ITO-42(1)(4), MUMBAI, MUMBAI vs. RAJKUMAR PAWANKUMAR CHOPRA, MUMBAI

IN THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI “D” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSIAN, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA No.9304/MUM/2025 (AY: 2022-23) ITO-42(1)(4), Room-736, 7th Floor, vs. Rajkumar Pawankumar Chopra, 405, Kautilya Bhawan, G Block, BKC, Raj Residency- 1, 4th Floor, Bandra(East), Mumbai-400051. Dahanukarwadi Kandivali West, Kandivali West S.O,, MUMBAI- 400067. PAN/GIR No: ACOPC4471D (Appellant) (Respondent)

Assessee by Shri Vipul Jhaveri & Dharan Gandhi Revenue by Shri Umashankar Prasad (CIT DR) Date of Hearing 30.04.2026 Date of Pronouncement 29.06.2026 O R D E R PER BIJYANANDA PRUSETH, AM:

This appeal filed by the revenue emanates from the order passed under

section 250 of the Income-tax Act, 1961 (in short, ‘Act’) by the National Faceless

Appeal Centre [in short, ‘CIT(A)’] dated 16.10.2025 for the assessment year (AY)

2022-23.

“1. On facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 11,42,56,260/ made under-section-68 of the Income-tax Act, 1961 on account of unexplained sundry creditors, without appreciating that the assessee had failed to establish the identity, creditworthiness and genuineness of the creditors.

ITA No.9304/MUM/2025 Rajkumar Pawankumar Chopra genuineness of the transactions, and merely relying on self-serving documents without independent verification.

the AY 2022-23 declaring total income of Rs.18,73,610/-. The case was selected

for scrutiny on the grounds of (i) large difference of opening stock of current year

and closing stock of the previous year, (ii) large increase in unsecured loans during

the year, (iii) high liabilities as compared to low income/receipts and (iv) debts

written off by the creditor and the debtor not shown as deemed income u/s 41 of

the Act. During the assessment proceedings, various notices were issued in 2

ITA No.9304/MUM/2025 Rajkumar Pawankumar Chopra response on which, the assessee submitted the list of unsecured loan taken

during the year with PAN, computation of income, Pawan Kumar Chopra’s(father)

death certificate, copy of PAN card of Pawan Kumar Chopra, balance sheet of

Pawan Kumar Chopra, trading and P&L of Pawan Kumar Chopra, sundry creditor

details of Pawan Kumar Chopra, unsecured loan of Pawan Kumar Chopra, sundry

debtors of Pawan Kumar Chopra, deposit & loan advances of Pawan Kumar

Chopra and written reply. The AO observed that no documentary evidences were

submitted regarding the sundry creditors, unsecured loans and reconciliation of

opening and closing stocks. The appellant had, however, submitted that the

increase in unsecured loan, creditor, stock etc was due to merging of balance

sheet of his father, late Shri Pawan Kumar Chopra, with the balance sheet of the

assessee. Since no documentary evidences were not filed, the AO added sundry

creditors of Rs.11,42,56,260/- and unsecured loans of Rs.18,38,06,525/- u/s 68 of

the Act and unexplained closing stock of Rs.17,86,03,906/- u/s 69C of the Act.

Accordingly, the total income was determined at Rs.47,85,40,301/- against

returned income of Rs.18,73,610/-.

The assessee filed detailed submission and reconciliation statement before the

CIT(A), which have been reproduced in the appellate order. After considering the

reply and the details, the CIT(A) observed that the appellant was proprietor of

M/s. Manita Industries and M/s. Swastik Fabtex and was also partner in Trendfila

and Mandhana Fashion House LLP. During the year under consideration, the 3

ITA No.9304/MUM/2025 Rajkumar Pawankumar Chopra appellant had earned rental income, business income, income from capital assets,

interest income and had duly filed his return of income on 01.12.2022 disclosing

total income of Rs. 18,73,610/-. He also found that M/s Manita Industries was

initially proprietorship concern of the appellant's father, late Pawankumar

Amritlal Chopra, who passed away on 10.12.2020 (AY 2021-22). Pursuant to the

death of his father, the appellant, being the legal heir of the deceased proprietor,

has succeeded to the estate and, in that capacity, has taken over all the assets and

liabilities of the aforesaid proprietary concern. Accordingly, the assessee

continued the business operations in the name of Manita Industries in the same

line w.e.f. 01.04.2021. The appellant had submitted the aforesaid facts along with

death certificate and balance sheet of the proprietary concern - M/s. Manita

Industries as on 31.03.2021 to the AO during the assessment proceedings. The

CIT(A) considered the balance sheet items of the late father’s proprietary firm M/s

Manita Industries along with the appellant’s own firm and found that there were

no unexplained sundry creditors, unsecured loans, closing stock etc. which had

been added in the assessment order. Accordingly, he allowed appeal of the

assessee.

Tribunal. The Ld. CIT DR has supported the order of AO and submitted that the

assessee did not file documentary evidences to support the increase in the

amounts under the head sundry creditors, unsecured loan and unexplained

investment in stock. Therefore, the AO has rightly added the impugned amounts 4

ITA No.9304/MUM/2025 Rajkumar Pawankumar Chopra in the assessment order. The CIT(A) has considered the reconciliation given by the

appellant upon transfer of all assets and liabilities of the late father of the

assessee consequent to his death. He submitted that the matter may be

remanded back to the file of AO for fresh verification and order.

increase in sundry creditor, unsecured loan and closing stock was due to merger

of the balance sheet of the late father of the assessee with that of the appellant.

He, however, has no objection if the reconciliation and details are sent back to the

AO for verification and fresh order.

of the appellant was taken up for scrutiny due to (i) increase in unsecured loans during the year, (ii) increase in sundry creditors and (iii) large difference in the

opening stock of current year and closing stock of previous year shown in P&L A/c

as per return of income. Before the AO, the assessee had contended that the variation were due to merging of the balance sheet of his father with his individual

balance sheet. However, the AO did not accept the contention by observing that

no documentary evidence like the audited books of account, bank statement, ITR, confirmation of accounts etc. of his father were submitted. During the appellate

proceedings, the assessee had submitted the relevant details and filed

reconciliation statement and submitted that the variations are fully reconciled, warranting no addition. The CIT(A) has allowed relief based on the submission of

the assessee including the reconciliation statement, without giving opportunity

ITA No.9304/MUM/2025 Rajkumar Pawankumar Chopra to the AO to verify the details and the reconciliation of various items. Both Ld. AR

and Ld. CIT DR have agreed that the matter may be remanded back to AO for

verification and fresh order. Accordingly, the order of CIT(A) is set aside and the

matter is restored to the file of AO for verification of the details and to pass a fresh

order as per law after granting adequate and reasonable opportunity of being

heard to the assessee. The grounds are allowed for statistical purpose.

the file of AO for fresh order, the other grounds become academic in nature and

do not require adjudication.

Order is pronounced on 29.06.2026.

Sd/- Sd/- (SANDEEP GOSAIN) (BIJYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER *Aniket Chand; Sr. PS MUMBAI Date: 29.06.2026 Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, MUMBAI 6. Guard File By Order

Assistant Registrar ITAT, MUMBAI