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“unexplained investment”

Cash Credits & Unexplained ItemsSection 69Section 695,821 judgments

The decision most relied on for unexplained investment is Sumati Dayal v. CIT (214 ITR 801), cited in 1,967 judgments on BharatTax.

Leading authorities on unexplained investment

Sumati Dayal v. CIT
214 ITR 801 · 1995 · Supreme Court
1,967
citing judgments

The Revenue is entitled to look behind the apparent form of a transaction to discover its true nature, applying the test of human probabilities and surrounding circumstances. If transactions defy logic or are unnatural, they can be treated as bogus, even if supported by some documentation, especially in cases of cash credits or unexplained investments.

K.P. Varghese v. ITO
131 ITR 597 · 1981 · Supreme Court
989
citing judgments

An addition to income cannot be made merely on the basis of a difference in valuation of assets or a Valuation Officer's report without establishing actual understatement of consideration or the source of unexplained funds through proper enquiry. The Assessing Officer must conduct proper enquiry and satisfy the conditions for making such additions.

Chuharmal v. CIT
172 ITR 250 · 1988 · Supreme Court
340
citing judgments

The expression 'income' under Section 69A of the Income-tax Act, 1961, has a wide meaning, encompassing anything that comes in or results in gain. Therefore, an assessee's unexplained investments, such as purchasing articles or depositing cash, can legitimately be inferred and deemed as income under this section.

CIT v. Kamdhenu Steel & Alloys Ltd.
361 ITR 220 · 2014 · High Court
328
citing judgments

When making an addition under section 68, the creditworthiness or financial strength of an investor contributing share capital or share application money can be proved by producing their bank statements showing sufficient balance for the investment. The Supreme Court dismissed the SLP against this decision.

CIT v. Dwarkadhish Investment (P) Ltd.
330 ITR 298 · 2011 · High Court
218
citing judgments

An assessee cannot be asked to explain the source of the source for cash credits, particularly share capital or share application money, once they have discharged the initial onus regarding the identity, genuineness of the transaction, and creditworthiness of the immediate investor.

CIT v. Jansampark Advertising & Marketing (P.) Ltd.
56 Taxmann.com 286 · 2015 · High Court
196
citing judgments

The Commissioner of Income-tax (Appeals) has an independent statutory obligation to conduct proper inquiries and verify facts, especially when the Assessing Officer has failed to do so. The CIT(A) must ensure effective inquiry is carried out before deleting additions or accepting additional evidence.

ITO v. Ch. Atchaiah
218 ITR 239 · 1996 · Supreme Court
149
citing judgments

Under the Income-tax Act, 1961, the Assessing Officer must tax any taxable income in the hands of the correct assessee to whom it truly belongs, having no option to assess it in any other person's hands.

CIT v. Stellar Investment Ltd.
192 ITR 287 · 1991 · High Court
146
citing judgments

Once the identity of the shareholders is established, no addition can be made in the hands of the assessee company under Section 68 for share capital or share application money, as it cannot be treated as undisclosed income.

Judgments citing unexplained investment

Ravi Mahexa, Daman and Diu vs. Income Tax Officer, Ward 5, Vapi

ITA 193/SRT/2022[2015-16]Status: DisposedITAT Surat31 Jul 2023AY 2015-16

Bench: Shri Pawan Singh, Jm & Dr. A. L. Saini, Am आयकर अपील सं./Ita Nos.193 To 195/Srt/2022 Assessment Years: (2015-16 To 2017-18) (Physical Hearing) Ravi Mahexa, Vs. Income Tax Officer, Ward-5, 7Th 14/55, Dilipnagar Near Dilip Nagar Vapi, Fortune Square, Floor, 8Th Floor & 9Th Floor, Ii, Ground, Daman, Daman – 396210, Daman & Diu (Ut) Chala Road, Vapi-396191 Ravi Mahexa Income Tax Officer, Daman 14/55, Dilipnagar Near Dilip Nagar Ward, Daman Jevanji Ground, Daman, Daman & Diu (Ut) - Apartment, Kavi Khabardar 396210 Road, Daman-396210 Vapi "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Apkpm1888H (Assessee) (Respondent) Assessee By Shri P. M. Jagasheth, Ca Respondent By Shri Minal Kamble, Sr. Dr Date Of Hearing 19/07/2023 Date Of Pronouncement 31/07/2023

Section 115BSection 143(3)Section 145(3)Section 40ASection 68

195/SRT/2022 Ravi Mahexa confirming the action of assessing officer in making the addition of Rs.4,31,479/- on account of alleged unexplained investment to the fixed assets.” (v) Ground No.5 raised by the assessee, in ITA No. 194/SRT/2022, is as follows: “On the facts on the facts and circumstances ... Income Tax (Appeals) has erred in confirming the action of assessing officer in making the addition of Rs.4,31,479/- on account of alleged unexplained investment to the fixed assets.” 55. Succinct facts qua the issue (facts as per ITA No.194/SRT/22) are that during the year under consideration, assessee

Kishan Singh, Jaipur vs. ACIT Central Circle-4, Jaipur

Appeal of the assessee is allowed

ITA 83/JPR/2023[2013-14]Status: DisposedITAT Jaipur28 Jul 2023AY 2013-14

Bench: DR. S. SEETHALAKSHMI (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Shri Ashish KhandelwalFor Respondent: Shri Ajay Malik (CIT) a
Section 127Section 132Section 133ASection 143(3)

Lakhs paid to Mr. Bhati and therefore on this count , the ld AO made addition of Rs. 24.49 /- lakhs by considering same to be unexplained Investment . Besides that ,AO added cash deposit made into bank account totaling Rs. 451000/- to be unexplained Income .Thus , in total addition

Lalita, New Delhi vs. DCIT Central Circle-3, New Delhi

In the result, the appeal is partly allowed for statistical purposes

ITA 9874/DEL/2019[2014-15]Status: DisposedITAT Delhi27 Jul 2023AY 2014-15

Bench: Shri G.S. Pannu, Hon’Ble & Shri Amit Shuklaassessment Year: 2014-15 Smt. Lalita, Vs. Dcit, Central Circle-2, 248, Ist Floor, New Delhi. Gujaranwalan Town, Part-Iii, New Delhi-1100 09 Pan :Aatpl3102H (Appellant) (Respondent)

Section 115BSection 143(3)Section 153ASection 56(2)Section 56(2)(vii)

during the financial year 2013-14. Learned Assessing Officer held that the payment of Rs.7,00,000 made by the assessee is unexplained investment and and accordingly he taxed under Section 115BBE of the Act. The said addition has been confirmed by the learned Commissioner of Income- Tax(Appeals

ACIT, Central Circle-6, New Delhi vs. Mahesh Chand Goyal, New Delhi

In the result, the appeal is partly allowed

ITA 2602/DEL/2018[2014-15]Status: DisposedITAT Delhi27 Jul 2023AY 2014-15

Bench: Shri G.S. Pannu, Hon’Ble & Shri Amit Shuklaassessment Year: 2014-15

Section 132Section 143(3)

cover up the loan amount of Rs.5.5 crores extended to KAD in cash. Accordingly, the mount of Rs.5,50,00,000/- is treated as unexplained investment and added to the income declared. 3.10 It is noted that since these cheques were undated and no documentary evidence regarding exact year

Omega Finhold Pvt. Ltd., New Delhi vs. ACIT, Central Circle- 14, New Delhi

In the result, the appeal filed by the assessee is allowed

ITA 1286/DEL/2018[2010-11]Status: DisposedITAT Delhi27 Jul 2023AY 2010-11
Section 115JSection 147Section 148

through the misuse of the CCM. The profit is, therefore, liable to be taxed and added to the total income of the assessee as unexplained investment u/s 68 r.w.s. 115BBE of the Income-tax Act, 1961.” 5.2 The Ld. Counsel accordingly, submitted that reasons recorded are thus incorrect

Gyan Prakash Shrivastava, Ujjain vs. The ITO 2(1), Ujain

In the result, appeal of assessee is allowed

ITA 401/IND/2022[2017-18]Status: DisposedITAT Indore27 Jul 2023AY 2017-18

Bench: Shri Vijay Pal Rao & Shri B.M. Biyanigyan Prakash Shrivastava Ito 2(1) 27/1, Kashpnak Marg, Ml Ujjain Vs. Nagar, Sashera Maidan, Ujjain, (Appellant / Assessee) (Respondent/ Revenue) Pan: Axnps 4295 D Assessee By Shri S.S. Deshpande, Ar Revenue By Shri Ashish Porwal, Sr. Dr Date Of Hearing 18.05.2023 Date Of Pronouncement 27.07.2023

Section 62ASection 69A

being the cash deposited in saving bank accounts.That the learned CIT (A) erred in retaining the addition of Rs. 8,00,000/- as unexplained investment u/s 69A being the amount of demonetized currency deposited in the bank accounts contrary to the facts of the cases and not appraising the circumstances ... which is against the principal of natural justice and otherwise bad in law. 2. Ground for challenging addition of Rs. 8,00,000/- as unexplained investment u/s 69A though is a recovery from on identifiable debtor. That the learned CIT(A) erred in not realizing the fact that

Preeti Pankaj Agarwal, Mumbai vs. Income Tax Officer 21(2)(5), Mumbai

In the result, the appeal of the assessee is allowed

ITA 1145/MUM/2023[2011-2012]Status: DisposedITAT Mumbai26 Jul 2023AY 2011-2012

Bench: Shri Aby T. Varkey, Jm आयकर अपील सं/ I.T.A. No.1145/Mum/2023 (निर्धारण वर्ा / Assessment Year: 2011-12) Preeti Pankaj Agarwal बिधम/ Ito-21(2)(5) 7A, Pankaj Mansion, 8, Dr. Piramal Chambers, Vs. Annie Besant Road, Worli, Mumbai-400012. Mumbai-400018. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Afxpa4228C (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee By: Shri Hiten Vasant Revenue By: Shri Dharmvir D Yadav (Sr. Dr) सुनवाई की तारीख / Date Of Hearing: 28/06/2023 घोषणा की तारीख /Date Of Pronouncement: 26/07/2023 आदेश / O R D E R Per Aby T. Varkey, Jm: This Is An Appeal Preferred By The Assessee Against The Order Of The Ld. Cit(A)/Nfac, Delhi Dated 17.02.2023 For Ay. 2011-12. 2. At The Outset, The Ld. Ar Assails, The Action Of Ld. Cit(A) Confirming The Action Of Ao Making Addition Of Rs. 1,55,500/- & Rs. 7,775/- On Purchase & Sale Of Shares Of M/S Sve Resources Ltd. 3. Brief Facts Are That The Assessee Is An Individual Had Filed Her Original Return Of Income On 28.09.2011 Declaring Total Income Of Rs. Nil For Ay. 2011-12. Later, The Case Of The Assessee Was Reopened By Issuance Of Notice U/S 148 Of The Income Tax Act, 1961 (Hereinafter “The Act”) Dated 30.03.2018 On The Ground That The Assessee Had Transacted In The Penny-Stock Named M/S. Svc Resources Ltd. & Ao After Re-Opening The Assessment, Heard The Assessee & Not Satisfied With The Replies Of Assessee Made An Addition Of Rs.1,55,500/-

For Appellant: Shri Hiten VasantFor Respondent: Shri Dharmvir D Yadav (Sr. DR)
Section 148Section 68

action of adding the entire purchase consideration of scrip in 4 A.Y. 2011-12 Preeti Pankaj Agarwal question of Rs.1,55,500/- as unexplained investment u/s 68 of the Act cannot be accepted. And on the same reasoning, the notional brokerage of Rs.7

Shri Murli Manohar, Jalandhar vs. Assistant Commissioneer of Income Tax Central Circle-2, Jalandhar

In the result, both the appeals of the assessee are allowed

ITA 556/ASR/2019[2016-17]Status: DisposedITAT Amritsar26 Jul 2023AY 2016-17

Bench: Dr. M. L. Meena & Sh. Anikesh Banerjee

For Appellant: NoneFor Respondent: Sh. Hitendra Bhauraoji Ninawe, CIT DR
Section 143(2)Section 143(3)Section 153ASection 153DSection 69

confirming the action of Ld. AO in making addition of Rs.20,00,000/- on account of investment in property by treating the same as unexplained investment u/s 69 of the Act, by ignoring the facts of the case and submissions of assessee and without observing the principles of natural justice

Shri Murli Manohar, Jalandhar vs. Assistant Commissioner of Income Tax Central Circle-2, Jalandhar

In the result, both the appeals of the assessee are allowed

ITA 555/ASR/2019[2015-16]Status: DisposedITAT Amritsar26 Jul 2023AY 2015-16

Bench: Dr. M. L. Meena & Sh. Anikesh Banerjee

For Appellant: NoneFor Respondent: Sh. Hitendra Bhauraoji Ninawe, CIT DR
Section 143(2)Section 143(3)Section 153ASection 153DSection 69

confirming the action of Ld. AO in making addition of Rs.20,00,000/- on account of investment in property by treating the same as unexplained investment u/s 69 of the Act, by ignoring the facts of the case and submissions of assessee and without observing the principles of natural justice

Smita Bhadauri, Bhopal vs. ACIT Central -2 Bhopal, Bhopal

In the result, appeal of assessee is allowed

ITA 67/IND/2022[2014-15]Status: DisposedITAT Indore25 Jul 2023AY 2014-15

Bench: Shri Vijay Pal Rao & Shri B.M. Biyanismita Bhaduaria Acit-Central-2 E-8/11, Basant Kunj, Arera Bhopal Vs. Colony Bhopal (Appellant / Assessee) (Respondent/ Revenue) Pan: Aewpb 4635 C Assessee By Ms. Nisha Lahoti & Shri Vijay Ar Revenue By Shri Ashish Porwal, Sr. Dr Date Of Hearing 11.05.2023 Date Of Pronouncement 25 .07.2023

no.22 to 38 of the paper book. The addition for the assessment year 2013- 14 was made by the AO on account of unexplained investment in jewellery but the quantity was within the limit as prescribed in the CBDT instruction no. 1916 dated 11.05.1994 and therefore, the same was deleted ... action u/s 132 of the Act. The only addition made by the AO in the assessment for the preceding year was on account of unexplained investment in Jewellery which was deleted by the Ld. CIT(A). Therefore, the closing cash balance available with the assessee was not doubted

Inderjeet, Ghaziabad vs. ITO, Ward-1(3), Ghaziabad

In the result, the appeal of the assessee is partly allowed

ITA 2646/DEL/2018[2009-10]Status: DisposedITAT Delhi21 Jul 2023AY 2009-10

Bench: Shri C.M. Garg & Shri M. Balaganeshinderjeet, Vs. Ito, C/O. M/S. Sanjeev Anand & Ward-1(3), Associates, 77, Navyug Market, Ghaziabad Ghaziabad, Ghaziabad (Appellant) (Respondent) Pan: Abspi6213Q Assessee By : Shri Somil Agarwal, Adv Revenue By: Mohd. Gayasuddin Ansari, Cit Dr Date Of Hearing 18/05/2023 Date Of Pronouncement 21/07/2023

For Appellant: Shri Somil Agarwal, AdvFor Respondent: Mohd. Gayasuddin Ansari, CIT DR
Section 144Section 147Section 69

addition in the hands of the assessee u/s 69 of the Act and ld CIT(A) was also correct in upholding the same as unexplained investment in the saving bank of the assessee. Inderjeet 6. On careful consideration of the above submission and on perusal of the assessee’s paper

Mr. Anil Kantilal Shah, Mumbai vs. CIT (A)-51, Mumbai

In the result, the appeal of the assesse vide

ITA 228/MUM/2023[2020-21]Status: DisposedITAT Mumbai20 Jul 2023AY 2020-21

Bench: Shri Amarjit Singh & Ms. Kavitha Rajagopalita Nos.227 & 228/Mum/2023 (A.Ys. 2018-19 To 2020-21)

For Appellant: Anil ThakrarFor Respondent: Ashok Kumar Kardam
Section 132Section 132(4)Section 153ASection 69B

issued show cause notice dated 15.09.2021 asking the assesse why an amount of Rs.42.69 lacs should not be added to the total income as unexplained investment u/s 69B of the Act. In response the assesse submitted that he had retracted the statement recorded during the search by way of filing ... happened with the builder. However, the AO has not agreed with the submission of the assessee and added the amount of Rs.42.69 lacs as unexplained investment on the basis of such transaction noted on the excel sheet found in the laptop seized from the premises of the assessee which

Mr. Anil Kantilal Shah, Mumbai vs. CIT (A)-51, Mumbai

In the result, the appeal of the assesse vide

ITA 227/MUM/2023[2018-19]Status: DisposedITAT Mumbai20 Jul 2023AY 2018-19

Bench: Shri Amarjit Singh & Ms. Kavitha Rajagopalita Nos.227 & 228/Mum/2023 (A.Ys. 2018-19 To 2020-21)

For Appellant: Anil ThakrarFor Respondent: Ashok Kumar Kardam
Section 132Section 132(4)Section 153ASection 69B

issued show cause notice dated 15.09.2021 asking the assesse why an amount of Rs.42.69 lacs should not be added to the total income as unexplained investment u/s 69B of the Act. In response the assesse submitted that he had retracted the statement recorded during the search by way of filing ... happened with the builder. However, the AO has not agreed with the submission of the assessee and added the amount of Rs.42.69 lacs as unexplained investment on the basis of such transaction noted on the excel sheet found in the laptop seized from the premises of the assessee which

Vimal Kishor Shah, Mumbai vs. ITO Ward-27(3)(1), Mumbai

In the result, both the appeals of the assessee are allowed

ITA 1499/MUM/2023[2014-2015]Status: DisposedITAT Mumbai19 Jul 2023AY 2014-2015

Bench: Shri B.R. Baskaran (Am) & Shri Narender Kumar Choudhry (Jm)

Section 10(38)Section 147Section 68Section 69

take up the appeal filed for A.Y. 2011-12, wherein the assessee is contesting the addition made under section 69 of the Act towards unexplained investment in jewellery. 3. We have heard the parties on this issue and perused the record. The assessee is an individual and deriving income ... Assessing Officer reopened the assessment by issuing notice under section 147 of the Act. The Assessing Officer treated the above said purchases as unexplained investment and assessed the same under section 69 of the Act. The learned CIT(A) also confirmed the same. 4. The Learned AR submitted that

Vimal Kishor Shah, Mumbai vs. ITO Ward-27(3)(1), Mumbai

In the result, both the appeals of the assessee are allowed

ITA 1498/MUM/2023[2011-2012]Status: DisposedITAT Mumbai19 Jul 2023AY 2011-2012

Bench: Shri B.R. Baskaran (Am) & Shri Narender Kumar Choudhry (Jm)

Section 10(38)Section 147Section 68Section 69

take up the appeal filed for A.Y. 2011-12, wherein the assessee is contesting the addition made under section 69 of the Act towards unexplained investment in jewellery. 3. We have heard the parties on this issue and perused the record. The assessee is an individual and deriving income ... Assessing Officer reopened the assessment by issuing notice under section 147 of the Act. The Assessing Officer treated the above said purchases as unexplained investment and assessed the same under section 69 of the Act. The learned CIT(A) also confirmed the same. 4. The Learned AR submitted that

Bhandari Gold and Jewellers Private Limited, Mumbai vs. CIT (Appeal), NFAC - Delhi

In the result, appeal filed by the assessee is allowed for statistical purpose

ITA 1619/MUM/2022[2017-2018]Status: DisposedITAT Mumbai19 Jul 2023AY 2017-2018

Bench: Shri S. Rifaur Rahman, Hon'Ble & Shri Sandeep Singh Karhail, Hon'Bledcit – 6(1)(2) V. M/S. Bandari Gold & Jewellers Pvt. Ltd., 407, Bussaudyog Bhavan Room No. 538B, 5Th Floor Tokersi, Jivraj Road, Sewree Aayakar Bhavan, M.K. Road Mumbai - 400015 Mumbai - 400020 Pan: Aadcb1291J (Appellant) (Respondent)

Section 143(3)Section 68

proper course would have been to make assessments in the cases of those creditors by treating the cash deposits in their bank accounts as unexplained investments of those creditors under s. 69. 2. Bombay High Court The question sought to be has held that in CIT raised in the appeal

Cy. CIT 6(1) (2), Mumbai vs. M/S. Bhandari Gold & Jewellers Pvt. Ltd, Mumbai

In the result, appeal filed by the assessee is allowed for statistical purpose

ITA 1564/MUM/2022[2017-18]Status: DisposedITAT Mumbai19 Jul 2023AY 2017-18

Bench: Shri S. Rifaur Rahman, Hon'Ble & Shri Sandeep Singh Karhail, Hon'Bledcit – 6(1)(2) V. M/S. Bandari Gold & Jewellers Pvt. Ltd., 407, Bussaudyog Bhavan Room No. 538B, 5Th Floor Tokersi, Jivraj Road, Sewree Aayakar Bhavan, M.K. Road Mumbai - 400015 Mumbai - 400020 Pan: Aadcb1291J (Appellant) (Respondent)

Section 143(3)Section 68

proper course would have been to make assessments in the cases of those creditors by treating the cash deposits in their bank accounts as unexplained investments of those creditors under s. 69. 2. Bombay High Court The question sought to be has held that in CIT raised in the appeal

DCIT, Central Circle-1, Gurgaon vs. Jethmal Mehta, New Delhi

In the result, appeals of the Revenue for AYs

ITA 8987/DEL/2019[2014-15]Status: DisposedITAT Delhi19 Jul 2023AY 2014-15
Section 153ASection 153A(1)Section 153CSection 68

learned AO has erred, both on facts in law, in making addition of Rs 2,82,020/ to the returned income on account of unexplained investment in jewellery. 5. Assessee craves leave to add alter modify any ground of cross objection at the time of hearing.” 4. Identical issues ... 162/Del/2022 DCIT vs. Jethmal Mehta AY 2012-13 (i) Addition of Rs. 2,80,020/- u/s 69A of the Act on account of unexplained investment in silver jewellery is not based on any incriminating material found during the search. (ii) Addition of Rs. 6,75,17,615/- on account

DCIT, Central Circle-1, Gurgaon vs. Jethmal Mehta, New Delhi

In the result, appeals of the Revenue for AYs

ITA 8986/DEL/2019[2013-14]Status: DisposedITAT Delhi19 Jul 2023AY 2013-14
Section 153ASection 153A(1)Section 153CSection 68

learned AO has erred, both on facts in law, in making addition of Rs 2,82,020/ to the returned income on account of unexplained investment in jewellery. 5. Assessee craves leave to add alter modify any ground of cross objection at the time of hearing.” 4. Identical issues ... 162/Del/2022 DCIT vs. Jethmal Mehta AY 2012-13 (i) Addition of Rs. 2,80,020/- u/s 69A of the Act on account of unexplained investment in silver jewellery is not based on any incriminating material found during the search. (ii) Addition of Rs. 6,75,17,615/- on account

DCIT, Central Circle-1, Gurgaon vs. Jethmal Mehta, New Delhi

In the result, appeals of the Revenue for AYs

ITA 8985/DEL/2019[2012-13]Status: DisposedITAT Delhi19 Jul 2023AY 2012-13
Section 153ASection 153A(1)Section 153CSection 68

learned AO has erred, both on facts in law, in making addition of Rs 2,82,020/ to the returned income on account of unexplained investment in jewellery. 5. Assessee craves leave to add alter modify any ground of cross objection at the time of hearing.” 4. Identical issues ... 162/Del/2022 DCIT vs. Jethmal Mehta AY 2012-13 (i) Addition of Rs. 2,80,020/- u/s 69A of the Act on account of unexplained investment in silver jewellery is not based on any incriminating material found during the search. (ii) Addition of Rs. 6,75,17,615/- on account