ITAT Bangalore Strikes Down Section 69 Addition: Tenant's Cheque Through Lease Arrangement Qualifies as Explained Investment
Case Overview
Case Name: Nagina Nusrath Vs ITO (ITAT Bangalore)
Assessment Year: 2023-24
Order Date: 16th May, 2026
Relevant Provision: Section 69 of the Income Tax Act, 1961
The Bangalore Income Tax Appellate Tribunal delivered a significant ruling in favour of the assessee by deleting an addition of ₹5 lakhs that had been made under Section 69 of the Income Tax Act, 1961. The core finding of the Tribunal was that where an investment is demonstrably traceable to an identifiable banking instrument and is supported by contemporaneous documentation, the Revenue cannot legitimately characterise it as an unexplained investment.
Background and Facts of the Case
The dispute originated when the Assessing Officer, functioning under the National Faceless Assessment Centre, treated a deposit of ₹5 lakhs made in the name of the assessee with M/s I Monetary Advisory as an unexplained cash investment, invoking Section 69 of the Income Tax Act, 1961.
The assessee, however, categorically denied making any cash payment to M/s I Monetary Advisory or its associated entities. The actual sequence of events, as placed before the authorities, was as follows:
- The assessee's husband, Dr. Shamsheer Baig, had received a lease advance amounting to ₹15,00,000/- from his tenant, Shri Harish A.N.
- Acting on the instructions of Dr. Shamsheer Baig, the tenant Shri Harish A.N. directly issued Cheque No. 058078 dated 01 February 2017 for a sum of ₹5,00,000/-, drawn on State Bank of India, favouring M/s I Monetary Advisory
- This cheque was subsequently deposited by Dr. Shamsheer Baig as an investment registered in the name of the assessee
- Critically, the said cheque number was expressly mentioned in the lease agreement executed between Dr. Shamsheer Baig and Shri Harish A.N., establishing a clear documentary trail
The assessee had furnished a comprehensive paper book running to 239 pages before the appellate authorities, which included the lease agreement (Pages 77 to 80), a copy of the cheque in question (Page 76), and the investment confirmation (Page 75).
Proceedings Before Lower Authorities
Before the Assessing Officer
The Assessing Officer, as well as the Joint Assessing Officer (JAO) under the National Faceless Assessment Centre, proceeded on the incorrect factual premise that the assessee had deposited cash of ₹5,00,000/- with M/s I Monetary Advisory. The AO made an addition under Section 69 of the Income Tax Act, 1961 treating the same as an unexplained investment. The authorities did not appear to have adequately examined or appreciated the documentary evidence that had been placed on record by the assessee.