“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

ACIT, New Delhi vs. M/S. Tirupati Buildings & Officers Pvt. Ltd., New Delhi

ITA 2405/DEL/2016[2010-11]Status: DisposedITAT Delhi09 Feb 2023AY 2010-11

Bench: Shri Anil Chaturvedi & Shri Chandra Mohan Gargassessment Year: 2010-11 The Acit, Central M/S. Tirupati Buildings & Circle-18, Jhandewalan, Offices Pvt. Ltd., New Delhi 110055 Vs. Plot No. 3, Dwarka City Centre Sector-10, Dwarka, New Delhi 110017 Pan Aacct7060J (Appellant) (Respondent) For Revenue : Shri Amaresh Singh, Cit Dr For Assessee : Shri Mahavir Singh, Advocate

For Appellant: Shri Mahavir Singh, AdvocateFor Respondent: Shri Amaresh Singh, CIT DR

Section 133(6)Section 250Section 4Section 68

order of the CIT (A) dated 20.03.2015 before the ITAT on the grounds pertaining to deletion of additions on account of unexplained cash credits, unexplained investments, interest paid on cash borrowings, personal expenses, long term capital gains etc. The assessee [Respondent before ITAT], admittedly did not file a cross appeal

Sandeep Sethi, Jaipur vs. Deputy Commissioner of Income Tax, Central Circle-1, Jaipur

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

ITA 155/JPR/2022[2017-18]Status: DisposedITAT Jaipur08 Feb 2023AY 2017-18

Bench: SHRI SANDEEP GOSAIN (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Sh. Rajeev Sogani (CA) &For Respondent: Sh. Sanjay Dhariwal (CIT)

Section 115BSection 132(1)

erred in confirming the action of the ld. AO, in making additions of Rs. 4,55,639 towards alleged unexplained investment in jewellery. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the entire

Rajiv Nigotiya, Jaipur vs. Deputy Commissioner of Income Tax, Central Circle-1, Jaipur

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

ITA 154/JPR/2022[2017-18]Status: DisposedITAT Jaipur08 Feb 2023AY 2017-18

Bench: SHRI SANDEEP GOSAIN (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Sh. Rajeev Sogani (CA) &For Respondent: Sh. Sanjay Dhariwal (CIT)

Section 115BSection 132(1)

Setech Electronics Ltd, New Delhi vs. ITO Ward - 3(4), Noida

In the result, the appeal No

ITA 5759/DEL/2019[2009-10]Status: DisposedITAT Delhi07 Feb 2023AY 2009-10

Bench: Shri Anil Chaturvedi & Shri N.K. Choudhry

For Appellant: Sh. Neelesh Kumar Jain, Ld. CAFor Respondent: Sh. Pradeep Singh Gautam, Sr. DR

Section 133(6)Section 144Section 147Section 148Section 249(4)(b)Section 250Section 69

Assessee which also remained un-complied with. Therefore considering the peculiar facts and circumstances, the Assessing Officer made the addition of Rs.1.2 crores as unexplained investment u/s. 69 of the Act. 4. The Assessee before the ld. Commissioner challenged the said assessment order and the addition made by the Assessing

Setech Electronics Ltd, New Delhi vs. ITO Ward - 3(4), Noida

In the result, the appeal No

ITA 5758/DEL/2019[2009-10]Status: DisposedITAT Delhi07 Feb 2023AY 2009-10

Bench: Shri Anil Chaturvedi & Shri N.K. Choudhry

For Appellant: Sh. Neelesh Kumar Jain, Ld. CAFor Respondent: Sh. Pradeep Singh Gautam, Sr. DR

Section 133(6)Section 144Section 147Section 148Section 249(4)(b)Section 250Section 69

ITO Ward 21(1), New Delhi vs. Rajdarbar Beverages Pvt Ltd, New Delhi

In the result, appeal of the Revenue is dismissed

ITA 3709/DEL/2019[2015-16]Status: DisposedITAT Delhi06 Feb 2023AY 2015-16

Bench: N.K. Billaiya & Ms. Astha Chandraasstt. Year: 2015-16

For Appellant: Shri Sudesh Garg, AdvFor Respondent: Shri Vivek Vardhan, Sr. DR

Section 131Section 143(1)Section 143(3)

circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs 1,82,00,000/- made by A.O. as unexplained investment in unlisted equities ignoring the facts that the identity and creditworthiness of entities from whom funds were taken to invest in unlisted equities during ... Gunvardhan Vyapaar Pvt. Ltd. and M/s. Rasaraj Sales Ltd. during the year. Accordingly, he added the amount of Rs. 1,82,00,000/- as unexplained investment and completed the assessment on 19.12.2017 under section 143(3) of the Act. 5. Aggrieved, the assessee filed appeal before

The ITO, Ward-1(3), Jamnagar vs. Shri Rajubhai N. Gorania, Jamnagar

In the result, appeal of the Revenue is dismissed

ITA 329/RJT/2016[2009-10]Status: DisposedITAT Rajkot03 Feb 2023AY 2009-10

Bench: Ms. Suchitra Kamble & Shri Waseem Ahmedassessment Year: 2009-10

For Appellant: Shri Chetan Agarwal, ARFor Respondent: Shri B.D. Gupta, Sr. DR

Section 147Section 148

erred on facts and in law in deleting the addition of Rs.32,34,568/- made by the Assessing Officer on account of unexplained investment in purchase of plot. 4. on the basis of the facts and circumstances of the case, the learned CIT(A) ought to have upheld the order ... land development and large amount of cash withdrawn and credited. Therefore, the CIT(A) is not justified in deleting the addition on account of unexplained investment in purchase of plot. 6. The Ld. AR relied upon the order of the CIT(A) and submitted that the Assessing Officer has made

Nicetel Electronics Private Ltd., New Delhi vs. ACIT, Circle-18(1), New Delhi

In the result, this appeal filed by the assessee stands dismissed

ITA 4768/DEL/2019[2010-11]Status: DisposedITAT Delhi02 Feb 2023AY 2010-11

For Appellant: NoneFor Respondent: Shri Jitender Chand, Sr. DR

Section 68Section 69C

such accommodation entry necessarily entails payment of commission to entry providers, the AO's 6 ITA No.4768/Del./2019 action in quantifying and adding such unexplained investment towards procurement of such accommodation entries at Rs.54,000/- is also upheld for the reasons discussed in the assessment order. Accordingly, entire addition amounting

DCIT Central Circle-03, New Delhi vs. Partani Appliances P Ltd, Secundrabad

In the result, the appeal filed by the Revenue stands

ITA 2875/DEL/2019[2013-14]Status: DisposedITAT Delhi01 Feb 2023AY 2013-14

Bench: Shri N.K. Choudhry & Dr. B.R.R. Kumarassessment Year: 2013-14 Dcit, Central Circle-03, Versus Partani Appliances P. Ltd., 702-E, 7Th Floor, Alkarim New Delhi. Trade Centre, Raniganj, Secunderabad. Pan: Aabcp3087G (Appellant) (Respondent)

For Appellant: NoneFor Respondent: Sh. T. Kipgen Ld. CIT- DR

Section 132Section 142(1)Section 148Section 148ASection 153CSection 250Section 271Section 69

addition of Rs. 2.75 crores in being made in the total income of the assessee for the AY 2013-14 on account of unexplained investment u/s 69 of the Act. Further, in view of the discussion made, I am satisfied that assessee has concealed income to the tune

Prashant Kumar Singh, Bulandshahr vs. ITO Ward - 3(3), Bulandshahr

In the result, the appeal of the assessee is treated as dismissed

ITA 5293/DEL/2019[2010-11]Status: DisposedITAT Delhi31 Jan 2023AY 2010-11

Bench: N.K. Billaiya & Ms. Astha Chandraasstt. Year: 2010-11 Prashant Kumar Singh, Vs. Ito, Ward-3(3) B-30, Yamunapuram, Bullandshahr. Bullandshahr Uttar Pradesh Pin: 203001 Pan Avpps5108R (Appellant) (Respondent)

For Appellant: NoneFor Respondent: Shri Vivek Vardhan, Sr. DR

Section 147Section 148Section 2Section 2(14)

deposited by him in the bank account. Thus, there is no aberration in the action of AO in making the above said addition as unexplained investment during the year. Further, AO found that the appellant sold one property individually and other properties jointly with seven other persons which were capital

Shri Gurbachan Singh S/O Shri.Gurdev Singh, Mansa vs. Income Tax Officer Ward- 1 (4 ), Mansa

In the result, the quantum appeal in ITA No

ITA 198/ASR/2022[2011-12]Status: DisposedITAT Amritsar31 Jan 2023AY 2011-12

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

Section 144Section 147Section 148Section 271Section 271(1)(c)Section 69A

addition of Rs. 9,51,000/- on account of the deposits in the bank account of the assessee and treating the same as unexplained investment under the provision of Section 69A is bad in law. 4. That the passing of an ex-parte order ... deposits, proceedings u/s 147 was initiated and notice u/s 148 was issued. The AO treated the cash deposit of Rs. 9,51,000/- as unexplained investment u/s 69A of the IT Act and added to the income vide assessment order dated 19.11.2018 passed u/s. 147/144 of the Income

Shri Gurbachan Singh S/O Sh. Gurdev Singh, Mansa vs. Income Tax Officer Ward - 1 (4), Mansa

In the result, the quantum appeal in ITA No

ITA 197/ASR/2022[2011-12]Status: DisposedITAT Amritsar31 Jan 2023AY 2011-12

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

Section 144Section 147Section 148Section 271Section 271(1)(c)Section 69A

M/S Neeventa Construction Private Limited, New Delhi vs. Income Tax Officer Ward-3(1), Ferozepur

In the result, the appeal of the assessee bearing ITA No

ITA 139/ASR/2019[2015-16]Status: DisposedITAT Amritsar31 Jan 2023AY 2015-16

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

Section 143(3)Section 250Section 40A(3)Section 40aSection 44A

facts in confirming the addition made by the Assessing Officer of Rs. 20,00,000/-and Rs. 4,99,969/- on account of alleged Unexplained Investments made by the assessee. 5. That the learned Commissioner of Income Tax (Appeals) Bathinda has failed to appreciate that this ... Hence the amount of Rs. 20,00,000/-paid by the assessee to M/s H.S.Agro is added to the income of the assessee as ‘ unexplained investment made by the assessee.” 6. We heard the rival submission and perused the documents available in the record. The assessee has credited

Palla Madhusudana Rao, Visakhapatnam vs. The Income Tax Officer, Ward-1(2), Visakhapatnam

In the result, the appeal of the assessee is allowed for statistical purpose

ITA 15/VIZ/2019[20011-12]Status: DisposedITAT Visakhapatnam31 Jan 2023

Bench: Shri Duvvuru Rl Reddy, Hon’Ble & Shri S Balakrishnan, Hon’Bleआयकर अपील सं./I.T.A.No.15/Viz/2019 (ननधधारण वर्ा / Assessment Year : 2011-12) Palla Madhusudana Rao Vs. Income Tax Officer Door No.14-6-7, Ramajogipeta Ward-1(2) Visakhapatnam Visakhapatnam [Pan : Bhrpp0382F] अपीलधथी की ओर से/ Appellant By : Shri G.V.N.Hari, Ar प्रत्यधथी की ओर से / Respondent By : Shri N.Ravi Babu, Dr सुनवधई की तधरीख / Date Of Hearing : 21.11.2022 घोर्णध की तधरीख/Date Of Pronouncement : 31.01.2023 O R D E R Per Shri Duvvuru Rl Reddy: This Appeal Is Filed By The Assessee Against The Order Of The Commissioner Of Income Tax [In Short, [Cit(A)]-6, Hyderabad In Appeal No.10357/2018-19/A3 Cit(A)-6 Dated 03.12.2018 For The Assessment Year (A.Y.) 2011-12. 2. Brief Facts Of The Case Are That The Assessee Is An Individual, Carrying On Business In The Sale Of Indian Manufactured Foreign Liquor, Filed His Return Of Income For The A.Y.2011-12 On 25.09.2011, Declaring A Total Income Of Rs.3,28,950/-. The Case Was Selected For Scrutiny, Accordingly

For Appellant: Shri G.V.N.Hari, ARFor Respondent: Shri N.Ravi Babu, DR

Section 143(2)Section 144Section 249

with proof for the purchases made, therefore, the AO proposed to add the amount of Rs.79,04,022/- as income of the assessee as unexplained investment and objections were called for. Since there was no response from the assessee, the AO added the amount of Rs.79,04,022/- as unexplained ... furnished any sources with proof for the capital introduced, Hence, the AO made addition of Rs.13,12,299/- as unexplained investment. The assessee has also shown an amount of Rs.2,53,896/- as deposits under “Loans and Advances (Assets)’. However, the assessee has not furnished any sources with proof