ITAT Reduces Unexplained Investment Addition from Rs. 67 Lacs to Rs. 10 Lacs, Recognizes Joint Property Ownership.

The ITAT partially allowed the appeal, reducing the addition of unexplained investment under Sec. 69 from Rs. 67 Lacs to Rs. 10 Lacs. The Tribunal recognized the joint ownership of the property and accepted the substantiated contributions from family members, aligning with the precedent that statements during surveys are not binding.

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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.

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