ABHAY KANTILAL SHAH,MUMBAI vs. ACIT CIRCLE 27(1), MUMBAI

The brief facts of the case are that the assessee, an individual, filed an appeal against the assessment order passed under section 143(3) of the Act for A.Y. 2016–17. During the course of assessment proceedings, the Ld. AO noticed a discrepancy in the value of investment in shares. In the revised balance sheet, the investment in shares was shown at Rs.68,44,006/-, whereas in the earlier balance sheet the same was reflected at Rs.73,17,807/-, resulting in a difference of Rs.4,73,801/-. The assessee explained that, while reconciling the capital gains and investment particulars with the statement of the broker/demat holdings, certain accounting discrepancies pertaining to earlier years were noticed. Consequently, the investment figure was corrected from Rs.73,17,807/- to Rs.68,44,006/-. According to the assessee, the difference of Rs.4,73,801/- represented merely an accounting reconciliation/correction and did not involve any fresh or unexplained investment. The assessee also relied upon the demat holding statement in support of the corrected figure.

The Ld. AR argued and filed a paper book comprising pages 1 to 38. The Ld. AR stated that the assessee had filed the additional evidence related to the investment in shares in earlier years. The Ld. AR accepted that during the assessment and appellate proceedings the assessee had not properly represented the case, so there is a lack of documents for filing before both the authorities. The Ld. AR contended that the relevant documents will go to the root of the matter for adjudication. The Ld. AR prayed to restore the appeal before the Ld. AO for verification of documents filed by the assessee in relation to the additional evidence.

The Ld. DR argued and relied on the order of the revenue authorities. But the Ld. DR had not made any strong objection related the assessee’s additional evidence.

The Ld. AR argued but made no objection against the submission of the assessee. We heard the rival submissions and considered the documents available on record. The assessee filed the return and the assessment was completed with an addition of difference of investment reflected in balance sheet and the investment made by the assessee which comes to Rs. 4,73,801/- which was added back u/s 69 of the Act. Further, the speculation profit amount to Rs. 4032/- was also added. The assessee challenged the addition amount of Rs. 4,73,801/- before the Ld. CIT(A). The assessee accepted that the entire investment was made in earlier years and in support of assessee's claim, relevant statement of investment script-wise, reconciliation, ledger account of different companies, ledger account and demand evidence of the companies are submitted before the Bench. He confirmed no fresh investment was made by the assessee in impugned assessment year. The Ld. AR conceded that the assessee was not able to submit the relevant documents before the revenue authorities. Considering this, we find that the assessee should get one more opportunity to substantiate its claim before the revenue authorities. On considering the natural justice, we accept the additional evidence filed by the assessee, restore the matter to the file of Ld. AO for verification of assessee's documents and allow the assessee reasonable opportunity for hearing in set aside proceeding. Nevertheless, to say the Ld. AO shall afford reasonable opportunity of being heard to the assessee. On the other hand, the assessee is directed to remain diligent and cooperate with set aside assessment proceedings, file the requisite documents/evidence within the time permitted and avoid seeking unnecessary adjournments. We have not expressed any opinion on merit of the reassessment proceedings and all such issues are left open for adjudication by the AO in accordance with law.

In the result, the appeal of the assessee bearing ITA No. 5725/Mum/2026 is allowed for statistical purposes. Order pronounced in the open court on 11th day of September 2026.