ITAT Deletes Section 69 Addition Where Investment Was Made Through Tenant’s Cheque and Properly Explained

Nagina Nusrath Vs ITO (ITAT Bangalore)

ITAT Deletes Section 69 Addition Where Investment Was Made Through Tenant’s Cheque and Properly Explained

The Bangalore ITAT deleted an addition of ₹5 lakh made under section 69, holding that an investment cannot be treated as unexplained when the source and mode of payment are clearly evidenced through contemporaneous documents. The Tribunal found that the Revenue authorities had incorrectly assumed that the assessee had made a cash investment in M/s I Monetary Advisory, whereas the records established that the payment was made through a cheque issued by a tenant pursuant to a lease arrangement.

The assessee explained that her husband had received a lease advance of ₹15 lakh from a tenant. As per his instructions, the tenant directly issued a cheque of ₹5 lakh in favour of M/s I Monetary Advisory towards an investment made in the assessee’s name. The cheque details were duly reflected in the lease documentation, and supporting evidence including the lease agreement and cheque records was furnished before the authorities.

The Tribunal observed that the impugned cheque was specifically identifiable and was linked to the lease transaction between the assessee’s husband and the tenant. Since the investment was made through an identifiable banking channel and the source stood explained through documentary evidence, there was no basis to treat the amount as unexplained investment under section 69.

Accordingly, the Tribunal held that the addition was unsustainable, set aside the order of the CIT(A), and directed the Assessing Officer to delete the entire addition of ₹5 lakh. Since the assessee succeeded on merits, the legal grounds raised in the appeal were treated as infructuous.

FULL TEXT OF THE ORDER OF ITAT BANGALORE

The present appeal has been instituted by the assessee against the order of the Ld. CIT(A) passed u/s 250 of the Act dated 24.03.2026 relevant to AY 2023-24.

2. The issue raised by the assessee is that the learned CIT(A) erred in confirming the order of the AO by sustaining the addition of Rs. 5 lakhs under the provisions of section 69 of the Act.

3. The AO in the present case has treated the deposit of Rs. 5 lakhs in M/s I Monetary Advisory as an unexplained cash deposit u/s 69 of the Act. The relevant finding of the AO is reproduced as under:

The above observations of the learned JAO as well as the learned Assessing Officer, National Faceless Assessment Centre, are factually incorrect for the simple reason that the appellant had furnished her Income Tax Return u/s 139 of the Act. It is also relevant to submit that the appellant had not deposited or paid any such alleged cash of Rs. 5,00,000/- to M/s. I Monetary Advisory/associated business entities. The correct fact is that the appellant’s husband, Dr. Shamsheer Baig, had received a lease advance of Rs. 15,00,000/-from Shri Harish A.N., and a copy of the lease agreement is placed at Page Nos. 77 to 80 of the Paper Book. Further, on the instructions of the appellant’s husband, the tenant, Shri Harish A.N., had issued Cheque No. 58078 dated 01 Feb. 2017 for Rs. 5,00,000/- payable at State Bank of India in favour of M/s. I Monetary Advisory [Refer to Page No. 76 of the Paper Book], which was deposited by the appellant’s husband towards investment in the name of the appellant [Refer Page No. 75 of the Paper Book]. Thus, it is submitted that the appellant had not paid any such alleged cash to M/s. I Monetary Advisory as alleged by the learned JAO and the learned Assessing Officer, National Faceless Assessment Centre.”

4. The above finding was subsequently confirmed by the learned CIT(A) vide order dated 19/03/2026. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us.

5. The ld. AR before us filed written submissions consisting of 20 pages and a paper book running from pages 1 to 239. The learned AR before us relied upon paragraph 3.4 of the written submissions. The same is reproduced herein below:

3.4 The above observations of the learned JAO as well as the learned Assessing Officer National Faceless Assessment Centre are factually incorrect for the simple reasons that the appellant had furnished her Income Tax Return u/s. 139 of the Act and it is also relevant to submit that the appellant had not deposited or paid any such alleged cash of Rs. 5,00,000/-to M/s. I Monetary Advisory / Associated business entities. The correct fact is that the appellant’s husband Dr. Shamsheer Baig had received lease advance of Rs. 15,00,000/- from Shri Harish A.N. and a copy of lease agreement is placed at Page Nos. 77 to 80 of the Paper Book and on the instructions of appellant’s husband, the tenant Shri Harish A.N. had issued one Cheque No. 058078 dated 01 Feb. 2017 for Rs. 5,00,000/- payable at State Bank of India in favour of M/s. I Monetary Advisory Refer to Page No. 76 of the Paper Book], which was deposited by appellant’s husband towards investment in the name of the appellant Refer Page No. 75 of the Paper Book]. Thus, it is submitted that the appellant had not paid any such alleged cash to M/s. I Monetary Advisory as alleged by the learned JAO and learned Assessing Officer, National Faceless Assessment Centre.

6. On the other hand, the learned DR vehemently supported the orders of the authorities below.

7. We have heard both the parties and perused the materials available on record. From the preceding discussion, we note that the assessee deposited a sum of Rs. 5 lakhs in her name with the company, viz., M/s I Monetary Advisory. This deposit was made by Shri Harish A.N. on behalf of the assessee, which is evident from the copy of the cheque bearing No. 058078 dated 01/02/2017. The impugned cheque number was duly disclosed in the lease documents executed between the assessee’s husband, Dr. Shamsheer Baig, and Shri Harish A.N. Accordingly, we are of the view that such deposit cannot be treated as undisclosed under section 69 of the Act. Hence, we set aside the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Accordingly, the ground of appeal of the assessee is hereby allowed.

8. Since the assessee succeeds on the merits of the case, we do not find any reason to dwell upon the legal issues raised by the assessee. Accordingly, we dismiss the legal grounds raised by the assessee as infructuous.

9. In the result, the appeal filed by the assessee is partly allowed.

Order pronounced in court on 16^thday of May, 2026