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Facts
The assessee, a professional, declared income of Rs.5,79,170/-. During assessment, it was found that the assessee purchased a flat for Rs.94,69,080/-. The Assessing Officer (AO) added the entire investment amount back to the assessee's total income, as the source of funds was not adequately supported by documentary evidence. The assessee appealed to the CIT(A), who rejected the appeal.
Held
The Tribunal held that the assessee had discharged the onus of proving the source of the loan obtained from Shri Anand P. Nair, as the transaction was routed through banking channels, the creditor's identity was undisputed, and their creditworthiness was established by income disclosed to the Settlement Commission. The Tribunal also referred to a coordinate bench decision in Passon Realtech Pvt. Ltd. vs. ACIT.
Key Issues
Whether the addition made by the AO for the entire investment in a flat, primarily on account of the loan obtained from Shri Anand P. Nair, is sustainable. Whether the denial of deduction under Chapter VIA for repayment of housing loan is justified.
Sections Cited
139(1), 153A, 143(3), 46A, 69A, VIA, 234B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI
Before: SHRI ANIKESH BANERJEE & SHRI MAKARAND VASANT MAHADEOKAR
Ekesh Gaurang Desai vs ACIT Central Circle -1(1), Mumbai C-46, Pandurang CHS, A.B. 321, Aayakar Bhavan, M.K. Road, Nair Road Near Juhu Post Mumbai 400020 Office, Juhu Mumbai-400049 PAN:AIBPD4569L APPELLANT RESPONDENT Assessee by : Shri DharanGandhi, Adv & Ms. Vinita Nara Adv Respondent by : Shri Ritesh Misra (CIT DR) Date of hearing : 29/01/2026 Date of pronouncement : 10/02/2026 O R D E R Per: Anikesh Banerjee (JM): The instant appeal of the assessee filed against the order of the Ld. Commissioner of Income Tax (Appeal)-47, Mumbai [for brevity ‘the Ld. CIT(A)’], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for Assessment Year 2011-12, date of order 28.07.2025. The impugned order emanated from the order of the Ld. Income-tax Officer Ward-22(1)(2), Mumbai
The brief facts of the case are that the assessee is a professional engaged in architectural and designing services. The assessee filed the return u/sec. 139(1) and declaring total income Rs.5,79,170/-. The assessee along with other namely Mr. Satyanand Menon was apprehended at the Jaipur Airport on 29.02.2012 by Air Intelligence Unit of Income-tax, Jaipur with cash amounting to Rs.1,00,00,000/-. The notice under section 153A was issued and the assessment was initiated against the assessee. During the assessment the Ld. AO found that the assessee with his wife had purchased a flat worth of Rs.94,69,080/-. During the assessment the Ld. AO had not received any documentary evidence related to this source of fund for investment for purchase of flat. The Ld. AO finally added back entire investment amount of Rs.94,69,080/- with the total income of the assessee. Being aggrieved assessee filed an appeal before the Ld. CIT(A). The assessee filed the additional evidence under Rule 46A of the Income Tax Rule, 1962 (in short, the ‘Rules’) before the Ld. CIT(A). And the Ld. CIT(A) called for remand report. The Ld. AO complied the remand notice and challenged the validity of the additional evidence and the submission of documents before the Ld. CIT(A). But there is no discussion on verification of the fact. The Ld. AO had not noted any specific lacunae related to alleged transaction. Considering said remand report, finally the appeal of the assessee was duly rejected. Being aggrieved assessee filed an appeal before us.
Ekesh Gaurang Desai 3. The Ld. AR argued and filed a paper book containing pages 1 to 65 which has been placed on record. The Ld. AR contended that the assessee had made the transaction for purchase of property. The transactions for acquiring the alleged property is filed in APB page 39 which is reproduced as below: “Details of Payment made for Pandurang CHS Particulars Date Cheque No. Amount Property Cost 15.03.2011 90,00,000.00 Stamp duty 4,38,600.00 Registration Fees 30,480.00 Total 94,69,080.00 Payment Details PNB Bank Ekesh Desai (A/c No.171515) 15.03.2011 620634 65,12,000.00 PNB Bank Ekesh Desai (A/c No.171515) 14.03.2011 620632 30,105.00 PNB Bank Ekesh Desai (A/c No.171515) 14.03.2011 620631 4,40,137.00 Bank of Baroda Bhumi Desai (A/c no.22459) 14.03.2011 257361 10,00,000.00 Bank of Baroda Anand Nair 18.02.2011 144223 15,00,000.00 94,82,242.00
The Ld. AR contended that the assessee has taken loan, from Shri Anand P. Nair amount to Rs.70,89,500/- for purchase of the said property. The rest amount was invested by the assessee and her wife. The wife has already invested amount to Rs.10,00,000/- from her bank account. Rest of the amount is from the own source of assessee. But the entire investment was added back by the Ld. AO. The Ld. AR specifically mentioned that the revenue has asked the explanation about the genuinity of the loan taken from Shri Anand P. Nair. The confirmation of loan- creditor, ledger book, bank statements are duly filed before revenue which are now annexed in APB page 16 to 28.
Ekesh Gaurang Desai 5. The Ld. AR further contended that the search was carried out in the premises of loan creditor, Shri Anand P. Nair and finally the loan creditor Shri Anand P. Nair filed the application in settlement commission bearing settlement application no. MH/MUCC-I/067/2013-14/IT and the said loan-creditor had declared the additional income amount of Rs.4,98,50,000/- related to A.Y. 2007- 08 to 2013-14. It is argued that the declaration of income clealy indicated the source of the investment to the assessee by loan creditors. The identity, creditworthiness and banking transactions are satisfactorily explained by the assessee before the Ld. AO and the Ld. CIT(A). So, the impugned addition is uncalled for.
The Ld. DR argued and relied on the order of the revenue authorities. But the Ld. DR contended that the assessee has failed to substantiate the creditworthiness of the loan-creditor. Even the Ld. AO in the remand report rejected the assessee’s plea. He prayed for upholding the impugned addition.
We heard the rival submissions and carefully considered the material available on record. Upon perusal of the records, we find that the assessee invested a total sum of Rs.94,69,080/- towards the purchase of a flat on 15.03.2011, which included the cost of the property, stamp duty, and registration charges. On examining the impugned appellate order, we observe that the Ld. CIT(A) reproduced the remand report of the Ld. AO dated 07.07.2025. The relevant extract of the remand report is reproduced below:
The Ld. AO stated that ‘the assessee submitted the ledger account as per their own books of account, without verification from Mr. Anand Nair.’ In this regard, we submit as under:
(i) Attention is invited to Enclosures Nos. 10 to 12 of our submission dated 18.02.2022. Enclosure No. 10 contains the signed confirmation of Mr. Anand Nair, Enclosure No. 11 is his PAN card, and Enclosure No. 12 is the ledger of the assessee as appearing in the books of Mr. Anand Nair. Therefore, the observation of the Ld. AO that the assessee submitted only its own ledger without verification from Mr. Anand Nair is factually incorrect.
(ii) Attention is also drawn to Serial No. 7, wherein amounts of ₹40,00,000/-, ₹8,64,000/- and ₹17,52,000/- are credited.
(iii) Even the narration clearly reflects the name of Mr. Anand Nair.
The Ld. AO further stated that ‘the assessee should have submitted documentary evidence to prove the creditworthiness of Mr. Anand Nair and that, in the absence of his bank statement, the genuineness of the transaction cannot be established.’ In this respect, we submit that it is abundantly clear from the facts that the cash of ₹1 crore seized from the assessee belonged to Mr. Anand Nair. The Department carried out a survey under section 133A on Mr. Anand Nair on 13.03.2013. During the course of the survey proceedings, Mr. Anand Nair disclosed substantial income, as evident from the order passed by the Settlement Commission dated 30.09.2015. The said order was already placed on record during the appellate proceedings for A.Y. 2012-13, based on which the Ld. CIT(A) deleted the addition of ₹1 crore made under section 69A for A.Y. 2012-13.
Therefore, the loan transaction is genuine, and the mere absence of the bank statement should not render the loan unexplained.
It is also placed on record that Mr. Anand Nair passed away on 18.09.2018, after completion of all proceedings before the Settlement Commission. A copy of the death certificate is enclosed.”
Ekesh Gaurang Desai 8. The assessee explained the source of investment under three categories— partly from his own funds, partly from his wife, and the balance amount by way of loan from the creditor, Shri Anand P. Nair, who had already declared income amounting to Rs.4,98,50,000/- for A.Ys. 2007-08 to 2013-14 before the Settlement Commission. The Ld. AR contended that there was no adverse observation by the Ld. AO regarding the assessee’s own contribution towards the purchase of the flat, and that the investment made by the wife could not be added in the hands of the assessee. The sole grievance of the revenue relates to the loan amount of Rs.70,89,500/- obtained from Shri Anand P. Nair. The assessee furnished bank statements evidencing the transactions, confirmations from the loan creditor, and material demonstrating the creditworthiness of the creditor. The Ld. AR placed reliance on the decision of the Coordinate Bench of ITAT, Delhi ‘E’ Bench, in Passon Realtech Pvt. Ltd. vs. ACIT (ITA No. 1248/Del/2025), pronounced on 17.01.2026. The observations of the Coordinate Bench in paragraph 12 are reproduced below: “12. Before us, the Ld. AR for the assessee submitted that during the year under appeal, the assessee had taken a loan of Rs.4.87 crores from M/s Height Propcon Pvt. Ltd., for which all necessary evidences establishing identity, genuineness of the transaction, and creditworthiness were furnished vide letter dated 16.12.2019, placed at pages 48 to 66 of the paper book. These included confirmation, ITR, bank statements, and financial statements of the lender company. The Ld. AR further submitted the ledger account of the lender company as appearing in its books of account, showing an opening balance of Rs.26.15 crores, and that the entire loan was repaid in F.Y. 2022-23. It was contended that, except for the year under appeal, the Revenue had never doubted the existence or creditworthiness of the lender, despite loans exceeding Rs.26 crores having been advanced in preceding years. Reliance was also placed on the assessment order passed under section 143(3) in the case of the lender company dated 18.12.2019 for the same assessment year, wherein both its existence and capacity to advance substantial loans were accepted by the Revenue. The Ld. AR thus argued
Ekesh Gaurang Desai that once no adverse inference was drawn in the case of the lender, its creditworthiness could not be doubted in the hands of the assessee. Accordingly, deletion of the addition was prayed for.”
In our considered view, the revenue has not recorded any adverse finding with respect to the assessee’s own source of investment. The contribution made by the assessee’s wife, who is a co-owner of the property, cannot be disputed in the hands of the assessee. The only issue pertains to the loan obtained from Shri Anand P. Nair. The loan transactions were routed through banking channels, the identity of the creditor is undisputed, and the creditworthiness stands established by the income disclosed by the creditor before the Settlement Commission. Even in the remand proceedings, the Ld. AO failed to point out any specific infirmity in the loan transaction. Respectfully following the decision of the Coordinate Bench of ITAT, Delhi, in Passon Realtech Pvt. Ltd. (supra), we hold that the assessee has duly discharged the onus cast upon him regarding the source of the loan. Accordingly, the addition made under section 69A in the hands of the assessee is arbitrary and unsustainable in law. The impugned appellate order is therefore set aside, and the addition made by the Ld. AO is deleted.
The assessee raised Ground No. 3 challenging the denial of deduction under Chapter VIA amounting to Rs.48,224/-. The Ld. CIT(A) adjudicated the issue and observed as under: “10.2 I have perused the facts of the case. The appellant has claimed deduction under Chapter VIA of the Act on account of repayment of housing loan. The Assessing Officer is directed to verify the facts and allow the necessary credit after examining the interest certificate submitted by the appellant. Interest charged under section 234B of the Act is mandatory and Ekesh Gaurang Desai consequential to the additions made in the assessment order. Accordingly, these grounds of appeal are partly allowed.” We find no reason to interfere with the findings of the Ld. CIT(A) on this issue. Accordingly, this ground is remanded to the file of the Ld. AO for verification. The Ld. AO is directed to examine the assessee’s claim in accordance with law after granting a reasonable opportunity of being heard.
11. Accordingly, the ground no.1 and 2 are allowed, ground no.3 stands dismissed. And ground no.4 and 5 are consequential in nature and dismissed.