Unexplained cash investment remitted for verification of gift evidence and fresh adjudication by assessing officer.

Addition under the law treating a cash payment as unexplained cash investment was challenged; the assessee claimed joint purchase and that the cash originated from a gift by the mother-in-law supported by bank statements and a gift declaration. The joint-purchase point was not accepted on record; the gift proof could not be verified before the Tribunal. The Tribunal remitted the matter to the Jurisdictional Assessing Officer for verification of the mother-in-law's bank records and the gift declaration and for fresh adjudication after affording a fair opportunity of hearing.

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Issues: Whether the addition of Rs. 3,40,000 made under Section 69 of the Income-tax Act, 1961 as unexplained cash investment in the purchase of a residential flat is justified.

Analysis: The assessment arose from reassessment proceedings initiated under Sections 147, 144 and 144B of the Income-tax Act, 1961 following information obtained during action under Section 133A; records showed a ledger mentioning a cash payment of Rs. 3,40,000 towards purchase of the flat. The assessee argued (i) the flat was jointly purchased and payments should be examined in the husband's hands, and (ii) alternatively, the cash payment was made from gifted cash withdrawn by the assessee's mother-in-law, with bank statements and a gift declaration to be produced. The first contention was not accepted on the record of joint purchase and reassessment. The alternative contention involved documentary proof that could not be verified before the Tribunal; in the interest of justice a remand was directed to the Jurisdictional Assessing Officer for verification of the mother-in-law's bank statement and gift declaration and for fresh decision after granting a fair opportunity of hearing.

Conclusion: Issue is partly decided in favour of the assessee; the addition of Rs. 3,40,000 under Section 69 is remitted to the Jurisdictional Assessing Officer for verification of the gift evidence and for fresh adjudication in accordance with law.

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