A woman's claim of investing Rs 50 lakh in a life insurance policy with only a declared annual income of Rs 4,81,340 has been rejected by tax authorities.
For the Assessment Year 2009-10, Pratibha Singh informed the authorities that she had earned Rs 4,81,340. The LIC, though, told the tax department that she had invested Rs 50 lakh in a life insurance policy during that year.
The Assessing Officer saw the investment as out of line with her income and reopened the case under Section 147.
On 25 February 2026, the Chandigarh Bench of the Income Tax Appellate Tribunal (ITAT) ruled on this anomaly and upheld the Rs 50 lakh addition as unexplained investment.
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Pratibha Singh's Defence
Pratibha claimed that the money belonged to a Hindu Undivided Family (HUF), not to her. The claim was that the HUF's orchard agri income had been routed through an LIC agent, Anand Chauhan, under a Memorandum of Understanding (MOU). She said she was merely a member of the HUF, so the tax should not be levied on her.
The ITAT bench found her argument weak on various grounds. First, the timeline of when the MOU was issued didn't match with the date when it was presented to the assessing officer. The assessing officer also confirmed that no original copy of the MOU was ever presented to him.The bench noted that a policy needs a personal declaration and a medical examination, which an individual does not an HUF. It was her life being insured by the policy.
Pratibha appealed for the addition to be treated as “protective”. The tribunal rejected this on legal grounds. A protective assessment is a tool for the taxman when he is unsure who owns the income.
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This tool cannot be demanded as a saving measure.
The tribunal said each assessment year stands alone. It added that double taxation arises only when the same income is finally taxed in two hands, and the HUF proceedings had not reached finality.
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