KALKERE PUTTARAJU VAJRAMUNIE, ROYAL HERMITAGE, KALKERE B.O, KALKERE vs. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(4) BANGALORE, BANGALORE, KARNATAKA

12.1 The assessee before the ld. CIT-A submitted that during the assessment proceedings, he explained that the property, located at No. 7, Gottigere, Bannerghatta Road, was purchased through a registered sale deed dated 21.10.2013. This investment was already disclosed in the Statement of Affairs for the year ending on 31.03.2014 under the head "Fixed Assets."

12.2 The assessee further submitted that the funds for the purchase of the property came partly from his bank account (₹18,56,200) and the remaining amount of ₹53,43,800/- was sourced through loans and advances from relatives and friends. Due to his father’s ill health and lack of sufficient opportunity during the assessment, the assessee could not produce confirmation letters for these loans and advances. However, a proper explanation was given during the assessment proceedings.

Page 5 of 17 assessee submitted that the addition made by the AO is not justified either on facts or in law and, therefore, it deserves to be deleted. Accordingly, the assessee prayed before the Ld. CIT(A) to quash the addition made under section 69B of the Act. However, the Ld. CIT(A) confirmed the addition made by the AO by observing as under: 5.3.1 The appellant contended that he is not required to maintain books of account as prescribed u/s 44AA of the Act, and the asset is reflected in the statement of affai₹ The appellant also submitted that if opportunity is provided, he can submit confirmation of loans obtained from friends and relatives. The AO accepted the appellant's explanation regarding sources of ₹ 18,56,200/- which was paid out of the appellant's own funds. However, with respect to the balance amount of ₹ 53,43,800/-, the AO noted that details of parties from whom the said loans have been obtained or confirmation from the said parties have not been submitted. The AO provided an opportunity vide notice dated 31.05.2021 to furnish the details of the persons from whom the loan was obtained. However, the appellant did not utilize the opportunity and therefore, the AO treated the balance investments of ₹ 53,43,800/- as unexplained u/s 69B of the Act. 5.3.2 During the appellate proceedings vide submission dated 17.01.2025 the appellant stated that he would require 2 weeks time to submit the confirmations for the loan borrowed for purchase of the property. However, as on the date of passing the appellate order i.e. 19th February 2025, the appellant has not furnished neither the details of the parties nor the confirmation. Hence, it is seen that in spite of providing ample time and opportunity the appellant has not provided the details even during the appellate proceedings. Accordingly, the addition made by the assessing officer u/s 69B is confirmed and grounds of appeal 3, 4 and 5 for the A.Y. 2014-15 are dismissed.

16.1 The learned AR argued that the AO made the addition of ₹53,43,800/- under section 69B of the Act only because the confirmation documents were not provided during assessment. He stressed that the appellant is now providing full details and confirmations from the lenders, and these should be taken on record as additional evidence along with supporting affidavits.

16.2 It was also argued that the appellant has already explained the source of the investment with proper documentation, thereby discharging the initial onus under section 69B of the Act. Once the identity and genuineness of the transaction are proven, the assessee is not required to prove the "source of the source" — i.e., where the lender got their funds from. The ld. AR relied on various court decisions, including that of the Hon’ble Delhi High Court in case of CIT v. Dwarkadhish Investment P. Ltd. in of 2010, and the judgment of Hon’ble Supreme Court in case of Sreelekha Banerjee’s vs. CIT reported in 49 ITR 112, to support this principle.

16.3 The learned AR further submitted that in cases where the investment has come from the appellant’s own account and partly from third parties, the appellant cannot be compelled to explain the source of funds of such third parties. Since the AO has already accepted the . factual position that the loans were taken from identified individuals, demanding proof of the lender's source is unjustified.

16.4 He also referred to Hon’ble Supreme Court rulings like CIT vs. Lovely Export P. Ltd in 11993 of 2007 and Madras High court ruling in Lalitha Jewellery Mart v. DCIT 399 ITR 425, where the courts held that if the investment is explained with proper documents, then no addition can be made. He emphasized that the provisions of section 69B of the Act are applicable only when investments are not recorded in the books of accounts. In the present case, the appellant did not maintain books of accounts, and hence the provisions of section 69B of the Act cannot be applied.

16.5 The ld. AR relied on the decision of the ITAT bench of Amritsar in case of Sudha Aggarwal v. ACIT in where the Tribunal held that no addition under section 69B of the Act can be made if the assessee does not maintain books of accounts. He also referred to various other rulings to show that legal fiction under Section 69B of the Act must be applied strictly and cannot be extended beyond its intended scope.

16.6 Finally, the ld. AR contended that the addition made under section 69B of the Act is legally unsustainable, the principle of natural justice has not been followed, and the appellant has now submitted sufficient materials to prove the genuineness of the transactions. Therefore, he prayed that the addition be deleted and suitable relief be granted.

18.1 The admitted facts are that the assessee purchased a property during the relevant assessment year for a total consideration of ₹72,00,000/-, out of which ₹18,56,200/- was paid from his own bank account, and this amount was duly recorded in his statement of affairs. The balance amount of ₹53,43,800/- was claimed to have been financed through loans from friends and relatives. However, during the assessment and appellate proceedings, the assessee failed to furnish any confirmation letters or details of such lenders, despite having been granted sufficient opportunities, including specific notice dated 31.05.2021 by the AO and time sought before the learned CIT(A). Therefore, we are unable to accept the contention of the learned AR that proper opportunity was not provided during earlier stages of the proceedings. This argument assessee is thus rejected.

18.2 At the same time, in the interest of substantial justice and fair play, we admit the confirmation letters and related evidences now furnished for the first time before us in support of the assessee’s contention that the source of ₹53,43,800/- was from friends and relatives. The principles laid down by the Hon’ble Supreme Court in .

NTPC Ltd. v. CIT [(1998) 229 ITR 383 (SC)] empower the Tribunal to admit additional evidence if necessary for deciding the matter effectively. Accordingly, we deem it appropriate to consider these documents and provide an opportunity to the AO to examine them.

18.3 We also reject the argument of the learned AR that the assessee is not obliged to explain the source of investment on the ground that the property was financed by third parties. From the order of the lower authorities its appears that the sale deed clearly records the name of the assessee alone as purchaser and absolute owner. There is no documentary evidence on record suggesting that the investment was made by others on his behalf. In such circumstances, the onus squarely lies on the assessee to explain the nature and source of the full consideration paid for the acquisition of the property. Therefore, in our considered view, mere oral claims of third-party investment cannot absolve the assessee of his responsibility under section 69B of the Act.

18.4 The contention that section 69B of the Act is not applicable because the assessee did not maintain books of account is also without merit. The phrase "not recorded in the books of account, if any, maintained by him for any source of income" appearing in section 69B of the Act makes it clear that the requirement of recording the investment arises only if books are maintained. However, the non-maintenance of books does not take the transaction outside the scope of section 69B of the Act. The words “if any” signify that maintenance of books is not a precondition. Even if books are not maintained, the deeming provisions can still be invoked based on other evidence. In holding so, we draw support and guidance from the ruling of Hon’ble Madras High Court in .

Page 10 of 17 the case of Mrs. R Chitra vs. National Faceless Assessment Centre reported in 164 taxmann.com 134 or 474 ITR 78 where it was held as under: “7. Based on the rival submissions, the first issue to be considered is whether the conclusion with regard to the addition of a sum of Rs.1,56,96,000/- calls for interference. Learned counsel for the petitioner contended that Section 69A of the Income Tax Act does not apply in cases where books of account are not required to be maintained. Section 69A reads as under: "Unexplained money, etc. 69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year." As is evident from the above provision, it is directed at unexplained money. Consequently, if the assessee concerned is required to maintain books of account and does not record the relevant income or other article in such books of account, the assessee is called upon to provide an explanation. If he fails to provide an explanation or if his explanation is not satisfactory, the money or other article shall be deemed to be the income of the assessee. In the case of an assessee who is not required to maintain books of account, but the Income Tax Department receives information that such person is the owner of unexplained money or other article, such assessee would be called upon to provide an explanation and the same consequences would follow if the assessee does not reply or if the reply of the assessee is not satisfactory. This is evident from the use of the expression "books of account, if any", in Section 69A. If any other interpretation is placed on this provision, any assessee not required to file books of account would get away scot-free when such assessee is found to have unaccounted money.”

18.5 In view of the above, we hold that unexplained investments can be taxed under section 69B of the Act even in cases where the assessee has not maintained books of account. Thus, the deeming fiction under section 69B of the Act remains applicable so long as the source of the investment is not satisfactorily explained.

18.6 Before parting, we are inclined to analyse the issue from a different angle, the provisions of section 69B of the Act provides that .

Page 11 of 17 where the Assessing Officer finds that the assessee has made investments which are not fully recorded in the books of account, and the assessee offers no satisfactory explanation about the nature and source of such investment, the value of such investment may be deemed to be the income of the assessee for that year. However, in the present case, there is no dispute that: • The property is registered in the assessee’s name. • ₹ 18,56200/- came from the assessee’s bank account. • ₹ 53,43,800/- came from the father, sourced from his friends and relatives. 18.7 There is indeed no dispute to the fact that the sum of Rs. 53,43,800/- was sourced by the father of the assessee which is evident from the observation made by the AO which is extracted as under: "4. Search findings: 4.1 During the course of the search proceedings at the residence and the survey proceedings at business premises, various incriminating material were seized/impounded From the said documents, it is noticed that the assessee, Shri. T. Puttaraju, father of the assessee, is deriving income from house property, capital gains on entering into Joint ventures and also on sale of some sites/properties. 4.2 Further, it is also noticed that Shri. T Puttaraju has invested in properties in his name as well as in the name of his son. The income from house property on the properties held in the name of his son, Shri. Vajramuni K.P is found to be more than the taxable income and it is noticed that they are also non-filers for the purpose of Income Tax. It was found that no books of accounts are maintained and there is no record with regard to the income of the assessee."

18.8 Now, the crucial point is whether the assessee is obliged to explain the source of the sum of ₹ 53,43,800/-, when it is demonstrated and accepted that this amount was arranged by his father from his known persons. It is settled law that legal ownership of property does not automatically make the assessee liable for explaining funds invested by someone else, provided there is evidence that the investment came from another person and that such person is identifiable and capable of making the investment. In this case, the father was subject to search, and the Department was aware of the fact the sum of ₹ 53,43,800/- was arranged by the father of the assess. No material is brought on record . by the AO to show that the said amount belonged to the assessee or had flown back from him in any indirect manner. The provisions of section 69B of the Act are attracted only when the AO finds that the assessee has made an unexplained investment. Here, the evidence on record shows that the sum of ₹ 53,43,800/- was not an investment by the assessee but by his father. The Department, if not satisfied with the father’s explanation, ought to have made suitable proceedings in the father’s case. Fastening the liability on the assessee merely because the property is in his name is not in accordance with law. Thus, the burden under section 69B of the Act must be discharged with reference to the person who actually made the investment, and the mere fact of registration of property in another’s name does not automatically shift the tax burden. In view of the above, we hold that the addition of ₹ 53,43,800/- under section 69B of the Act in the assessee’s hands is unsustainable. The AO is directed to delete the same. Hence, the ground of appeal of the assessee is allowed.

19 The issues raised by the assessee through Grounds Nos. 11 & 12 are pertaining to initiation of penalty proceeding and levy of interest under section 234A, 234B and 234C of the Act which are either premature or consequential in nature and do not require any separate adjudication. Hence, the impugned grounds of appeal are hereby dismissed as infructuous.

24. The next issue raised by the assessee through Grounds Nos. 3 to 6 and 8 of the appeal are interconnected and pertain dismissal of appeal by the Ld. CIT(A) by invoking the provision of section 249(4) of the Act and passing the ex-parte order.

25. The relevant facts are that the assessee for the year under consideration has not filed a return of income under the provision of section 139 of the Act and failed to furnish return of income in response to the notice issued under section 153A of the Act. However, the assessee during the assessment proceeding furnished statement of . income showing gross total income of Rs. 24,79,352/- consisting of income from house property and other sources and after claiming deduction under chapter VI-A of the Act disclosed taxable income of Rs. 24,55,060/- only.

26. The AO completed the assessment under section 144 of the Act assessing the total income at Rs. 24,79,352/- without allowing deduction as claimed and raised a demand of Rs. 9,85482/- consisting of tax liability of Rs. 5,72,994/- and levy of interest under section 234A and 234B of the Act for Rs. 1,83,328/- and 2,29,160/- respectively.

27. The aggrieved assessee preferred an appeal before the learned CIT(A).

28. Before the Ld. CIT(A), the assessee claimed that due to technical glitches in income tax portal the return of income was not furnished but the statement of income along with other documents was filed before the AO. Therefore, making addition of the same income and raising demand was not required. The assessee in support of the claim furnished copy of grievance filed with e-Nivaran at ITB portal and copy of statement of income. As per the statement of income, the assessee has shown total income of Rs. 24,55,060/- on which computed total tax liability along with cess at Rs. 5,65,489/- only. Against the impugned tax liability, the assessee claimed TDS credit of Rs. 2,11,075/- and accordingly computed final liability after levy of interest and fee etc at Rs. 4,16,291/- which claimed to be paid as self-assessment tax through union bank of India having challan No. 002 dated 05th November 2019.

Order pronounced in court on 14th day of August, 2025