ITAT Accepts NRI Husband’s Funding for Property Purchase: Deletes Rs. 80.10 Lakh Income Tax Addition:

ITAT Accepts NRI Husband’s Funding for Property Purchase: Deletes Rs. 80.10 Lakh Income Tax Addition The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has granted major relief to taxpayer Sanobar Ajaz Ahmed Saudagar by deleting an addition of Rs 80.10 lakh made by the Income Tax Department under Section 69 of the Income Tax Act. The case related to the purchase of a residential property worth Rs 1.40 crore during Assessment Year 2016-17. The tax department reopened the assessment after receiving information that the assessee had purchased the property but had not originally filed her income tax return. During assessment, the Assessing Officer accepted payments of Rs 58.50 lakh but treated the remaining Rs 80 lakh as an unexplained investment, alleging that sufficient evidence was not provided to prove that the amount had been directly paid by the assessee’s husband, a Dubai-based resident, to the property seller. An additional Rs 10,000 was also added as an unexplained investment.

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The assessee explained that the entire property purchase was funded through sale proceeds of an earlier property, gifts and financial support from her husband, and duly accounted-for payments. She furnished all supporting documents, including her husband’s passport, income records, gift deed, affidavit, bank confirmations, seller’s bank statements, property documents, etc., in support of the claims made by her. After examining the evidence, the ITAT observed that the identity and financial capacity of the husband were never disputed by the tax authorities. The Tribunal noted that the seller’s bank account reflected receipt of Rs 80 lakh, and the Revenue had not produced any evidence showing that the funds represented the assessee’s undisclosed income.

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The ITAT held that merely because old remittance records from a Dubai exchange bureau were unavailable after nearly ten years, the entire explanation could not be rejected. Since the source of the entire investment stood fully explained and supported by documentary evidence, the Tribunal directed the Assessing Officer to delete the addition of Rs 80.10 lakh in full and allowed the assessee’s appeal.