2026 (1) TMI 544 - AT - Income Tax

Father's salary and pension savings used for joint property purchase; additions under ss. 69/69C deleted as source proved.

Additions under ss. 69 and 69C for alleged unexplained investment and expenditure in purchase of jointly owned immovable property were challenged on the ... Addition u/s.69 & 69C - purchase of a property by the assessee - property was purchased in joint ownership with mother of the assessee - assessee proved the source as payments through father's accumulated savings - HELD THAT:- Money was received from father, who is aged 83 years and retired from Hindustan Cables ltd. on 31.10.1996 after 34 years of services and it was the only salary income which was accumulated over the years. The father of the assessee has not filed any return of income because the income is not taxable. Since around 29 years are passed from his date of retirement, it was not possible to retain all the retirement papers and receipts thereon. The ld.AR further submitted that the details of funds utilized for purchase of the said property was available, aggregating to Rs. 32,00,000/- and also for meeting the other incidental expenses connected therewith. Thus, property purchased by the assessee is from the personal savings of her father from salary and pension etc. Accordingly, we are inclined to set aside the order of the CIT(A) and direct the AO to delete the addition made u/s.69 & 69C - Appeal of the assessee is allowed. 1. ISSUES PRESENTED AND CONSIDERED (i) Whether the amounts treated as unexplained investment and unexplained expenditure in connection with purchase of immovable property-being Rs. 32,00,000/- under section 69 and Rs. 3,60,307/- under section 69C-were sustainable when the assessee explained the source as payments made through identified bank cheques (and part cash) and claimed the funds to be from her father's accumulated savings. 2. ISSUE-WISE DETAILED ANALYSIS Issue (i): Sustainability of additions under sections 69 and 69C relating to property purchase and stamp duty/registration charges Legal framework (as discussed/applied by the Tribunal): The Tribunal applied the principle underlying sections 69 and 69C that additions for 'unexplained investment' and 'unexplained expenditure' are not warranted where the assessee satisfactorily explains the source of the investment/expenditure from the material placed on record. Interpretation and reasoning: The Tribunal noted that the property had been booked earlier and registered later, and that the payments aggregating to Rs. 32,00,000/- (and incidental amounts towards stamp duty/registration charges) were made through specific cheques drawn from identified bank branches, with one cash payment of Rs. 2,00,000/- also shown. The Tribunal accepted the explanation that the property was purchased in joint ownership with the assessee's mother and that the funds were provided by the assessee's father, an elderly retired person, out of accumulated salary/pension savings over the years. The Tribunal also accepted the practical explanation that, given the long lapse of time since retirement, complete preservation of retirement papers/receipts was not feasible. On these facts, the Tribunal found the source of funds to be satisfactorily explained as personal savings of the father. Conclusion: The Tribunal held that the investment of Rs. 32,00,000/- and the expenditure of Rs. 3,60,307/- stood explained; therefore, the additions under sections 69 and 69C were not sustainable. The order sustaining the additions was set aside and the Assessing Officer was directed to delete both additions. The appeal was allowed.