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Judgment
PER MANISH AGARWAL, AM :
The present appeal is filed by Revenue against the order dated 28.08.2025 by Ld. Commissioner of Income Tax (A), National Faceless Appeal Centre (“NFAC”), Delhi [“Ld.CIT(A)”] in Appeal No. NFAC/2021-22/10334577 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 24.03.2024 passed u/s 143(3) r.w.s. 144B of the Act pertaining to Assessment Year 2022-23.
Brief facts of the case are that the assessee is an individual and filed his return of income on 30.07.2022, declaring total income from income of INR 44,23,590/- from salary and capital gain etc. The case of the assessee was selected for scrutiny and it is observed by the AO that the total investment shown in the unlisted shares in return of income declared accordingly, the AO has made the inquiries. The AO observed that the assessee has declared investment of INR 3.4 crores from earlier year and in subsequent year, there was a credit forward of investment of INR 18.82 crores and thus, there is a difference of INR 15,41,52,000/- and source of which is not explained after considering the submission of the assessee wherein it was the claim of the assessee that due to some inadvertent error, the credit figure of the investment could not be stated in the ITR however, the immediate source from bank finance and all the details were filed. The AO has not accepted the contention of the assessee and made the addition by holding the same as unexplained investment u/s 69 of the Act.
Against the said order, the assessee filed appeal before Ld.CIT(A) who vide impugned order dated 28.08.2025, partly allowed the appeal of the assessee after appreciating the facts and the details filed by the assessee.
Aggrieved by the order of Ld.CIT(A), the Revenue is in appeal before the Tribunal by taking following Grounds of appeal:-
1.“Whether in facts and in law, Ld. CIT(A) erred in deleting the addition of Rs. 15,41,52,000/- made u/s 69 of the Income Tax Act, 1961 merely relying on the submission made by the AO and not calling for remand report from AO on the submissions made by the AO?”
2.Whether in facts and in law, Ld. CIT(A) erred in deleting the addition of Rs. 15,41,52,000/- made u/s 69 of the Income Tax Act, 1961 without ascertaining that the source of investments was genuine?
3.Whether in facts and in law, Ld. CIT(A) erred in deleting the addition of Rs. 15,41,52,000/- made u/s 69 of the Income Tax Act, 1961 without ascertaining that the valuation of shares were as per the provisions of the Income Tax Act, 1961.
4.The appellant craves leave to add, amend, modify, or withdraw any of the aforesaid grounds of appeal at any time before or during the course of the hearing?.”
Since all the Grounds of appeal with respect to the deletion of addition of INR 15.41 crores made therefore, they are taken for consideration.
Before us, Ld.CIT DR submits that assessee has failed to reconcile the difference between the investment shown in the year and brought forward investment declared in the ITR filed for the subsequent year. Ld.CIT DR further submits that assessee has not explained the source therefore, the AO has rightly made the additions which deserves to be upheld.
Alternatively, Ld.CIT DR supported the orders of the lower authorities and submits that Ld.CIT(A) has deleted the additions by accepting the evidence which are not confronted with the AO therefore, in the larger interest of the justice, the matter may be set aside to the file of AO for fresh consideration.
Per contra, Ld.AR for the assessee vehemently supported the order of Ld.CIT(A) and submits that during the course of assessment proceedings, beginning of the proceedings, assessee has contended that there was an inadvertent error in filing the return of income wherein the figures of the previous year was taken as investment in the year under appeal.
Ld. AR drew our attention to the fact that in subsequent AY 2023-24 in ITR filed, opening balance of investment was shown at INR 18.82 crores thus, it is clear that assessee has not malafide intention in disclosing lesser amount of investment in the year under appeal. With respect to the immediate source of such investment that during the course of assessment proceedings vide letter dated 23.02.2024 which is reproduced at page 7 of the assessment order. The assessee has explained the entire source of investment made which is out of the loans and gifts taken from the family members and the necessary details of the lenders were filed before the AO. Ld.AR submits that AO has not pointed out any defect any details so filed and merely for the reason that assessee has not corrected the error by filing the revised return of income for investment, has made the additions. Ld.AR submits that once the AO has accepted the genuineness of the loans taken and also the necessary re-conciliation was filed, there is no reason to make the addition. He submits that Ld.CIT(A) after considering these facts, has deleted the additions therefore, requested for the confirmation of the order of Ld.CIT(A).
Heard the contentions of both the parties at length and perused the material available on record. In the instant case, the solitary issue of the Revenue is with respect to the deletion of addition of INR 15,41,52,000/- made u/s 69 of the Act on account of investment made by the assessee alleged as unexplained. The AO observed that assessee had declared investment of INR 3.41 crores in the return of income filed as against the actual investment of INR 18.82 crores which was appearing in the return of income filed for subsequent Assessment Years has opening balance. On being asked about the such difference, the assessee vide reply dated 23.02.2024 has made a detailed written submissions explained the facts about the total investment made and sources thereof. The relevant letter is reproduced in para 13 of the assessment order is extracted herein below:-
CLFPK3259R- NISCHINT A KANoudia A.Y. 2022-23 ITBA/AST/S/143(3)/2023-24/1063306914(1) Date: 23.02.2024 To The Assessing Officer, Assessment Unit, Income Tax Department Sub: Submission of reply to notice u/s 142(1) of the Act, dated 16.02.2024, in respect of, Sh. Nischint A Kanoudia, PAN: CLFPK3259R, for the A.Y. 2022-23-reg. Ref: Your notice u/s 142(1) of the Income Tax Act, 1961, bearing DIN & Notice No. ITBA/AST/F/142(1)/2023-24/1061042745(1) dt 16.02.2024. Respected Sir, We, on behalf of and under the instructions from the Assessee Company Sh. Nischint A Kanoudia, PAN: CLFPK3259R, submit that the assessee has received notice u/s 142(1) of the Income Tax Act, 1961, bearing DIN & Notice No. ITBA/AST/F/142(1)/2023-24/1061042745(1) dt 16.02.2024. In this regard, our point wise reply to the questionnaire is submitted hereunder: -
i)Reply to Point No. 1: - The working of cost of improvement with indexation shown under schedule CG of ITR along with the proper working of long-term capital gain attached as Annexure-1. The copy of invoices in relation to the cost to improvement is enclosed as Annexure-2.
ii) Reply to Point No. 2: - During the year under consideration, the assessee had investment of Rs. 18,82,49,200/- in Unlisted shares but erroneously the same was not updated by the accountant of the assessee while filing the Income Tax Return of A.Y. 2022-23 and the previous year holding was prefilled. The details of the Investments made during the year in unlisted shares are produced as under for your reference: -
Source of Investment PAN No. Amount (Rs.) Gift from Anil Kanoudia (Father) 3,99,81,000 Gift from Anil Kaoudia HUF (Father is Karta) 99,40,000 Proceeds from Sale of Property 3,91,00,000 Interest Free Loan: 2,77,03,000 Anil Kanoudia (Father) 2,00,55,000 Kanchan Kanoudia (Mother) 36,50,000 Anil Kanoudia HUF (Father is Karta) Loans & Advances received Back: 1,33,38,497 Nischint Traders Income Receipt (Balance amount) 1,14,503 Total Investment during the year 15,38,82,000 The source of Investment made in unlisted shares of Rs. 15,38,82,000 during the year is as under: -
Source of Investment PAN No. Amount (Rs.) Gift from Anil Kanoudia (Father) 3,99,81,000 Gift from Anil Kaoudia HUF (Father is Karta) 99,40,000 Proceeds from Sale of Property 3,91,00,000 Interest Free Loan: 2,77,03,000 Anil Kanoudia (Father) 2,00,55,000 Kanchan Kanoudia (Mother) 36,50,000 Anil Kanoudia HUF (Father is Karta) Loans & Advances received Back: 1,33,38,497 Nischint Traders Income Receipt (Balance amount) 1,14,503 Total Investment during the year 15,38,82,000 The copy of Loan account confirmations has been enclosed as Annexure-3 during the year under consideration to prove the genuineness and credit worthiness of the transaction. The above transactions related to purchase of shares during the year was performed through banking channels, the copy of bank statement highlighting the payment for shares is enclosed as Annexure-4. We hope that the above-mentioned details/documents will suffice all your requirements. In case, your good self requires any additional details/explanation, an opportunity may kindly be provided to the Assessee to furnish the same. Thanking You. Yours faithfully, s/d-For Sh. Nischint A Kanoudia
From the perusal of the above reply filed before the AO, it is observed that the assessee has explained the reasons that erroneously the pre-filled form was taken for filing the return of income due to which the error was occurred in reporting the correct figure of the investment made by the assessee. The assessee further filed the list of investments including the opening balances and the fresh investments were made during the year. In the same letter, the assessee has also stated that all the investments were made through banking channel and the corresponding sources thereof which comprised of gifts from his father, HUF, proceeds from sale of properties, loans taken from family members and the HUF. Further, the assessee has filed the loan confirmations and the bank statements. All these facts were duly submitted before the lower authorities. However, the AO has not pointed out any deficiency in the details so filed. It appears that though the AO has accepted the genuineness and creditworthiness of the loans with respect to the source of investment made however, for the sole reason that the assessee has not filed revised return by replacing the correct amount of investment, has made the addition. Ld.CIT(A) had appreciated these facts and vide para 5(C) of its order, has deleted the additions. The relevant observations of Ld.CIT(A) as contained in para 5(C) is reproduced as under:-
5(c) Accordingly, on careful consideration of Appellant's detailed and overall submissions as extracted supra, keeping in view the overall facts of case and circumstances of claims of Appellant and reasoning adduced by AO, it is clearly noticeable that appellant is indeed involved in filing his voluntary ROI for assessment year 2022-23 on 30.07.2022 by admitting an income of Rs. 44.23 lakhs. In this ROI, appellant has reflected investments in unlisted shares for only Rs. 3.40 crore as involving carry-forward figure of investments from previous year ROI, as against of its total investments of Rs. 18.82 crore and with reference to the same appellant is claiming the mistake has occurred due to adoption of pre-filled data by tax CLFPK3259R- NISCHINT A KANOUDIA A.Y. 2022-23 ITBA/NFAC/S/250/2025-26/1080133122(1) professional who was involved in filing this ROI and accordingly claimed the mistake as involving inadvertent bonafide omission/mistake as the stated investments are already admitted/reflected in the relevant ROI of appellant investee companies against appellant for this assessment year 2022-2023. Further, appellant claimed that the same as already reconciled and reflected correctly in the ROI filed in immediately subsequent assessment year i.e. AY 2023-24 on 28-07-2023 vide acknowledgment no. 783622590280723 wherein it is claimed that closing investment balances of this assessment year 2022-23 as having already reflected as opening balances of investments of assessment year 2023-24 as per this ITR of 2023-24 and requested to consider the same as involving only bonafide omission of tax professional due to inadvertent mistake in adopting pre-filled data of previous year carry forward investments in the ROI of AY 2022-23. Accordingly, on this analogy, appellant further, contended that the entire investments as attributable to this AY 2022-23 as at Rs.15.41 crore as observed by AO stands reconciled to that extent as per the ROI filed for subsequent AY 2023-24 as it has reflected these investments as opening balance investments of AY 2023-24 and thereby requested such observations of AO as not reconciled by appellant by filing any ROI as observed in assessment order is contended as not maintainable. Accordingly, appellant advanced relevant extracts forming part of the copy of ITR of AY 2023-24 as filed reflecting these investments as at Part A, item (k) of ROI which is extracted as under:
| Item | Description | Value | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | Amount | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ | \$ |
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Further, apparently appellant has filed various details of these investments as made during the year totaling to Rs.15.41 crore as sought by AO during assessment proceedings for its explanation/reconciliation and same are apparently comprehensively explained in the above detailed submissions dated 16.10.2024 as at para (3.1) to (3.10), reconciling appellant various sources of investment as attributable to these investments in unlisted shares through banking channels/transactions as made during the year totaling to Rs.15.41 crores. Apparently, AO has not made any adverse observations/findings if any as attributable to these claims of appellant involving explainable sources of these transactions in investments as took place during the year totaling to Rs.15.41 crore and thereby appellant is claiming the sources of investments stands reconciled and explained before AO during assessment proceedings and apparently, such claims of appellant are substantiated as per the above submissions of the appellant. Further appellant has adduced various citations to advance/support the appellant claims on the explainability of these investments with explainable sources as explained before AO demonstrating bonafide omissions in mistaken non-reflection of these investments in the ITR of appellant of AY 2022-23 and thereby requested to consider the same. Apparently, appellant various claims as advanced on this analogy to support the explainability of investments as explained to AO as reconcilable as detailed/discussed in above submissions of appellant is apparently reconcilable as per the facts of case as advanced by the appellant on merits including the ROI filed for AY 2023-24 as explained/extracted supra depicting these investments as reconciled as per law. Considering all these overall facts of case, keeping in view the apparent reconciliations of appellant claims as attributable to these investments as reconcilable with appellant subsequent filing of ROI of AY 2023-24 reflecting these closing investment balances of AY 2022-23 as opening investment balances of AY 2023-24 etc., appellant overall claims as advanced in the above detailed submissions/evidences/proofs etc., as already submitted during assessment proceedings before AO as claimed, seems apparently, reconcilable/explainable as attributable to these investments for Rs.15.41 crore of this AY 2022-23 as involving reconcilable claims of appellant as per ROI filed for AY 2023-24 explaining the same as admitted as reasoned and discussed supra. Accordingly, total investments as at Rs.15.41 crore as reconciled by AO as reasoned in the assessment order, is to be apparently, treated as involving explainable investments of appellant in investee companies as reconciled/explained before AO as reasoned/adduced in the above detailed submissions to advance appellant GOA no. (1) to (3) as discussed supra and thereby the addition as made at Rs.15.41 crore as applicable u/s 69 of IT Act is to be treated as reconciled and directed to be deleted as per the facts of case and reasoning advanced by appellant on merits as above. In the result, appellant GOA no. (1) to (3) to hold the order of AO as not maintainable in treating the explainable investments of the year for Rs. 15.41 crore is to be treated as allowed and thereby AO directed to delete the addition for Rs.15.41 crore as reasoned supra as per the appellant submissions as advanced on facts and merits as per law.
Before us, the Revenue has failed to controvert the findings given by Ld.CIT(A) with respect to the source of investment made by the assessee regarding revenue’s request of setting aside the order. It is observed that no fresh details were filed before Ld.CIT(A) and all the documents based on which Ld.CIT(A) has deleted the additions, were already filed during the course of assessment proceedings.
In view of these facts, we find no error in the order of Ld.CIT(A) who has rightly deleted the additions made without appreciating the facts that assessee has been able to explain the source of the investment and for the sole ground of addition was incorrect reporting of figure of investment in the ITR which was duly reconciled before the AO. Accordingly, Ground of appeal No.1 to 3 raised by the Revenue are dismissed.
In the result, appeal of the Revenue is dismissed.