Anita Bafna Vs ITO (ITAT, Jodhpur Bench)
Relevant facts
In Anita Bafna v. ITO, the Jodhpur Bench of the Income Tax Appellate Tribunal considered whether an alleged unexplained investment could be taxed u/s 69 in AY 2019–20 merely because the property conveyance was registered during FY 2018–19, although the disputed payments had actually been made in FY 2017–18.
The assessee acquired an immovable property for an agreed consideration of ₹1.55 crore, as against its stamp-duty value of ₹1,59,27,000. She had earlier entered into a registered agreement dated 31 December 2011 with M/s Sai Leela Corporation for purchasing Flat No. 402 in Sunita Building. Since the builder failed to construct & deliver the flat, the amounts previously paid by the assessee were allegedly refunded. The refunded money was thereafter utilised for acquiring another property, namely Flat No. 302-B, through an agreement ultimately executed on 28 March 2019.
The assessee produced the earlier agreement, bank account, passbook & payment schedule to explain the movement of funds.
Assessment proceedings
During reassessment, the AO examined the source of payments made towards the new property. Out of the total consideration, the assessee had paid ₹84,22,500 through different cheques. The registered document itself recorded payments of ₹25 lakh on 7 November 2017, another ₹25 lakh on 21 November 2017 & ₹30 lakh on 21 November 2017.
Thus, the disputed aggregate payment of ₹80 lakh was made in November 2017, falling within FY 2017–18 relevant to AY 2018–19.
The assessee explained that this amount represented the refund received from M/s Sai Leela Corporation through her IDBI Bank account. The AO rejected the explanation mainly because the assessee could not furnish the cancellation agreement with the earlier builder & had allegedly failed to establish satisfactorily the original source of the amount initially invested with that builder.
Consequently, the AO treated ₹80 lakh as unexplained investment u/s 69 in AY 2019–20.
Findings of the CIT(A)
Before the CIT(A), the assessee contended that even if the explanation regarding the source was considered unsatisfactory, the addition could be made only in the assessment year corresponding to the financial year in which the investment was actually made.
The CIT(A) expressly acknowledged that the payments were made during FY 2017–18. However, he sustained the addition in AY 2019–20 because the registered conveyance was executed during FY 2018–19. According to him, the assessee acquired legal title or a right in the property only upon registration; hence, the investment culminated during the later financial year.
Issue before the Tribunal
The central issue was whether the relevant year for applying Section 69 is determined by the date of actual payment or investment, or by the subsequent date on which legal title is acquired through registration of the property.
A connected issue was whether the Revenue could treat payments made in one financial year as unexplained investments of a later year merely because the sale deed was registered subsequently.
Assessee’s contentions
The assessee argued that the CIT(A)’s reasoning contradicted the plain language of Section 69. The payment schedule forming part of the registered document conclusively established that ₹80 lakh was paid in November 2017.
Section 69 refers to the financial year in which the assessee “has made investments.” It does not identify registration of the conveyance or perfection of legal title as the taxable event. Therefore, an investment made during FY 2017–18 could not be shifted to FY 2018–19 merely because registration took place later.
Tribunal’s findings & legal reasoning
The Tribunal accepted the assessee’s contention & deleted the addition. It observed that the sine qua non for invoking Section 69 in a particular assessment year is that the unexplained investment must have been made during the previous year relevant to that assessment year.
The provision does not postpone taxability until legal documentation is completed. The documentary evidence, including the payment schedule incorporated in the registered instrument, conclusively showed that the disputed ₹80 lakh was paid through banking channels in November 2017. Even the CIT(A) had accepted this factual position.
The Tribunal held that the CIT(A) had conflated two conceptually distinct events: making an investment & acquiring or perfecting legal title. Registration may determine the transfer of title for property-law purposes, but it cannot alter the financial year in which the money was actually invested.
Section 69 contains no deeming fiction permitting an investment made in an earlier year to “transmogrify” into an investment of a later year because the conveyance was subsequently registered.
The Revenue could not identify the November 2017 payments as unexplained investments while simultaneously disregarding their dates. Once those payments formed the foundation of the addition, their actual dates necessarily determined the relevant previous year.
Scope of the relief
The Tribunal clarified that it was not deciding whether the assessee had satisfactorily established the original source of the money paid to M/s Sai Leela Corporation or whether the cancellation & refund evidence was sufficient.
Those questions could arise only in the assessment year in which Section 69 could lawfully be invoked. Whether an addition could have been made in AY 2018–19 was neither before the Tribunal nor decided by it.
Accordingly, the addition of ₹80 lakh u/s 69 was deleted. Since the entire addition was eliminated on this substantive ground, the assessee’s challenges to reopening u/s 147/148 were treated as academic & left open.
Practical implications
The ruling establishes that for Section 69, the year of actual investment controls—not the year of registration. In property transactions involving advance or instalment payments across multiple years, each payment must be examined with reference to the financial year in which it was actually made.
The decision prevents the Revenue from shifting unexplained investments to a convenient later year based solely on registration. However, deletion on the ground of the wrong assessment year does not conclusively validate the source; it only confirms that an investment cannot be taxed in a year to which it does not belong.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT, JODHPUR BENCH
1. The aforesaid appeal has been filed by the assessee against the order dated 06.10.2025 passed by the learned Commissioner of Income-tax (Appeals), NFAC, in relation to the assessment framed under section 147 of the Income-tax Act, 1961 for the Assessment Year 2019-20. The assessee has raised various grounds, including legal grounds challenging the validity of reopening under sections 147/148 of the Act. However, one of the principal grounds urged before us, being Ground No. 6, challenges the addition of ₹80,00,000 made under section 69 of the Act on the fundamental ground that the alleged investment itself was made during Financial Year 2017-18, relevant to Assessment Year 2018-19, and therefore could not, by any process of reasoning, be brought to tax under section 69 in Assessment Year 2019-20.
2. The material facts relevant for adjudication of this ground are that the assessee had acquired an immovable property for an agreed consideration of ₹1,55,00,000, as against the stamp duty valuation of ₹1,59,27,000. During the course of reassessment proceedings, the Assessing Officer examined the source of payments made towards acquisition of the said property. The assessee explained that she had earlier entered into a registered agreement dated 31.12.2011 with M/s Sai Leela Corporation for purchase of Flat No. 402 in Sunita Building and had made payments to the said builder. Since the builder could not construct and deliver the agreed flat, the amounts earlier paid by the assessee were returned/refunded by M/s Sai Leela Corporation and the money so received was utilised towards acquisition of another property, namely Flat No. 302-B, under an agreement ultimately executed on 28.03.2019. In support, the assessee furnished the relevant agreement, bank account/passbook and the schedule of payments evidencing the movement of funds.
3. The Assessing Officer noticed that, out of the consideration of ₹1,55,00,000, payments aggregating to ₹84,22,500 had been made by the assessee through different cheques. The documentary material and the payment schedule forming part of the registered instrument show, inter alia, payments of ₹25,00,000 on 07.11.2017 vide cheque No. 638487, ₹25,00,000 on 21.11.2017 vide cheque No. 638488 and ₹30,00,000 on 21.11.2017 vide cheque No. 638489, apart from subsequent payments. Thus, insofar as the amount of ₹80,00,000 forming the subject matter of the impugned addition is concerned, the payments were made in November 2017, i.e., during Financial Year 2017-18. The assessee explained that the corresponding amount had been received from M/s Sai Leela Corporation through her IDBI Bank account on account of refund of the amounts earlier paid to the said builder. The Assessing Officer, however, was not satisfied with the explanation, principally for the reason that the assessee could not furnish the cancellation agreement with M/s Sai Leela Corporation and, according to him, had also not satisfactorily established the original source of the amount earlier invested with the said builder. He accordingly treated ₹80,00,000 as unexplained investment under section 69 of the Act in Assessment Year 2019-20.
4. Before the learned CIT(A), the assessee specifically challenged the addition, inter alia, on the ground that even assuming that the explanation regarding the source of the investment was not acceptable, the addition under section 69 could only be made in the assessment year relevant to the financial year in which the investment was actually made. It was pointed out that the impugned payments were made in November 2017 and were duly reflected in the documentary evidence and bank account; hence, they pertained to Financial Year 2017-18, relevant to Assessment Year 2018-19. The learned CIT(A), however, did not accept this contention. Interestingly, while recording his finding, he acknowledged that the payments towards acquisition of the property had indeed been made in Financial Year 2017-18, relevant to Assessment Year 2018-19, but proceeded to sustain the addition in Assessment Year 2019-20 on the reasoning that the investment in the property ultimately culminated in execution of the registered deed during Financial Year 2018-19 and it was only upon such registration that the assessee acquired legal title or right in the property. On this premise, he held that the relevant event had occurred during Financial Year 2018-19 and, therefore, the addition under section 69 was sustainable in Assessment Year 2019-20.
5. Before us, learned counsel submitted that the aforesaid reasoning of the learned CIT(A) is contrary to the plain mandate of section 69. He drew our attention to the registered document and particularly to the schedule of payments appearing at page 98 of the paper book, which clearly records that the payments aggregating to ₹80,00,000 had been made in November 2017. Thus, whatever may be the controversy regarding the source of such payments, the fact remains that the investment represented by these payments stood made during Financial Year 2017-18. It was submitted that section 69 does not make the registration of an instrument or acquisition of legal title the taxable event; rather, it expressly refers to the financial year in which the assessee “has made investments”. Therefore, an investment actually made in Financial Year 2017-18 cannot be shifted to Financial Year 2018-19 merely because the sale deed or conveyance came to be registered subsequently.
6. We have heard the parties and carefully considered the material placed on record. In our considered opinion, the issue can be decided on the very language of section 69 and the undisputed chronology emerging from the documentary evidence. Section 69, insofar as relevant, contemplates a situation where, in the financial year immediately preceding the assessment year, the assessee has made investments which are not recorded in the books of account, if any, maintained by him, and the assessee offers no explanation about the nature and source of the investments or the explanation offered is not found satisfactory. Thus, the statutory provision itself identifies the relevant year with reference to the point of time when the investment is made. The sine qua non for invoking section 69 in a particular assessment year is, therefore, the making of the unexplained investment during the previous year relevant to that assessment year. The provision does not postpone the incidence to a subsequent year merely because the legal documentation or registration relating to the underlying asset takes place later.
7. When the facts of the present case are tested on the aforesaid statutory parameter, the addition made in Assessment Year 2019-20 cannot be sustained. The schedule forming part of the registered document itself records the dates and amounts of payments. The amount of ₹80,00,000 which has been subjected to addition was paid through banking channels in November 2017. These payments indisputably fall in Financial Year 2017-18, relevant to Assessment Year 2018-19. In fact, this factual position has not been disputed even by the learned CIT(A); rather, his order specifically proceeds on the premise that the payments towards acquisition of the property were made during Financial Year 2017-18. Once this foundational fact stands accepted, the conclusion that the same investment can nevertheless be assessed under section 69 in Assessment Year 2019-20 merely because the registered deed was executed during Financial Year 2018-19 is difficult to sustain.
8. The learned CIT(A), in our view, has conflated two conceptually distinct events, namely, making of the investment and acquisition or perfection of legal title in the property. For the purpose of section 69, what is relevant is the former and not the latter. Registration of a conveyance may have its own legal consequences in relation to transfer and acquisition of title; however, it cannot alter the financial year in which the money constituting the alleged unexplained investment was actually invested. If an assessee makes payments towards purchase of an asset in one previous year and the conveyance is registered in a subsequent previous year, the earlier payments do not, merely by reason of such subsequent registration, transmogrify into investments made in the later year. Section 69 contains no such deeming fiction. On the contrary, its language fastens the enquiry to the financial year in which the investment has actually been made.
9. There is yet another aspect which reinforces this conclusion. The very addition made by the Assessing Officer is of ₹80,00,000 representing the payments which, according to him, remained unexplained. Therefore, if those very payments constitute the alleged unexplained investment for the purposes of section 69, their dates necessarily determine the relevant previous year. The Revenue cannot, on the one hand, identify the payments made in November 2017 as the unexplained investment and, on the other hand, disregard the dates of those payments and shift their taxability to Financial Year 2018-19 merely by reference to the date of registration of the property. Such an approach would detach the addition from the very investment which forms its foundation.
10. We may also clarify that the question before us is not whether the assessee had satisfactorily explained the original source of the amount paid to M/s Sai Leela Corporation or whether the documentary evidence regarding cancellation/refund was sufficient. Those questions would become relevant only in the assessment year in which an addition under section 69 could lawfully be considered in respect of the investment in question. For the present appeal, it is sufficient that the impugned investment of ₹80,00,000 was made during Financial Year 2017-18 and not Financial Year 2018-19. Therefore, even assuming, without accepting, the Assessing Officer’s objection regarding the sufficiency of the explanation as to source, the amount could not have been assessed as unexplained investment under section 69 in Assessment Year 2019-20. Whether any such addition was otherwise permissible in the assessment year relevant to Financial Year 2017-18 is neither before us nor called upon to be decided, and we accordingly express no opinion thereon.
11. In view of the aforesaid facts and the clear statutory prescription contained in section 69, we are unable to uphold the reasoning of the learned CIT(A) that the year in which the conveyance was registered should determine the year of assessment of the alleged unexplained investment. Once it is established from the registered document itself, and indeed accepted in the impugned order, that the impugned payments were made during Financial Year 2017-18, the addition under section 69 could not have been made in Assessment Year 2019-20. The subsequent registration of the property during Financial Year 2018-19 does not efface the dates of actual investment nor does it shift those investments to a later previous year.
12. Accordingly, the addition of ₹80,00,000 made by the Assessing Officer under section 69 and confirmed by the learned CIT(A) is deleted. Ground No. 6 raised by the assessee is allowed. Since the entire addition which is the subject matter of the present appeal stands deleted on this substantive ground, the other legal grounds raised by the assessee challenging the validity of reopening under sections 147/148 are rendered academic for the purposes of the present appeal and are, therefore, left open without adjudication.
13. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 10/08/2026.
