Loading judgment…
Facts
The assessee declared income of Rs. 4,32,940/-. During scrutiny, the Assessing Officer (AO) made additions of Rs. 20,00,000/- under Section 69B for unexplained investment in fixed deposit and Rs. 101/- under Income From Other Sources (IFOS). The assessee claimed the fixed deposit was funded by a cheque received from his sister, but failed to provide supporting evidence of the sister's financial capacity.
Held
The CIT(Appeals) upheld the additions, finding that the assessee failed to substantiate the source of funds and the donor's creditworthiness. The tribunal admitted additional evidence filed by the assessee and remanded the matter to the CIT(Appeals) for reconsideration.
Key Issues
Whether the addition made under Section 69B for unexplained investment is justified without proper substantiation of the source of funds and donor's creditworthiness? Whether additional evidence should be admitted at the appellate stage?
Sections Cited
143(3), 144B, 69B, 115BBE, 250(4), 250(6), 46A(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAIPUR BENCH “SMC”, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM
The present appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, Delhi dated 05.01.2026 for the assessment year 2022-23 as per the grounds of appeal on record.
2. The brief facts in this case are that the assessment in this case was completed u/s.143(3) r.w.s. 144B of the Act on 15.03.2024 at an assessed income of Rs.24,33,041/- against the returned income of Rs.4,32,940/- by making the following additions: (i) Addition of Rs.20,00,000/- by invoking the provisions of Section 69B of the Act; (ii) Addition of Rs.101/- under the head IFOS.
3. That being further aggrieved, the assessee preferred an appeal before the Ld. CIT(Appeals)/NFAC wherein written submissions were filed by the assessee which reads as follows: “The applicant is Individual employed as business correspondent at central bank of India Sitapur Branch. During the financial year 2021-22 applicant has filled his return of income in response to notice u/s 139(1) declaring gross total income of Rs.432940/-. The return of income has been processed u/s 143(1) accepting the returned income. Subsequently the case has been selected for scrutiny. The assessment has been completed determining the total income at Rs 24,33,041/- against returned income Rs.432940/- While doing so the assessing officer has made following addition. On 15.03.2024 order passed by assessing officer u/s. 143(3) r.w.s 144B treating the fixed deposit of Rs.2000000/- made in central bank of India as unexplained
1. 3 Omprakash Gupta Vs ITO, Ambikapur. investment and brought to tax u/s. 698 but during the course of proceeding applicant submitted his explanation that the fixed deposit made by him was amount received from his sister Sita Gupta via cheque no 024073 on 04th March 2022 and on same date Fixed deposit made by applicant. Hence the Fixed deposit of Rs.20,00,000/- made by assessee was from amount received from his sister in bank account through account payee cheque and AO made an arbitrary addition of the same u/s 698 of the Income Tax Act, 1961.
The Ld. CIT(Appeals)/NFAC after considering the assessment order and submissions of the assessee held and observed as follows: “The explanation offered by the appellant was examined by the Assessing Officer in detail. It is evident from the assessment order that the appellant failed to substantiate his claim with any reliable and convincing evidence. Except for stating that the amount was received from his sister, no documentary material was brought on record to establish the financial capacity of the alleged donor. No confirmation, no return of income, no bank statement of the sister and no evidence explaining the source of funds in her hands were furnished. In the absence of such material, the explanation remained unsupported and unverified. The Assessing Officer, therefore, came to the conclusion that the appellant had failed to satisfactorily explain the source of investment in the fixed deposit and rightly invoked the provisions of section 69B of the Act. During the appellate proceedings, the appellant has reiterated the same explanation and relied upon the bank statement of his own account to show that the amount was credited through cheque and thereafter used for making the fixed deposit. However, this plea does not advance the appellant's case any further. Mere reflection of a credit entry in the bank account does not, by itself, explain the true source of funds for the purpose of section 69B. The statutory onus cast upon the assessee under the deeming provisions requires a satisfactory explanation regarding the source of investment, which necessarily includes establishing the identity of the person from whom the funds are stated to have been received, her creditworthiness and the genuineness of the transaction. While the identity may not be in dispute, the appellant has completely failed to establish
4 Omprakash Gupta Vs ITO, Ambikapur. the creditworthiness of his sister and the source of funds in her hands. In the absence of such evidence, the explanation cannot be accepted. The contention of the appellant that the addition has been made arbitrarily and without proper appreciation of facts is not borne out from the record. The assessment order clearly demonstrates that adequate opportunities were granted and the explanation of the appellant was duly considered. The findings recorded by the Assessing Officer are based on the failure of the appellant to discharge the onus placed upon him under the Act. It is also well settled that transactions between close relatives are not immune from scrutiny under the Income Tax Act, and the assessee is equally required to prove the source and genuineness of such transactions when examined under the deeming provisions. Once the investment is held to be unexplained under section 69B, the consequential application of section 115BBE follows as per law. The appellant has not been able to point out any legal or factual infirmity in the action of the Assessing Officer in applying the said provision. As regards the addition of Rs.101/- under the head income from other sources, the same is based on information available on record and no cogent rebuttal has been furnished by the appellant even during appellate proceedings. In view of the totality of facts and circumstances of the case, it is clear that the appellant has failed to offer a satisfactory explanation regarding the source of investment of Rs.20,00,000/- made in the fixed deposit. The explanation furnished is not supported by credible evidence and does not inspire confidence. The assessment order has been passed after due consideration of facts, material on record and the relevant provisions of the Income Tax Act. I find no merit in the grounds raised by the appellant. Accordingly, the addition of Rs.20,00,000/- made u/s 69B of the Act and the addition of Rs.101/- under the head income from other sources are upheld, and the appeal filed by the appellant stands dismissed. 6.2 In the result, the appeal is dismissed.”
That as discernable from the foregoing paras, as claimed by the assessee, he has received an amount of Rs.20 lacs from his sister which 5 Omprakash Gupta Vs ITO, Ambikapur. was made as fixed deposit by the assessee. The Department was not satisfied regarding credibility of the sister of the assessee as regards the amount Rs.20 lacs given to her brother since no documentary evidence was brought on record so to establish the financial capacity of the donor. No confirmations, no return of income, no bank statements of the sister and no evidence explaining the source were furnished. Hence, addition was upheld by the Ld. CIT(Appeals)/NFAC.
At the time of hearing, the Ld. Counsel for the assessee even without going into the merits of the matter, submitted an application under Rule 29 of the ITAT Rules, 1963 praying for admission of additional evidences. For the sake of completeness, the said application is extracted as follows:
6 Omprakash Gupta Vs ITO, Ambikapur.
7 Omprakash Gupta Vs ITO, Ambikapur.
That in the aforesaid petition, the assessee has clearly explained the reasons why these evidences could not be furnished before the sub- ordinate authorities. The Revenue has also not brought on record any 10 Omprakash Gupta Vs ITO, Ambikapur.
Rule 29 of the ITAT Rules, 1963. That further, it was very fairly conceded by the Ld. Sr. DR that in the interest of substantive justice, additional evidences may be admitted and remanded to the file of the Ld. CIT(Appeals)/NFAC for adjudication in terms with Rule 46A(3) of the IT Rules, 1962.
Having heard the submissions of the parties herein, I admit the additional evidences and remand them to the file of the Ld. CIT(Appeals)/NFAC to comply with Rule 46A(3) of the IT Rules, 1962 and call for a remand report from the A.O with regard to these additional evidences and accordingly, pass a speaking order in terms with Section 250(4) & (6) of the Act complying with principles of natural justice. The assessee shall also comply with all the hearing notices from the office of the Ld.CIT(Appeals)/NFAC. The order of the Ld.CIT(Appeals)/NFAC is set- aside. I order accordingly.
That as per above terms, appeal of the assessee is allowed for statistical purposes. Order pronounced in open court on 07th day of April, 2026.