ASHISH ASHOK NIRKHE,MUMBAI V. INCOME TAX OFFICER, INT TAX. WARD 3(3)(1), MUMBAI

ITA 1005/MUM/2025

AI Insights

The case involves Ashish Ashok Nirkhe, a non-resident Indian, who was assessed for unexplained investment in immovable property amounting to Rs. 60,19,000 for the Assessment Year 2015-16. The Income Tax Officer (International Tax), Mumbai, initiated re-assessment proceedings upon receiving information about the property purchase, and subsequently treated the entire purchase consideration as unexplained due to insufficient substantiation of the source of funds. The assessee contested this decision, providing documents such as bank statements and loan agreements, which were initially disregarded by the lower authorities. However, upon appeal to the Tribunal, it was determined that the assessee had indeed provided adequate evidence to substantiate the source of funds, leading to the allowance of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 706137 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2015-2016
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KRISHNA KUMAR
• Assessee Lawyers: USHMA MAKECHA
• Keywords: Unexplained investment; Principle of natural justice; Source of fund; FORM 26AS
• Section: 148; 143(3); 69; 234B

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI BEFORE MS PADMAVATHY S, AM & SHRI RAJ KUMAR CHAUHAN, JM I.T.A. No. 1005/Mum/2025 (Assessment Year: 2015-16) Ashish Ashok Nirkhe, B-703, Navkar Paradise, LT road, Babhai Naka, Borivali West, Mumbai-400091. PAN: AGNPN1767C Vs. Income Tax Officer (International Tax), Ward-3(3)(1), Room No. 626, Kautilya Bhavan, Bandra Kurla Complex, Mumbai-400051. Appellant) : Respondent) Appellant /Assessee by : Ms. Ushma Makecha, AR Revenue / Respondent by : Shri Krishna Kumar, Sr. DR Date of Hearing : 24.06.2025 Date of Pronouncement : 30.06.2025 O R D E R Per Padmavathy S, AM: This appeal by the assessee is against the final order of assessment of the Income Tax Officer (International Circle)-3(3)(1), Mumbai [In short 'AO'] passed under section 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (the Act) dated 29.01.2025 for AY 2015-16. The assessee raised the following grounds of appeal: “1) The Learned DRP has erred in confirming the draft assessment order of Assessing Officer with making addition of Rs. 60,19,000/- on account of unexplained investment under section 69 of the Income Tax Act. 2 ITA No. 1005/Mum/2025 Ashish Ashok Nirkhe 2) The learned DRP has erred in disregarding the information and material placed on record to prove the source of funds towards purchase of immovable property such as Home Loan repayment certificate, loan closure letter etc. 3) The Assessing Officer has erred in not granting the opportunity of adjournment to the assessee despite his request for the same and has denied the client natural justice by not providing the material they have relied on. 4) The Appellant submits that the Assessing Officer erred in fact and in law by making an addition of Rs. 60,19,000/- under Section 69 of the Act, on the ground that the assessee could not justify the source of funds used for the purchase of the property, while ignoring the material placed on record. 5) The learned AO has erred in passing the Assessment order after 30 days of the direction of the DRP. 6) The Assessing Officer has erred in levying interest under Sections 234B and 234C. 7) The order appealed against is bad in law and against the principal of natural justice.” 2. The assessee is an individual and non-resident Indian since 2011. For the year under consideration the assessee did not file any return of income. The Assessing Officer (AO) received information that the assessee has purchased immovable property and accordingly the AO initiated re-assessment proceeding. The assessee filed the return of income in response to notice under section 148 of the Act. The assessee also filed the supporting documents such as a copy of purchase agreement, Form 26AS, copy of bank statement, computation of income, etc. The AO after perusing the documents submitted by the assessee held that the assessee has not properly substantiated the source of funds utilized for purchase of property and accordingly treated the entire purchase consideration of Rs. 60,19,000/- as unexplained in the hands of the assessee. Aggrieved, the assessee filed its objections before the DRP. The assessee submitted before the DRP that Housing loan is taken from HDFC Bank towards purchase of property to the tune of Rs. 44,80,320/- and 3 ITA No. 1005/Mum/2025 Ashish Ashok Nirkhe the balance amount is from personal savings paid out of NRE A/c. Accordingly, the assessee submitted that the source for purchase of the property are clearly substantiated and no addition can be made under section 69A of the Act. The DRP however did not accept the submissions of the assessee and upheld the addition made by the AO by holding that “It is seen from the draft order and the Ld. JAO's report that no clear reconciliation of the transfer of funds from NRE (it is not clear from the headers of the bank statement that they are NRE accounts - no evidence like cheque leaf has been put on record to establish the fact) to NRO account has been provided. SBI Bank statement has not been submitted. Property Purchase agreement has not been provided till date to Ld.JAO or in panel proceedings, which means it is not clear how, when and what amounts have been paid to builder. Bare account statement has been submitted, and Panel agrees with the observation of the Ld.JAO in report submitted that '6. Assessee has submitted bank statements of HDFC bank, as mentioned in para 4, from date of account opening to 31.12.2023 and 30.06.2023 respectively, however from bank narration it is not ascertainable when and what amounts have been paid to the seller in subsequent years.' Thus, the appellant has fallen short of the evidence bar which would tilt scale in its favour.” 3. The assessee is in appeal before the Tribunal against the final order of assessment passed by the AO pursuant to the directions of the DRP. 4. We heard the parties and perused the material on record. During the course of hearing the ld. AR submitted the below table explaining the source of funds towards purchase of property: 4 ITA No. 1005/Mum/2025 Ashish Ashok Nirkhe Particulars of property Amount Amount paid Date of payment Mode of payment Reference Agreement Value Rs. 60,19,000 Rs. 2,00,000 04.12.2014 Cheque issued vide cheque no 605921 SBI passbook, email received from the builder and demand letter 1 Rs. 9,98,000 15.12.2014 Cheque issued vide cheque no 605925 SBI passbook, email received from the builder, proof of cheque deposited and demand letter 1 Rs. 44,80,320 HDFC loan HDFC loan disbursement record Service Tax, VAT and other remaining dues Rs. 6,23,023 15.03.2016 Cheque issued vide cheque no 505654 SBI passbook and demand letter 2 Stamp duty and registration Charges Rs. 3,91,140 Rs. 3,91,200 13.12.2014 Cheque issued vide cheque no 605924 SBI passbook, email received from the builder and demand letter 1 Total Rs. 66,92,543 5. The ld. AR also submitted the bank statement substantiating the amount paid from assessee's own funds as mentioned in the above table (page 3 to 6 of PB). From the perusal of records we notice that the assessee has availed housing loan from HDFC Bank and this fact is substantiated by the loan sanction letter given by HDFC Bank (page11 & 12 of PB). We further notice that the assessee has repaid the Housing Loan availed through EMI which is supported by the entries in the NRO A/c with HDFC Bank (page 13 to 19 of PB). During the course of hearing the ld. 5 ITA No. 1005/Mum/2025 Ashish Ashok Nirkhe AR also took us through the email from the builder acknowledging the payments and also the certificate of possession wherein the builder has acknowledged the receipt of entire consideration. From the perusal of the facts and documentary evidences elaborated hereinabove it is clear that the assessee provided sufficient documentary evidences explaining the source of funds towards purchase of property. From the observations of the DRP as extracted in the earlier part of this order the submissions of the assessee have been rejected for the reason that the bank narration is not ascertainable. Further the AO in the order of assessment also acknowledges the fact that the assessee has submitted various documentary evidences including the purchase agreement. Therefore, in our considered view when the assessee has discharged the onus of substantiating the source of funds through various documentary evidences the lower authorities are not correct in making the addition under section 69A of the Act. We have examined the documentary evidences submitted by the assessee before the lower authorities and see merit in the submission that the assessee has explained the source with sufficient documentary evidences substantiating the source. Considering the facts peculiar to the assessee and the documentary evidences, we hold that the lower authorities are not correct in holding that the source for purchase of property have not been properly explained and accordingly we direct the AO to delete the addition made in this regard. 6. In result, the appeal of the assessee is allowed. Order pronounced in the open court on 30-06-2025. Sd/- Sd/- (RAJ KUMAR CHAUHAN) (PADMAVATHY S) Judicial Member Accountant Member *SK, Sr. PS 6 ITA No. 1005/Mum/2025 Ashish Ashok Nirkhe Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai "