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Facts
The assessee, a non-resident Indian, purchased an immovable property for Rs. 60,19,000 without filing a return of income. The AO initiated reassessment proceedings and, after the assessee filed a return and submitted documents, treated the entire purchase consideration as unexplained investment under Section 69 of the Income Tax Act.
Held
The Tribunal held that the assessee had provided sufficient documentary evidence, including a housing loan from HDFC Bank and personal savings from NRE account, to substantiate the source of funds for the property purchase. The lower authorities were incorrect in making the addition under Section 69A of the Act.
Key Issues
Whether the source of funds for the purchase of immovable property was sufficiently substantiated by the assessee, and if the addition made under Section 69A of the Income Tax Act was justified.
Sections Cited
143(3), 144C(13), 69, 69A, 148, 234B, 234C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “I” BENCH, MUMBAI
Before: SHRI RAJ KUMAR CHAUHAN, JM
(Assessment Year: 2015-16) Ashish Ashok Nirkhe, Income Tax Officer (International B-703, Navkar Paradise, LT road, Tax), Ward-3(3)(1), Babhai Naka, Borivali West, Vs. Room No. 626, Kautilya Bhavan, Mumbai-400091. Bandra Kurla Complex, PAN: AGNPN1767C Mumbai-400051. Appellant) : Respondent) Appellant /Assessee by : Ms. Ushma Makecha, AR Revenue / Respondent by : Shri Krishna Kumar, Sr. DR : 24.06.2025 Date of Hearing : 30.06.2025 Date of Pronouncement O R D E R
Per Padmavathy S, AM:
This appeal by the assessee is against the final order of assessment of the Income Tax Officer (International Circle)-3(3)(1), Mumbai [In short 'AO'] passed under section 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (the Act) dated 29.01.2025 for AY 2015-16. The assessee raised the following grounds of appeal:
“1) The Learned DRP has erred in confirming the draft assessment order of Assessing Officer with making addition of Rs. 60,19,000/- on account of unexplained investment under section 69 of the Income Tax Act.
Ashish Ashok Nirkhe 2) The learned DRP has erred in disregarding the information and material placed on record to prove the source of funds towards purchase of immovable property such as Home Loan repayment certificate, loan closure letter etc. 3) The Assessing Officer has erred in not granting the opportunity of adjournment to the assessee despite his request for the same and has denied the client natural justice by not providing the material they have relied on. 4) The Appellant submits that the Assessing Officer erred in fact and in law by making an addition of Rs. 60,19,000/- under Section 69 of the Act, on the ground that the assessee could not justify the source of funds used for the purchase of the property, while ignoring the material placed on record. 5) The learned AO has erred in passing the Assessment order after 30 days of the direction of the DRP. 6) The Assessing Officer has erred in levying interest under Sections 234B and 234C. 7) The order appealed against is bad in law and against the principal of natural justice.”
The assessee is an individual and non-resident Indian since 2011. For the year under consideration the assessee did not file any return of income. The Assessing Officer (AO) received information that the assessee has purchased immovable property and accordingly the AO initiated re-assessment proceeding. The assessee filed the return of income in response to notice under section 148 of the Act. The assessee also filed the supporting documents such as a copy of purchase agreement, Form 26AS, copy of bank statement, computation of income, etc. The AO after perusing the documents submitted by the assessee held that the assessee has not properly substantiated the source of funds utilized for purchase of property and accordingly treated the entire purchase consideration of Rs. 60,19,000/- as unexplained in the hands of the assessee. Aggrieved, the assessee filed its objections before the DRP. The assessee submitted before the DRP that Housing loan is taken from HDFC Bank towards purchase of property to the tune of Rs. 44,80,320/- and Ashish Ashok Nirkhe the balance amount is from personal savings paid out of NRE A/c. Accordingly, the assessee submitted that the source for purchase of the property are clearly substantiated and no addition can be made under section 69A of the Act. The DRP however did not accept the submissions of the assessee and upheld the addition made by the AO by holding that “It is seen from the draft order and the Ld. JAO's report that no clear reconciliation of the transfer of funds from NRE (it is not clear from the headers of the bank statement that they are NRE accounts - no evidence like cheque leaf has been put on record to establish the fact) to NRO account has been provided. SBI Bank statement has not been submitted. Property Purchase agreement has not been provided till date to Ld.JAO or in panel proceedings, which means it is not clear how, when and what amounts have been paid to builder. Bare account statement has been submitted, and Panel agrees with the observation of the Ld.JAO in report submitted that '6. Assessee has submitted bank statements of HDFC bank, as mentioned in para 4, from date of account opening to 31.12.2023 and 30.06.2023 respectively, however from bank narration it is not ascertainable when and what amounts have been paid to the seller in subsequent years.' Thus, the appellant has fallen short of the evidence bar which would tilt scale in its favour.”
The assessee is in appeal before the Tribunal against the final order of assessment passed by the AO pursuant to the directions of the DRP.
We heard the parties and perused the material on record. During the course of hearing the ld. AR submitted the below table explaining the source of funds towards purchase of property:
Ashish Ashok Nirkhe Particulars Amount Amount Date of Mode of Reference of property paid payment payment Agreement Rs. Rs. 04.12.2014 Cheque SBI passbook, Value 60,19,000 2,00,000 issued vide email received cheque no from the builder 605921 and demand letter 1
Rs. 15.12.2014 Cheque SBI passbook, 9,98,000 issued vide email received cheque no from the builder, 605925 proof of cheque deposited and demand letter 1 Rs. HDFC loan HDFC loan 44,80,320 disbursement record Service Tax, Rs. 15.03.2016 Cheque SBI passbook VAT and 6,23,023 issued vide and demand other cheque no letter 2 remaining 505654 dues Stamp duty Rs. Rs. 13.12.2014 Cheque SBI passbook, and 3,91,140 3,91,200 issued vide email received registration cheque no from the builder Charges 605924 and demand letter 1 Total Rs. 66,92,543
The ld. AR also submitted the bank statement substantiating the amount paid from assessee's own funds as mentioned in the above table (page 3 to 6 of PB). From the perusal of records we notice that the assessee has availed housing loan from HDFC Bank and this fact is substantiated by the loan sanction letter given by HDFC Bank (page11 & 12 of PB). We further notice that the assessee has repaid the Housing Loan availed through EMI which is supported by the entries in the NRO A/c with HDFC Bank (page 13 to 19 of PB). During the course of hearing the ld. Ashish Ashok Nirkhe AR also took us through the email from the builder acknowledging the payments and also the certificate of possession wherein the builder has acknowledged the receipt of entire consideration. From the perusal of the facts and documentary evidences elaborated hereinabove it is clear that the assessee provided sufficient documentary evidences explaining the source of funds towards purchase of property. From the observations of the DRP as extracted in the earlier part of this order the submissions of the assessee have been rejected for the reason that the bank narration is not ascertainable. Further the AO in the order of assessment also acknowledges the fact that the assessee has submitted various documentary evidences including the purchase agreement. Therefore, in our considered view when the assessee has discharged the onus of substantiating the source of funds through various documentary evidences the lower authorities are not correct in making the addition under section 69A of the Act. We have examined the documentary evidences submitted by the assessee before the lower authorities and see merit in the submission that the assessee has explained the source with sufficient documentary evidences substantiating the source. Considering the facts peculiar to the assessee and the documentary evidences, we hold that the lower authorities are not correct in holding that the source for purchase of property have not been properly explained and accordingly we direct the AO to delete the addition made in this regard.
In result, the appeal of the assessee is allowed.