Rachna Ashokbhai Desai Vs National Faceless Assessment Centre (ITAT Surat)
The ITAT Surat partly allowed the assessee’s appeal relating to an addition of ₹15.90 lakh made under Section 69 read with Section 115BBE in respect of investments in mutual funds and insurance policies. The assessee had not originally filed a return for AY 2013-14, and reassessment proceedings were initiated after information indicated investments aggregating ₹47.59 lakh. The assessee explained that the investments were funded through agricultural income, gifts received on engagement and marriage, and other disclosed sources, and submitted supporting documents including balance sheets, capital accounts, agricultural land records, and crop sale bills. The Assessing Officer and CIT(A) rejected the explanation, observing that certain crucial evidences were either not produced or were insufficient to establish the source of investments. The Tribunal noted that substantial documentary evidence had been furnished, although some documents were self-serving in nature. Holding that taxation is on income and not gross receipts, the Tribunal granted partial relief and directed that only ₹79,549, being 5% of ₹15.90 lakh, be added and taxed under normal provisions instead of Section 115BBE.
Core Issue: Whether investments in Mutual Funds and Bajaj Allianz Insurance Policies could be treated as wholly unexplained investments taxable as deemed income under section 69 read with section 115BBE, despite the assessee furnishing documentary evidence regarding agricultural income, gifts, capital account, balance sheet, land records and investment sources; and whether only an estimated addition could be sustained where the explanation was partly substantiated but certain inconsistencies remained.
