The Income Tax Appellate Tribunal, Mumbai Bench, examined the validity of an addition made under Section 69 of the Income-tax Act, 1961, in respect of alleged unexplained investment in immovable property made by a non-resident individual. The appeal arose from reassessment proceedings initiated under Section 147, culminating in a final assessment order passed pursuant to directions issued by the Dispute Resolution Panel under Section 144C of the Act.

The Assessing Officer, on the basis of information available in the departmental database, noted that the assessee had purchased an immovable property for a total consideration inclusive of stamp duty amounting to ₹2.55 crore. In the absence of compliance to notices issued under Sections 148A and 148, the assessment was completed under Section 144 of the Act. The Assessing Officer treated the entire investment as unexplained under Section 69 and proposed an addition accordingly in the draft assessment order.

During the proceedings before the Dispute Resolution Panel, the assessee furnished detailed submissions supported by documentary evidence, explaining that a substantial portion of the consideration was paid out of a housing loan availed from HDFC Bank, while the balance amount was paid through the assessee’s SBI NRE account. Upon calling for a remand report from the Assessing Officer and considering the assessee’s response thereto, the Dispute Resolution Panel accepted the explanation in respect of the loan-funded portion and a part of the remittance from the NRE account. However, it treated a sum of approximately ₹9 lakh as unexplained and directed the Assessing Officer to restrict the addition to that extent.

On appeal, the Tribunal observed that, during the year under consideration, the assessee had made payments aggregating to ₹5,02,774 from the SBI NRE account towards the property purchase, while the remaining payments were either made in earlier years or out of undisputed loan disbursements. The Tribunal held that any addition under Section 69 in the relevant assessment year could not exceed the actual amount invested during that year. Since the assessee was unable to fully substantiate the source of the remittance of ₹5 lakh allegedly received from the overseas account immediately prior to the payment, the Tribunal deemed it appropriate, in the interest of justice, to grant one further opportunity to explain the source of the said payment.

Accordingly, the Tribunal set aside the impugned assessment order and restored the matter to the file of the Assessing Officer for the limited purpose of examining the nature and source of the payment of ₹5,02,774 made during the year from the assessee’s SBI NRE account. The appeal was thus allowed for statistical purposes.

Source Link - https://itat.gov.in/public/files/upload/1768191964-rTUNnq-1-TO.pdf

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