Suman Sangwan Vs ITO (ITAT Delhi)
Husband’s Funds Explained, No Source-of-Source Burden: Delhi ITAT Deletes ₹3.5 Cr Addition on Partner’s Capital Contribution; Capital Contribution Cannot Be Treated as Unexplained When Funded by Credible Source; No Addition Permissible Once Identity, Source and Creditworthiness Are Proven; Source of Source Cannot Be Demanded Beyond Proven Bank Trail; Reassessment Addition Fails Due to Ignoring Documentary Bank Evidence; Capital Introduced Through Banking Channels Cannot Be Branded Unexplained; Creditworthiness of NRI Contributor Proves Legitimacy of Partnership Investment; Addition Quashed as Assessing Officer Ignored Loans and Overseas Remittances; Unexplained Investment Addition Set Aside for Failure to Disprove Bank Trail; Capital Contribution Taxed Incorrectly Despite Evidence of Genuine Funding
Delhi ITAT, Delhi Bench ‘G’, in Suman Sangwan Vs ITO (ITA No.3497/Del/2024; AY 2017-18; order dated 19-12-2025), allowed the assessee’s appeal and deleted the addition of ₹3.50 crore made u/s 69A towards alleged unexplained investment in partner’s capital of GSGK Hotels LLP.
The Tribunal accepted the assessee’s explanation that her entire capital contribution was funded by her husband, an NRI based in Dubai, who directly transferred monies from his NRE/NRO accounts with HDFC & Axis Bank to the LLP. Detailed bank statements demonstrated multiple remittances (₹1.89 cr, ₹2.00 cr, ₹3.00 cr, etc.), sourced from overseas remittances and secured loans against property from ICICI Bank, and showed sufficient balances and creditworthiness in the husband’s accounts. The Tribunal noted that the husband had admitted the funding, filed his returns, and his salary income abroad was not taxable in India.
Holding that once the immediate source and creditworthiness of the fund-provider are proved, the assessee cannot be asked to prove “source of source”, the Tribunal ruled that the addition was unsustainable. Accordingly, the ₹3.5 crore addition u/s 69A was deleted, and having granted relief on merits, other grounds including jurisdictional challenges to reopening were left academic. The appeal was allowed in full.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal is filed by the Assessee against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (‘the CIT(A)’ in short) dated 04.06.2024 passed u/s 250 of the Income Tax Act, 1961 in Appeal No. NFAC/2016-17/10133933 against the order passed u/s 147 r.w.s 144 of the Act dated 31.03.2022 for Assessment Year 2017-18.
