SUCHIT KANTILAL LOTIA,MUMBAI vs. INCOME TAX OFFICER WARD 19 3 1 MUMBAI, MUMBAI

In the instant case, the Assessee had purchased an immovable property for a total consideration of ₹3,24,00,000/- during the year under consideration. Based on specific information received through the Insight Portal regarding the aforesaid transaction, the assessment was reopened under section 147 of the Act. Pursuant thereto, statutory notices were issued to the Assessee.

During the assessment proceedings, though the Ld. AO accepted the Assessee's explanation regarding the substitution of the source of consideration paid, he ultimately made an addition of ₹19,55,000/- under section 69 of the Act by observing that the aggregate amount of ₹19,55,000/-, as reflected in the chart reproduced in the assessment order, had been received by the Assessee after 20.04.2019 and, therefore, could not be accepted as the source of investment for purchase of the property. Accordingly, the said amount was treated as unexplained investment. For brevity and ready reference, the details of amounts involved are reproduced hereunder:

Thus, the Assessee being aggrieved, preferred the first appeal before the Ld. Commissioner. However, the Ld. Commissioner, substantially concurring with the reasoning adopted by the Ld. AO, confirmed the aforesaid addition. Before us, the Ld. Counsel for the Assessee drew our attention to Clause 2 of the Agreement for Sale dated 23.04.2019, which provides as under:

We have heard the parties and considered the rival submissions and perused the material available on record. From the aforesaid clause, it is evident that the Assessee was contractually required to pay the balance sale consideration of ₹1,26,50,000/- within 31 days from the date of registration of the Agreement for Sale. Since the Agreement was registered on 23.04.2019, the balance consideration was payable on or before 24.05.2019.

Therefore, the amounts received by the Assessee on or before 24.05.2019 cannot be disregarded while examining the source of investment towards the purchase of the property. The amount of ₹70,000/- received as loan from Kanthilal PopatlalLotia (HUF) and ₹5,85,500/- received as gift from his wife SuchitaLotia, having been received within the stipulated period prescribed under the Agreement for Sale, cannot be treated as unexplained or as amounts not utilized towards the purchase consideration.

So far as the remaining amounts are concerned, it is observed from the material placed on record that only the amounts of ₹8,90,000/-, ₹80,000/- and ₹80,000/- aggregating to ₹10,50,000/-, received from Shri Kantilal PopatlalLotia (father), Ms. Shaila Lotia (sister-in-law) and Shri Jigish Kantilal Lotia (brother) respectively after 24.05.2019, were stated to have been utilized for repayment of the housing loan of ₹1,26,50,000/- obtained from HSBC Bank.

Thus, considering the peculiar facts and circumstances in totality, we direct the Ld. AO to delete the addition under consideration, subject to verification that (i) the Assessee had received an aggregate amount of ₹9,05,500/- (₹70,000/- + ₹5,85,500/- + other eligible receipts, if any, as reflected in the record) on or before 24.05.2019 towards the purchase consideration; and (ii) the balance amount of ₹10,50,000/-, comprising ₹8,90,000/-, ₹80,000/- and ₹80,000/-, received from Shri Kantilal Popatlal Lotia, Ms. ShailaLotia and Shri Jigish Kantilal Lotia respectively after 24.05.2019, was in fact utilized for repayment of the HSBC Bank loan of ₹1,26,50,000/-. Subject to such verification, the addition shall stand deleted.

In the result, Assessee’s appeal is allowed in the aforesaid terms.