No Section 69 Addition as Complete Money Trail From Overseas Remittances Established

ITO Vs Priya Barbana Farrokh Irani (ITAT Mumbai)

ITAT Deletes Section 69 Addition Because Foreign Remittance Trail Fully Explained Property Investment; Section 69 Addition Quashed Because Assessee Proved Source of Investment Through Banking Channels; ITAT Rejects Revenue Appeal Because Documentary Evidence Supported Property Purchase Funding; Section 69 Cannot Apply Because Property Investment Was Explained With Contemporaneous Evidence.

In this case, the Revenue challenged the order of the Commissioner of Income Tax (Appeals) [CIT(A)] deleting an addition of ₹2,00,91,780 made under Section 69 of the Income Tax Act for Assessment Year 2017-18. The Revenue also contended that the CIT(A) had admitted additional evidence in violation of Rule 46A and therefore the matter should have been restored to the Assessing Officer (AO).

The assessee had purchased an immovable property for a total consideration of ₹2,00,91,780. During reassessment proceedings under Section 147, the AO sought an explanation regarding the source of investment. The assessee explained that she was married to a British citizen employed abroad and that the entire investment had been funded through foreign remittances received from her husband through banking channels into her NRE account with HSBC Bank. She also submitted that payments towards the property had commenced from 2012 onwards and that a substantial portion of the investment related to earlier years. However, although this explanation was given during video conferencing proceedings, the supporting documents were not uploaded within the limited time granted by the AO. Consequently, the AO treated the entire investment as unexplained and added it under Section 69.

Before the CIT(A), the assessee furnished detailed documentary evidence to establish the source of funds. These included HSBC bank statements of NRE and NRO accounts, a ledger account showing year-wise remittances and payments, the agreement for sale dated 29 February 2012, possession letter, registered sale deed dated 17 February 2017, stamp duty and registration payment records, receipts issued by the developer, and confirmations from Barclays Bank, London, evidencing foreign inward remittances from her husband.

After examining the evidence, the CIT(A) found that the bank statements clearly reflected receipt of funds from the husband and corresponding payments to the developer. The appellate authority noted that the assessee had established the complete flow of funds from the husband’s foreign account to her bank account and thereafter to the builder. The documentary evidence demonstrated that inward remittances totaling more than ₹2.83 crore had been received over several years, while payments towards the property were made from time to time through identifiable banking channels. The CIT(A) also observed that only a small portion of the overall payment related to the financial year relevant to Assessment Year 2017-18, while most payments had been made in earlier years. Accordingly, the addition under Section 69 was deleted.

The Tribunal upheld the findings of the CIT(A). It observed that the foundation of the AO’s addition was merely the inability of the assessee to upload supporting documents within the short time available before completion of assessment. The Tribunal noted that the assessment order itself acknowledged that the assessee had explained during assessment proceedings that the investment originated from remittances received from her husband and that payments had largely been made in earlier years. Thus, the explanation regarding the source of investment was already before the AO.

The Tribunal rejected the Revenue’s contention regarding violation of Rule 46A. It held that the documents submitted before the CIT(A) were not new evidence introducing a fresh case but were merely corroborative documents supporting the explanation already furnished before the AO. The bank statements, remittance confirmations, sale agreement, payment receipts, and related documents all directly substantiated the same explanation consistently maintained by the assessee. Therefore, no violation of Rule 46A was found.

The Tribunal further observed that the evidence established a clear nexus between the foreign remittances and payments made to the developer. The confirmations from Barclays Bank, HSBC account statements, and builder receipts collectively demonstrated the complete money trail. Once the assessee had shown the source of funds and movement of money through identifiable banking channels, there was no basis for invoking Section 69 merely because the assessee’s returned income was comparatively low.

The Tribunal also noted that the investment was made over several years beginning from 2011-12 onwards and not solely during the year under consideration. Therefore, even on facts, addition of the entire amount in Assessment Year 2017-18 was unsustainable. Since the assessee had furnished an explanation regarding the source of investment and had fully substantiated it through contemporaneous documentary evidence, the conditions for invoking Section 69 were not satisfied.

Holding that the CIT(A) had properly appreciated the facts and evidence, the Tribunal found no infirmity in the order deleting the addition. The Revenue’s grounds, including the allegation of violation of Rule 46A, were dismissed and the appeal was rejected. The order was pronounced on 29 May 2026.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

The aforesaid appeal has been filed by the Revenue against the order dated 29.08.2025 passed by the learned CIT(A)/NFAC for the assessment year 2017-18, whereby the learned first appellate authority has deleted the addition of Rs.2,00,91,780/- made by the Assessing Officer under section 69 of the Income Tax Act. The Revenue is further aggrieved on the ground that the learned CIT(A) had allegedly admitted additional evidences during the course of appellate proceedings in contravention of Rule 46A and, therefore, according to the Revenue, the matter ought to have been restored back to the file of the Assessing Officer.

2. The brief facts borne out from the assessment records are that the assessee had purchased an immovable property for a total consideration of Rs.2,00,91,780/-. During the course of reassessment proceedings initiated under section 147, the Assessing Officer called upon the assessee to explain the source of investment made in the said property. The assessee had explained before the Assessing Officer that she was married to one Mr. Simon Todd, a British citizen and marine engineer employed abroad, and the entire investment in the residential property had been made out of foreign remittances received from her husband through proper banking channels into her NRE account maintained with HSBC Bank. It was also specifically submitted that the payments towards the property had commenced from the year 2012 onwards and the investment substantially pertained to earlier years. However, according to the Assessing Officer, though the assessee had orally explained the source during video conferencing proceedings conducted on 28.03.2022, the documentary evidences were not uploaded within the limited time granted till 3:00 PM on 29.03.2022, and therefore, the explanation was not accepted. The Assessing Officer accordingly proceeded to treat the entire investment of Rs.2,00,91,780/- as unexplained investment under section 69 and added the same to the income of the assessee.

3. Before the learned CIT(A), the assessee reiterated the entire factual background and furnished complete documentary evidences demonstrating the source of investment. The assessee explained that the property had been acquired out of inward foreign remittances received from her husband from time to time through banking channels and corresponding payments were made to the builder/developer against the agreement for sale. In support thereof, the assessee furnished copies of HSBC bank statements of NRE and NRO accounts, ledger account reflecting year-wise remittances and payments, agreement for sale dated 29.02.2012, possession letter issued by the developer, registered sale deed dated 17.02.2017, e-challans evidencing payment of stamp duty and registration charges, copies of receipts issued by the developer acknowledging payments made from time to time and also confirmations issued by Barclays Bank, London evidencing foreign inward remittances made by the husband of the assessee.

4. From the appellate order, it is seen that the learned CIT(A), after examining the documentary evidences in detail, recorded a categorical finding that the assessee had furnished copies of relevant HSBC bank account statements wherein the receipts from the husband and corresponding payments to the developer stood duly reflected. The learned CIT(A) further noted that the assessee had filed complete supporting evidences establishing the flow of funds from the husband’s foreign account to the assessee’s bank account and thereafter towards payment to the builder/developer. The details of inward remittances received from the husband along with corresponding dates of payment to the developer and cheque particulars, as furnished in the paper book and tabulated before the appellate authority, are reproduced hereunder:–

5. The assessee has also submitted a copy of Agreement for Sale signed on 29th February 2012, a copy of letter dated 02nd July 2015 issued by the developer M/s Highland Construction Pvt Ltd handing over the possession of the house property, a copy of Sale Deed dated 17th February 2017, e-challan highlighting payments of Stamps and Registration fees of Rs. 8,04,380/- paid through a cheque number 757994 drawn on State Bank of India dated 22ⁿd February 2017 and the copies of receipt vouchers acknowledging the payments made by the assessee towards the purchase of property issued by the developer from time to time which are summarized in the following table:-

6. Apart from the aforesaid chart, the assessee had also furnished before us copies of confirmations issued by Barclays Bank, London evidencing the foreign inward remittances made by the husband of the assessee, namely Mr. Simon Todd, into the HSBC account of the assessee. The paper book filed before the Tribunal specifically contains documentary evidences from pages 105 to 127, the details whereof, as reflected in the index of the paper book, include confirmations of inward foreign remittances corresponding to various dates and amounts received by the assessee from time to time. The relevant documentary evidences filed in the paper book are reproduced hereunder:–

1. Notice dated 31.03.2021 issued by the AO under Section 148

2. ROI acknowledgement

3. Notice dated 15.11.2021 issued by the AO

4. Notice dated 16.02.2022 issued by the AO

5. Notice dated 07.03.2022 issued by the E-Assessment Unit under Section 143(2) read with Section 147

6. Show cause notice dated 23.03.2022 issued by the AO

7. Marriage Certificate between Simon John William Todd and Priya Barbana Farrokh Irani issued by Marriage in the Republic of Seychelles by dated 11.11.2011

8. Submission dated 25.03.2022

9. Agreement for Sale between M/s. Highland Construction Pvt Ltd. And Smt Priya Irani dated 29.02.2012

10. Submission dated 29.03.2022 to show cause notice dated 23-03-2022

11. Person of Indian Origin Card of Mr Simon John William Todd, husband of the Assessee

12. Ledger Account of Assessee in the books of M/s. Highland Constructions for the period 2012 to 2017

13. Stamp Duty paid receipt dated 22.02.2017

14. Receipt Voucher from Highland Constructions Pvt Ltd

15. Copy of receipt received from Citizen Credit co-op Bank Ltd for creating Stamp duty demand draft for property registration

16. Possession letter dated 02.07.2015 and acceptance of the possession letter dated 02.07.2015

17. Office of the civil registrar cum sub registrar, Taluka Registration Department, Government of Goa Input form for Registration of a documents

18. HSBC Bank statement account number 030-466106-006

19. Submission dated 20.10.2024 before CIT (Appeals)”

7. The learned CIT(A), after examining the aforesaid evidences, came to a categorical conclusion that the nature and source of investment in the property stood fully explained. The learned CIT(A) further observed that the Assessing Officer had made the addition merely because the documentary evidences could not be uploaded within the extremely short time granted during the course of reassessment proceedings. It was also specifically noted by the learned CIT(A) that during the financial year relevant to the impugned assessment year, only a small portion of the overall payment had actually been made and the substantial investment pertained to earlier years. Accordingly, the addition made under section 69 was deleted.

8. After hearing the rival submissions and upon careful perusal of the entire material placed before us, we find ourselves in complete agreement with the findings and conclusion arrived at by the learned CIT(A). The entire edifice of the addition made by the Assessing Officer rests merely upon the premise that the documentary evidences could not be uploaded within the constrained timeline available before passing of the assessment order. However, the assessment order itself records that during the course of video conferencing proceedings, the assessee had categorically explained that the source of investment was the remittances received from her husband, a British national employed abroad, and that the payments for acquisition of the property had substantially been made in earlier years. Thus, the explanation regarding the source of investment was very much before the Assessing Officer during the assessment proceedings itself.

9. We also do not find any merit in the grievance of the Revenue alleging violation of Rule 46A. The evidences furnished before the learned CIT(A) were not in the nature of any altogether new evidence introducing a fresh case. On the contrary, they were merely corroborative and supporting documentary evidences substantiating the explanation already furnished before the Assessing Officer. The assessee had consistently maintained that the property investment was sourced from inward remittances received from her husband through banking channels. The documents furnished before the learned CIT(A), namely bank statements, remittance confirmations, receipts issued by the developer, agreement for sale and payment details, were all directly connected with and supportive of the very explanation already available before the Assessing Officer. Therefore, it cannot be said that the learned CIT(A) violated Rule 46A in any manner while examining such evidences.

10. It is also pertinent to observe that the evidences placed on record establish a clear and direct nexus between the remittances received from abroad and the payments made to the developer. The confirmations issued by Barclays Bank, London, the HSBC bank account statements and the payment receipts issued by the builder collectively establish the complete money trail. Once the assessee had duly demonstrated the source of funds and the movement of money through identifiable banking channels, there remained no basis whatsoever for invoking section 69 merely because the assessee’s independent returned income was comparatively low. The Assessing Officer has completely overlooked the settled legal position that the source of investment has to be examined in the context of the explanation and evidences furnished by the assessee and not merely on presumptions arising from returned income figures.

11. What further demolishes the case of the Revenue is that the investment in the property was not made during the relevant previous year alone. The documentary evidences clearly demonstrate that the remittances and payments commenced from the year 2011-12 onwards and continued over a period of several years. The learned CIT(A) has rightly appreciated this factual position and has correctly observed that during the financial year relevant to assessment year 2017-18, only a limited amount was paid. Therefore, even otherwise, the addition of the entire amount of Rs.2,00,91,780/- in the year under consideration was wholly untenable on facts.

12. The provisions of section 69 can be invoked only where the assessee either offers no explanation regarding the nature and source of investment or the explanation offered is found to be unsatisfactory. In the present case, not only was an explanation furnished right from the stage of assessment proceedings itself, but the same stood fully substantiated by contemporaneous documentary evidences including foreign inward remittance confirmations, bank statements, agreement for sale, developer receipts and payment details.

13. The Assessing Officer, instead of examining the evidences objectively, proceeded to draw adverse inference merely because the documents could not be uploaded within the extremely short timeline available before the assessment was finalized. Such an approach, in our considered opinion, cannot be sustained either in law or on facts.

14. Thus, having regard to the entirety of facts, documentary evidences and the categorical findings recorded by the learned CIT(A), we do not find any infirmity in the impugned order deleting the addition made under section 69. The order passed by the learned CIT(A) is based upon proper appreciation of facts and evidences and calls for no interference. Accordingly, the grounds raised by the Revenue, including the ground relating to alleged violation of Rule 46A, stand dismissed.

14. In the result, the appeal filed by the Revenue is dismissed.

Order pronounced on 29t^h May, 2026.