Deepak Devidas Sajnani Vs ITO (ITAT Mumbai)
Section 69 Limited to Yearly Outflow: ITAT Restricts Unexplained Investment to Actual Payment Made
The Mumbai Bench of the Income Tax Appellate Tribunal partly allowed the assessee’s appeal for AY 2015-16, holding that an addition under section 69 on account of investment in immovable property cannot exceed the amount actually paid during the relevant year.
The assessee, a non-resident individual, had purchased an immovable property with total consideration (including stamp duty) of about ₹2.56 crore. While the Assessing Officer treated the entire amount as unexplained investment, the DRP restricted the addition to ₹9 lakh, being the portion allegedly not explained through loan or NRE account payments.
Before the Tribunal, it was shown that:
- Substantial payments were made through HDFC housing loan, which were never disputed;
- During the year under consideration, only ₹5,02,774 was actually paid by the assessee from his SBI NRE account; and
- The remaining payments related to other years.
The Tribunal held that section 69 can apply only to the investment made in the relevant assessment year, and not to the entire purchase consideration spread over multiple years. Since the assessee could not conclusively substantiate the source of ₹5 lakh remitted from the UAE account for the NRE payment, the Tribunal restored the matter only to that limited extent to the Assessing Officer for fresh verification.
Accordingly, the assessment order was set aside, and the issue was remanded to the AO solely to examine the source of ₹5,02,774, with all other additions effectively ruled out. The appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
