Unexplained on-money additions and invalid post-direction verification fail where banking evidence and jurisdictional limits are established

An alleged on-money addition could not be sustained where the residential purchase was shown to be funded through a bank loan and remittances received through banking channels, and the Revenue failed to prove any undisclosed source of income in India. The mere difference between the registered value and the total consideration was insufficient to treat the amount as unexplained payment when supported by documentary evidence. A further addition made in the final assessment order pursuant to Dispute Resolution Panel directions was also deleted because section 144C did not permit post-direction verification beyond the panel's jurisdiction. Both additions were deleted.

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Issues: (i) Whether the addition of Rs. 9,06,000 as alleged on-money paid for purchase of the residential unit was sustainable; (ii) Whether the addition of Rs. 5,20,000 made in the final assessment order pursuant to the directions of the Dispute Resolution Panel was valid.

Issue (i): Whether the addition of Rs. 9,06,000 as alleged on-money paid for purchase of the residential unit was sustainable.

Analysis: The purchase consideration was shown to have been funded through a bank loan and remittances received from Singapore through banking channels. The Revenue did not establish any undisclosed source of income in India for the assessee. Mere difference between the registered value and the total consideration could not, by itself, be treated as on-money or unexplained payment when the payments were supported by declared sources and documentary evidence.

Conclusion: The addition of Rs. 9,06,000 was deleted and the issue was decided in favour of the assessee.

Issue (ii): Whether the addition of Rs. 5,20,000 made in the final assessment order pursuant to the directions of the Dispute Resolution Panel was valid.

Analysis: The directions required the Assessing Officer to undertake further verification and enquiries after the Dispute Resolution Panel proceedings. The statutory scheme of section 144C does not permit the panel to direct the Assessing Officer to make post-direction verification before passing the final assessment order. The direction travelled beyond the panel's jurisdiction, rendering the consequent addition unsustainable.

Conclusion: The addition of Rs. 5,20,000 was deleted and the issue was decided in favour of the assessee.

Final Conclusion: The appeal was allowed to the extent of deletion of both additions, while the challenge to the reopening and the penalty-related ground did not survive or was not adjudicated on merits.

Ratio Decidendi: An addition for alleged on-money cannot be sustained without proof of an undisclosed source when the purchase consideration is shown to have been funded from declared banking channels and verified remittances, and the Dispute Resolution Panel cannot direct post-decisional verification beyond the jurisdiction conferred by section 144C.

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