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Judgment
PER MANISH AGARWAL, AM:
This appeal is filed by the revenue against the order of Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [‘CIT(A)’ in short] in Appeal No. CIT(A), Gurgaon-1/10926/2019-20 dated 18.11.2025 passed u/s 250 of the Income Tax Act, 1961 (the Act, in short) arising out of the assessment order dated 19.11.2019 passed u/s 143(3) of the Act for Assessment Year 2012-13.
The brief facts of the case are that reassessment proceedings were initiated by issue of notice u/s 148 of the Act on 30.03.2019 which were completed after making addition of Rs. 1,75,85,811/- being investment made in mutual funds alleged as unexplained. The background of the addition is that the information was received during the course of proceedings in the case of Smt. Manjula Bhargava (mother of the assessee) that investment in the mutual funds of Rs.1,75,85811/- were made along with the assessee. As per the AO, Smt. Manjula Bhargava stated that entire investment was made by her son Mr. Saurabh Bhargava i.e. the assessee therefore, reassessment proceedings u/s 147 of the Act were initiated in the case of assessee. The AO than made the addition of the said sum in the hands of the assessee against which an appeal was field before the ld. CIT(A) who has deleted the additions made.
Aggrieved by the said order, revenue has filed the present appeal before ethe tribunal by taking following grounds of appeal:
“1.The Ld. CIT(A) has erred in deleting the addition of Rs. 1,75,85,811/- made u/s 69 of the Income-tax Act, 1961, ignoring the fact that the assessee failed to discharge the onus cast upon him to explain the nature and source of the investments in mutual funds.
2.The Ld. CIT(A) has erred in holding that the Assessing Officer did not bring any evidence to establish beneficial ownership, without appreciating that the reopening was based on specific information received from the office of ITO Ward 2(4), Gurgaon, wherein the assessee's mother, Smt. Manjula Bhargava, categorically stated that the investments appearing against her PAN were actually made by the assessee.
3.The Ld. CIT(A) has erred in placing undue emphasis on the alleged lack of affidavit or bank trail from Smt. Manjula Bhargava, while ignoring the fact that the assessee himself failed to furnish any explanation or evidence regarding the source of the investments despite multiple statutory notices under sections 142(1) and 143(2).”
Heard both the parties at length and perused the material available on record. It is observed that before the Ld. CIT(A) assessee has stated that the entire investment was made by his father Shri Subodh Bhargava and the Ld. CIT(A) in para 6.3 of its order observed that the investment was made jointly in the name of Sh. Subodh Bhargava, father of the assessee and Smt. Manjula Bhargava, mother of the assessee. Ld. CIT(A) further observed that such fact cannot be accepted solely on the basis of reply filed and corroborative evidence like bank statement etc. should be brought on record. Further while deleting the addition in the hands of the assessee, Ld. CIT(A) observed that while accepting the claim of Smt. Manjula Bhargava, Revenue has not brought on record any evidence like affidavit, bank statements etc. to accept the contention of the assessee. Such a dual approach taken by the Ld. CIT(A) is not acceptable. While referring to the action of the AO of reopening the case, Ld. CIT(A) observed that the AO should bring on record corroborative material, however, has accepted the claim of the assessee without referring to any such bank statement etc. of the assessee to hold that the investment was not made by the assessee. During the appellate proceedings, assessee made a fresh claim that all the investments were made by Sh. Subodh Bhargava and not by the assessee nor by Smt. Manjula Bhargava. All these facts have not been examined properly.
It is further observed that Ld. CIT(A), no evidence was brought on record to prove that the appellant is beneficial owner of the investment made. However, the facts remained that initially when the proceedings were to be initiated in the case of Smt. Manjula Bhargava, it was stated by her that investment was made by the assessee and when the Department has taken remedial action in the case of assessee, fresh claim was made that the entire investment were made by the father of the assessee Sh. Subodh Bhargava. It appears that by changing the stand at every stage, both Smt. Manjula Bhargava and the assessee have tried to avoid the explanation with respect to the source of investment made.
In view of these facts, we set aside the orders of both the lower authorities and remand the matter back to the file of Assessing Officer for making necessary examination of the facts about the source of investment in mutual funds after examining the bank accounts of the assessee, his mother Smt. Manjula Bhargava and his father Shri Subodh Bhargava and decide the issue in accordance with law. The AO is at liberty to take remedial action, if required, as per law to initiate proceedings in the case of the person who was found to be the actual investor. With these directions, all the grounds of appeal of revenue are allowed for statistical purposes.
In the result, appeal filed by the revenue is allowed for statistical purposes.