ITAT Mumbai Remands ₹2.30 Crore Section 69A Addition on Property Purchase; Calls for Fresh Enquiry into Source of Funds

Key Facts and Tribunal Findings

The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, partly allowed the appeal of Mohammed Athar Badruddin Khan for Assessment Year 2013–14, setting aside an addition of ₹2.30 crore made under Section 69A and remanding the matter for fresh adjudication.

The case arose from information received by the Assessing Officer regarding purchase of immovable property for ₹2.35 crore, including stamp duty, during the relevant financial year. The assessee had declared income of ₹4.78 lakh and had not disclosed the property transaction in the return of income. The stamp valuation authority had determined the value of the property at ₹3.37 crore. During assessment proceedings, the assessee explained that the investment was funded through accumulated savings of ₹1.65 crore, advances received from candidates amounting to ₹64.88 lakh in connection with manpower supply business, and a loan of ₹5 lakh. Supporting documents including wealth tax returns and details of candidates were furnished.

The Assessing Officer rejected the explanation, terming it unreliable, and treated the entire amount of ₹2.30 crore as unexplained money under Section 69A. The addition was upheld by the first appellate authority. Before the Tribunal, the assessee sought an opportunity to substantiate the claim through further evidence. The Tribunal observed that the assessee had furnished certain primary details, including wealth tax returns and a list of candidates with passport details, but these were not adequately examined.

It further noted that no enquiry was conducted with the seller of the property or with the candidates whose details were available, despite identifiable information such as passport numbers. The Tribunal held that the Assessing Officer’s conclusions were based on suspicion rather than verification.

In view of these deficiencies, the Tribunal restored the issue to the Assessing Officer for de novo adjudication, directing thorough enquiry and providing reasonable opportunity to the assessee.