JAYSHREE RAO,VADODARA V. THE ITO, WARD-1(2)(1), VADODARA

ITA 1262/AHD/2025

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Jayshree Rao, a Non-Resident Indian (NRI) residing in the UK, appealed against the order of the Commissioner of Income-tax (Appeals), which sustained an addition of Rs. 89,400 to her income as unexplained investment in property. The property, valued at Rs.3,08,93,102, was purchased jointly with her brothers. The Assessing Officer initially added Rs.5,89,400 as unexplained investment, which was later reduced to Rs.89,400 after considering some explained sources. The Tribunal found that the CIT(A) had erred in sustaining the addition without proper consideration of the sequence of events and documentary evidence provided by the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 771851 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2018-2019
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRATIK SHARMA
• Assessee Lawyers: JAIMIN SHAH
• Keywords: Unexplained investment; Principle of natural justice; FORM 26AS
• Section: 147; 148; 69

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER ITA No.1262/Ahd/2025 (Assessment Year: 2018-19) Jayshree Rao, 401, Ivory, Nr. Pantaloon, Lawgarden, Mithakhali, Navrangpura, Ahmedabad-380009 [PAN :ARLPR 8185 R] Vs. The Income Tax Officer, Ward 1(2)(1), Vadodara (Appellant) .. (Respondent) Appellant by : Shri Jaimin Shah, AR Respondent by: Shri Pratik Sharma, Sr DR Date of Hearing 07.08.2025 Date of Pronouncement 25.08.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as \"CIT(A)\" for short) dated 26.03.2025 passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as \"the Act\" for short], for Assessment Year (AY) 2018-19. 2. The assessee has raised the following grounds of appeal:- “01. That the Ld. CIT(A), NFAC has erred both in law and on facts while sustaining the addition made by Ld. A.O. of Rs. 89,400/-, and therefore it requires to be deleted. 02. That the Ld. CIT(A), NFAC has not consider the submissions made by the appellant and addition sustained u/s 69 of the I.T. Act, 1961 for Rs. 89,400/- is against the principal of natural justice and require to be deleted. 03. That the appellant has explained the source of payments of Rs. 89,400/-, however without appreciating the facts and documents on record addition sustained of Rs. 89,400/-require to be deleted.” Printed from counselvise.com ITA No.1262/Ahd/2025 Jayshree Rao Vs. ITO Asst. Year : 2018-19 - 2– 3. The assessee, in this case, is an individual and a Non-Resident Indian (NRI) residing in the United Kingdom for the past 30 years. The assessee did not earn any taxable income in India during the relevant assessment year and, therefore, did not file a return of income. The assessee’s case was reopened u/s 148 of the Act based on information indicating the purchase of immovable property valued at Rs.3,08,93,102/- during the year under consideration and the fact that no return of income had been filed. The assessee clarified that the agricultural land in question was jointly purchased along with her four brothers for a total consideration of Rs.1,54,46,551/-, and that the transaction was mistakenly recorded twice in the records. Upon verification of the documents and Form 26AS, the Assessing Officer confirmed that the correct purchase value was Rs.1,54,46,551/- and that the assessee’s share was Rs.30,89,400/-, representing a 20% share in the property. Despite this explanation, the Assessing Officer completed the assessment under Section 147 r.w.s. 144 of the Act and added Rs.5,89,400/- as unexplained investment u/s 69 of the Act. 4. Aggrieved by the assessment order, the assessee filed an appeal before the Ld. CIT(A), who partly allowed the appeal but sustained the addition to the extent of Rs.89,400/- with the following observations:- “6.1 I have carefully considered the statement of facts, grounds of appeal, assessment order and submission of the appellant along with the remand report submitted by the AO and the endorsement of the Range Head. 6.2 Vide various grounds of appeal, the appellant has raised the sole issue of addition of Rs.5,89,400/- as unexplained money invested in the purchase of immovable property u/s 69 of the Act. After going through the remand report, it is seen that the appellant has claimed to have received Rs.5,00,000/- as loan from one Sh. Vaibhav Piyushbhai Brahmbhatt in the form of banking transaction. The appellant submitted copy of PAN and bank statement of the lender and after examining the same the AO has accepted the genuineness and identity of the lender. However, the AO has submitted that as the purported lender has filed a return of only Rs.3,30,890/- for the corresponding AY, however, has shown to be advancing a loan of Rs.5,00,000/- and hence the creditworthiness of the Printed from counselvise.com ITA No.1262/Ahd/2025 Jayshree Rao Vs. ITO Asst. Year : 2018-19 - 3– lender is not established and has recommended that the claim of the said source should be disallowed. It is noted that even the AO has admitted the genuineness and identity of the lender. The question regarding creditworthiness of the lender and the reservations expressed in this regard are without any basis. The creditworthiness of the lender cannot be questioned on the sole basis of the fact that the returned income is less than the amount lent specially when the transaction is through banking channels and nothing adverse was found in the bank statement of the lender. The AO does confirm the transaction was through banking channels and if the AO had any doubt about the creditworthiness he should have analyzed the concerned and the adjacent entries in the bank statement. No such exercise has been done nor is there any suspicious looking credit entry is noticed in the vicinity of the concerned loan entry. The creditworthiness of the lender cannot be challenged merely because of a fact that the extended loan amount is in excess of the returned income. It is not necessary that the amount lent should be coming out of the concerned years income and could may well have been the accumulation of the past savings. In view of the same, addition to the extent of Rs.5,00,000/- is deleted. 6.3 The appellant has submitted two other loan transactions as source of the purchase of the immovable property I.e. a loan of Rs.30,894/- from Atulbhai Brahmbhatt HUF (appellant's brother HUF) and Rs.58,416/- from one Sh. Ashokbhai Brahmbhatt (appellant's brother). However, an analysis of the bank statements of these two persons revealed that both the amounts were received by the appellant after the date of purchase of property i.e. after 09.03.2018. It is also noted that as per the conveyance deed entered into on 09.03.2018, the entire consideration was paid and no payment to the seller was outstanding which could have been paid through any of the above two loans. Hence, the said contention of the appellant is rejected and addition to the extent of Rs.89,400/- (Rs.5,89,400/- minus Rs.5,00,000/-) is sustained.” 5. Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal. 6. During the course of hearing, the Ld. AR submitted that the Ld. CIT(A) had erred in rejecting the assessee’s explanation solely based on the dates mentioned in the conveyance deed, without considering the actual sequence of events. The Ld. AR submitted that the sale deed was actually executed on 12.03.2018, not 09.03.2018 as incorrectly assumed by the CIT(A), and this was supported by documentary evidence submitted before the Tribunal. Printed from counselvise.com ITA No.1262/Ahd/2025 Jayshree Rao Vs. ITO Asst. Year : 2018-19 - 4– 7. The Ld. Departmental Representative (DR), on the other hand, relied on the findings of the CIT(A) and supported the order. 8. We have heard the rival contentions and perused the material available on record. It is undisputed fact that the assessee had explained the source of Rs.5,00,000/- from Shri Vaibhav Piyushbhai Brahmbhatt, and the Ld. CIT(A) has rightly deleted the corresponding addition after considering the evidence. As regards the balance amount of Rs.89,400/-, we find that the assessee had submitted details of loans of Rs.30,984/- and Rs.58,416/- received from her brother and her brother’s HUF respectively. Both transactions were made through banking channels, and no adverse findings were recorded by the Assessing Officer or the CIT(A) regarding the creditworthiness, genuineness or identity of the lenders. Hence, keeping in view the fact that the assessee is a NRI, residing at UK for the past 30 years and since the sources have been proved, no addition is called for. 9. In the result, appeal of the assessee is allowed. The order is pronounced in the open Court on 25.08.2025 Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 25.08.2025 *btk आदेश की \u0007ितिलिप अ ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0007 / The Appellant 2. \b थ\u0007 / The Respondent. 3. संबंिधत आयकर आयु\u0015 / Concerned CIT 4. आयकर आयु\u0015(अपील) / The CIT(A)- 5. िवभागीय \bितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad Printed from counselvise.com "