ACIT, LUCKNOW vs. RAM KAPOOR, LUCKNOW

ITA 341/LKW/2025Status: DisposedITAT Lucknow22 July 2026AY 2018-1918 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the initial capital account was defective because the 'sauda' value of derivatives cannot be considered closing stock. Losses from previous years also could not be brought into the current year's capital account. The Tribunal found no basis to sustain the AO's addition.

What were the facts?

The Assessing Officer (AO) added Rs. 2,82,44,223/- to the assessee's income, treating it as unexplained investment under Section 69A. This addition was based on a disproportionately large proprietor's capital in the balance sheet compared to reported income, and the AO was not satisfied with the assessee's explanation regarding derivative trading losses and capital introduction.

What were the issues?

Whether the 'sauda' value of derivatives can be treated as closing stock, and if losses from previous years can be added to the current year's capital account to justify unexplained investments.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE,Section 143(3),Section 250,Section 44AB

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, LUCKNOW ‘A’ BENCH, LUCKNOW

Hearing: 28.04.2026Pronounced: 22.07.2026

PER NIKHIL CHOUDHARY, A.M.: This is an appeal filed by the Revenue against the orders of the ld. CIT(A), NFAC under section 250 of the Income Tax Act, 1961, dated 25.02.2025, wherein the ld. CIT(A) has allowed the appeal of the assessee against orders passed by the Assessing Officer, for the A.Y. 2018-19 on 27.08.2021, under section 143(3) of the Income Tax Act, 1961. The grounds of appeal are as under:

“1. The Ld. CIT(A) has erred in law by not appreciating the fact that the assessee has introduced Capital from unexplained sources amounting to Rs. 2,82,44,223/- during the year. Also a perusal of the statement of Derivative trading account with M/s Fairwealth Securities Ltd., it was noticed that the assessee had incurred a Net Loss of Rs. 25,48,963/- and

The order continues below.

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