ITAT Deletes Section 69 Addition as Property Investment Belonged to Earlier Year

Case Details: Dove Buildcon vs. ITO - [2026] 186 taxmann.com 719 (Mumbai - Trib.)

Judiciary and Counsel Details

• Amit Shukla, Judicial Member & Makarand Vasant Mahadeokar, Accountant Member
• Suresh Gupta, Ld. AR for the Applicant.
• Annavaram Kosuri, Ld. DR for the Respondent.

Facts of the Case

The assessee was a partnership firm. It had not filed its return of income for the relevant assessment year. As per the information available with the Department, the assessee had entered into a substantial financial transaction during the relevant assessment year, being the purchase of an immovable property for a consideration of Rs. 2,00,00,000.

On the basis of the said information, proceedings under section 148A were initiated, and a notice under section 148 was issued. The assessee furnished a copy of the bank book, details of partners’ capital, partners’ loans, and unsecured loans, as well as an agreement for the purchase of land. Despite sufficient opportunities, the assessee failed to substantiate the source of investment with corroborative evidence.

Accordingly, invoking the provisions of section 69, the Assessing Officer (AO) treated the purchase consideration of Rs. 2,00,00,000 as an unexplained investment and brought the same to tax under section 69 read with section 115BBE of the Income-tax Act.

Aggrieved by the order, the assessee preferred an appeal to the CIT(A). The CIT(A) allowed the assessee’s appeal. Aggrieved by the order, the Department preferred an appeal to the Tribunal.

ITAT Held

The Mumbai Tribunal held that the AO had not brought any material on record to controvert the assessee’s claim that the transaction was executed in the earlier year. The evidence placed on record, including registered documents and bank statements, demonstrated that the consideration of Rs. 2,00,00,000 was paid during the financial year 2014-15.

Once the assessee has discharged its primary onus by producing documentary evidence demonstrating that the transaction pertains to an earlier year, the burden shifts to the Revenue to establish that the investment was made during the relevant year. In the present case, the AO failed to discharge this burden and proceeded solely on information without any independent verification.

It is a settled position of law that an addition under section 69 of the Act cannot be sustained merely based on suspicion, conjectures or unverified third-party information, without the AO discharging the primary burden cast upon him to establish that the assessee has, in fact, made an investment during the relevant year, which remains unexplained.

In the absence of any cogent evidence establishing that the assessee has made an unexplained investment in the relevant previous year, the addition made under section 69 of the Act cannot be sustained in law.

List of Cases Reviewed

• CIT v. Pradeep Kumar Gupta [2008] 303 ITR 95 (Delhi) (para 22) followed.

List of Cases Referred to

• CIT v. Pradeep Kumar Gupta [2008] 303 ITR 95 (Delhi) (para 12).