AAKASH DEEP SETHI,NAVI MUMBAI vs. INCOME TAX OFFICER - INTERNATIONAL TAX - 4(2)(1), BANDRA

The Ld. AO & DRP erred in appreciating that the appellant had duly discharged the onus of establishing the nature & source of the immovable property jointly acquired.

Brief facts of the case are that the assessee is a non-resident during the year under consideration. The assessee had not filed its return of income for AY 2018-19. However, it was noticed from the departmental database that the assessee had made investments in the purchase of immovable property and equity shares and had also sold equity shares during the year under consideration. Accordingly, a notice u/s 148 was issued after passing order u/s 148A(d) on 06.04.2022 with the approval of the prescribed authority. In response to this notice, the assessee filed the return on 25.01.2023 declaring total income of Rs. 27,380/-. After detailed scrutiny was conducted and after obtaining directions of the Ld. DRP, Ld. AO finalized the assessment at Rs 58,29,150/- vide order u/s 147 r.w.s. 144C(3) of the Act dated 19.12.2024 after making an addition of Rs. 58,01.023/- on account of unexplained investment.

Before us, Ld. AR has explained that a sum of Rs. 88,42,898/- towards the purchase of the property in question was paid by Shri Deep Sethi (father of the assessee). While the payment of Rs. 30,41,875/- made from his (father’s) account in SBI was treated as explained by the Ld. AO, balance payment of Rs. 58,01,023/- which was made by Shri Deep Sethi from his account in Punjab National Bank was not accepted. Ld. AO, accordingly, proceeded to treat this amount as unexplained u/s 69 of the Act with the following observations: “The assessee has submitted home loan sanction letter and loan disbursement history of Rs.99,94,030/-. Further, the assessee has made payment of Rs.26,11,028/- from his State Bank of India NRE account no. 31181966099. The assessee has made payment of Rs.30,41,875/- from his father's State Bank of India NRE account no. 10309584389. The assessee has also stated that balance payment of Rs. 58,01,023/- was made through his father's account in Punjab National Bank. On perusal of account statement of his submitted his father's account in Punjab National Bank statement, it is seen that the assessee has highlighted some debit entries. But in the narration in account statement, nowhere it is written that these payments are towards purchase of immovable property as it was mentioned in State Bank of India account statement. Therefore, it can not be verified that these payments were made for purchase of immovable property. Further, it is also seen that account description of the account in not mentioned as 'NRE' account. The assessee has also not submitted source of credit in the account. Therefore, the assessee has not substantiated the source of balance payment of Rs.58,01,023/-. Thus, the assessee could not explain the nature and source of investment in the immovable property....................”

Ld. AR has filed details along with narrations regarding the immediate source of credit in respect of the bank account of Shri Deep Sethi (father of the assessee) to demonstrate that the payments were made from explained sources. Ld. AR, further, pointed out that none of these payments have been made during the period under consideration.

We have heard the rival submissions and perused the material placed before us. Admittedly, the payments towards the purchase of the property have been made by Shri Deep Sethi from his bank accounts. Moreover, perusal of the breakup submitted by Ld. AR reveals that none of the payments falls in the year under consideration. While the payments from the SBI account were made during AY 2015-16, those from the PNB and the IDBI accounts have been made after 14.04.2018. We, accordingly, hold that since no payment has been made by Shri Deep Sethi during the Financial Year 2017-18 relevant for AY 2018-19, there is no justification for making any addition on account of unexplained investment in respect of these amounts during the year under consideration. This ground of the assessee is, therefore, allowed.

In view of the above, since the sole substantive issue has been decided in favour of the assessee, the rest of the grounds are rendered academic in nature and are, therefore, not being adjudicated upon.

In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 28.02.2025.