Tribunal: Co-owner tag alone can’t trigger tax addition

Mumbai: The Mumbai bench of the income tax appellate tribunal (ITAT) has held that merely being named as a co-owner in a property deal does not automatically make a person liable for ‘unexplained' investment, especially when there is evidence to show that the funds came from other family members.In a recent order that could offer relief to taxpayers in similar situations, the ITAT said that I-T officers must examine who actually paid for the property, rather than relying solely on names appearing in the purchase documents. The tax tribunal set aside additions of over Rs 60 lakh made to the income of the taxpayer and sent the matter back to the I-T officer for a fresh review. The dispute relates to the purchase of a flat in a western suburb by Parveen, the taxpayer, jointly in her name with that of her parents. The registered purchase agreement showed the price to be Rs 75.8 lakh, but the fair market value was Rs 1.8 crore. The I-T officer observed that the price paid for the flat was less than the fair market value; the differential was over Rs 1 crore. Therefore, the I-T officer added one-third of the difference of Rs 35.7 lakh as the daughter's share of unexplained income. He also proceeded to add one-third of the registered purchase price of Rs 25.2 lakh, taking the total addition to over Rs 60 lakh. Parveen contended that she had not contributed any fund towards the purchase and that the entire purchase consideration was paid by her parents through banking channels. The ITAT observed that while documentary evidence regarding the source of funds was placed on record, the I-T officer neither verified nor examined these details. Thus, it directed the officer to re-adjudicate the matter after granting adequate opportunity to the taxpayer.