Karim Tajdin Halani Vs ITO (ITAT Ahmedabad)
Income Tax Appellate Tribunal (ITAT) Ahmedabad, in Karim Tajdin Halani vs. ITO, deleted an Rs. 18 lakh addition made by the Assessing Officer (AO) on the grounds of unexplained investment. The case pertained to the assessment year 2016-17, where the assessee’s return was selected for scrutiny under CASS to verify cash deposits and property transactions. The AO added Rs. 18 lakh as undisclosed investment, arguing that the amount was not explained. The CIT(A) upheld the addition, prompting the assessee to appeal before ITAT.
The assessee contended that while he had purchased the property for Rs. 43 lakh, Rs. 25 lakh was financed through a bank loan, and the remaining Rs. 18 lakh was not yet paid due to a dispute with the seller. The Tribunal noted that while the assessee claimed a dispute, no supporting legal evidence was presented. However, it observed that mere suspicion or assumption of payment could not justify an addition, especially in the absence of concrete evidence linking the amount to undisclosed income.
Relying on CIT vs. Star Builders (IT Ref. No.9 of 1999, Gujarat High Court), the Tribunal reiterated that suspicion alone cannot be grounds for addition. It emphasized that the AO failed to demonstrate that the assessee had indeed made the payment or that the amount came from undisclosed sources. The Tribunal also found inconsistencies in the AO’s approach, as there was no direct evidence of the alleged payment in the assessee’s bank statements or financial records.
