Summary of this article
ITAT Mumbai deleted an ₹80.10 lakh unexplained investment addition.
Husband’s Dubai remittances funded part of the property purchase.
Documents established the source of funds and transaction trail.
A Mumbai woman has won a tax dispute after the Income Tax Appellate Tribunal (ITAT) deleted an additional tax of Rs 80.10 lakh after the tax department treated it as an unexplained investment in a property purchase. The case involves a property that was bought in Mumbai for around Rs 1.40 crore. The taxpayer has explained that the purchase was funded collaboratively with her money as well as with her husband, who was working in Dubai.
What Was The Case?
The woman had paid for the property through her Indian bank account, somewhere around Rs 58.5 lakhs, while her husband paid the remainder of Rs 80 lakh directly to the property seller through a Dubai-based exchange bureau. The Income Tax Department accepted the payments, which were made through her account, but questioned the remainder, which was paid by her husband. During the proceedings of the reassessments, the department treated the amount as an unexplained investment under Section 69 of the Income Tax Act, 1961. The tax authorities added the additional Rs 80.10 lakh to her taxable income since the taxpayer could not produce the original remittance documents from the Dubai exchange bureau. The addition also included Rs 10,000 more, which was also treated as unexplained. The taxpayer challenged this order before the ITAT Mumbai. She submitted a source-wise reconciliation of the entire purchase.
What Was The Explanation?
As per her submissions and explanations, Rs 48 lakh came from the sale of an earlier property, Rs 80 lakh was transferred to her by her husband from Dubai in two equal instalments of Rs 40 lakh each time, and the remainder of Rs 20 lakh was gifted to her by her husband. From the Rs 20 lakh gift money, Rs 18.5 lakh was used for purchasing a property. The remaining Rs 10,000 was paid through a bank pay order.
In front of the tribunal, she submitted various documents which justified these transactions and payment transfers. These included her husband’s passport and identity documents, his income tax records, the seller’s bank statement showing the transaction of Rs 80 lakh, registration and sale deeds, a gift deed, a bank confirmation and a copy of the pay order.
What Was The Ruling?
The ITAT noted that the Income Tax Department had not disputed the identity of the husband and his relationship with the taxpayer, his financial capacity or the fact that the Rs 80 lakh was sent to the seller. The department also did not rule out that the documents presented were false or fabricated. Therefore, the ITAT deleted the Rs 80 lakh addition under Section 69 along with the additional Rs 10,000 fine, and ruled in favour of the taxpayer.
