Payalben Rajeshbhai Malvaniya Vs ITO (ITAT Ahmedabad)
Relative’s Confirmation Supports Property Payment: ITAT Deletes Section 68 Addition
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) deleted an addition of ₹1,76,250 under Section 68 of the Income-tax Act, 1961 concerning a payment towards a jointly purchased property. Considering the purchase deed, loan sanction letter, bank statement and confirmation from the relative who made the disputed payment, the Tribunal held that the addition was unsustainable on the facts.
The assessee had filed her return under Section 139(4), declaring total income of ₹3,13,010 from short-term capital gains on equity shares and income from other sources.
The assessment was reopened on information concerning an immovable property transaction valued at ₹1.90 crore. In response to the Section 148 notice, the assessee filed a return on 24 May 2021 declaring the same income.
Property purchased jointly by eight co-owners
During reassessment, the assessee explained that eight co-owners had jointly purchased the property with the assistance of a ₹1.50 crore loan from Aditya Birla Finance.
Each co-owner’s proportionate purchase consideration was ₹23.75 lakh, against which the proportionate loan liability was ₹18.75 lakh. The balance contribution therefore worked out to ₹5 lakh per co-owner.
The assessee furnished the purchase deed, loan sanction letter and bank statement. However, the Assessing Officer observed that she had not established the name and creditworthiness of the person who paid a difference amount of ₹1,76,250. He consequently added that amount under Section 68.
Relative’s confirmation furnished before CIT(A)
Before the CIT(A), the assessee explained that her relative, Shri Ashokbhai R. Malvaniya, had paid ₹1,76,250. She furnished his confirmation and supporting documents.
The CIT(A) rejected the explanation and confirmed the addition.
Before the Tribunal, the assessee argued that the documentary evidence explained the source of investment and that the addition arose from failure to properly appreciate the supporting material.
Tribunal accepted evidence supporting payment
The Tribunal considered the purchase deed, loan sanction letter, bank statement and confirmation of the alleged payer.
It observed that the payment’s genuineness could not be doubted merely in the absence of further evidence, particularly considering the smallness of the amount, which it noted was below the taxable income threshold.
In the circumstances, the Tribunal also held that the payer’s identity and creditworthiness could not reasonably be questioned solely on that basis. It found no reason at that stage to doubt the confirmation’s evidentiary value or its correlation with the actual payment.
Accordingly, the Tribunal directed deletion of the ₹1,76,250 addition.
Following this relief, the separate ground challenging reassessment under Section 147 became infructuous. The assessee’s appeal was allowed.
FULL TEXT OF THE ITAT AHMEDABAD JUDGMENT/ORDER
1. This appeal has been filed by the Assessee against the order dated 29.10.2025 passed by the National Faceless Appeal Centre(NFAC), Delhi (hereinafter referred to as ‘Ld. CIT (A)’ in short), under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’ in short) for Assessment Year 2017-18.
2. The Assessee has raised the following grounds of Appeal: –
1. Whether, on facts and circumstances of the case and in law, Ld. CIT(A) has erred in confirming the addition amounting to Rs.1,76,250/- as unexplained cash credit u/s.68 of the act?
2. Whether, on facts and in circumstances of the case and in law, Ld. AO erred in making addition while passing the assessment order u/s.147 of the Act.
Further, appellant craves leave to add, amend, alter or withdraw all or any grounds of appeal.
3. The assessee is an individual filed her return of income under Section 139(4) of the Act in Form ITR-2, declaring total income of ₹3,13,010 for the year under consideration. The assessee’s sources of income included short-term capital gains from the purchase and sale of equity shares and income from other sources. The case was reopened on the basis of information regarding the purchase and sale of immovable property involving a transaction value of ₹1,90,00,000. In response to the notice issued under Section 148 of the Act, the assessee filed her return of income on 24.05.2021, declaring the same income as disclosed in the original return. During the reassessment proceedings, the Assessing Officer issued notices under Sections 143(2) and 142(1) of the Act and a show-cause notice. During the assessment proceedings, the assessee explained that the immovable property valued at ₹1,90,00,000 had been jointly purchased by eight co-owners. According to the assessee, a loan of ₹1,50,00,000 had been obtained from Aditya Birla Finance for the purchase of the property. Accordingly, the proportionate purchase consideration attributable to each co-owner was ₹23,75,000, against which the proportionate loan liability worked out to ₹18,75,000, leaving a balance of ₹5,00,000 per co-owner to be funded otherwise. The assessee furnished a copy of the purchase deed, the loan sanction letter issued by Aditya Birla Finance and her bank statement for the relevant financial year. However, the Assessing Officer observed that the assessee had not furnished the name and creditworthiness of the person who had paid the difference amount of ₹1,76,250. Accordingly, the Assessing Officer treated the amount of ₹1,76,250 as unexplained income under Section 68 of the Act and added the same to the total income of the assessee.
4. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). During the appellate proceedings, the assessee contended that the amount of ₹1,76,250 had been paid by her relative, Shri Ashokbhai R. Malvaniya, and furnished his confirmation along with other supporting documents. The CIT(A), however, did not accept the assessee’s explanation and confirmed the addition.
5. Aggrieved by the order of the CIT(A), the assessee is in appeal before this Tribunal.
6. The learned counsel for the assessee submitted that the property was jointly purchased by eight co-owners and that the source of the investment had been explained by furnishing the purchase deed, loan sanction letter and bank statement. It was further submitted that the amount of ₹1,76,250 had been paid by Shri Ashokbhai R. Malvaniya, a relative of the assessee, and that his confirmation had also been furnished before the CIT(A). The learned counsel accordingly contended that the addition was made without properly appreciating the explanation and supporting evidence furnished by the assessee and prayed that the addition be deleted.
7. We have heard the submissions placed on record and perused the material available before us. The dispute in the present appeal relates to the addition of ₹1,76,250 made under Section 68 of the Act in connection with the assessee’s investment in the jointly purchased immovable property. It is the case of the assessee that the property was purchased jointly by eight co-owners with the assistance of a loan of ₹1,50,00,000 obtained from Aditya Birla Finance. The assessee has also stated that the amount in question was paid by her relative, Shri Ashokbhai R. Malvaniya, and that a confirmation in this regard was furnished before the CIT(A). We find that the assessee has referred to documentary evidence, including the purchase deed, loan sanction letter, bank statement and confirmation of the alleged payer. The genuineness of the payment of ₹1,76,250/- cannot be doubted merely in the absence of further evidence, particularly having regard to the smallness of the amount, which is even below the taxable income threshold. In the facts and circumstances of the case, the identity of the person who made the payment and his creditworthiness also cannot reasonably be called into question solely on this basis. The evidentiary value of the confirmation and its correlation with the actual payment cannot be doubted at this juncture. In these circumstances, the addition is directed to be deleted.
8. As regards Ground No. 2, challenging the reassessment proceedings under Section 147 of the Act, becomes infructuous.
9. In the result, the appeal of the assessee is allowed.
The order pronounced in the open Court on 15.10.2026
