assessee is aggrieved by the confirmation of addition of Rs.80,10,000/- made under section 69 of the Act comprising Rs.80,00,000/- treated as unexplained investment in purchase of an immovable property and a further addition of Rs.10,000/- alleged to represent unexplained balance consideration. The assessee has also challenged the validity of the reassessment proceedings. However, since the appeal is being adjudicated and allowed on merits, the legal grounds challenging the assumption of jurisdiction are left open and are not being separately adjudicated.
2. The relevant facts borne out from the record are that information was flagged on the Insight Portal under the Risk Management Strategy (RMS) of the CBDT indicating purchase of an immovable property by the assessee for a consideration of Rs.1,40,00,000/-. The information emanated from the office of the Sub Registrar and was further corroborated by information available through the TDS statement relating to purchase of immovable property. Since the assessee had not originally filed her return of income, proceedings under section 148A were initiated. In response thereto, the assessee explained that the entire investment in the property stood duly explained and that the source of acquisition comprised sale proceeds of her earlier property and financial assistance received from her husband, Mr. Azaz Saudagar, who was residing and working in Dubai. However, the explanation was not accepted and notice under section 148 was issued, pursuant to which the assessee filed her return of income.
3. During the course of assessment proceedings, the Assessing Officer examined the registered sale deed, Form 26AS, the bank account of the assessee and the bank account of the seller and noted that the total purchase consideration of the property was Rs.1,40,00,000/- and after deduction of TDS of Rs.1,40,000/-, the actual payment worked out to Rs.1,38,60,000/-. The Assessing Officer accepted payments aggregating to Rs.58,50,000/-comprising Rs.40,00,000/- paid on 12.08.2015 and Rs.18,50,000/- paid on 26.08.2015 after finding that the same stood reflected in the assessee’s bank account and corresponded with entries appearing in the seller’s bank account. However, in respect of the balance amount of Rs.80,00,000/-, the assessee explained that the same had been directly remitted by her husband to the seller through a Dubai Exchange Bureau in two instalments of Rs.40,00,000/- each. Though extracts of the seller’s bank account evidencing receipt of the said amounts were furnished, the Assessing Officer was of the view that the assessee had failed to furnish direct documentary evidence such as remittance advices, exchange bureau records, transfer instructions or bank statements evidencing debit of the said amount from the husband’s account. The Assessing Officer further observed that the narration appearing in the seller’s bank account merely described the remitter as “From Azaz” and, according to him, such narration did not conclusively establish that the amount had originated from the assessee’s husband. Proceeding on this reasoning, the Assessing Officer treated Rs.80,00,000/- as unexplained investment under section 69 of the Act. The Assessing Officer further noted that after reducing the explained payment of Rs.58,50,000/- and the aforesaid addition of Rs.80,00,000/- from the total payment of Rs.1,38,60,000/-, a balance difference of Rs.10,000/- still remained unexplained and accordingly added the same under section 69, resulting in an aggregate addition of Rs.80,10,000/-.
4. Aggrieved by the assessment order, the assessee carried the matter in appeal before the learned CIT(A) and reiterated that the entire investment of Rs.1,40,00,000/- stood fully explained and supported by documentary evidence. The assessee furnished a detailed source-wise reconciliation of the entire purchase consideration demonstrating that no part of the investment remained unexplained. It was submitted that out of the total consideration, Rs.48,00,000/- represented sale proceeds received from disposal of the assessee’s earlier property; Rs.80,00,000/-was directly paid by her husband, Mr. Azaz Saudagar, to the seller through banking channels; Rs.20,00,000/- was gifted by the husband to the assessee, out of which Rs.18,50,000/- was paid to the seller; Rs.10,000/- was paid through a pay order issued from Jammu and Kashmir Bank; and TDS of Rs.1,40,000/- was duly accounted for.
5. In support of the aforesaid explanation, the assessee furnished passport and residential identity documents of Mr. Azaz Saudagar, copies of his income tax returns, the seller’s bank statement evidencing receipt of two credits aggregating to Rs.80,00,000/-, the sale deed evidencing receipt of Rs.48,00,000/- from the earlier property, the registered sale deed relating to the property under consideration, copy of the pay order of Rs.10,000/-, affidavit of Mr. Azaz Saudagar confirming payment of Rs.80,00,000/- on behalf of the assessee, Gift Deed executed in favour of the assessee and a bank confirmation identifying Mr. Azaz Saudagar as the remitter. It was specifically argued that once the identity of the husband, his financial capacity, the receipt of money by the seller and the overall source of investment stood established, there was no justification for treating the amount as unexplained merely because remittance records pertaining to an old transaction were not available.
6. The learned CIT(A), however, concurred with the reasoning adopted by the Assessing Officer and held that while the source of Rs.58,50,000/- stood satisfactorily established, the assessee had failed to furnish conclusive documentary evidence directly evidencing movement of Rs.80,00,000/- from the husband’s account to the seller. According to the learned CIT(A), the narration “From Azaz” appearing in the seller’s bank account was not sufficient by itself to conclusively establish either the identity of the remitter or the source of funds. The explanation regarding closure of the exchange bureau and non availability of old records was also not accepted and, consequently, the additions of Rs.80,00,000/- and Rs.10,000/- were sustained. Aggrieved by the aforesaid findings, the assessee is now in further appeal before us.
7. We have carefully considered the rival submissions, perused the orders of the lower authorities and examined the entire material placed before us in the paper book. The controversy before us lies in a very narrow compass. There is no dispute regarding the purchase of the residential property by the assessee for a consideration of Rs.1,40,00,000/-. There is equally no dispute regarding the identity of the seller, the execution of the registered sale deed, the consideration mentioned therein or the fact that the entire consideration stood paid. The sole basis on which the impugned addition of Rs.80,00,000/- has been sustained is that, according to the Assessing Officer and the learned CIT(A), the assessee could not furnish satisfactory documentary evidence directly evidencing the remittance of the said amount by her husband, Mr. Azaz Saudagar, to the seller through a Dubai Exchange Bureau. Therefore, the entire controversy essentially revolves around whether the evidences placed on record by the assessee sufficiently establish the source of investment and whether the lower authorities were justified in disregarding the same while invoking section 69 of the Act.
8. At the outset, we find that the assessee has placed before us a complete reconciliation of the entire purchase consideration of Rs.1,40,00,000/- together with corresponding documentary evidences supporting each component of the payment. The payment chart furnished before us demonstrates that two payments of Rs.40,00,000/- each aggregating to Rs.80,00,000/-were made by Mr. Azaz Saudagar directly to the vendor on behalf of the assessee; a further sum of Rs.40,00,000/- was paid by the assessee out of the sale proceeds received from disposal of her earlier property amounting to Rs.48,00,000/-; another amount of Rs.18,50,000/- was paid out of gift funds received from her husband; a sum of Rs.10,000/- was paid through a pay order issued from Jammu and Kashmir Bank; and tax deducted at source amounting to Rs.1,40,000/- was duly accounted for. Thus, the assessee has not merely explained the disputed amount of Rs.80,00,000/- but has explained the entire investment of Rs.1,40,00,000/- source-wise, payment-wise and document-wise. Every component of the consideration stands identified and linked with supporting documentary evidence.
9. We further find that the assessee has not merely offered an explanation but has supported the same by a complete chain of documentary evidences. The passport and residential identity documents of Mr. Azaz Saudagar establish his identity and residential status abroad. Copies of his income tax records establish his financial capacity. The bank statement of the seller evidences receipt of two separate credits aggregating to Rs.80,00,000/- corresponding to the disputed payments. The affidavit of Mr. Azaz Saudagar specifically confirms that the payments were made by him on behalf of the assessee towards acquisition of the property. The Gift Deed corroborates the financial support extended by him to the assessee. The bank confirmation identifies him as the remitter. The sale deed relating to the assessee’s earlier property establishes receipt of Rs.48,00,000/- and the corresponding utilisation thereof towards acquisition of the new property. The pay order issued through Jammu and Kashmir Bank explains the payment of Rs.10,000/-. These evidences are not isolated documents but interconnected and corroborative pieces of evidence which collectively establish the source and movement of funds forming part of the property transaction.
10. Significantly, neither the Assessing Officer nor the learned CIT(A) has disputed the identity of Mr. Azaz Saudagar, his relationship with the assessee, his financial capacity, the receipt of Rs.80,00,000/- in the seller’s bank account, the sale proceeds received by the assessee from disposal of her earlier property, the Gift Deed, the affidavit confirming the payments, or the genuineness of the registered sale transaction itself. More importantly, neither of the authorities has recorded any finding that the documents furnished by the assessee are false, fabricated, manipulated or otherwise lacking in authenticity. The documents placed on record have been accepted as genuine; however, the explanation has been rejected solely on the ground that further remittance records from the Dubai Exchange Bureau were not available. Once the primary evidences remain unrebutted and no contrary material has been brought on record by the Revenue, the explanation furnished by the assessee cannot be discarded merely because one additional piece of corroborative evidence could not be produced. The Revenue has also not brought any material whatsoever on record to establish that the impugned funds originated from any undisclosed source belonging to the assessee. No inquiry has been conducted from the seller, no adverse material has been gathered from the bank and no evidence has been brought on record to suggest that the payments represented the assessee’s own unaccounted money routed through any accommodation arrangement.
11. We find that the entire foundation of the addition rests upon the inability of the assessee to produce, after a lapse of nearly ten years, the remittance records of the Dubai Exchange Bureau through which the payments were stated to have been made by her husband directly to the vendor. However, the material placed before us demonstrates that the transaction as a whole stands fully explained and duly corroborated by independent documentary evidence. The payments aggregating to Rs.80,00,000/- are reflected in the bank account of the vendor and the remitter is described as “Azaz”. The affidavit of Mr. Azaz Saudagar and the duly executed Gift Deed further confirm that the said payments were made by him on behalf of the assessee towards acquisition of the residential property. The balance consideration of Rs.40,00,000/- stands explained from the sale proceeds of the assessee’s earlier property, Rs.18,50,000/- stands explained from the gift received from the husband and routed through banking channels, Rs.10,000/- stands evidenced by the pay order issued through Jammu and Kashmir Bank and the TDS component of Rs.1,40,000/- is also duly accounted for. Thus, the entire purchase consideration of Rs.1,40,00,000/- stands fully reconciled with the registered sale deed, banking records and contemporaneous documentary evidence.
12. Further, once the entire purchase consideration stands fully reconciled with the registered sale deed, the corresponding banking entries, the documentary evidences placed on record and the source-wise break up of payments, and the Revenue itself has neither disputed the genuineness of the purchase transaction nor brought any material on record to demonstrate that the impugned funds represented the assessee’s own undisclosed income, the addition under section 69 cannot be sustained merely on the premise that a particular remittance advice or record of the exchange bureau, pertaining to a transaction undertaken almost a decade earlier, could not be produced. Suspicion, however strong, cannot substitute evidence, particularly when the surrounding facts and documentary material overwhelmingly support the explanation furnished by the assessee. In the absence of any contrary material brought on record by the Revenue, the explanation offered by the assessee cannot be rejected on mere conjectures, assumptions or technical deficiencies in one segment of the evidentiary chain when the transaction as a whole stands duly explained. Accordingly, we hold that the assessee has fully discharged the burden cast upon her under section 69 by establishing the identity of the contributor, his financial capacity, the source of funds and the actual utilisation thereof towards acquisition of the property. Once the entire investment stands explained by cogent documentary evidence and the Revenue has failed to bring any material to the contrary, the impugned addition cannot survive.
13. So far as the separate addition of Rs.10,000/- is concerned, we find that the assessee has placed on record a copy of the pay order issued from Jammu and Kashmir Bank and the corresponding entry reflecting receipt thereof in the bank account of the seller. The payment forms an integral part of the registered property transaction and stands duly evidenced from the documents placed before us. Once such documentary evidence is available on record, there remains no basis whatsoever for sustaining a separate addition of Rs.10,000/- under section 69. We accordingly set aside the impugned order of the learned CIT(A) and direct the Assessing Officer to delete the addition of Rs.80,10,000/- in entirety.
14. In the result, the appeal of the assessee is allowed.
Order pronounced on 11th June, 2026.
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