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2022 (8) TMI 247 - AT - Income TaxUnexplained investment u/s 69 - investment in Mutual Fund unexplained - HELD THAT - The proceeds of FD maturity was transferred to assessee wife bank account and from there an amount of Rs. 85 lakh was transferred to the assessee bank account and accordingly investment was made in the unit of mutual fund of different banks for an amount aggregating to 80 Lakh. The explanation of the assessee was rejected by the CIT (A) for the reason that it was not established that investment was made out of foreign remittance. We have perused the paper book submitted by the assessee where FD maturity advice along bank statement of assessee s wife Smt. Meena Nausik Desai - Form perusal of the document we find there several deposit were matured during F.Y. 2009-10 and maturity amount were credited in the bank account of Smt. Meena Nausik Desai. All these deposit were created during F.Y. 2007-08 and 2008-09 in USD. We further find an amount of Rs. 50 Lakh and 35 Lakh were transferred from bank account of Smt. Meena Nausik Desai to the assessee bank as on 02-12-2010 and 24-12-2010 respectively. From the above documentary evidences there remains no doubt with regard to sources of fund in the hand of the assessee which were utilized in making investment in mutual fund. Thus we are of the considered view that the assessee has sufficiently discharged the obligation cast under 69 by explaining the nature of investment and sources of fund. Therefore, we hereby set aside the order of the CIT(A) and direct the assessee to delete the addition of Rs. 80 Lakh made under section 69 - Decided in favour of assessee.
Issues Involved:
1. Disallowance of addition made by AO and assessing income at a higher amount. 2. Validity of invoking reassessment proceedings. 3. Treatment of investments in Mutual Funds as unexplained under section 69 of the Act. 4. Consideration of documentary evidence for HSBC Term deposits used for investments in Mutual Funds. Analysis: Issue 1: Disallowance of addition made by AO and assessing income at a higher amount The assessee challenged the action of the Assessing Officer (AO) in not accepting the Return of Income (ROI) filed by the appellant and instead assessing the income at a higher amount. The appellant requested the AO to delete the addition made and accept the ROI. However, the Tribunal dismissed this ground as it was general in nature and did not require separate adjudication. Issue 2: Validity of invoking reassessment proceedings The appellant contested the validity of invoking reassessment proceedings by the AO. The appellant argued that the proceedings were initiated without complying with the prerequisites as laid down in Section 147 read with Section 151 of the Income-tax Act, rendering them void ab initio and bad in law. However, the Tribunal did not find any infirmity in the proceedings under Section 147/148 and upheld the actions of the AO. Issue 3: Treatment of investments in Mutual Funds as unexplained under section 69 of the Act The main contention revolved around the addition of Rs. 80 Lakhs by treating investments in Mutual Funds as unexplained under section 69 of the Act. The AO treated the investments as unexplained due to the lack of submission or explanation from the assessee regarding the sources of the investment. However, the appellant provided detailed explanations, including the nature of investment, sources of funds, and identity of the payee. The Tribunal found that the appellant sufficiently explained the sources of funds for the investments, and after reviewing documentary evidence, set aside the addition of Rs. 80 Lakhs made by the AO. Issue 4: Consideration of documentary evidence for HSBC Term deposits used for investments in Mutual Funds The appellant argued that the documentary evidence on record substantiated the sources of funds used for investments in Mutual Funds, specifically related to HSBC Term deposits in US Dollars. The Tribunal considered the documentary evidence, including bank statements and FD maturity advice, which showed the flow of funds from the wife's bank account to the appellant's account for investment purposes. The Tribunal concluded that the appellant had sufficiently discharged the obligation under section 69 of the Act by explaining the nature of investment and sources of funds, leading to the deletion of the Rs. 80 Lakh addition. In conclusion, the Tribunal partly allowed the appeal of the assessee, setting aside the addition of Rs. 80 Lakhs made under section 69 of the Act and dismissing the challenge to the validity of the assessment framed under section 147.
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