PARESH DHANSUKHLAL GANDHI,MUMBAI vs. INCOME TAX OFFICER, WARD-24(3)(3), ROOM NO-701, 7TH FLOOR, PIRAMAL CHAMBERS, MUMBAI-400012, MUMBAI

The sole issue raised by the assessee in this appeal is relating to the confirmation of the addition made by the Assessing Officer [in short “the AO”] on account of unexplained investment for purchase of a flat amounting to Rs.58,03,689/- and further, addition of Rs.3,36,150/- of expenditure incurred

At the outset, the Ld. Counsel for the assessee has submitted that the assessee had not purchased the flat in question during the assessment year under consideration rather, the assessee had entered into a registered agreement to sale with the seller. As per the terms of agreement to sale, Rs.45 lakhs was paid at the time of execution of agreement and the remaining amount was to be paid subsequently on completion of the building. The Ld. Counsel for the assessee, in this aspect has relied upon the registered agreement to sale dated 16.02.2010. So far as, the source of Rs.45 lakhs paid by the assessee to the builder is concerned, the Ld. Counsel for the assessee has relied upon the bank statement of the assessee and submitted that the amount of Rs. 50 lakhs was withdrawn by the assessee from his firm namely M/s. Vijay Developers, out of which, the said amount was paid to the builder. The assessee has furnished these evidences during the appellate proceedings before the Ld.CIT(A), where upon, the remand report was called for by the Ld.CIT(A) from the AO.

On perusal of the comments of the AO as reproduced in the impugned appellate order, it would reveal that the AO has not denied that the assessee had received a sum of Rs.50 lakhs from his firm. However, he has given certain observations regarding the accounts of the firm stating that the after withdrawal of Rs.50 lakhs, there was a negative balance in the firm’s bank account and further, there was a credit entry of Rs.26 lakhs, etc. However, these observations of the AO doesn’t disprove the case of the assessee that the amount in question of Rs.50 lakhs was withdrawn/transferred to the assessee from firm’s bank account, out of which, Rs.45 lakhs was paid by the assessee to the builder as advance money for purchase of the flat, and out of the balance amount, expenditure in the shape of stamp duty and registration charges was also incurred. We, therefore, don’t find justification on the findings of lower

In the result, appeal filed by the assessee is allowed. Order pronounced in the open court on 11.09.2026.