MAHESH RAMAKANT GAWDE,DATA MANDIR ROAD MUMBAI vs. ITO, 35(2)(3), MUMBAI, MUMBAI

During the course of hearing, the assessee submitted that the Ld. CIT(A) has erred in passing the ex-parte order and confirming the addition so made by the AO, treating and assessing the single purchase transaction of Flat No. 21 in Ratnagaga CHS Ltd., at Borivali in Mumbai twice, first as un-explained investment u/s. 69 of the Act at Rs. 38 lakhs and again treating the very same purchase transaction as undisclosed sale transaction u/s. 56 of the Act at Rs. 38 lakhs. It was submitted that the said flat was purchased jointly by him along with his wife, mainly out of the borrowed funds from the bank and they are currently staying in the said flat. It was further submitted that the said transaction has again been taxed in the hands of his wife and the said matter is currently pending adjudication before the ld CIT(A). It was accordingly submitted that a single transaction has been brought to tax thrice, twice in his hands and separately, in hands of his wife which is absolutely unwarranted and uncalled for. It was submitted that during the course of assessment proceedings, he has submitted before the AO that the flat has been purchased mainly out of bank loans besides personal savings and necessary documentation were submitted which has been completely ignored by the AO. It was further submitted that the AO has erred in disallowing loss from house property which was in respect of the interest paid on housing loans taken for acquisition of self-occupied flat. It was further submitted that the AO has erred in disallowing the claim made in the return of income u/s. 80C and 80CCF of the Act. An affidavit narrating the events and in support of submissions made aforesaid and documents submitted before the AO have also been placed on record. It was accordingly submitted that necessary relief be provided to him and the addition so made be directed to be deleted and necessary deductions so made be allowed to him.

Per contra, the Ld.DR is heard, who has relied on the orders passed by the AO as well as that of the Ld.CIT(A). It was submitted that the assessee has been granted adequate opportunities both by the AO as well as by the explanation Ld.CIT(A), however, in absence of necessary and documentation so submitted by the assessee, the additions have been made by the AO and confirmed by the Ld.CIT(A). Regarding the contentions raised by the assessee that the same transaction has been taxed twice in the hands of the assessee and separately, in the hands of his wife, the Ld.DR fairly submitted that the same needs necessary verification and where the Bench so decide, the matter may be remitted to the file of the AO.

We have heard the rival contentions and perused the material available on record. On perusal of the assessment order, it is noted that the case of the assessee was reopened basis AIR/CIB information that the assessee has purchased an immovable property to the tune of Rs 38,00,000/- and has sold an immovable property to the tune of Rs 76,00,000/-. Thereafter, notices were issued by the AO seeking necessary explanation from the assessee, and as stated by the AO, there was no compliance on part of the assessee though contested by the latter before us and the AO proceeded and brought to tax Rs 38,00,000/- as unexplained investments u/s 69 and an amount of Rs 38,00,000/- being the sale consideration from sale of the flat as income from other sources. As per the AO, there is prima facie evidence that the assessee has purchased and sold immoveable property and since the said transactions have not been reported in the return of income, both the purchase and sale transaction has been brought to tax in the hands of the assessee.

Having said that, the situation becomes more glaring where the assessee comes forward and contends that the same transaction has been taxed twice in his hands and separately again in the hands of his wife and necessary explanation and documentation in terms of source of such investments being the housing loan and past savings were submitted during the assessment proceedings but completely ignored by the AO and an affidavit has been placed on record. It has been contended before us that the assessee along with his wife have jointly purchased a flat No. 21 in Ratnaganga CHS Ltd., at Borivali in Mumbai partly through bank borrowings to the tune of Rs 17.50 lacs and partly out of past savings during the financial year under consideration and they are currently staying in the said flat so there is no question of sale of the said flat. Necessary documentation in terms of housing loan certificate taken from Cosmos bank, bank account statement of the assessee and copy of purchase agreement has been placed on record and on perusal thereof, we find that the assessee has duly demonstrated the nature and source of investment in the flat out of housing loan and sufficient past savings as reflected in the bank statement. In light of the same, we are of the considered view that basis material available on record, there is no justifiable and legal basis to make any additions in the hands of the assessee and the addition so made towards purchase of the flat and subsequent sale which is again factually incorrect is hereby directed to be deleted. Thus, the addition of Rs.76,00,000/- is hereby directed to be deleted.

Regarding loss under the head “Income from house property”, it is noted that the assessee has claimed interest on housing loan and on perusal of material available on record, we find that the same can be allowed to the extent of Rs.64,604/- actually incurred by the assessee as against Rs.1,50,000/- being the outer limit as so claimed by the assessee in his return of income, the AO is directed to allow the loss to the extent of Rs 64,604/- and the remaining disallowance of loss is confirmed.

Regarding deduction u/s 80C, it is noted that the same was in respect of employee contribution to provident fund, payment towards the life insurance policy and repayment of housing loan and basis material available on record, we find that the assessee has rightly claimed the same and the AO is directed to allow the deduction of Rs 1,00,000 as so claimed by the assessee.

In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open court on 24-09-2025.