NIKHIL RAVINDRA MANJREKAR ,MUMBAI V. ACIT-35(2)(1), MUMBAI

ITA 5547/MUM/2024

AI Insights

The case revolves around the denial of deduction under section 54 of the Income Tax Act, 1961, concerning the reinvestment made by the assessee, Nikhil Ravindra Manjrekar, in a residential property. The assessee had sold a residential flat and reinvested the proceeds into another property, claiming exemption under section 54. However, the exemption was initially denied by the Assessing Officer and later by the CIT(A), primarily due to the alleged failure to disclose the mode of payment for the new property. The Tribunal found that the assessee had indeed provided sufficient evidence of the mode of payment through bank statements and receipts, thus reversing the decision of the lower authorities.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 781390 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 25-10-2024
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEYAQAT ALI AAFAQUI
• Assessee Lawyers: RAHUL V. DAGA
• Keywords: Additional evidence; Cost of acquisition; Capital Gains; TDS
• Section: 143(3); 54

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, ‘B’ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No.5547/Mum/2024 (Assessment Year :2016-17) Nikhil Ravindra Manjrekar F/1007, Oberoi Splendour J.V.L.R. Jogeshwari East Mumbai – 400 060 Vs. Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre, Delhi PAN/GIR No.AFWPM2549D (Appellant) .. (Respondent) Assessee by Shri Rahul V. Daga, CA Revenue by Shri Leyaqat Ali Aafaqui, Sr.AR Date of Hearing 06/08/2025 Date of Pronouncement 30/09/2025 आदेश / O R D E R PER AMIT SHUKLA (J.M): This appeal by the assessee is directed against the order dated 29/08/2024 passed by the National Faceless Appeal Centre (NFAC), Delhi, arising from the assessment framed under section 143(3) of the Income-tax Act, 1961 for the Assessment Year 2016–17. 2. The solitary grievance of the assessee is against the denial of deduction under section 54 of the Act in respect of reinvestment made in a residential property. 3. The relevant facts are that the assessee, an individual, filed his return of income on 04/08/2018 declaring total Printed from counselvise.com ITA No.5547/Mum/2024 Nikhil Ravindra Manjrekar 2 income of ₹85,60,120 comprising salary and income from other sources. The case was selected for scrutiny to verify the genuineness of capital gains and the corresponding claim of deduction under section 54. 4. The Assessing Officer issued a show-cause notice dated 26/12/2018, which went unanswered. Consequently, the assessee’s claim of deduction under section 54, arising from the investment of ₹3,55,00,000 in the new residential property, was summarily disallowed and the assessment came to be completed ex parte. 5. Before the learned CIT(A), the assessee explained that he had sold a residential flat on 08/04/2015 for ₹2,27,00,000, which had originally been purchased on 04/09/2010 for ₹1,17,75,000. Soon thereafter, the assessee purchased another residential flat at Oberoi Splendour, Jogeshwari, Mumbai, vide agreement dated 30/05/2015. The computation of long-term capital gain and claim of exemption under section 54 was placed on record as follows: Sr No. Particulars Amount Rs 1. Sale Consideration 2,27,00,000/- 2. Less: Indexed cost of Acquisition (CII of FY 2010-11:711 and CII of FY 2015- 16:1081) Original Cost *[CII of FY 2015-16 / CII of FY 2010- 11) i.e, 1,17,75,000*1081/711 1,79,02,367 3. Expenditure for transfer 2,27,000/- 4. Long Term Capital gain [l-(2+3)] (A) 45,70,363 Printed from counselvise.com ITA No.5547/Mum/2024 Nikhil Ravindra Manjrekar 3 6. In support of his claim, the assessee produced the following documents: copy of the original purchase agreement dated 04/09/2010, copy of sale deed dated 08/04/2015, and copy of purchase agreement dated 30/05/2015 for the Oberoi Splendour flat. 7. The learned CIT(A), while considering the matter, noted the payment schedule for the new property aggregating to ₹3,55,00,000 as reflected in the purchase deed. Rs. 5,00,000/- Rupees Five Lacs Only as token money Rs. 20,00,000/- Rupees Twenty Lacs Being paid as earnest money part payment before the execution of these presents. Rs. 1,61,45,000/- Rupees One Crore Sixty One lakhs & Forty Five thousand Only: Being paid as part payment on or before the execution of these presents. Rs. 3,55,000/- Rupees Three Lakhs and fifty five thousand only Being TDS 1% of the total consideration to be paid by the TRANSFEREE to the credit of the TRANSFEROR'S Income tax acct, u/s 194 IA of the Income Tax Act, 1961 Rs. 1,65,00,000/- Rupees One Crore & Sixty Five Lakhs Only: Being the balance full and final consideration, to be paid to the TRANSFERORS on or before the TRANSFERORS hands over all original documents along with the TRANSFERORS handing over Printed from counselvise.com ITA No.5547/Mum/2024 Nikhil Ravindra Manjrekar 4 the vacant and peaceful possession of the Said Flat Total Rs. 3,55,00,000/- (Rupees Three Crore & Fifty Five Lacs Only) 8. However, the learned CIT(A) rejected the claim essentially on the premise that the assessee had failed to furnish the mode of payment in respect of the said purchase and, therefore, the exemption under section 54 could not be allowed. 9. The assessee, in rebuttal, drew attention to the sale deed itself which contained details of cheque payments along with receipts annexed thereto. It was further explained that copies of bank statements were filed (even if as additional evidence) and that at no stage was any specific query raised by the appellate authority regarding the mode of payment. Thus, according to the assessee, the denial of deduction was wholly unwarranted. 10. The learned Departmental Representative, however, urged that the matter may be restored to the Assessing Officer for factual verification. 11. We have given our thoughtful consideration to the rival submissions and perused the material on record. Certain facts stand beyond dispute: the assessee sold his residential property at Kandivali on 08/04/2015 for ₹2,27,00,000 and, within a short span of over a month, reinvested the sale proceeds into another residential property at Oberoi Splendour, Jogeshwari, for ₹3,55,00,000 vide agreement Printed from counselvise.com ITA No.5547/Mum/2024 Nikhil Ravindra Manjrekar 5 dated 30/05/2015. The computation of capital gains placed before us shows that the taxable long-term capital gain amounted to ₹45,70,363, against which exemption under section 54 was claimed. 12. The reasoning adopted by the learned CIT(A) cannot stand judicial scrutiny. Once the sale deed itself recorded the consideration of ₹3,55,00,000, acknowledged receipt of substantial part of the consideration by cheques, and annexed contemporaneous receipts, it is wholly incorrect to conclude that mode of payment was not disclosed. The law does not require needless formalism when substantive compliance is manifest. 13. Moreover, it was never the case of the Revenue, either at the assessment stage or at the first appellate stage, that the source of purchase of the new property was doubtful or unexplained. The controversy was confined only to the claim of deduction under section 54. The assessee’s sale deed and supporting documents had already put the matter beyond doubt. 14. Now before us, the assessee has also produced his bank statements reflecting the payments made through regular banking channels. These statements corroborate the recitals in the registered sale deed and receipts, and establish beyond cavil that the entire purchase consideration was discharged through identifiable and explained sources. In this factual matrix, to disallow the claim by alleging absence of disclosure Printed from counselvise.com ITA No.5547/Mum/2024 Nikhil Ravindra Manjrekar 6 of payment details is not only unwarranted but also contrary to the very purpose of section 54. 15. We, therefore, hold that the assessee is entitled to exemption under section 54 to the extent of ₹45,70,363. The disallowance sustained by the lower authorities is accordingly directed to be deleted. 16. In the result, the appeal of the assessee is allowed. Order pronounced on 30th September, 2025. Sd/- (GIRISH AGRAWAL) Sd/- (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 30/09/2025 KARUNA, sr.ps Copy of the Order forwarded to : BY ORDER, (Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Printed from counselvise.com "