ITAT Delhi Deletes Section 69 Addition on Property Investment, Gives Full Relief

Abuchi Infra Ventures Ltd filed its return for AY 2017-18, declaring an income of Rs. 1,27,520. The case was selected for limited scrutiny on issues relating to exempt income expenses, loans and investments, and investment in immovable property. During the assessment, the Assessing Officer repeatedly issued notices under sections 143(2) and 142(1) through the ITBA portal and email. The assessee did not respond, stating later that the email ID was not operational. Observing from AIR information that the assessee had made an investment of Rs. 1.11 crore in a property, and finding no supporting documents on record, the AO treated the entire amount as an unexplained investment under Section 69 and framed a best-judgment assessment under Section 144.

CIT(A) Held: Before the CIT(A), the assessee submitted detailed additional evidence, including a ledger account titled “advance against property,” copies of relevant bank statements, and the registered sale deed executed on 02.05.2019. The CIT(A) acknowledged the documents but upheld the addition, noting that the assessee had not established details of the liquidated investments and questioning the credibility of the assessee’s explanation regarding lack of access to email communication.

Issue Raised: Whether the addition of Rs. 1.11 crore under Section 69 for alleged unexplained investment was justified when the assessee had recorded the transaction in its books and the payments were made entirely through banking channels.

ITAT Held: The ITAT Delhi allowed the appeal and deleted the entire Section 69 addition. The Tribunal observed that the investment was duly recorded in the company’s books and supported by the ledger for “advance against property,” bank statements, and the registered sale deed. The assessee had demonstrated that the payments were made to the Indian Bank as advance consideration for a property originally belonging to Bina Finance Ltd., and the transaction was fully reflected in the financial records. The Tribunal noted that since the investment was properly accounted for, one of the basic conditions for invoking Section 69, i.e., that the investment must be unrecorded in the books, was absent.

The Tribunal also found that the CIT(A), despite possessing co-terminus powers with the AO and having accepted the additional evidence, did not effectively evaluate the documents and instead sustained the addition on peripheral observations. The AO had not provided any remand report, leaving the assessee’s materials unchallenged.  The Tribunal held that the addition was made merely on suspicion arising from non-compliance at the assessment stage. Therefore, the Court held that Section 69 could not be applied when the investment was already recorded and adequately explained, the Tribunal deleted the addition and allowed all grounds raised by the assessee.

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