Unexplained investment in property: payment timing outside relevant financial year leads to deletion of addition and appeal allowed

Unexplained investment in purchase of property was contested where payments appeared from the assessee's bank accounts. The tribunal examined timing of payments and found none fell in the financial year relevant to the assessment year in dispute; payments occurred in earlier or later years. Because no payment was made by the assessee during the relevant financial year, the tribunal rejected the revenue's addition for unexplained investment and allowed the assessee's appeal.

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Issues: Whether the addition of Rs. 58,01,023/- as unexplained investment under Section 69 of the Income-tax Act, 1961, is justified for Assessment Year 2018-19 when the payments in question were made by the assessee's father and none of the payments fell within the financial year relevant to AY 2018-19.

Analysis: The issue involves application of Section 69 regarding unexplained investments and the principles governing reassessment proceedings under Sections 147 and 148 read with procedural safeguards in Section 148A. The material on record shows that the payments towards the property were effected from the father's bank accounts and that the detailed breakup establishes the dates of those payments. The payments from the father's State Bank of India account occurred in an earlier assessment year, and payments from the Punjab National Bank and IDBI accounts were made after 14.04.2018. Since none of the impugned payments were made during the financial year 2017-18 relevant to AY 2018-19, the temporal link required to treat those amounts as investments during the year under assessment is absent. The burden to link the funds to the relevant assessment year is not discharged by treating narrations in bank statements as insufficient where the dates do not fall within the year under consideration. In these circumstances, treating the amount as unexplained investment for AY 2018-19 is unsustainable.

Conclusion: The addition of Rs. 58,01,023/- under Section 69 for AY 2018-19 is not sustainable and the appeal is allowed in favour of the assessee.

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