Chandra Swaminathan Vs ITO (ITAT Chennai)
The assessee filed an appeal against the order of the Commissioner of Income Tax (Appeals) confirming additions of ₹49,80,330 and ₹10,80,000 as unexplained money under Section 69A for AY 2017–18.
The assessee sold a residential flat on 04.10.2016 for ₹35,50,000, receiving ₹33,00,000 through bank and ₹2,50,000 in cash. She also sold household items and electronic goods for ₹8,09,600 in cash. These amounts, along with ₹1,00,000 received as gifts and ₹20,400 cash balance, totaling ₹11,80,000, were deposited into her bank account. The assessee subsequently purchased a residential flat on 05.01.2017 for ₹35,00,000, incurred ₹2,80,330 as stamp duty and registration charges, and spent ₹12,00,000 on interiors, aggregating ₹49,80,330. She claimed exemption under Section 54 on the basis of reinvestment of sale proceeds and reported a long-term capital loss.
During scrutiny, the Assessing Officer accepted the sale transaction but questioned the deduction under Section 54. The AO observed that payments for the new flat and interiors were reflected in August 2017 instead of January 2017 as per the registered deed. The assessee explained that cheques were issued at the time of registration but encashed later when possession was handed over. The AO rejected this explanation, doubted the lease agreement due to its post-dated stamp paper, disbelieved the transaction, denied the Section 54 deduction, and treated ₹49,80,330 as unexplained under Section 69A. Additionally, cash deposits of ₹10,80,000 were also treated as unexplained. These findings were confirmed by the CIT(A).
