2025 (7) TMI 1809 - AT - Income Tax

Unexplained Investment under Section 69A Not Attributable to Assessee if Made by Spouse, Penalty Under 271AAC Set Aside

Prerna Pramod Kadam Versus Income Tax Officer Income Tax Officer, Ward 22 (2) (1), Lalbaug

The ITAT Mumbai held that unexplained investment under section 69A could not be attributed to the assessee where the investment was made by the husband ... Unexplained investment in the property u/s. 69A - Co-ownership in property - HELD THAT:- Since, the investment has been made by the husband which has been considered is entirely in his assessment, there is no justification for making addition u/s. 69A in the hands of the assessee. Penalty u/s. 271AAC also set aside. ISSUES: Whether addition under section 69A of the Income Tax Act for unexplained investment in property is justified against a co-owner when the entire investment has been made and assessed in the hands of the other co-owner.Whether addition under section 56(2)(vii)(b) of the Income Tax Act for difference between consideration paid and stamp duty valuation is warranted when the difference is within permissible limits or has been accounted for in the hands of the other co-owner.Whether penalties under sections 271AAC(1) and 270A of the Income Tax Act should be sustained when the underlying additions have been deleted.Whether an appeal against penalty under section 270A is maintainable after deletion of the penalty by the Commissioner of Income Tax (Appeals). RULINGS / HOLDINGS: The addition under section 69A of the Act amounting to Rs. 10,50,000/- was not justified against the assessee as the entire investment was made by the husband and the addition was considered in his hands; therefore, no addition should be made in the assessee's hands.The addition under section 56(2)(vii)(b) of Rs. 5,30,000/- representing the difference between stamp duty value and consideration paid was restricted by the Commissioner of Income Tax (Appeals) to the actual difference determined by the valuation officer, and since this difference was accounted for in the husband's assessment, no addition was warranted in the assessee's hands.The penalty under section 271AAC levied in respect of the addition under section 69A was deleted as the underlying addition was deleted.The appeal against penalty under section 270A was dismissed as withdrawn since the penalty had already been deleted by the Commissioner of Income Tax (Appeals). RATIONALE: The Court applied the provisions of the Income-tax Act, 1961, specifically sections 56(2)(vii)(b), 69A, 271AAC(1), and 270A, considering the principle that income or additions should not be doubly taxed or added in the hands of multiple co-owners when the entire investment and corresponding additions have been accounted for in one co-owner's assessment.The valuation officer's report was relied upon to determine the market value of the property, which limited the addition under section 56(2)(vii)(b) to the actual difference between the stamp duty value and the consideration paid, rather than the entire difference initially considered by the Assessing Officer.The deletion of penalty under section 271AAC was consequent to the deletion of the substantive addition under section 69A, reflecting the principle that penalties are contingent on the existence of the underlying addition or concealment.No unique doctrinal shift or dissenting opinion was noted; the decision followed established principles of tax assessment and penalty imposition under the Act.