Assessee Proves Investment Sourced from Family; Unexplained Investment Addition deleted

Kshama Sanjay Tripathi Vs ITO (ITAT Ahmedabad)

In the case of Kshama Sanjay Tripathi Vs ITO, the ITAT Ahmedabad ruled on the appeal concerning unexplained investment in property for the Assessment Year 2010-11. The assessee, identified as a non-filer, faced an addition of ₹40,00,000 for property purchase and ₹17,58,500 for cash deposits in her bank account. The Assessing Officer (AO) completed the assessment under Section 144 of the Income Tax Act, considering the investments as unexplained. The Commissioner of Income Tax (Appeals) [CIT(A)] later deleted the cash deposit addition but enhanced the assessment by ₹2,10,000, citing unexplained expenditure, without issuing a notice of enhancement.

Aggrieved, the assessee appealed to the Tribunal, asserting that the ₹40,00,000 investment was sourced from her family members, including her brother, husband, father, and father-in-law, all of whom transferred funds to her through documented transactions. The Tribunal reviewed the bank statements provided and found that the primary onus of proving the sources was met. Since no adverse inference could be drawn against the assessee, the Tribunal allowed the appeal on the unexplained investment addition. Additionally, the Tribunal found no justification for the ₹2,10,000 enhancement by the CIT(A), as no proper notice was given for the increase. Therefore, the Tribunal ruled in favor of the assessee, setting aside both the investment addition and unexplained expenditure enhancement.

FULL TEXT OF THE ORDER OF ITAT AHMEDABAD

This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals)-8, Ahmedabad vide order dated 10.10.2017 passed for the Assessment Year 2010-11.

2. The Assessee has taken the following grounds of appeal:

1. That, on facts, and in law, the learned CIT (A) has grievously erred in confirming the addition of Rs. 40, 00,000/- made as unexplained investment in purchase of property.

2. That on facts and in law, the learned CIT (A) has grievously erred in enhancing the assessment by making addition of Rs.2,10,000/- towards unexplained expenditure without issuing notice of enhancement as required by law.

3. The appellant craves leave to add, alter, and amend any ground of appeal.

3. Facts of the case are that the assessee was identified as a non filer in the NMS [Non-filler Management System) who has not filed return of income for the A. Y. 2010-11. The AIR information on the ITD systems of the revenue in respect of the assessee was that the assessee had purchase of immovable property of Rs. 40,00,000/- and also made Cash Deposits in bank account of Rs. 17,58,500/- during the year under consideration. In view of above backdrop, the case was reopened and notice u/s 148 of the IT Act was issued on 29/03/2017 was sent through Speed post which was dully served to the assessee at the known address. Owing to the non-filing of the return, the assessment has been completed u/s.144 determining total income of Rs.40,00,000/- on account of purchase of property and Rs.17,58,500/-on account of cash deposits in the bank account. The assessee contested the additions before the Ld. CIT(A)., who has deleted the additions of Rs.17,58,500/- made on account of cash deposits in the bank account but enhanced the addition by Rs.Rs.2,10,000/- being unexplained expenditure

4. Aggrieved by the order of the Ld. CIT(A), the Assessee filed appeal before the Tribunal.

5. Before us, the Ld. AR argued explaining the sources of Rs.40,00,000/- receive by the assessee for the purchase of property.

6. The Ld.AR explained that the assessee received the amount from the husband, father and family members and the sources have been aptly proved before the before the Ld. CIT(A) which he chooses to ignore. The details are tabulated as under:

7. On the other hand the Ld.DR argued that the assessee could not filed any confirmation and creditworthiness of the person who have lend the monies.

8. We have gone through the bank statements of all the persons mentioned at page no.5, 6, 8, 20, 22, 32 to 34, 31 to 35 and 38 of the paper book which reflect lending of the monies by this parties to the assessee. All these monies have been received from the family members and due evidences have been furnished before the revenue authorities and no adverse inference could be drawn about the sources of these monies against of the assessee as the assessee has duly discharged the primary onus of proving the sources. Hence the appeal of the assessee on ground no.1 is hereby allowed. With regard to the enhancement on account of unexplained expenditure, on going through the record we find no reason for such enhancement and especially in the absence on any issue of notice to the assessee.

9. In the result, the appeal of the assessee is allowed.

This Order pronounced in Open Court on 24.01.2025