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The Tribunal held that the AO was unjustified in denying the deduction under section 54 and making additions under section 69A for the purchase of the new flat, as the transaction was supported by registered deeds and bank statements, and the source of funds was traceable to the sale of the old flat. The addition for cash deposits was also deleted as the assessee provided plausible explanations and supporting documents for the cash received from the sale of personal effects and the cash portion of the sale of the old flat.
The Tribunal held that the filing of Form 67 within the prescribed due date is directory, not mandatory, following various judicial pronouncements. The Tribunal noted that the DTAA provisions override the Act and Rules, and procedural delays should not curtail substantive relief. Consequently, the matter was restored to the AO for verification of Form 67 and a decision in accordance with the law.