- ITAT ruled Rs 80 lakh not unexplained property investment.
- Tax department questioned husband’s overseas remittance for property.
- Taxpayer presented robust evidence, proving fund sources and transfers.
A woman has secured relief from the Income Tax Appellate Tribunal (ITAT), Mumbai, after it ruled that Rs 80 lakh paid by her husband from the UAE towards the purchase of a Mumbai property could not be treated as an unexplained investment under the Income Tax Act.
The tribunal deleted an addition of Rs 80.10 lakh made by the Income Tax Department, holding that the authorities had failed to disprove the evidence submitted by the taxpayer regarding the source of funds. The ruling relates to the purchase of a residential property worth around Rs 1.40 crore, which was financed through a combination of the woman’s own funds and contributions from her husband, who was employed in Dubai.
Why The Tax Department Raised An Objection
According to the case, the taxpayer paid approximately Rs 58.5 lakh for the property through her Indian bank account. The balance amount of Rs 80 lakh was remitted directly to the property seller by her husband through a Dubai-based exchange bureau.
While the Income Tax Department accepted the payments routed through the taxpayer’s bank account, it questioned the amount transferred by her husband. During reassessment proceedings, the tax authorities treated the Rs 80 lakh as an unexplained investment under Section 69 of the Income Tax Act, 1961.
The department cited the taxpayer’s inability to produce the original remittance documents issued by the Dubai exchange bureau and consequently added Rs 80.10 lakh to her taxable income. This included an additional Rs 10,000, which was also classified as unexplained.
The taxpayer challenged the assessment before the ITAT, Mumbai.
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Taxpayer Explained The Source Of Funds
Before the tribunal, the taxpayer presented a detailed reconciliation of the property purchase and explained how the transaction had been financed.
She stated that Rs 48 lakh came from the sale proceeds of an earlier property. Her husband transferred Rs 80 lakh from Dubai in two instalments of Rs 40 lakh each, while he also gifted her Rs 20 lakh. Out of the gifted amount, Rs 18.5 lakh was utilised for the property purchase, with the remaining Rs 10,000 paid through a bank pay order.
To support her submissions, the taxpayer produced documentary evidence, including her husband’s passport and identity documents, his income tax records, the seller’s bank statement reflecting receipt of Rs 80 lakh, the sale and registration deeds, the gift deed, bank confirmation and a copy of the bank pay order.
What The Tribunal Held
The ITAT observed that the Income Tax Department had not disputed the identity of the taxpayer’s husband, their relationship, his financial capacity or the fact that Rs 80 lakh had been transferred to the property seller.
The tribunal also noted that the department had not established that any of the documents submitted by the taxpayer were false or fabricated.
In view of these findings, the ITAT ruled that there was no basis to treat the amount as an unexplained investment under Section 69. It, therefore, deleted the addition of Rs 80 lakh as well as the separate addition of Rs 10,000.
The ruling provides relief to the taxpayer after the tribunal accepted that the property purchase had been adequately explained through documentary evidence and identifiable sources of funds.
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