Property Purchase Funded by Husband's Gift: ITAT Mumbai Remands Rs. 70 Lakh Unexplained Investment Case for Fresh Verification

Case Overview

Case Name: Devyani Pravin Solanki Vs CIT (Appeals)
Forum: Income Tax Appellate Tribunal, Mumbai
Assessment Year: 2020-21
Relevant Provisions: Section 147, Section 144, Section 144B, Section 69, Section 142(1), Section 148, Section 148A(d), Section 250 of the Income-tax Act, 1961

Background and Origin of Dispute

This matter arose from a reassessment proceeding initiated against an individual assessee for Assessment Year 2020-21. The Assessing Officer received information through the Insight Portal indicating that the assessee had acquired an immovable property valued at Rs. 70,00,000/- and had also earned bank interest amounting to Rs. 69,750/- during the relevant financial year. Crucially, no return of income had been filed by the assessee for this year.

Acting on this information, the Assessing Officer passed an order under Section 148A(d) dated 19.03.2024 and simultaneously issued a notice under Section 148 on the same date, thereby formally initiating reassessment proceedings under Section 147 of the Income-tax Act, 1961.

Assessment Proceedings and Ex Parte Order

Following the initiation of reassessment, the Assessing Officer issued multiple notices under Section 142(1) along with detailed questionnaires on various occasions. The assessee, however, failed to respond to any of these communications and did not furnish any documents, explanations, or supporting material in connection with the impugned transactions.

Given the continued non-compliance, the Assessing Officer was left with no alternative but to proceed ex parte and complete the assessment under Section 147 read with Section 144 and Section 144B of the Income-tax Act, 1961, vide order dated 14.02.2025.

Additions Made by the Assessing Officer

The Assessing Officer determined the total income of the assessee at Rs. 71,11,750/- by making the following additions:

1. Rs. 70,42,000/- under Section 69 of the Income-tax Act, 1961 — treating the investment in immovable property, inclusive of stamp duty and registration charges, as unexplained investment
2. Rs. 69,750/- under the head "Income from Other Sources" — representing interest earned from bank accounts

Note: Penalty proceedings were also separately initiated under Section 271AAC, Section 270A, and Section 234F of the Income-tax Act, 1961.

First Appellate Stage: CIT(A) Proceedings

Aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), NFAC, Delhi. However, the pattern of non-participation unfortunately continued at the appellate stage as well.