Uday Ramesh Nayak Vs ACIT (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench, has deleted an addition of Rs. 13.73 lakh made by the tax authorities to the income of an individual, ruling that the source of investment in a property was adequately explained. The case, involving Uday Ramesh Nayak and the Assistant Commissioner of Income Tax (ACIT), International Taxation, Vadodara, for the Assessment Year 2018-19, centered on an alleged unexplained investment in a Mumbai property.
The matter originated when the Assessing Officer (AO) received information regarding the assessee’s purchase of a flat in Andheri (East), Mumbai, on August 29, 2017, for a total consideration of Rs. 2,16,50,000. The AO sought an explanation for the source of this significant investment. Initially, the assessee provided an interest certificate from a loan account, which the AO deemed insufficient to explain the entire investment. Consequently, the AO made a substantial addition of Rs. 2,16,06,693 to the assessee’s income under Section 69 of the Income Tax Act, 1961, treating it as unexplained investment.
Aggrieved by the AO’s order, the assessee filed objections before the Dispute Resolution Panel (DRP), Mumbai. During the DRP proceedings, the assessee submitted additional evidence, including bank statements from ICICI Bank, a loan statement from HDFC Bank, and copies of cheques used to pay the property developer. The DRP, after reviewing these submissions, acknowledged that a significant portion of the investment was explained. The DRP noted that the AO was satisfied with explanations covering Rs. 2,02,76,933 of the investment. However, a balance amount of Rs. 13,72,952 remained unexplained according to the DRP.
