2024 (10) TMI 593 - AT - Income Tax

Unexplained investment u/s 69 - admission during survey u/s 133A - HELD THAT -As assessee has undertaken construction on a land which is jointly owned by the assessee, his wife and two sons. The same is also evident from the fact that after completion of the building, the same has been let out and rental income has been offered in respective hands on proportionate basis. In such a case, adding entire alleged undisclosed investment in the hands of the assessee could not be held to be justified. Another fact is that the assessee has furnished cash flow statements and statement of affairs of all the persons before lower authorities in support of the claim. However, going by the admission of the assessee in statement recorded during survey u/s 133A, AO has made impugned addition on estimated basis. There is no material on record to indicate that the assessee has made that kind of investment. The statement recorded during survey u/s 133A do not bind the assessee as per the decision of of S. Khader Khan 2013 (6) TMI 305 - SC ORDER The same is rebuttable one. The assessee, in our considered opinion, by furnishing the cash flow statements and loan sanction letters, duly substantiated its case to a great extent. Considering the fact that the property is a joint one and with a view to put an end to litigation, we restrict the impugned additions to the extent of Rs. 10 Lacs. The balance addition stand deleted - Decided partly in favour of assessee.

Summary

Issues: Assessment of unexplained investment under section 69 for Rs. 67 Lacs.

Analysis:
1. The appeal was filed by the assessee for Assessment Year 2015-16 challenging the addition of unexplained investment under section 69 for Rs. 67 Lacs made by the Assessing Officer. The assessee, a resident individual running a Jewellery Shop, admitted income of Rs. 15.57 Lacs in the return of income. During a survey, the assessee disclosed an investment of Rs. 3.50 Crores for construction, sourced from loans and personal funds. However, discrepancies arose in subsequent statements regarding the source of funds, leading to the addition of Rs. 67 Lacs as undisclosed income.

2. The assessee submitted a break-up of amounts spent by himself, his wife, and two sons during AYs 2014-15 and 2015-16. The Assessing Officer alleged that all funds were routed through the assessee's accounts, leading to the addition. The assessee contended that the property was jointly owned and the construction costs were contributed by multiple family members. The rental income from the property was offered for tax proportionately. The assessee provided details of contributions by each family member, supported by cash flow statements and loan sanction letters.

3. The Tribunal observed that the property was jointly owned by the assessee and family members, evident from the rental income distribution. The cash flow statements and supporting documents substantiated the contributions made by each individual. The Tribunal noted that the statement recorded during survey u/s 133A was not binding on the assessee, following the decision in S. Khader Khan case. Considering the joint ownership and the evidence provided, the Tribunal restricted the addition to Rs. 10 Lacs, deleting the balance addition.

4. In conclusion, the Tribunal partially allowed the appeal, restricting the addition to Rs. 10 Lacs, based on the joint ownership of the property and the substantiated contributions by family members. The decision was pronounced on 9th October 2024.