“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

Sheetal Mehra, New Delhi vs. ITO, Ward-40(1), New Delhi

ITA 905/DEL/2019[2008-09]Status: DisposedITAT Delhi03 Feb 2022AY 2008-09

Bench: Shri Anil Chaturvedi & Shri Amit Shukla

For Appellant: Shri S.R. Wadhwa, AdvocateFor Respondent: Shri Umesh Takyar, Senior DR

Section 143(3)Section 148Section 271(1)(c)

under section 148 of the Act and assessment was made by treating the cash deposits as well as funds transferred in her account as unexplained investments. Accordingly, the assessment order was passed u/s 143(3)/147 vide order dated 03.03.2014 for all the three assessment years separately. Against

Sheetal Mehra, New Delhi vs. ITO, Ward-40(1), New Delhi

ITA 904/DEL/2019[2007-08]Status: DisposedITAT Delhi03 Feb 2022AY 2007-08

Bench: Shri Anil Chaturvedi & Shri Amit Shukla

For Appellant: Shri S.R. Wadhwa, AdvocateFor Respondent: Shri Umesh Takyar, Senior DR

Section 143(3)Section 148Section 271(1)(c)

Sri K. Harsha Reddy, Davanagere vs. The Income Tax Officer Ward - 1(2), Davanagere

In the result, the appeal filed by assessee stands partly allowed as indicated above

ITA 2055/BANG/2018[2011-12]Status: DisposedITAT Bangalore31 Jan 2022AY 2011-12

For Appellant: Shri V. Srinivasan, Advocate

Section 133ASection 148Section 234

therefore, the same deserves to be deleted. 4. The learned CIT[A] is not justified in upholding the addition of Rs.5,63,675/- as unexplained investment made by the appellant in agricultural lands and other properties purchased although the benefit of telescoping was allowed against the income from real estate ... facts and in the circumstances of the appellant's case. 4.1 The learned CIT[A] ought to have appreciated that there was no such unexplained investment made by the appellant at all and the source for the investments made were duly explained alongwith documentary evidence and consequently, the addition made

DCIT, Central Circle-1, Noida vs. Golf Link Hospitality P.Ltd, New Delhi

In the result, appeal of the Revenue is dismissed

ITA 6413/DEL/2018[2011-12]Status: DisposedITAT Delhi31 Jan 2022AY 2011-12

Bench: Shri Rama Kanta Panda & Shri N. K. Choudhry(Through Video Conferencing) Dcit, Vs. Golf Link Hospitality Pvt. Ltd, Central Circle-1, F-302, Aditya Commercial, Noida Plot No. 12, Preetvihar Community Centre, New Delhi Pan: Aadcg5239R (Appellant) (Respondent)

For Appellant: ShriMayankPatawari, CAFor Respondent: ShriGovindSinghal, Sr. DR

Section 132Section 153CSection 250(6)

respectively. Thereafter, the assessment has been completed after making addition of Rs.12,71,00,000/- on account of unsecured loan and on account of unexplained investment in construction of hotel. 4. Before the Learned CIT(A), assessee took a specific plea that additions made in the assessment framed u/s 153C

Shri Pankaj P. Khara, Navi Mumbai vs. Pr. CIT-7, Mumbai

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

ITA 801/MUM/2021[2016-17]Status: DisposedITAT Mumbai27 Jan 2022AY 2016-17

Bench: Shri Prashant Maharishi & Shri Pavan Kumar Gadaleshri Pankaj P Khara, Vs. Pr. Cit-27 64D,Askini, Op Chs Room No. 401, 4Th Ltd,Plotno.20, Secotr- Floor, Tower No. 6, 11, Behind Kanchan Vashi Railway Station Junga, Koparkhairne, Commercial Complex, Navi Mumbai – 400709 Vashi – 400703 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Akhpk0207E Appellant .. Respondent Appellant By : Ms.Hiral Sejpal.Ca. Dr Respondent By : Mr.Nikhil Chaudhary.Dr Date Of Hearing 06.01.2022 Date Of Pronouncement 31.01.2022 आदेश / O R D E R Per Pavan Kumar Gadale Jm: The Assessee Has Filed The Appeal Against The Order Passed By The Pr.Commissioner Of Income Tax (Pcit)-27, Mumbai Passed U/S 263 Of The Act. The Assessee Has Raised The Following Grounds Of Appeal:

For Appellant: Ms.Hiral Sejpal.CA. DRFor Respondent: Mr.Nikhil Chaudhary.DR

Section 143(2)Section 143(3)Section 263

sources of the assessee are received in the month of October 2015 to march 2016 and treated the differential investment as a unexplained investments in Angle Broking prior to October 2015 Rs7,92,770/-. Whereas in respect of Pinnacle Forex, the PCIT observed that the differential payments made prior ... October 2015 of Rs. 3,36,000/- as unexplained investment and finally Pr.CIT observed that the total unexplained investments made by the assessee which was not verified by the A.O is Rs. 11,28,770/-. 4. The findings of the PCIT are that the assessee has received the funds subsequent

Assistant Commissioner of Income Tax Central Circle-2(4), Bangalore vs. Sri B G Channappa, Bangalore

In the result, the appeal of the Revenue is dismissed

ITA 2104/BANG/2017[2013-14]Status: DisposedITAT Bangalore27 Jan 2022AY 2013-14

Bench: Shri Chandra Poojari & Shri George George Kassessment Year : 2013-14

For Appellant: Shri V Srinivasan, AdvocateFor Respondent: Dr. Manjunath Karkihalli, CIT (DR)

Section 132Section 143Section 153ASection 234Section 69B

computed the difference between the sale value mentioned in the agreement and actual sale deed value contained at Rs.1,01,34,000/- as unexplained investment in land as follows:- Addition on account of purchase of Land from Smt. Rekha Venugopal and Shri G.N.Venugopal - Rs. 1,01,34,000/- :- - Regarding this ... rate of Rs. 50,000/- per acre. - In course of the proceedings, the A.O. called upon the assessee to state as to why the unexplained investment of the assessee should not be computed on the basis of the sale agreement dated 29/11/2012. The assessee furnished his objections vide letter dated

Shri Rajmal Hemraj Vanigota, Mumbai vs. Dy CIT, CC-7(3), Mumbai

In the result, the appeal of the assessee is allowed

ITA 140/MUM/2021[2010-11]Status: DisposedITAT Mumbai25 Jan 2022AY 2010-11

Bench: Shri Rajesh Kumar & Shri Ravish Soodassessment Year: 2010-11

For Appellant: Shri Neel Khandelwal, A.RFor Respondent: Shri Mahendra Ahuja, Sr. A.R. CIT

Section 132(1)Section 153ASection 69

confirming the addition of Rs.4,40,39,152/- as made by the AO to the income of the assessee on account of unexplained investments u/s 69 of the Act in flat No.1002 & 2 Shri Rajmal Hemraj Vanigota 1006 in the building known as Lodha Costeria on the basis of stamp ... value shown by the assessee and treated the difference of Rs. 4,40,39,152/- as income of the assessee on account of unexplained investments under section 69 of the Act thereby making total addition of Rs.4,40,39,152/- to the income of the assessee. Pertinent to mention that

ITO 6 (2)(1), Mumbai vs. M/S Confiance Trading Pvt Ltd., Mumbai

ITA 199/MUM/2020[2012-13]Status: DisposedITAT Mumbai24 Jan 2022AY 2012-13

Bench: Shri Rajesh Kumar & Shri Amarjit Singhassessment Year: 2012-13 Ito 6(2)(1), M/S. Confiance Trading 5Th Floor, Pvt. Ltd., Room No.510, 308, Adharu Industrial Aaykar Bhavan, Vs. Estate, M.K. Road, Sun Mill Compound, Mumbai – 400 020 Lower Parel, Mumbai – 400 013 Pan: Aaccc4316L (Appellant) (Respondent) Present For: Assessee By : Shri Dharmvir, A.R. Revenue By : Shri Gaurav Kabra, D.R. Date Of Hearing : 10.11.2021 Date Of Pronouncement : 24.01.2022 O R D E R

For Appellant: Shri Dharmvir, A.RFor Respondent: Shri Gaurav Kabra, D.R

Section 143(1)Section 56(2)(viib)Section 68

wherein it has been held that no addition can be made under section 68 of the Act on account of unexplained investments where the assessee furnished before the AO the evidences to prove identity of the investors. The Ld. CIT(A) also followed the decision of Hon’ble Bombay High ... genuineness and capacity of the shareholders who subscribed to the shares then AO was not justified in making addition of share subscription amount as unexplained investments besides holding that proviso to section 68 as introduced by the Finance Act, 2012 is not retrospective and is applicable from

Sh. Sunil Jindal, New Delhi vs. DCIT, Faridabad

The appeal of the assessee is allowed for statistical purposes

ITA 836/DEL/2017[2013-14]Status: DisposedITAT Delhi24 Jan 2022AY 2013-14

Section 69A

maintaining any books of account, the benefit of bank withdrawals could not be given to the assessee. With respect to the alleged unexplained investment in chit fund, the Ld. CIT DR submitted that the case of Shri Vikas Gupta cannot be the basis for deleting the addition in the case

The Deputy Commissioner of Income Tax, Central Circle- 1, Mangaluru vs. Shri. M N Rajendra Kumar, Udupi

In the result, the Revenue’s appeal is dismissed

ITA 2366/BANG/2019[2017-18]Status: DisposedITAT Bangalore21 Jan 2022AY 2017-18

Bench: Shri Chandra Poojarismt. Beena Pillaiassessment Year : 2017-18

For Appellant: Smt. Sheetal, AdvocateFor Respondent: Shri Vilas V Shinde, CIT(DR)

Section 132(4)Section 143(3)

made u/s.132(4) by the assessee, the AO added to the returned income of the assessee a sum of Rs.10,00,00,000/- as unexplained investments in land and flats of Navodaya Estate Land Development, Nitte (other than investment in land of M/s OmSaiRiddiSiddi Developers). 4. With regard to additions ... made on account of unexplained investment in other than Om SaiRiddiSiddi Developers, the AO has discussed that, during the search itself, certain evidences related to cash payments in respect to the other investments were retrieved, when this was posed to the assessee, he agreed that he has made investment from

Sh. Anil Vashist, New Delhi vs. ACIT, New Delhi

In the result, the appeal is dismissed

ITA 6195/DEL/2016[2011-12]Status: DisposedITAT Delhi21 Jan 2022AY 2011-12

Bench: Shri Saktijit Dey & Dr. B.R.R. Kumarassessment Year: 2011-12

Section 132Section 153A

material record. As per the grounds of appeal, the dispute in the present appeal is confined to addition of Rs.5,42,000/- being unexplained investment in purchase of plot of land. 6. Briefly the facts are, the assessee is an individual. A search and seizure operation under Section ... claim that the cash payment was made out of past savings, the Assessing Officer treated the cash payment of Rs.5,42,000 as unexplained investment and added back to the income of the assessee. While deciding the issue in appeal, learned Commissioner (Appeals) upheld the addition made by the Assessing

Ramchandra Dashrath & Co., Navi Mumbai vs. DCIT 22(3), Mumbai

In the result, the appeal of the assessee is allowed

ITA 5107/MUM/2011[2002-03]Status: DisposedITAT Mumbai20 Jan 2022AY 2002-03

Bench: Shri Promod Kumar ()And Ms. Suchitra Kamble () Assessment Year: 2002-03 Ramchandra Dashrath & Co. Dy. Commissioner Of Income Tax- F-108, Apmc Fruit Market, Sector- Vs. 22(3), 19, Turbhe, Navi Mumbai-400705. Mumbai. Pan No. Aaffr 7250 L Appellant Respondent Assessee By : Ms. Aasifa Khan, Ar Revenue By : Mr. Sunil Kumar Jha, Cit-Dr Date Of Hearing : 11/01/2022 Date Of Pronouncement : 20/01/2022

For Appellant: Ms. Aasifa Khan, ARFor Respondent: Mr. Sunil Kumar Jha, CIT-DR

Section 132Section 143(2)Section 143(3)Section 147Section 148Section 158B

facts circumstances of the case and in law, the CIT(A) erred in calculating the excess cash over receipts, over few days as unexplained investment ignoring the submission of the appellant that the opening cash balance has not been considered in the calculation and hence such calculation is erroneous ... cash credits of ₹87,46,462/- towards difference between balance in sundry creditors and sundry debtors, Ramchandra Dashrath & Co. 5 ₹22,96,896/- towards unexplained investments and ₹5,44,600/- towards income from business operation. Thus the Assessing Officer assessed the total income at ₹1,64,44,860/-. 5. Being

Kaksh Impex Private Limited, New Delhi vs. ACIT Central Circle-26, New Delhi

In the result, the additions made in all these appeals are deleted and the appeals filed by the respective assessees are allowed

ITA 223/DEL/2021[2011-12]Status: DisposedITAT Delhi18 Jan 2022AY 2011-12

Bench: Shri R.K. Panda & Ms. Suchitra Kamble

For Appellant: Shri Ramesh Goyal, C.AFor Respondent: Shri Surender Pal, CIT-

Section 132Section 142(1)Section 143(1)Section 153A

Helicorp Pvt. Ltd., M/s. S B Hospitality 8s Services Pvt Ltd. and M/s. Santech Energy System & Services Pvt Ltd. The addition on account of unexplained investment 15 ITA.Nos.223 to 229/Del./2021, 220 to 222/Del./2021, ITA.Nos.213 to 219/Del./2021 & 212/Del./2021 M/s. Kaksh Impex Pvt. Ltd., New Delhi

Kanwar Sain Gupta, Faridabad vs. ITO Ward 1(4), Faridabad

Appeal is partly allowed

ITA 3599/DEL/2019[2010-11]Status: DisposedITAT Delhi18 Jan 2022AY 2010-11

Bench: Shri Kul Bharat[Assessment Year: 2010-11

Section 143(3)Section 145(3)Section 251(1)

find that the assessee has not filed any evidence regarding genuineness of the purchases. The authorities below have not added the entire purchases as unexplained investment but made addition on the basis of the embedded profit. Learned CIT(A) has applied the rate at 14.77%. However, considering the case laws

ACIT, New Delhi vs. M/S. Lepro Herbals Pvt. Ltd., New Delhi

In the result, the appeal filed by the Revenue is dismissed

ITA 111/DEL/2016[2010-11]Status: DisposedITAT Delhi18 Jan 2022AY 2010-11

Bench: Shri R.K. Panda & Ms. Suchitra Kamble

For Appellant: Dr. Rakesh Gupta, AdvocateFor Respondent: Shri Pravin Rawal, CIT-DR

Section 132Section 132(1)Section 145

especially when no other corroborative 32 ITA.No.111/Del./2016 M/s. Lepro Herbals Pvt. Ltd., New Delhi. evidences such as bogus purchases bills/bogus expenses or unexplained investment, etc. were found during the course of search. In this view of the matter and in view of the detailed reasoning given

Sri. M.K. Kempasiddaiah, Bangalore vs. Assistant Commissioner of Income Tax, Central Circle-1(3), Bangalore

In the result, all the appeals are allowed

ITA 686/BANG/2020[2013-14]Status: DisposedITAT Bangalore06 Jan 2022AY 2013-14

Bench: Shri N.V. Vasudevan

For Appellant: Shri. V. Srinivasan, AdvocateFor Respondent: Shri. Ganesh R. Ghale, Standing Counsel for Department

Section 10Section 11Section 12Section 143(2)Section 153A

submitted that it is out of past savings. Since no documentary evidence was filed, the AO treated the sum of Rs.2,50,000/- was unexplained investment which the CIT(A) confirmed. It is the plea of the assessee that the assessee is a 80 years old person and his savings