This problem is occurring after updating Gradle plugin and updating Android Studio to version canary 16.
After spending more time, I found working fix for this:
The project folder path shouldn't have any spaces in it, like in the error log above. For example, the project path *C:\Users\Aditya\My Projects\zomato* contains spaces in the folder name for the My Projects folder. I was able to fix this by just eliminating the space and rename folder to MyProjects.
New project path - *C:\Users\Aditya\MyProjects\zomato*
Reference - here