ABHAY KUMAR AGARWAL,MAHARAJGANJ vs. INCOME TAX OFFICER,, MAHARAJGANJ

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ITA 164/VNS/2024Status: DisposedITAT Varanasi20 July 2026AY 2010-20115 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the investment was made through a joint bank account with the assessee's brother and that it was unclear if any addition was made in the brother's hands. Therefore, the matter requires verification by the AO.

What were the facts?

The Assessing Officer (AO) made additions to the assessee's income for unexplained investments in mutual funds, short capital gains, interest in savings accounts, and disallowed expenses. The CIT(A) dismissed the assessee's appeal.

What were the issues?

Whether the investments in mutual funds were unexplained, and if so, whether the additions made by the AO and affirmed by the CIT(A) were justified, requiring further verification of the source of funds.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(3),Section 151(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VARANASI CIRCUIT BENCH, VARANASI

Before: SHRI KUL BHARAT & SHRI ANADEE NATH MISSHRA

For Respondent: Shri Sunil Kumar Rajvanshi, Sr. DR

PER KUL BHARAT, VICE PRESIDENT.:

The present appeal has been filed by the assessee against the order of the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi dated 25.07.2024, pertaining to the assessment year 2010-11. The assessee has raised the following grounds of appeal: -

“1. BECAUSE the CIT(A) has erred in law and as on facts in completely ignoring the submissions made by the appellant before him and just persuaded by the finding given by the Id. Assessing Officer while passing the assessment order dated 30.12.2017 and affirming the entire addition made by him in the said assessment order. 2. BECAUSE the CIT(A) has erred in law as well as on facts in affirming the addition of Rs.32,96,706/- as alleged unexplained investments Mutual Funds as entire investment in Mutual Funds were made out of the current account with Axis Bank Ltd. maintained by his elder brother Sri Pradeep Kumar Agrawal, through Sri Mohan Murari Banka (relative of the appellant and also an agent of Mutual Funds) since the source of investment being proved, addition of Rs 32,96706/- could not have been sustained by CIT(A) in the impugned appellate order, which has been made by the Id. Assessing Officer in the assessment order dated 30.12.2017 passed under section 147 r.w.s. 143(3) of the Act. 3. BECAUSE on the basis of facts enumerated hereunder that;

ITA. No. 164/VNS/2024 Page 2 of 5 i) entire investments of Rs.31,65,000/- in Mutual Funds made during the year in the name of the appellant by his elder brother Sri Pradeep Kumar Agrawal was out of his current account maintained with Axis Bank Ltd. Account No. 331010200002417 in the name of M/s Shiv Enterprises in which he is Proprietor: ii) the said proprietary concern was duly registered under the Sales Tax Act/Commercial Tax Act during the period under consideration: iii) entire maturity of the aforesaid investment in Mutual Funds have been credited in the Savings Account No. 33101000048967 with Axis Bank Ltd. belonging in the joint names of Sri Pradeep Kumar Agrawal; and iv) the overall gain on redemption of in Mutual Funds aggregated to Rs.20,491/-only; there being no dispute as regard source of the investments in Mutual Fund, the CIT(A) has erred in law as well as on facts in not appreciating the submissions made by the appellant and affirming the addition of Rs.32,96,706/- made by the ld. Assessing Officer. 4. BECAUSE the CIT(A) has grievously erred in law in affirming the addition of Rs.34.54.145/- made by the Id. Assessing Officer towards outstanding liability appearing in the name of Mohan Banka in the balance sheet compiled from in complete information and filed by the appellant, corresponding debit of the same relates to investment in Mutual Funds, as the appellant has categorically stated that the said balance sheet filed during the course of assessment proceedings was based on the distorted facts and not to be relied upon, further, from the documentary evidences source of investment having been proved having which could not have been disputed. 5. BECAUSE the appellant has placed on record entire facts in relation to the erroneous addition of Rs.34.54.145/- made by the ld. Assessing Officer, before the ld. CIT(A) during the course of appellate proceedings, the CIT(A) without rebutting to any of the aspect stated in the said submission has dismissed the ground raised by the appellant and has affirmed the addition made by the Id. Assessing Officer on the basis of observation made by the Id. Assessing Officer in the assessment order. 6. BECAUSE the CIT(A) has grievously erred in law as on facts in affirming the addition of Rs.4,03,549/- made by the ld. Assessing Officer in the assessment order dated 30.12.2017, without looking into the fact that the business concerned M/s Shiv Enterprises is the Proprietary concern Sri Pradeep Kumar Agrawal (elder brother of the appellant) duly registered under the Sales Tax Act/ Commercial Tax Act during the period under consideration and all the income and expenses disclosed in the said profit and loss account relates to him and not of the appellant, accordingly, no addition was called for. 7. BECAUSE order appealed against, is contrary to facts, law and principles of natural justice.” 2. At the time of hearing, none appeared on behalf of the assessee despite due notice. No application seeking adjournment was filed. Accordingly, we proceed to dispose of the appeal ex

ITA. No. 164/VNS/2024 Page 3 of 5 parte qua the assessee on the basis of the material available on record.

3.

The facts in brief are that in this case, the Assessing Officer (“AO”, for short) was having an information in the form of AIR wherein it was noted that the assessee had made purchase of Mutual Funds of Rs.21,50,000/-. Upon failure of the assessee to explain source of investment the Assessing Officer (“AO”, for short) treated this amount so invested as income escaped from assessment and proceeded to re-open the assessment after obtaining requisite approval u/s 151(2) of the Act. Accordingly, a notice u/s 148 of the Act. was issued to the assessee. It is noted by AO that during the proceedings Ld. AR for the assessee attended the proceedings and filed Income Tax Return disclosing income at Nil. The AO recorded that the assessee could not satisfactorily explain the source of investment in mutual funds Hence, the AO treated the investment in the mutual fund as unexplained and made an addition of Rs.34,54,145/- in this regard. Further, The AO made additions on account of short capital gain, interest in saving books and disallowance of expenses of Rs.4,03,549/- against the entire commission from Western Union and commission from e-tickets. Thus, the AO assessed total income of the assessee at Rs.71,54,560/- u/s 147 read with section 143(3) of the Act. Aggrieved against this, the assessee preferred an appeal before the Ld. CIT(A) who dismissed the appeal of the assessee. Now, the assessee is in appeal before this Tribunal.

4.

Apropos to the grounds of appeal, the Ld. Departmental Representative for Revenue supported the orders of the lower authorities and submitted that the stand of the assessee is self contradictory.

ITA. No. 164/VNS/2024 Page 4 of 5 5. Heard the Ld. Sr. Departmental Representative for the Revenue and perused the material available on records. It is noticed through grounds of appeal that the assessee has tried to explain that investment was made through borrowed funds from Shri Mohan Murari Banka. It is further stated that the bank account was jointly held with brother, the outstanding liability in the books of the assessee.

Looking to the submissions made and more particularly in view of the fact that the bank account through which the impugned investment was made was held jointly by the assessee with his brother, we are of the view that this aspect of matter needs verification at the end of the AO. Since there is no such finding in the assessment order. It is also not clear whether any addition is made in the hand of brother and lender of money. We, therefore, set aside the assessment order and restore to AO for making assessment afresh after making due verification of claim of the assessee regarding investment made in the mutual funds. The grounds raised by the assessee are partly allowed for statistical purposes.

In the result, the appeal of the assessee is partly allowed for statistical purposes.

Order deemed to be pronounced under Rule 34(4) of IT(AT) Rules on 20/07/2026.

Sd/- Sd/- [ANADEE NATH MISSHRA] [KUL BHARAT] ACCOUNTANT MEMBER VICE PRESIDENT DATED: 20/07/2026 Vijay Pal Singh, Sr. PS

ITA. No. 164/VNS/2024 Page 5 of 5

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