Chinnasaminaidu Chandrasekar Vs ITO (ITAT Chennai)
No obligation to prove Source of Source – Addition u/s 69 on property investment deleted. ITAT deleted an addition of ₹87.88 lakh under Section 69. Payments made by son-in-law and other family members were held genuine, and “source of source” proof was not required for AY 2015-16. ITAT Chennai ruled that once identity, genuineness, and source of funds are established, the assessee is not obliged to prove the source of source. The Tribunal rejected AO’s reliance on “intention” for making additions. Registered agreements, TDS deduction, and banking channels proved the genuineness of the property transaction. In this case, ITAT Chennai emphasized that payments through close relatives are valid under Sections 2(d) & 25 of Contract Act and Section 123 of Transfer of Property Act. Chinnasaminaidu Chandrasekar’s ITAT win clarifies that unexplained investment additions require more than mere suspicion, and documentary evidence establishing credibility of transactions suffices.
Assessee, an individual, had filed return declaring income of ₹2.30 lakh in response to notice u/s 148. AO noted that the Assessee along with two others had purchased an immovable property for ₹2.41 crore, of which Assessee’s share was ₹80.41 lakh. AO observed that part of the investment was paid through cheques & demand drafts directly from the bank account of the Assessee’s son-in-law & partly in cash. Taking the view that Assessee had not routed payments through his own bank account & had failed to prove genuineness & creditworthiness of parties, AO made an addition of ₹87.88 lakh u/s 69 as unexplained investment & determined total income at ₹90.18 lakh. CIT(A) upheld the addition.
