Section 54F Benefit Denied When New Property Bought in Mother's Name; Unexplained Cash Deposits Rejected

The ITAT Delhi upheld the CIT(A)'s decision denying the benefit of section 54F where the new residential property was purchased in the name of the assessee's mother, following the jurisdictional Punjab & Haryana HC rulings. Grounds 1 to 3 of the appeal were dismissed accordingly. Regarding unexplained cash deposits, the assessee's initial explanation of withdrawals was later changed to advances from the sale of immovable property by the mother, but no supporting details were provided. The tribunal found this explanation unsubstantiated and rejected it, dismissing grounds 4 and 5 of the appeal.

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ISSUES:

Whether deduction under section 54F of the Income Tax Act, 1961 can be claimed when the new residential property is purchased in the name of a person other than the assessee.Whether unexplained cash deposits in the assessee's bank accounts can be added to income under section 69 read with section 115BBE of the Income Tax Act, 1961.

RULINGS / HOLDINGS:

The claim of deduction under section 54F of the Act is not allowable where the new asset is purchased in the name of a person other than the assessee, as the condition laid down under section 54F requires the new asset to be purchased in the name of the assessee; the court upheld the rejection of deduction following the "decision rendered by Hon'ble Jurisdictional High Court" in Jai Narayan vs. ITO and Kamal Kant Kamboj vs. ITO.The addition of Rs. 16,45,400/- under section 69 read with section 115BBE of the Act on account of unexplained cash deposits was upheld because the assessee's explanation that the deposits were from advance received on sale of immovable property was unsubstantiated and details of the alleged property sale were not furnished; the earlier explanation of withdrawals from bank was partly accepted but insufficient to exclude the addition.

RATIONALE:

The court applied the statutory provisions of section 54F of the Income Tax Act, 1961, which conditions the allowance of deduction on the purchase of a new residential asset in the name of the assessee; it followed binding precedent from the Hon'ble Jurisdictional High Court interpreting these requirements strictly, rejecting contrary views from non-jurisdictional High Courts.The addition under section 69 read with section 115BBE was based on the principle that unexplained cash credits are taxable unless satisfactorily explained; the assessee's inconsistent explanations and failure to substantiate the source of cash deposits led to the addition being sustained.No dissenting or concurring opinions were recorded; the judgment respects established judicial precedent and statutory interpretation without doctrinal shifts.

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