CHETAN SHASHIKANT THAKKAR ,MUMBAI vs. DCIT, CIRCLE 27(1), MUMBAI

Facts

The assessee, an advocate and partner in M/s. Kanga & Co., purchased an immovable property with his wife. During the A.Y. 2015-16, he paid Rs. 1,21,81,762/- towards this property, sourced from an interest-free loan of Rs. 1,00,00,000/- from an NRI friend (Mr. Mitu Misra) and withdrawals of Rs. 21,81,762/- from his partnership firm. During reassessment proceedings initiated u/s 147, the AO made an addition of Rs. 78,05,200/- u/s 69, treating it as unexplained investment, which was subsequently confirmed by the CIT(A) as a "colourable device".

Held

The Tribunal found no basis for the addition, determining that the assessee had successfully discharged his onus by demonstrating the identity and creditworthiness of the lender (an NRI whose loan was repaid) and the genuineness of the transactions through proper banking channels and documentary evidence. The Tribunal observed that the AO failed to conduct cross-verification and the CIT(A)'s reliance on the McDowell case was misplaced. Consequently, the Tribunal set aside the CIT(A)'s order and directed the AO to delete the addition.

Key Issues

1. Whether the reassessment proceedings initiated under Sections 147 and 148 were valid. 2. Whether the addition made under Section 69 for unexplained investment/cash credit, related to a personal loan from an NRI friend and partnership firm withdrawals, was justified. 3. Applicability of Section 115BBE and consequential interest under Sections 234B and 234C.