Ankit Kumar Vs ITO (ITAT Jaipur)
A Wrong Explanation Need Not Defeat a Genuine Investment When the Correct Source Is Already Embedded in the Record: ITAT Deletes Addition u/s 69 After AO Verifies Complete Money Trail
The Jaipur Bench of the Income Tax Appellate Tribunal has deleted an addition of ₹7,77,342 made u/s 69 after the AO, during verification directed by the Tribunal, accepted that the assessee had satisfactorily explained the investment made in an immovable property. Although the assessee had initially offered an incorrect explanation regarding adjustment of commission income, the documents supporting the correct explanation were already available before the AO.
The decision recognises that an addition cannot be sustained merely because the assessee’s earlier pleading was defective when the underlying documents establish the true source of investment.
Property Purchased for ₹18.15 Lakh
The assessee purchased Unit No. C-FF 12A in Capital Galleria, Alwar, for a total consideration of ₹18,15,216.
During assessment proceedings, he explained that ₹11 lakh had been financed through a housing loan from HDFC Bank and the balance amount of ₹7,15,216 represented commission income receivable from R-Tech Group, which had been adjusted against the purchase consideration.
The AO found that the alleged commission adjustment was not supported by the ledger account, vouchers, receipts or confirmation from R-Tech Group. He therefore treated ₹7,15,216 as investment from unexplained sources and made an addition u/s 69.
The AO further relied upon digital data recovered during search proceedings u/s 132 conducted in the case of R-Tech Group. According to this material, an additional amount of ₹62,126 had allegedly been paid in cash as “on-money” for acquiring the unit. This amount was also added u/s 69.
Thus, the aggregate addition came to ₹7,77,342, which was subjected to tax at the special rate prescribed u/s 115BBE. The CIT(A) confirmed the additions.
Assessee Offers an Entirely Different Explanation Before ITAT
Before the Tribunal, the assessee candidly admitted that the earlier explanation regarding adjustment of commission income was not correct. He offered a fresh explanation concerning the purchase transaction.
It was submitted that the assessee was not the original allottee of the commercial unit. The unit had initially been allotted to Rahul Lakhera, who had already paid substantial amounts to the developer. Subsequently, the unit was assigned in favour of the assessee, though the final sale agreement was executed directly between the developer & the assessee.
The amount previously paid by Rahul Lakhera to the developer was adjusted in his account. The assessee, in turn, reimbursed or discharged Rahul Lakhera’s investment and liabilities.
The assessee claimed that the payment was funded through an HDFC Bank loan of ₹11 lakh, a transfer of ₹3.89 lakh from his IndusInd Bank account and cash payments of ₹3.11 lakh supported by withdrawals from his bank accounts. The amount transferred through IndusInd Bank was stated to have originated from redemption of mutual funds credited to his PNB account.
Supporting Documents Were Already on Record
The assessee relied upon the letter dated 13.07.2019 issued by R-Tech assigning the unit to him, the sale agreement dated 22.08.2019, IndusInd Bank and PNB statements, evidence of mutual fund redemption & documents evidencing sanction and utilisation of the HDFC loan of ₹11 lakh.
Although the explanation was new, the assessee maintained that all the underlying documents had already been furnished before the AO. The problem was not the absence of evidence but the failure to properly explain the transaction.
The Departmental Representative fairly accepted that the relevant documentary evidence was part of the assessment record.
Considering the fresh explanation and the availability of the supporting documents before the AO, the Tribunal directed the Department to obtain a verification report from the AO. The assessee was also directed to participate in the verification exercise.
Remand Verification Confirms the Transaction
In the verification report, the AO initially objected to admission of the fresh evidence and contended that adequate opportunities had already been granted during assessment and first appellate proceedings. However, without prejudice, he examined the transaction as directed by the Tribunal.
The AO’s verification revealed that the unit had indeed been initially allotted to Rahul Lakhera. The Space Buyer’s Agreement recorded the basic sale price of ₹17,16,882 and established the original allotment. A notarised endorsement form further confirmed that Rahul Lakhera had nominated the assessee, Ankit Kumar, to be substituted in his place. The developer had also confirmed this substitution.
The HDFC loan account showed that a loan of ₹11 lakh was sanctioned to the assessee. Out of this, ₹9,08,715 was applied towards Rahul Lakhera’s outstanding HDFC loan liability, ₹1,76,824 was paid to R-Tech against his outstanding dues and ₹14,461 was subjected to internal adjustment.
The IndusInd Bank statement further established that ₹3,89,000 was transferred to Rahul Lakhera on 31.05.2019 through cheque.
The remaining amount of ₹3,11,000 was paid in cash in three instalments – ₹1,11,000 on 31.05.2019, ₹1 lakh on 15.06.2019 and ₹1 lakh on 30.06.2019. These payments were supported by receipts and corresponding bank withdrawals.
Both the Departmental Representative & the assessee agreed before the Tribunal that the verification had confirmed the correctness of the fresh explanation and the source of investment.
No Addition Survives Once the Source Is Verified
The Tribunal held that the AO’s report established the complete transaction as well as the source of the investment. Once the documentary evidence and money trail were verified and found correct, there remained no justification for sustaining the addition u/s 69.
Accordingly, the aggregate addition of ₹7,77,342 was deleted, and the appeal was allowed.
The order, in paragraph 14, mentions the deleted figure as “₹77,77,342”. This appears to be a typographical error since the disputed additions were ₹7,15,216 and ₹62,126, aggregating to ₹7,77,342.
Author’s Comments
The decision demonstrates that assessment proceedings should ultimately determine the correct taxable income, not merely punish an assessee for defective drafting or an inaccurate initial explanation. An admission or explanation is relevant evidence, but it is not necessarily conclusive when reliable documents reveal the true character of the transaction.
At the same time, a changed explanation is naturally viewed with suspicion and cannot be accepted merely on assertion. What saved the assessee was that the assignment documents, loan records, bank statements, mutual fund redemption evidence, payment receipts and cash withdrawals were capable of independent verification. More importantly, the AO himself confirmed the explanation during the remand proceedings.
The case also illustrates the Tribunal’s wide fact-finding powers. Where the material is already on record but has not been properly appreciated, the Tribunal may call for verification instead of sustaining an otherwise unsustainable addition on a technical ground.
The principle emerging from the decision is that a defective earlier explanation may weaken the assessee’s case, but it cannot justify an addition u/s 69 once the actual source of investment is established through a verified documentary trail.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT JAIPUR
The present appeal has been filed by the assessee against the order passed by the National Faceless Appeal Centre , Delhi(hereinafter referred to as “Ld. CIT(A)”), dated 27.11.2025under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).
2. The grounds raised read as under:
1. The Ld. CIT(A), NFAC has erred on facts and in law in confirming the addition of Rs.7,15,216/- made by AO u/s 69 of IT Act, 1961 on account of unexplained investment in purchase of unit from R-Tech Group whereas assessee has not purchased the unit from R-Tech Group, rather the unit allotted to Rahul Lakhera was assigned by R-Tech Group to the assessee against which he paid Rs. 18,15,216/- to Rahul Lakhera, being amount paid from finance taken from HDFC of Rs. 11 lacs, out of redemption of mutual funds of Rs.5,04,182/- and out of the past savings.
2. The Ld. CIT(A), NFAC has erred on facts and in law in confirming the addition of Rs.62,126/- made by AO u/s 69 of IT Act, 1961 on account of unexplained investment by upholding the finding of AO that assessee has paid on money of Rs.62,126/- to R-Tech Group on purchase of unit whereas this amount represent the discount given by R-Tech Group to Rahul Lakhera.
3. The appellant craves to alter, amend and modify any ground of appeal.
4. Necessary cost be awarded to the assessee.
3. The solitary issue in the present appeal relates to the addition made to the income of the assessee on account of investment made in an immovable property, the source of which remained unexplained amounting to Rs.7,77,342/-.
4. The facts of the case are that, the assessee had purchased Unit No. C-FF 12A in Capital Galleria Alwar for consideration of Rs.18,15,216/-. The assessee claimed to have taken Rs.11 lacs through Housing loan from HDFC Bank and balance of Rs.7,15,216/- by way of adjustment of commission income from R Tech Group. The AO held that in absence of any corroborative evidence such as ledger, vouchers receipts, or confirmation from the R Tech Group, the claim of adjustment of commission was not substantiated andaccordingly, addition of Rs.7,15,216/- was made to the income of the assessee as investment made from unexplained sources. Further during search proceedings u/s 132 of the Act conducted on R Tech Group, digital data retrieved revealed on money of Rs.62,126/- allegedly paid in cash for the purchase of the aforesaid Unit . The AO added Rs.62,126/- also to the income of the assessee u/s 69 of the Act as unexplained investment resulting in a total addition of Rs.7,77,342/- to the income of the assessee which was taxed at the rate specified u/s 115BBE of the Act@ 60%.
5. Ld. CIT(A) confirmed the order passed by the AO.
6. Before me, ld. Counsel for the assessee offered a completely different explanation for the source of investment made in the impugned flat and stated that though it was a new explanation, however, all the facts relating to and corroborating the explanation were on record before the AO and could be very well verified by him. His explanation was to the effect that:-
- The assessee was not the initial allottee of the unit. That it was allotted to one Mr. Rahul Lakhera and subsequently assigned to assessee.
- That the final sale deed was entered into between the builder developer and the assessee.
- The amount already paid by Mr. Rahul Lakhera for the purchase of property amounting to Rs.17.19 lacs was adjusted in his account by the builder developer and the balance amount was paid by the assessee to the builder developer.
- That Rs.17 lacs paid by Mr. Rahul Lakhera to the builder was then paid by the assessee to Mr. Rahul Lakhera fromthe loan of Rs.11 lacs taken from HDFC Bank, Rs. 3,89,000/- from IndusInd Bank, the source of which was sale proceeds of mutual fund credited to his PNB Account, and the balance in cash from his own source. The assessee being a broker filing return of income every year of Rs.4 lacs approximately.
7. My attention was drawn to all documentary evidencessubstantiating the above facts as under:-
- The letter of R-Tech assigning the unit to the assessee on 13.07.2019 placed at paper book page No.26.
- Sale agreement for a consideration of Rs. 18.15 lakhs dated 22.08.2019 placed at paper book page No.21.
- The copy of Bank statement of IndusInd Bank for the impugned year placed at paper book page Nos. 32 to 36.
- The copy of Bank Statement of Punjab National Bank for the impugned year placed at paper book page Nos. 37 to 43.
- The evidence of redemption of mutual fund placed at paper book page No.44.
- The copy of document evidencing loan of Rs.11 lakhs sanctioned by HDFC Bank and utilization of such loan placed at paper book Page Nos. 30 to 31
8. He also pointed outthe details of payment made being
- Rs.11 lakhs loan sanctioned on 31.05.2019,
- Rs.3.89 lakhs on 31.05.2019 and
- the balance paid in cash.
9. Ld. Counsel for the assessee contended that all documents were before the AO where however proper pleadings were not made.
10. The Ld. DR fairly agreed that all documentary evidences referred to above were there before the AO.
11. Considering the fresh explanation offered by the assessee of the source of investment made in the impugned property and noting that all the facts relating to the same were admittedly on record before the AO, the Ld. DR was directed to submit a report of the AO on the submissions and explanation given by the assessee after due verification. An order sheet entry to this effect was passed on 25.06.2026, when the aforestated contentions were made before us by the Ld. Counsel for the assessee, the contents of which are as under:-
Ld. Counsel for the assessee has argued in detail before me, explaining the source of investment in a property purchased by him during the impugned year amounting to Rs.7,15,216/-, the source of which allegedly remained unexplained before the Lower Authorities, and was added back to the income of the assessee. Another addition of on-money paid for the purchase of property of Rs.62,126/-, was also made to the income of the assessee. The explanation of the assessee was that, the AO made addition on the basis of evidence procured during search conducted on the Builder i.e. R-Tech, which revealed, on-money to have been paid for the purchase of the impugned unit, and also the investment in the unit to have been made to the tune of Rs.18,15,000/-. The pleadings of the ld. counsel before me, was that the assessee was not the initial allottee of the unit, that it was allotted to one Mr. Rahul Lakhera, and was subsequently assigned to the assessee, that ultimately the sale deed was entered into between the builder developer and the assessee. The amount already paid by Mr. Rahul Lakhera for the purchase of property amounting to Rs.17.19 lakhs, was adjusted in his account by the builder developer and the balance amount was paid by the assessee to the builder developer. That Rs.17 lakhs paid by Mr. Rahul to the builder was then paid by the assessee to Mr. Rahul Lakhera through the loan of Rs.11 lakhs taken from HDFC Bank, Rs.3,89,000/- from IndusInd Bank, the source of which was sale proceeds of mutual fund credited to his PNB Bank Account, and the balance in cash from his own sources, the assessee being a broker, filing return of income every year of Rs.4 lakhs approximately. He fairly admitted before me, that this explanation was not submitted to the Authorities below specifically. However, the documents furnished to the AO and the Ld. CIT(A) revealed all the above facts. He drew my attention to the letter of R-Tech assigning the unit to the assessee on 13.07.2019 placed at paper book page No.26, sale agreement for a consideration of Rs. 18.15 lakhs dated 22.08.2019 placed at paper book page No.21, the copy of Bank statement of IndusInd Bank for the impugned year placed at paper book page Nos. 32 to 36, the copy of Bank Statement of Punjab National Bank for the impugned year placed at paper book page Nos. 37 to 43, the evidence of redemption of mutual fund placed at paper book page No.44 and the copy of document evidencing loan of Rs.11 lakhs sanctioned by HDFC Bank and utilization of such loan placed at paper book Page Nos. 30 to 31. He also pointed out, the details of payment made being Rs.11 lakhs loan sanctioned on 31.05.2019, Rs.3.89 lakhs on 31.05.2019 and the balance paid in cash. Since, all the documents were before the AO, but in the absence of proper pleading made by the assessee before the AO. I direct the Ld. DR to seek a report from the AO on the submissions, now made by the assessee before me. The Ld. DR is directed to submit the report before me on 13th July 2026. The appeal is accordingly kept as part heard. Copy of the report be given to the ld. Counsel for the assessee well in advance for his rebuttal to the same. Further, the ld. Counsel, is directed to participate in the verification exercise conducted by the AO. Adjourned to 13.07.2026.
12. In response to the same, the ld. DR submitted a report of the AO dated 24.08.2026. Relevant portion of the report of the AO is being reproduced hereunder:-
In the present case, the assessing officer had provided ample opportunities to the assessee during the assessment proceedings as clearly mentioned in the assessment order dated 27-03-2025. Also, on perusal of the appeal order u/s 250 dated 17-11-2025 Id. CTT(A) gave sufficient opportunities to the assessee to comply the notices. Hence, both the orders were not passed by without giving sufficient opportunity to produce the evidence during the assessment proceeding and appeal proceedings as well. The assessee was also not prevented by sufficient cause from producing the evidence before assessing officer. Thus, the case of the assessee does not fall under any exception as mentioned in the Rule-29 of the ITAT Rules, 1963. Therefore, it is kindly requested to not consider /accept the additional evidences filed by the assessee during the appellate proceedings. Without prejudice, report as directed by the Hon’ble ITAT, Jaipur is submitted as under-
During the F.Y. 2019-20 relevant to AY 2020-21, the assessee has purchased Unit No. C-FF12A in Capital Galleria, Alwar, and paid Rs. 18,15,216/- to R Tech Group. During the assessment proceedings the asessee has stated that he has taken housing loan of Rs. 11,00,000/- from HDFC Bank for purchase of above immovable property and the remaining amount was adjusted with the amount of commission against the services provided earlier to R Tech group as commission agent for sale and purchase of property whereas in the Paper Book Submitted before the Hon’ble ITAT, Jaipur pleading thatthe assessee was not the initial allottee of the unit, that it was allotted to one Mr. Rahul Lakhera, and was subsequently assigned to the assessee, that ultimately the sale deed was entered into between the builder developer and the assessee
Further, in the reply dated 18-08-2026 assessee has submitted that
-Out of the total consideration, I obtained a loan of Rs. 11,00,000/- from HDFC Bank. From thia amount, Rs. 9,08.715/- was paid directly towards the outstanding loan liability of Shri Rahul Lakhera with HDFC Bank, and Rs. 1,76,824/- was paid to R-Tech against the outstanding dues/liability of Shri Rahul Lakhera. The bulunce amount of Rs 14,461/- was adjusted towards miscellaneous internal adjustment
In support of this claim, assessee has submitted copy of Space Buyer’s Agreement between R Tech Infra Capital Galleria LLP and Mr. Rahul Lakhera and JKD Pearl India Developers Pvt. Ltd. & Others where Basic Sale Price of the Unit-12A, in Block C, on first floor was agreed for Rs. 17,16,882/-, clearly indicates that Unit was initially allotted to one Mr. Rahul Lakhera
1. Further, assessee has submitted a copy of Endorsement Form duly notarized where Mr. Rahul Lakhera has nominated assessee Sh. Ankit Kumar to be substituted in the place of Mr. Rahul Lakhera. The Endorsement Form is duly Confirmed by within Narned Developer Company i.e. R Tech Infra Capital Galleria LLP. During the Remand Proceedings found that assessee has submitted copies of Bank Statement of HDFC Bank Loan Account in which it is found that loan was sanctioned of Rs. 11,00,000/- from which amount of Rs. 9,08,715/- was paid to the outstanding loan liablity of Mr. Rahul lakhera with the same HDFC Bank. Remaining amount of Rs. 1,76,824/- was paid to the R Tech against outstanding dues of the liability of Mr. Rahul Lakhra
2. Further, on perusal of bank statement of Indusind bank, in which the fund was transferred of Rs. 3,89,000/- to Rahul Lakhera on 31-05-2019 through Cheque No. 069052 of Indusind Bank.
3. Balance amount of Rs. 3,11,000/-, in respect to this the assessee has submitted the Recipt of Cash Payment to Sh. Rahul Lakhera on dated 31-05-2019 of Rs. 1,11,000/-, on 15-06-2019 of Rs. 1,00,000/- and on 30-06-2019 of Rs. 1,00,000/- and in support of these paymentsassessee has also submitted copies of bank account where withdrawal is available
Thus, the addition made by this office in the assessment order dated 27-03-2025 in the case of the assessee is as per the facts available with this office and the submission provided by the assessee. It is submitted for necessary perusal and action.
13. Referring to the above, both the ld. DR and the ld. Counsel for the assessee submitted that the AO in his remand report had inquired into the explanation furnished by the assessee regarding the source of investment made in the impugned property duly substantiated with evidences ,and had found the explanation to be true. They pointed out that the AO had found the contention of the assessee to be true, that the impugned unit was initially allotted to one Mr. Rahul Lakhera which was subsequently endorsed to the assessee Sh. Ankit Kumar; that the bank statements submitted by the assessee clearly showed that the amount of Rs.9,08,715/- was paid to Mr. Rahul Lakhera by the assessee out of loan taken of Rs.11 lakhs and balance of Rs.1,76,824/- was paid by the assessee to Mr. Rahul Lakhera ;has also confirmed the fact that the assessee had transferred of Rs.3,89,000/- to Mr. Rahul Lakhera from his IndusInd Bank and has also confirmed the fact of the assessee paid Rs.3,11,000/- in cash to Mr. Rahul Lakhera which was corroborated with withdrawals shown in the bank account of the assessee of cash. This fact, both the parties have agreed, the ld. AO had examined the explanation of the source of investment made in the immovable property during the year and found the same to be correct and duly explained.
14. In the light of the report of the AO as above, finding the assessee to have duly explained the source of investment made in Unit No. C-FF 12A in Capital Galleria Alwar, I see no reason for any addition to be made to the income of the assessee on account of investment in the said immovable property . The addition made to the income of the assessee of Rs.77,77,342/- is accordingly deleted.
15. In effect, the appeal of the assessee is allowed.
Order pronounced in the Open Court on 15.09.2026
