Shwetha Rajanna Vs ITO (ITAT Bangalore)
No Reply to Second Show-Cause Notice, Yet the Source Was Already on Record: Bangalore ITAT Deletes ₹37.60 Lakh Addition
Housing loan, mutual fund redemptions and bank payments explained the jointly purchased house
An assessee should respond to every show-cause notice. But failure to reply to a later notice does not make an investment unexplained when the supporting evidence is already before the Assessing Officer. The Bangalore ITAT applied this principle in Shwetha Rajanna v. ITO, ITA No. 1706/Bang/2026, order dated 21 September 2026, for AY 2022–23.
The assessee and her husband had jointly purchased a residential property for approximately ₹1.95 crore. The Assessing Officer accepted a ₹1 crore housing loan and some mutual fund proceeds, but treated the remaining ₹75.20 lakh as unexplained. He added 50% of that amount, ₹37.60 lakh, in the assessee’s hands under section 69. The Tribunal examined the bank accounts and supporting documents, found the acquisition funds explained, and deleted the addition.
How the assessment moved from ₹1 crore to ₹37.60 lakh
The assessee, a salaried individual, returned income of ₹12,10,720. Her return was selected for scrutiny concerning the property investment and a capital gains deduction claim. She explained that she and her husband were joint purchasers and that the consideration had been paid through banking channels. Both had deducted and deposited TDS on their respective shares of the purchase payments.
Want to Read the Complete Judgment?
You have read the free case summary. Unlock the full judgment, the detailed judicial reasoning and the downloadable PDF, along with every other premium judgment on TaxGuru.
Already subscribed? Log in
One subscription covers the entire premium judgment library, not just this case.
