Loading judgment…
Facts
The assessee purchased an immovable property for Rs. 15,00,000 as his share. The Assessing Officer added the entire amount under Section 68, deeming it unexplained investment. The CIT(A) sustained the addition.
Held
The ITAT found that the assessee had adequately explained the source of Rs. 9,25,000 (from FDR maturities and bank balance) but failed to substantiate the source of Rs. 5,75,000, which was vaguely attributed to 'regular business receipts'. Therefore, the addition was sustained only for Rs. 5,75,000.
Key Issues
The key legal issue was the unexplained investment in property, specifically whether the assessee could prove the source of funds for the property purchase under Section 68 of the Income Tax Act.
Sections Cited
Section 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AGRA (SMC
Before: SHRI S. RIFAUR RAHMAN
Assessment Year: 2015-16 Ajay Kumar Gupta Vs. ITO, 01, Mata Mandir Wali Gali Mihona Ward 2(1), Gawalior Dist. Bhind, Madhya Pradesh PAN : AMBPG9026B (Appellant) (Respondent) Assessee by Shri Ravi Agarwal, Adv. Department by Shri Anil Kumar, Sr. DR Date of hearing 16.02.2026 Date of pronouncement 16.02.2026 ORDER
The assessee has filed this appeal against the order of the learned Commissioner of Income-tax (Appeals)-6, Delhi dated 30.03.2025 for the Assessment Year 2015-16.
Brief facts of the case are, the assessee filed his return of income on 20.03.2016 declared total income of Rs. 6,04,400/-. The case was selected for scrutiny through CASS. Accordingly, notices u/s 143(2) and 142(1) were issued and served on the assessee. In response, the ld. AR of the assessee submitted the relevant information and relevant documents.
3. During the assessment proceedings, the Assessing Officer observed that the assessee has purchased an immovable property together with 3 other co-owners for a total consideration of Rs. 60,00,000/-. He observed that the assessee has paid Rs. 15,00,000/- for his share.
He observed that the stamp duty value stood at Rs. 78,70,000/-. When the assessee was asked to explain the source of investments of Rs. 15,00,000/-. In this regard, the assessee submitted as under:- (i) Cheque of P.N.B Naya Bazar, Gwalior vide no. 108611 dated 25.03.2015 Rs. 4,50,000/-. This amount credited in Bank of 29.01.2015. After maturity of F.D.R. of Rs. 4,25,000/-. (ii) Cheque of IDBI Bank Naya Bazar, Gwalior vide no. 252381 dated 25.03.2015 Rs. 4,75,000/- This amount Credited in Bank on 25.03.2015 after maturity of FDR of Rs. 4,29,314/- (iii) Rs. 5,75,000/- cash out of cash balance available in cash book.
5. After considering the above, the Assessing Officer has not convinced with the submissions of the assessee. He proceeded to make the addition of Rs. 15,00,000/- u/s 68 of the Act.
6. Aggrieved with the above order, the assessee preferred an appeal before ld. CIT(Appeals), the assessee filed a detailed submissions before ld. CIT(Appeals), after considering the detailed submissions of the assessee. Ld. CIT(Appeals) sustained the addition made by the Assessing Officer.
7. Aggrieved, the assessee is in appeal before ITAT, raising following grounds:
1. Because, the addition which was made by the Ld. AO of Rs. 1500000/- and which was confirmed by the Ld. CIT(A) is illegal and bad in law.
2. Because, the Ld CIT(A) had not examined the facts of the case of the assessee and confirmed the addition which was made by the Ld. AO in the assessment order. The assessee deals in the business of money lending in Mihona, Distt. Bhind.
Because, the assessee purchased the property of Rs. 1500000/- jointly with three co-owners and made the payment to the seller of the property by issuing the cheques and the cash out of the cash balance available in the cash book of the assessee.
4. Because, the Ld. CIT(A) has not appreciated the reply of the assessee which was submitted twice i.e. on 26.05.2023 and 24.02.2025, on the e-portal in which assessee has furnished the bank statements of IDBI Bank, PNB Bank, Central Bank of India.
Because, the Ld. CIT(A) was in great haste and hurry to complete the order of the appeal and has not taken the order of the Ld. AO in pursuance that assessee has produced the cash book alongwith trading and P&L account, capital account and balance sheet for the A.Y. 2015-16.
Because, the Ld. CIT(A) while passing the order on 30.03.2025 has not examined the facts of the case that, the cash which was deposited in Bank was out of the cash available in the cash book of the assessee.
Because, the Cheque was issued to the seller of the property by maturity of FDRs and cash out of the balance available in the cash book of the assessee. These facts are mentioned in the Ao's Order at page no. 2 vide order dated 28.11.2017.
Because, the addition confirmed by the Ld. CIT(A) of Rs. 1500000/- made by the AO, is wholly unjustified and illegal and bad in law which may kindly be deleted. 8. At the time of hearing, the ld. AR of the assessee brought to our notice a copy of cash book, copy of bank statement and copy of the passbook of Punjab National Bank and Central Bank of India. He brought to our notice page 18 of the paper book which is the bank pass book wherein the assessee has paid at Rs. 4,50,000/- for the purchase of 3 | P a g e property and he brought to our notice the relevant source for the same is maturity of FDR of Rs. 4,24,000/-. Similarly, he brought to our notice page 20 of the paper book which is bank statement of IDBI Bank and submitted that the assessee has made payment for Rs. 4,75,000/- towards of the purchase property and brought to our notice pre-closure of FDR for Rs. 4,29,314/- and the balance is from the previous deposits in the same bank. With regard to Rs. 5,75,000/-, he submitted that the assessee has made the above said amount out of regular business receipt of the assessee. The assessee has already proved that the source of payment of Rs. 15,00,000/- to purchase the property, submitted that the same may be deleted.
On the other hand, ld. DR submitted that the source of investments made by the assessee in the property was remain unexplained before lower authorities and he brought to our notice page 2 of the assessment order and relied on the finding of the lower authorities.
Considered the rival submissions and the material placed on record. I observe that the assessee made investments of Rs. 15,00,000/- in the property along with other 3 co-owners. The Assessing Officer observed that the assessee has made above investment without properly explaining source for the same after considering the submissions of the assessee, I observe that at the time of making payment, there are maturity of FDRs and there are sufficient balance to make payment of Rs. 4,50,000/- and Rs. 4,75,000/-. However, the assessee could not explain the source of Rs. 4 | P a g e 5,75,000/-. Since, the assessee could not brought on record the source of making the payment of Rs. 5,75,000/- and only submitted that this is out of regular business receipts. We are not convinced with the submissions of the assessee on making the payment of Rs. 5,75,000/-. With regard to other two payment, the assessee has brought on record the relevant maturity of FDR and the source already explained. In the result to the extent of Rs. 5,75,000/-. The assessee could not be substantiated the same. Therefore, I am inclined to sustain the same u/s 68 of the Act.