Javeed Ismail Khatri Vs DCIT (ITAT Mumbai)
ITAT Deletes Section 69 Addition: Joint Holder Cannot Be Taxed for Alleged On-Money Without Independent Evidence
The Mumbai ITAT deleted an addition of ₹5.32 lakh under section 69 made towards alleged on-money payment for purchase of a flat, holding that mere inclusion of the assessee’s name as a joint holder in the sale agreement is insufficient to fasten tax liability in the absence of independent evidence establishing that she actually made the unexplained investment. The addition had been made solely on the basis of statements recorded from the builder during search proceedings and the builder’s disclosure before the Settlement Commission regarding receipt of on-money.
The Tribunal found that the Revenue had failed to produce any corroborative material linking the assessee with the alleged cash payment. No evidence such as cash withdrawals, incriminating documents, cash flow, or any other material was brought on record to establish that the assessee herself had paid the on-money. The Tribunal reiterated the settled legal principle that a third-party statement, by itself, cannot constitute the sole basis for an addition unless supported by independent corroborative evidence.
The ITAT further noted that the registered agreement showed the assessee was only the second holder, while her husband was the first holder and beneficial owner. The entire cheque consideration had been paid from the husband’s bank account, the property had consistently been disclosed by him in his income-tax returns, and the rental income had also been offered to tax by him. Significantly, no reassessment proceedings were initiated against the husband, despite his being the person who paid the purchase consideration and treated the property as his own. These undisputed facts strongly supported the assessee’s contention that her name had been included merely for convenience.
Holding that the Revenue had failed to discharge the initial burden of proving that the assessee had made the alleged cash payment, the Tribunal concluded that the addition under section 69 was unsustainable in law. Accordingly, the addition of ₹5,32,500 was deleted and the assessee’s appeal was allowed.
Cases Discussed
