Unexplained investment additions fail where banking records and credible documents establish sources for property and mutual-fund investments.
Section 69 unexplained-investment additions require a satisfactory explanation of the source of funds. Documentary confirmation of a gift, the donor's bank records evidencing liquidation of fixed deposits, and matching RTGS entries established the source and genuineness of funds applied to property investment; the addition was deleted. Bank debits, account credits, and the stated use of salary income and savings supported recurring mutual-fund contributions; that addition was also deleted. Credible documentary and banking evidence establishing funding sources prevents property and mutual-fund investments from being treated as unexplained.
Issues: (i) Whether Rs. 10,87,000 invested in property was unexplained investment under Section 69 of the Income-tax Act, 1961; (ii) Whether Rs. 24,840 invested in mutual funds was unexplained investment under Section 69 of the Income-tax Act, 1961.
Issue (i): Whether Rs. 10,87,000 invested in property was unexplained investment under Section 69 of the Income-tax Act, 1961.
Analysis: The confirmation of the gift to the assessee's wife, the donor's bank records showing liquidation of fixed deposits, and the matching RTGS debit and credit entries established the source and genuineness of the funds used for the property investment. The explanation for the investment was therefore supported by documentary banking evidence.
Conclusion: The addition of Rs. 10,87,000 as unexplained investment under Section 69 was deleted, in favour of the assessee.
Issue (ii): Whether Rs. 24,840 invested in mutual funds was unexplained investment under Section 69 of the Income-tax Act, 1961.
Analysis: The bank account reflected the mutual-fund debits. The investments comprised nominal recurring SIP payments ranging from Rs. 1,000 to Rs. 3,000, and the explanation that they were funded from salary income and savings was accepted in light of the account credits and the small scale of the investments.
Conclusion: The addition of Rs. 24,840 as unexplained investment under Section 69 was deleted, in favour of the assessee.
Final Conclusion: The property and mutual-fund investments stood explained, and the corresponding unexplained-investment additions could not be sustained.
Ratio Decidendi: An addition for unexplained investment cannot be sustained where credible documentary and banking evidence establishes the source of funds.