INCOME TAX OFFICER (W)-1(3)(4), MUMBAI, MUMBAI vs. MUNOT HOUSING PRIVATE LIMITED, MUMBAI

PER SHRI SANDEEP GOSAIN, JUDICIAL MEMBER: This appeal is filed by the Department and the cross-objection is filed by the assessee against the order of the Ld. CIT(A)/ NFAC, vide DIN: ITBA/NFAC/S/250/2025-26/1083991536(1) dated 23-Dec-2025 for Assessment Year 2022-23. The Department has raised the following grounds of appeal:

1) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made towards undisclosed income amounting to Rs.15,22,00,000/ for which Source of Source had remained unexplained during the assessment proceedings. 2) On the fact and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made on account of undisclosed income of Rs. 15,22,00,000/ without calling for remand report to verify the Source of Source i.e. M/s. A. A. Estate Private Limited. 3) The appellant craves leave to amend OR alter any ground OR to submit additional new ground, which may be necessary.

To, The Hon’ble Members ITAT, ‘B’ Bench, Mumbai Sub: Written Submission in the case of M/s. Munot Housing Private Limited (PAN: AAGCR8403F) ITA No. 1665/Mum/2026 AY 2017-18 (Appeal by the Revenue against order dated 23.12.2025 of CIT(A), NFAC, Delhi deleting the addition of Rs. 15,22,00,000/- made by the AO vide order u/s 143(3) r.w.s. 144B dated 12.03.2024, Date of Hearing - 09.07.2026). Your Honours, These written submissions are filed on behalf of the Revenue in support of its appeal against the order dated 23.12.2025 passed u/s 250 of the Income-tax Act, 1961 (‘the Act’) by the learned CIT(A), NFAC, Delhi, deleting the addition of Rs. 15,22,00,000/- made by the Assessing Officer as undisclosed income under the head “Income from Other Sources” vide order u/s 143(3) r.w.s. 144B dated 12.03.2024 for AY 2022-23 (tax effect: Rs. 3,83,05,696/-). The Revenue’s case rests on the peculiar facts of the money trail, and these submissions accordingly concentrate on the factual matrix. I. GROUNDS OF APPEAL 1.1 Ground 1: The learned CIT(A) erred in deleting the addition of Rs. 15,22,00,000/- made towards undisclosed income, for which the “source of source” had remained unexplained during the assessment proceedings. 1.2 Ground 2: The learned CIT(A) erred in deleting the addition without calling for a remand report from the AO to verify the “source of source”, i.e. the transaction with M/s. A. A. Estates Private Limited. II. CHRONOLOGY OF MATERIAL EVENTS:

Date Event The respondent-company (then known as Ravi Jain Designer Pvt. Ltd.) was 24.12.2018 acquired by the present director/shareholder, Admittedly, Ltd.). No business activity was carried on since acquisition. Board resolution of the respondent to obtain funding from a sister concern, 30.12.2020 M/s. Munot Investment Pvt. Ltd. (OPC), having a common director, Shri Mukesh Munot. Agreements for purchase of three plots at Village Kandivali, Taluka Borivali, 31.03.2021 from East and West Builders for a total consideration of Rs. 77,06,00,000/-. 06.04.2021 Sister concern sells SBI Mutual Fund units for Rs. 15,17,04,774/-.

Sister concern transfers Rs. 15,00,00,000/- (out of the mutual fund proceeds, 12.04.2021 from its Punjab National Bank account) to the respondent. This leg was accepted by the AO. Sister concern receives Rs. 15,22,00,000/- from M/s. A. A. Estates Pvt. Ltd. in 15.04.2021 its Canara Bank account and transfers the entire amount by RTGS to the respondent on the very same day. This is the disputed leg. Return of income filed for AY 2022-23 declaring NIL income; processed u/s 30.09.2022 143(1) on 03.11.2022. Case selected for complete scrutiny through CASS; notice u/s 143(2) issued. 01.06.2023 No compliance by the due date of 16.06.2023. 16.10.2023 Notice u/s 142(1) issued; reply filed with property agreements, loan / confirmation and bank statements. 28.10.2023 22.02.2024 Show-cause notice proposing variation of Rs. 30,22,00,000/- u/s 56(2)(x); / reply filed by the assessee. 28.02.2024 Assessment completed u/s 143(3) r.w.s. 144B: addition restricted to Rs. 15,22,00,000/- as undisclosed income under “Income from Other Sources”, 12.03.2024 the trail of this leg having remained unsubstantiated; penalty u/s 270A initiated. 23.12.2025 CIT(A), NFAC deleted the addition. Revenue’s appeal filed before the Hon’ble Tribunal (ITA No. 16.02.2026 1665/Mum/2026). 22.04.2026 Cross-objection filed by the assessee and thereafter withdrawn as “filed / inadvertently”. 04.05.2026

III. THE FACTUAL MATRIX 3.1 The profile of the respondent-assessee, as borne out by its own return and annual accounts, is decisive and undisputed: Particulars Position as per record Revenue from operations (AY 2022-23) NIL Business activity since acquisition on None (admitted in submission before CIT(A)) 24.12.2018 Loss of Rs. 24,727/-; losses in two consecutive Result for the year years Rs. 79,87,08,326/- (current liabilities Rs. Total liabilities as per ITR 38,66,76,322/-) Reserves/surplus and collateral security None (admitted) Investment in immovable property Rs. 77,06,00,000/- (three plots at Kandivali; Rs. during the year 38,44,91,222/- paid) Unsecured interest-free loan from Rs. 30,22,00,000/- (no security, no interest, no related OPC with common director repayment schedule) 3.2 A dormant company with nil revenue, no business, no reserves and accumulated losses received Rs. 30.22 crore of unsecured, interest-free funds and deployed Rs. 77.06 crore in litigation-encumbered land. The case was, unsurprisingly, selected under CASS on five parameters: large investment in property (Form 26QB and SFT)

as compared to total income, high liabilities against low income, large increase in unsecured loans, and inflow of funds into an entity consistently showing loss before depreciation. 3.3 The AO carefully segregated the two legs of the credit. The first leg of Rs. 15,00,00,000/- received on 12.04.2021 was traceable to the sister concern’s own asset – redemption of SBI Mutual Fund units on 06.04.2021 for Rs. 15,17,04,774/- – and was accepted as explained. The second leg stands on an entirely different footing: on 15.04.2021, Rs. 15,22,00,000/- entered the sister concern’s Canara Bank account from an outside entity, M/s. A. A. Estates Pvt. Ltd., and exited to the respondent by RTGS on the very same day. The sister concern held the funds for not even a day; it neither used them nor could it explain any commercial reason for the instantaneous onward transmission. The lender was, qua this leg, a mere conduit interposed between A. A. Estates Pvt. Ltd. and the respondent. 3.4 The explanation offered for this leg – that the sister concern had sold “rights in immovable property” to A. A. Estates Pvt. Ltd. for Rs. 33,28,50,000/- and paid capital gains tax – was never verified by the AO, because it was set up through documents (computation, ITR acknowledgement and bank statement of the lender) whose underlying transaction the AO had no occasion to examine. The nature of the “rights”, their acquisition and cost, the genuineness and capacity of A. A. Estates Pvt. Ltd., and why precisely Rs. 15,22,00,000/- out of an alleged consideration of Rs. 33,28,50,000/- moved out the same day, all remained unexamined. 3.5 The record also contains unreconciled variations in the assessee’s own narration, which underline the need for verification: the statement of facts before the CIT(A) describes the second transfer as made on 21.04.2021, while the bank statement and the assessment order record 15.04.2021; the first reply dated 28.10.2023/31.10.2023 describes the credit from A. A. Estates Pvt. Ltd. as Rs. 15,33,00,000/-, while the amount transferred is Rs. 15,22,00,000/-; and the CIT(A)’s own order records the total receipt in one place as Rs. 32,22,00,000/- as against Rs. 30,22,00,000/-. None of these discrepancies was reconciled at any stage. IV. GROUND 1 – THE DELETION IS CONTRARY TO THE FACTS ON RECORD 4.1 The addition was not made u/s 56(2)(x). Although the show-cause notice had proposed a variation of Rs. 30,22,00,000/- u/s 56(2)(x), the AO, after considering the reply dated 28.02.2024, consciously restricted and re-founded the addition: Rs. 15,22,00,000/- was added as undisclosed income chargeable under the head “Income from Other Sources”, on the finding (para 3.6 of the assessment order) that the assessee “has not produced a reliable clarification with regard to movement/trails of the high value of funds”, that the movement “raises suspicion of evasion of tax by one or more entities in the trail”, and that “the assessee is the final beneficiary of the funds”. The CIT(A), however, devoted the operative part of his order to holding that section 56(2)(x) does not apply to loans, and deleted the addition on that basis. The very foundation of the assessment – an unexplained credit routed through a conduit – was thus never actually adjudicated. 4.2 Movement through banking channels proves nothing by itself. The only material relied upon to “explain” the second leg is that the money came by RTGS and that the lender filed an ITR. It is settled by the Hon’ble Supreme Court in PCIT v. NRA Iron & Steel Pvt. Ltd. [2019] 412 ITR 161 (SC) that mere movement of funds through banking channels and production of PAN/ITR of the creditor does not establish the creditworthiness of the creditor or the genuineness of the transaction; the surrounding circumstances must be tested on the touchstone of human probabilities (CIT v. Durga Prasad More [1971] 82 ITR 540 (SC); Sumati Dayal v. CIT [1995] 214 ITR 801 (SC)). 4.3 The surrounding circumstances here all point one way: (i) the recipient is a company with no business, no income and no capacity to service a Rs. 30.22 crore borrowing; (ii) the loan is interest-free, unsecured and without any repayment terms, in the teeth of current liabilities of Rs. 38.66 crore; (iii) the disputed funds did not belong to the corpus of the lender at all – they landed from a third party and were passed on within hours; (iv) the lender is a one-person company of the common director, with an admitted inability to transact by itself; and (v) the end-use was acquisition of litigation- encumbered plots which no bank would finance. Pumping of such funds into an entity consistently showing cash losses, in this manner, bears every hallmark of an arranged accommodation of funds, and the AO rightly treated the unexplained leg as the assessee’s undisclosed income. 4.4 The “same source, same treatment” argument is fallacious. The two legs were not from the same source. The Rs. 15 crore leg came out of the lender’s own realised investment (mutual fund units held and redeemed by it). The Rs. 15.22 crore leg originated from an outside entity and merely transited the lender’s account on the same day. The AO’s differential treatment reflects exactly the difference in the quality of the two sources; it is the CIT(A)’s uniform treatment which ignores this critical distinction. 4.5 The “double taxation” argument is misconceived on facts. What the lender offered to capital gains tax (if at all, and to what extent, was never verified) was a distinct taxable event in distinct hands. Payment of capital gains tax by the lender neither explains the nature of the receipt in the respondent’s hands nor establishes that the arrangement was a genuine loan. In any event, tax would have been paid only on the gain element and not on the sum of Rs. 15,22,00,000/- transferred; the plea of “tax-paid funds” is an assertion, not a verified fact. 4.6 The assessee’s plea that “source of source was never asked” is contrary to the record. It is the assessee itself which produced the lender’s bank statements showing the credit from A. A. Estates Pvt. Ltd.; the AO examined precisely that trail, put the movement of funds to the assessee, and recorded in the assessment order that the assessee “could not substantiate the trail of funds” and gave no “satisfactory clarification of movement of such a huge amount of funds”. The enquiry into the origin of the disputed leg was thus the very basis of the assessment, not an afterthought at the appellate stage. The reliance on CIT v. Lovely Exports (P) Ltd. and Nemi Chand Kothari is misplaced: those decisions protect an assessee where the immediate creditor’s transaction is genuine; they do not protect a same-day pass-through arrangement in which the immediate creditor is demonstrably a conduit and the genuineness of the loan itself is in issue. V. GROUND 2 – RELIEF GRANTED WITHOUT VERIFICATION / REMAND REPORT 5.1 The CIT(A) recorded a categorical factual finding that the lender “sold its rights in immovable property for Rs. 33,28,50,000/- to A. A. Estates Pvt. Ltd. and on the sale proceeds necessary capital gains was paid” and that the assessee “clearly given sources and trail of the funds”. These findings rest on the lender’s computation, ITR acknowledgement and bank statements – material whose correctness and underlying genuineness the AO never had occasion to test, since the assessment was framed on the footing that the trail was unsubstantiated.

5.2 Where the first appellate authority proposes to reverse the AO on the basis of factual verification not carried out in assessment, the least that procedure requires is that the AO be confronted and his report obtained – whether under Rule 46A(3) of the Income- tax Rules, 1962 (where additional evidence is admitted) or in exercise of the power of further enquiry u/s 250(4) of the Act. Neither course was adopted. Verification of the “source of source” – the existence and genuineness of the transaction with A. A. Estates Pvt. Ltd., the nature of the property rights allegedly transferred, and the capital gains claimed to have been taxed – was never done by any authority. The deletion therefore rests on unverified assertions. 5.3 Without prejudice to the Revenue’s primary prayer that the addition be restored, if the Hon’ble Tribunal considers that the factual foundation requires examination, the appropriate course would be to set aside the issue to the file of the AO/CIT(A) for verification of the source of the funds received from M/s. A. A. Estates Pvt. Ltd. and the genuineness of the underlying transaction, after affording opportunity to both sides. It is well settled that the appellate authority’s duty extends to having the enquiry properly made where the record is incomplete. VI. CROSS-OBJECTION 6.1 The cross-objection filed by the assessee on 22.04.2026 in Form 36A has been withdrawn by its application dated 04.05.2026 as having been “filed inadvertently”. Nothing therefore survives on the assessee’s side except opposition to the Revenue’s grounds. VII. SUMMARY 7.1 A company that had transacted no business since 2018, earned nothing and owned nothing received Rs. 15,22,00,000/- which had entered its related lender’s bank account from a third party and left it the same day. No authority has, till date, verified who M/s. A. A. Estates Pvt. Ltd. is, what “rights” it allegedly purchased for Rs. 33.28 crore, or whether the claimed capital gains were real and taxed. On these facts, the deletion of the addition – founded on a provision (section 56(2)(x)) on which the addition was not ultimately made, and on assertions never verified – is unsustainable. VIII. PRAYER 8.1 In the premises, it is respectfully prayed that the Hon’ble Tribunal may be pleased to: (i) set aside the order dated 23.12.2025 of the learned CIT(A), NFAC, and restore the addition of Rs. 15,22,00,000/- made by the AO vide order dated 12.03.2024; (ii) in the alternative and without prejudice, set aside the issue to the file of the AO/CIT(A) for verification of the source and genuineness of the funds of Rs. 15,22,00,000/- routed through M/s. Munot Investment Pvt. Ltd. from M/s. A. A. Estates Pvt. Ltd., after affording reasonable opportunity to both sides; and (iii) pass such further or other order as may be deemed fit in the facts and circumstances of the case. Respectfully submitted,

CO 152/MUM/2026

Order pronounced in the open court on 16.09.2026.

Sd/- Sd/- JAGADISH SANDEEP GOSAIN ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai Dated: 16.09.2026 RY-SrPS Copy to: INCOME TAX OFFICER (W)-1(3)(4), MUMBAI, ROOM NO.528, 5TH FLOOR, AAYAKAR 1 BHAVAN, M. K. ROAD, MUMBAI, MUMBAI-400020, MAHARASHTRA

MUNOT HOUSING PRIVATE LIMITED, 320 PODDAR CHAMBERS, S A BRELVI 2 ROAD, FORT, MUMBAI, MUMBAI-400001, MAHARASHTRA

3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE