A Mumbai ITAT ruling has provided relief to a taxpayer whose name appeared in a property purchase agreement even though the entire payment was made by her husband. The tribunal deleted a Rs 54.93 lakh addition after finding that the source of funds had been fully explained and criticised the CIT(A) for ignoring findings recorded in the Assessing Officer’s remand report.

June 10, 2026 15:07 IST

Can a taxpayer face a hefty tax demand merely because her name appears on a property purchase agreement, even though the entire payment was made by someone else?

In a recent ruling by the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) in the case of Sanjeevani Sanjay Rane vs ACIT (ITA No. 7361/Mum/2025) for Assessment Year 2017-18, the tribunal deleted additions of Rs 54.93 lakh made by the tax department after finding that the entire investment in the property had been made by the taxpayer’s husband and that the source of funds was adequately explained.

How the dispute began

The case relates to a residential property purchased during FY 2016-17 for Rs 52.81 lakh. According to the taxpayer, her name was included in the registered agreement only as a family member for convenience, while the entire consideration for the property was paid by her husband, Sanjay Rane.

However, since Sanjeevani Rane had not filed an income tax return for the relevant year, the Income Tax Department reopened her assessment under Section 147 of the Income Tax Act.

The Assessing Officer (AO) concluded that the property purchase represented unexplained investment in her hands and made an addition of Rs 52.81 lakh under Section 69B. Another Rs 2.12 lakh was added under Section 56(2)(vii)(b) on account of the difference between the purchase consideration and the stamp duty valuation of the property.

As a result, the total addition worked out to Rs 54.93 lakh.

Evidence produced by the taxpayer

During appellate proceedings, the taxpayer furnished several documents to establish that the investment had not been made by her.

These included registered property agreement, payment schedule relating to the property, housing loan documents issued by LIC Housing Finance Ltd, builder payment receipts, husband’s income tax records, and bank statements showing the flow of funds.

The taxpayer maintained that every payment connected with the purchase had been made by her husband and that her name was merely included in the property documents as a family member.

What the remand proceedings revealed

While hearing the appeal, the Commissioner of Income Tax (Appeals) [CIT(A)] sought a remand report from the Assessing Officer.

The remand proceedings turned out to be crucial.

After examining the documentary evidence submitted by the taxpayer, the Assessing Officer recorded that:

-Payments towards the property had been made from the husband’s bank accounts.

-The housing loan used for the purchase had been obtained by the husband from LIC Housing Finance.

-Stamp duty and registration expenses were also paid by the husband.

-The documentary evidence furnished by the taxpayer supported her claim regarding the source of funds.

-The remand report was incorporated into the appellate record.

Despite remand findings, appeal was dismissed

Surprisingly, despite the remand report acknowledging the source of funds and the payment trail, the CIT(A) upheld the additions made by the Assessing Officer.

The appellate authority observed that the taxpayer had failed to furnish cogent documentary evidence in support of her claim and dismissed the appeal.

The matter subsequently reached the Mumbai ITAT.

What the ITAT said

The tribunal found a clear contradiction between the conclusions drawn by the CIT(A) and the factual findings contained in the remand report.

In unusually strong observations, the ITAT noted that the findings of the CIT(A) were in “stark contravention” of the factual position already recorded by the Assessing Officer in the remand proceedings.

The tribunal further described the approach of the first appellate authority as “callous”, adding that such an approach was “uncalled for” and deserved to be deprecated.

After reviewing the evidence, the bench held that the taxpayer had adequately explained the source of investment and that the entire payment for the property had been made by her husband.

The tribunal also accepted the taxpayer’s contention that her name had been included in the purchase agreement only for convenience as a family member.

Accordingly, the ITAT deleted the entire addition of Rs 54.93 lakh and allowed the appeal.

Why this ruling matters

The ruling highlights an important principle in tax law: merely having one’s name on a property document does not automatically mean that the investment belongs to that person.

Where documentary evidence clearly establishes who actually funded the purchase, tax authorities are expected to examine the source of funds rather than rely solely on the name appearing in the property records.

At the same time, experts caution that such cases are highly fact-specific. Taxpayers seeking similar relief must be able to substantiate the source of funds with proper documentary evidence, including bank statements, loan documents, payment receipts and related records.

Disclaimer: This article is based on an ITAT ruling in the specific facts of the case. Judicial decisions depend on individual facts and circumstances and may be challenged before higher courts. Taxpayers should consult a qualified tax professional before relying on this ruling for their own cases.

This article was first uploaded on June ten, twenty twenty-six, at seven minutes past three in the afternoon.

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