2025 (8) TMI 1649 - AT - Income Tax

Taxpayer's bank records and demand draft prove lawful source of funds for property purchase; unexplained payment disallowed

Nibedita Deb Barma Versus Income Tax Officer, Ward-60 (2), Kolkata

Nibedita Deb Barma Versus Income Tax Officer, Ward-60 (2), Kolkata - TMI ISSUES PRESENTED AND CONSIDERED 1. Whether payments made in the financial year relevant to the assessment year (FY 2015-16) for purchase of immovable property, which the assessee purports to have made from her salary account, constitute explained investments so as to negate an addition under section 69 as 'unexplained investment'. 2. Whether the excess of stamp duty value over consideration (after DVO/valuation adjustments) is taxable as income of the purchaser under section 56(2)(vii)(b), and, if so, whether that addition survives where the purchaser has produced bank evidence showing payment by banking channel. 3. Admissibility and effect of additional documentary evidence filed at appellate stage (bank statements / paper book) - whether such material may be relied upon to rebut additions under sections 69 and 56, in light of Rule 46A of the Income Tax Rules. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Application of section 69 (unexplained investments) Legal framework: Section 69 permits addition where the assessee is unable to satisfactorily account for investments made in the previous year relevant to the assessment year; the provision targets unexplained investments. Precedent Treatment: No precedent was relied upon by the Tribunal or parties in the record; therefore no precedent was followed, distinguished or overruled. Interpretation and reasoning: The Tribunal examined the bank statement produced in the paper book which showed payment entries from the assessee's salaried account for the amounts claimed to have been paid in FY 2015-16, and documentary evidence of registration payment (demand draft). The entries demonstrated that the payments were effected through the banking channel and corroborated by contemporaneous pass-book entries. On that factual foundation the Tribunal concluded that the source of the payment for the property (for the FY 2015-16 component of payments) was adequately explained as arising from the assessee's salary account. Ratio vs. Obiter: Ratio - where documentary bank records contemporaneously demonstrate that payments for acquisition of property were made from disclosed salary account funds, section 69 cannot be invoked to treat those payments as unexplained investments. Obiter - none material to this point. Conclusion: The addition of Rs. 5,03,490 treated as unexplained investment under section 69 is deleted because the assessee satisfactorily established the source by bank account entries and registration payment evidence. Issue 2 - Application of section 56(2)(vii)(b) (stamp duty value excess over consideration) Legal framework: Section 56(2)(vii)(b) deems, subject to the monetary threshold, the excess of stamp duty valuation over the consideration paid by the purchaser as income in the hands of the purchaser where the stamp duty value exceeds the consideration and the difference exceeds the prescribed limit. Precedent Treatment: No case law was cited or applied to alter the statutory approach; Tribunal proceeded on statutory interpretation and factual record. Interpretation and reasoning: The appellate authority below had already reduced the addition by applying the stamp duty valuation facts and left an addition of Rs. 1,23,156 under section 56(2)(vii)(b). The Tribunal, having accepted that the payment for purchase and registration were effected through the assessee's bank account and that the bank evidence and demand draft corroborate the transaction, concluded that the factual basis for treating any portion as taxable under section 56(2)(vii)(b) did not survive. The Tribunal treated the documentary proof establishing the payment and the transaction as sufficient to negate the impugned addition. Ratio vs. Obiter: Ratio - factual evidence showing payment through banking channels and corroborative documents can be decisive to negate an addition under section 56(2)(vii)(b) where the alleged discrepancy arises from valuation differences; when the purchaser satisfactorily establishes the payment and transaction, the deemed income provision cannot be mechanically applied. Obiter - Tribunal did not elaborate broader valuation law or valuation disputes beyond the documentary proof accepted. Conclusion: The addition of Rs. 1,23,156 under section 56(2)(vii)(b) is deleted, the Tribunal directing that the assessing officer remove the addition in light of the accepted bank and registration evidence. Issue 3 - Admissibility and weight of additional evidence filed at appellate stage (Rule 46A) Legal framework: Rule 46A permits filing of additional evidence before the appellate authority subject to compliance with conditions; admissibility at appellate stage is governed by the rule and the appellate authority's discretion. Precedent Treatment: The record contains no extended doctrinal analysis or reliance on authority about Rule 46A; the Tribunal proceeded on examination of the material produced (paper book / bank statements). Interpretation and reasoning: Although the assessee asserted that bank statements were filed under Rule 46A before the CIT(A), and the Revenue questioned admissibility, the Tribunal directly examined the bank statement and documentary entries placed as paper book before the ITAT. The Tribunal treated the bank records and demand draft evidence as contemporaneous documentary proof of payment and gave them decisive evidentiary weight. The Tribunal did not rest its order on a formal ruling about procedural compliance with Rule 46A; rather it evaluated and accepted the documentary proof on its merits. Ratio vs. Obiter: Obiter - the Tribunal's acceptance of the appellate-stage documents without a detailed Rule 46A determination suggests a pragmatic evidentiary approach but does not establish a general rule on procedural compliance; the operative ratio remains that where admissible documentary evidence (bank entries, demand drafts) establishes payment, it negates additions under sections 69 and 56. Conclusion: The bank statements and related documentary evidence placed in the paper book were relied upon by the Tribunal to establish the source of payments; consequently, the additions based on alleged non-explanation were deleted. The Tribunal's decision turned on the probative value of the documents rather than a formal pronouncement on Rule 46A compliance. OVERALL CONCLUSION The Tribunal allowed the appeal, directing deletion of additions of Rs. 5,03,490 (under section 69) and Rs. 1,23,156 (under section 56(2)(vii)(b)), holding that contemporaneous bank records and demand draft/registration evidence satisfactorily established the source and mode of payment for the property and hence rebutted the basis for the impugned additions. The decision is founded on factual documentary proof rather than new legal precedent.