Unexplained investment addition deleted where source was proved by cheque transactions and banking records.

Where an assessee proves the source of an investment through credible evidence and shows the funds moved through banking channels, an addition for unexplained investment cannot be sustained. On the facts, the amount was advanced by cheque as a loan to a relative and later received back through banking channels, which was found sufficient to explain the source. The addition was therefore deleted. The note also states that the appeal did not abate on the assessee's death and was proceeded with on that basis.

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Issues: Whether the addition made towards alleged unexplained investment of Rs. 11,50,000 was sustainable.

Analysis: The assessee's case was that the amount in question had been advanced by cheque as a loan to a relative and had returned through banking channels in the relevant assessment year. The evidence on record was found sufficient to establish the source of the amount, and no basis remained to treat it as an unexplained investment. The appeal was also proceeded with despite the death of the assessee, in view of the principle that such appeal does not abate on that account.

Conclusion: The addition of Rs. 11,50,000 was deleted and the issue was decided in favour of the assessee.

Ratio Decidendi: Where the source of an investment is duly proved through credible evidence and the amount is shown to have moved through banking channels, the addition as unexplained investment cannot be sustained.

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