POORNIMA SANJAY PRABHU,MUMBAI vs. ASSESSMENT UNIT, FACELESS ASSESSMENT CENTRE

Around the same time, Mr. Sanjay Prabhu sold his old flat in Bangalore on 19/08/2016 to Mr. Amlesh Vijay Sane for ₹88,50,000/–, duly reflected in his Form 26AS for AY 2017– 18. The proceeds were deposited into his NRO account and utilised for the Godrej investment. The balance payments were made through his NRE/NRO accounts, supported by banking records and his affidavit, thereby establishing that the entire investment emanated from his resources.

The payments were made progressively between FY 2015–16 and FY 2020–21. All instalments, along with deduction of TDS u/s 194IA, are duly reflected in his Form 26AS. In stark contrast, the assessee’s Form 26AS for AY 2017–18 reflects nil investment in the said flat, reinforcing that no part of the investment can be attributed to her.

However, the ld. AO based on information under NMS noted that assessee has not filed the return of income for A.Y.2017-18 and that assessee has entered into purchase of immovable property of Rs.1,76,16,200/-. Based on this information, the assessee’s case has been reopened u/s.148 and notice was issued. Before the ld. AO assessee has categorically stated that she is a house wife not involved in any business activity and was not residing in India and Poornima Sanjay Prabhu therefore, she was not required to file any return of income in India. Assessee has also provided all the list of bank details which was held that her husband Mr. Sanjay Prabhu who was the first holder. However, the ld. AO held that since assessee could not furnish the required documentary evidences in respect of purchase of immovable property has treated the entire source of purchase of Rs.1,76,16,200/- unexplained investment u/s.69 and invoked Section 115BBE.

The ld. CIT(A) without considering the assessee’s submissions and the documents furnished that the investment in the property was done by her husband and that she was not a non-resident and did not have any source of income, still proceeded to confirm the addition. He has shifted the onus on the assessee stating that assessee has to provide a trial of funds to establish that the investment in India was entirely funded from foreign earnings or through a legitimate source and even if she was a second name holder in the property alongwith her husband that does not absolve her from tax liability. Despite noting all these facts that investment has come through her husband he has confirmed the addition.

Before us ld. Counsel submitted that first of all assessee had not made any investment and even her Form 26AS for A.Y.2017-18 establishes in this investment entire purchase consideration was paid by her husband Shri Sanjay Prabhu from his explained sources. The relevant submissions can be summarized in the following manner:-

On the other hand ld. DR strongly relied upon the order of the ld. CIT(A) and ld. AO.

We have considered the submissions advanced on behalf of the assessee, perused the assessment order, the appellate order of the CIT(A), and examined the evidences brought on record, including Form 26AS, bank statements, affidavits, and supporting documents. The short issue is whether the addition of ₹1,76,16,200/– could be sustained in the hands of the assessee u/s 69 of the Act on account of purchase of a flat with Godrej Redevelopers.

The assessee is a Non-Resident Indian, a homemaker with no independent source of taxable income in India. During the relevant previous year she stayed in India for only 45 days. The Assessing Officer proceeded on the sole premise that her name appeared as a joint holder in the registered Sale Agreement dated 29/06/2016, and therefore treated the entire consideration of ₹1,76,16,200/– as her unexplained investment.

Thus, the cumulative investment made by Mr. Sanjay Prabhu aggregates to ₹1,85,74,777, as evidenced from his Form 26AS across the respective years.

In contrast, the assessee’s Form 26AS for AY 2017–18 shows nil investment. This glaring fact, though fundamental to the issue, was ignored by both the Assessing Officer and the CIT(A).

The sources of these investments have also been convincingly explained. A substantial part was generated from the sale of Mr. Sanjay Prabhu’s Bangalore flat on 19/08/2016 for ₹88,50,000, duly credited into his NRO account. The balance was drawn from his professional earnings as CEO of Solas Marine LLC, Dubai, where he earned a salary of AED 801,000 in FY 2016–17 (equivalent to ₹1.41 crores). The flow of funds through his NRE/NRO accounts is corroborated by bank statements and his sworn affidavit, leaving no manner of doubt about the capacity and source of investment. 17. Once these facts are appreciated, the legal consequence is inevitable. Section 69 empowers the Revenue to tax unexplained investment, but only in the hands of the person who has actually made such investment. It does not authorize imputing an investment to someone who has not contributed any funds. The mere inclusion of the assessee’s name in the Sale Agreement, for convenience or family reasons, cannot by Poornima Sanjay Prabhu itself justify an addition when her records and financial position establish nil investment.

The Assessing Officer acted mechanically in fastening liability upon the assessee without appreciating the record already available. The learned CIT(A), in confirming the addition, failed to deal with the assessee’s categorical submissions and the decisive evidence from her Form 26AS and her husband’s records. This omission has vitiated the appellate order.

In these facts and circumstances, no addition could have been made in the hands of the assessee. The impugned addition of ₹1,76,16,200/– made u/s 69 is accordingly directed to be deleted.

In the result, the appeal of the assessee is allowed. Order pronounced on 30th September, 2025.