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Facts
The assessee made cash deposits and LIC investments, which the AO treated as unexplained under section 69 of the Act. The CIT(A) restricted the addition after deleting a part of it. The assessee claimed the LIC investment was from a loan taken from her brother, which was returned and used for the investment.
Held
The Tribunal held that the LIC investment was ₹10,61,161 and not ₹13,29,245. It further held that the investment was explained by the loan received back from the brother, and the onus was on the revenue to disprove the claim, which they failed to do.
Key Issues
Whether the LIC investment amount was correctly determined and whether it was unexplained under section 69 of the Act.
Sections Cited
69
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Income Tax Appellate Tribunal, ‘SMC’ BENCH, BANGALORE
Before: SHRI NARENDER KUMAR CHODHRY & SHRI WASEEM AHMED
PER WASEEM AHMED, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against the order passed by the NFAC, Delhi vide order dated 17/03/2025 in DIN No. ITBA/NFAC/S/250/2024-25/1074553984(1) for the assessment year 2017-18.
2. The interconnected issue raised by the assessee is that the learned CIT(A) erred in confirming the addition of ₹13,29,245 on account of investment in LIC under section 69 of the Act.
The AO, during the assessment proceedings, found that the assessee made cash deposits in the bank amounting to ₹2,50,000 and invested in LIC through cash amounting to ₹23,44,245.00, the source of these amounts was not explained. Accordingly, the AO treated the same as unexplained investment under section 69 of the Act and added the sum of ₹25,94,245 to the total income of the assessee.
Aggrieved, the assessee preferred an appeal to the learned CIT(A). The assessee, before the learned CIT(A), made various submissions. One of the submissions was that the investment in LIC was only ₹10,61,161.00 only. According to the assessee, she had given a loan of ₹13,00,000 to her brother. This is evident from the bank statement. The brother returned the loan, and this money was used for the LIC investment. Therefore, no addition was warranted.
The learned CIT(A) deleted the addition of ₹2.50 lakhs and found that there was a double addition on account of investment in LIC of ₹10,50,000.00 only. Thus, the learned CIT(A) restricted the addition to ₹13,29,245 on account of investment in LIC on the same reasoning of the AO.
Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us.
The learned AR before us submitted a paper book from pages 1 to 39. He submitted that the actual LIC investment was ₹10,61,161.00 only. This is evident from the LIC policies placed on pages 12 to 14 of the paper book. The learned AR also submitted that the assessee had . already explained before the learned CIT(A) that her brother had returned the loan money, which was then used for the LIC payment. The ld. AR also filed confirmation regarding the source of money in the hands of the brother. These are placed on pages 30 to 39 of the paper book. The learned AR argued that the learned CIT(A) did not doubt this explanation. Therefore, the LIC investment cannot be treated as unexplained under section 69 of the Act.
On the other hand, the learned DR strongly supported the orders of the authorities below.
We have heard the rival contentions of both the parties and perused the records. In this case, the following issues arise for our consideration: 1. How much was the LIC investment — ₹10,61,161 or ₹13,29,245 as alleged by the Revenue?
Was the LIC investment unexplained under section 69 of the Act?
9.1 As regards the LIC investment, we note that the assessee has placed copies of the LIC policies on pages 12 to 14 of the paper book. These show the investment as ₹10,61,161 only. This was not disputed by the learned DR at the time of hearing. Accordingly, we hold that the LIC investment was ₹10,61,161 and not ₹13,29,245 as alleged by the Revenue.
9.2 Moving further, we examine whether the LIC investment was unexplained under section 69 of the Act. The assessee claimed to have . given a loan of ₹13,00,000 to her brother. This is reflected in the bank passbook. The loan was received back in cash and used for the LIC investment. Importantly, the source of giving this ₹13 lakh loan to the brother was never doubted by the authorities below. Thus, we find merit in the ld. AR’s argument that the returned loan was utilized for the investment. The ld. AR has also filed confirmation placed on pages 30 to 39. All these details shifted the onus to the Revenue to disprove the assessee’s claim. However, no verification was carried out by the authorities below to disprove the contention of the assessee. Accordingly, we hold that the LIC investment was made from the loan received back from the brother. We, therefore, set aside the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Thus, the ground of appeal of the assessee is hereby allowed.
In the result, the appeal of the assessee is hereby allowed. Order pronounced in court on 14th day of August, 2025