Unexplained Investment in Property: ITAT Deletes Rs. 13.73 Lakh Addition After Verifying Source from Fixed Deposits [Read Order]

The Ahmedabad Bench of Income Tax Appellate Tribunal(ITAT)deleted the Rs. 13.73 lakh addition for unexplained investment in a property purchase after verifying the source from fixed deposits.

Uday Ramesh Nayak,appellant-assessee, purchased Flat No. 1604, Zinnia Vasant Oasis, Andheri (East), Mumbai, on 29.08.2017 for Rs. 2,16,50,000/-. The Assessing Officer(AO) found that the appellant did not explain the source of the investment, despite providing an interest certificate. As a result, the AO added Rs. 2,16,06,693/- as unexplained investment under Section 69 of the Act.

The assessee filed objections before the Dispute Resolution Panel(DRP) and submitted additional evidence, including bank statements, loan statements, and cheques paid to the developer. The DRP reviewed the evidence and reduced the addition to Rs. 13,72,952/-. The DRP noted that the assessee had valid reasons for not submitting complete details earlier and admitted the additional evidence.

The AO reviewed the evidence and accepted Rs. 2,02,76,933. However, Rs. 13,72,952 remained unexplained. The assessee claimed the amount belonged to his spouse, but the bank statement did not show the amount, leaving it unexplained.

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The DRP directed the AO to delete the addition of Rs. 2,02,76,933 and added Rs. 13,72,952 as unexplained. The assessee has appealed, stating that the balance amount was fully explained.

The two member bench comprising Siddhartha Nautiyal(Judicial Member) and Makarand V.Mahadeokar(Accountant Member) reviewed the rival contentions and the material on record. It was noted that the assessee's spouse was a joint owner of the property. The bank statement of the spouse showed that the balance amount was paid to M/s. Neepa Real Estates Ltd. on 26.03.2019 via bank transfer. The spouse had encashed fixed deposits with Bank of India on 20.03.2019, which were then used to make the payment.

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The appellate tribunal concluded that the source of the investment, amounting to Rs. 13.72 lakhs, was fully explained as coming from the maturity of the fixed deposits held by the assessee’s wife.The additions were deleted.

In short,the appeal filed by the assessee was allowed.

To Read the full text of the Order CLICK HERE

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