LOGANATHAN MEENALOCHANI,CHENNAI vs. ITO, NCW-7(3), CHENNAI

Briefly, the facts of the case are that the appellant is an Individual. The Return of Income for the Assessment Year 2018-19 was filed on 14.07.2018 disclosing income at Rs.2,75,820/-. Against the said Return of Income, no regular scrutiny assessment was made. Subsequently, based on the information that the appellant manipulated in the trade by way of complex web of prearranged or artificial web of transactions carried out to book bogus LTCG/STCL entries of Rs.15,24,686/- during the previous year relevant to assessment year under consideration. The Jurisdictional Assessing Officer formed an opinion that the income got escaped assessment from tax, accordingly notice u/s.148 of the Act issued on 31.03.2022 calling upon the appellant to file the Return of Income after duly complying with the procedure laid down u/s.148A of the Income Tax Act. In response to notice u/s.148, the appellant filed the Return of Income on 23.04.2022 declaring at a total income of Rs.4,26,720/-. Against the said Return of Income, the assessment was completed by e-Assessment Unit of the Department (hereinafter called ‘AO’) vide order dated 02.03.2023 passed u/s.147 r.w.s 144B of the Income Tax Act, 1961. While doing so, the Assessing Officer made addition of Rs.35,71,722/- as unexplained investment in shares u/s.69 of the Act and taxed as per the provisions of 115BBE of the Act.

Being aggrieved by the above assessment order, the appellant preferred an appeal before ld.CIT(A), who vide impugned order confirmed addition on account of unexplained investment of Rs.35,11,922/- by holding that the appellant had failed to produce documentary evidence in support of the source of the investments made. However, ld.CIT(A) allowed the ground of appeal relating to the set-off of long term capital loans of Rs.15,24,686/-, thus, appeal filed by the assessee came to be partly allowed by the ld.CIT(A).

Being aggrieved by the order of ld.CIT(A), the appellant is in appeal before us in the present appeal. The learned Counsel submits that the appellant is a regular investor in stock market for last one decade. The husband of the appellant also supported the appellant by providing periodical amount for the maintenance of family and savings purposes. He further submits that the Assessing Officer had only considered the purchase of shares made by the appellant without considering the sale of shares during the same period. Thus, he submits that the Assessing Officer without considering the sale proceeds of shares sold had considered the entire purchase of shares as undisclosed investment. The ld.CIT(A) without giving him proper opportunity of hearing to the appellant, merely confirmed the action of the Assessing Officer. He further submits that the ld.CIT(A) had only given one opportunity. Therefore, the matter may be remanded back to the file of Assessing Officer for denovo assessment.

On the other hand, learned Sr.DR has opposed the above submissions and submit that the ld.CIT(A) passed a very reasoned order and requires no interference by this Tribunal.

We heard rival submissions and perused the material available on record. We find that the Assessing Officer made addition of Rs.35,11,992/- being the investment made in shares as undisclosed investment for the failure of the appellant to explain the source of the said investment. Before the ld.CIT(A), the appellant took specific plea that the sale of shares were not considered by the ld.CIT(A) while arriving at the cost of investment. Further, we find that on mere perusal of the order passed by the ld.CIT(A), we are unable to discern that a proper reasonable and sufficient opportunity was given to the appellant to represent the matter before him. In the circumstances, we are of the considered opinion that the matter requires remand to the file of Assessing Officer for denovo assessment in accordance with law after affording opportunity of being heard to the appellant.

In the result, appeal filed by the assessee is partly allowed for statistical purpose. Order pronounced in the open Court on 24th July, 2026.