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Facts
The Assessing Officer (AO) received information about the assessee receiving funds from a company with no creditworthiness. The AO reopened the case and made an addition of Rs. 2,37,75,000/- on account of unexplained money, treating it as sale of investment from the suspect company.
Held
The CIT(A) allowed the assessee's appeal, deleting the addition. The CIT(A) observed that the AO failed to conduct proper inquiry and did not independently apply his mind. The CIT(A) also noted that Section 69A is not applicable as the sale consideration was recorded in the assessee's books.
Key Issues
Whether the addition made by the AO on account of unexplained money (sale of investment) is sustainable when the sale consideration was recorded in the assessee's books and proper inquiry was not conducted by the AO.
Sections Cited
69A, 147, 148, 144/144B
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Income Tax Appellate Tribunal, “D” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR & SHRI PRADIP KUMAR CHOUBEY
O R D E R
Per Rajesh Kumar, AM :
This is an appeal filed by the revenue against the order dated 26.03.2025, passed by the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2018-2019.
The only issue raised by the revenue in its appeal is against the order of the ld. CIT(A) in deleting the addition of Rs.2,37,75,000/- as made by the AO on account of unexplained money. 3. Facts in brief are that the AO received information from INSIGHT portal that the assessee has received fund from M/s Compare Dealers Pvt. Ltd., who has made suspicious transaction through its bank account maintained with HDFC Bank Ltd. The AO noted that the said company has no creditworthiness as it has no turnover, no fixed assets and has been paying minimal taxes. The AO during the course of assessment proceedings noted that the assessee has received Rs.2,37,75,000/- on 2 sale of investment from the said company. Accordingly, the case of the assessee was reopened u/s.147 of the Act by issuing notice u/s.148 of the Act and finally the addition was made by the AO of Rs.2,37,75,000/- to the total income of the assessee by treating the same as unexplained u/s.69A of the Act in the assessment framed u/s.147 r.w.s.144/144B of the Act dated 16.03.2024. 4. In the appellate proceedings, the ld.CIT(A) allowed the appeal of the assessee by deleting the addition so made by the AO by observing that the AO has not done proper enquiry during the course of assessment proceedings to rebut the claim of the assessee, regarding sale of shares held by them since 2014-2015 and also not clear as to why the matter for AY 2017-18 was dropped on same facts and proceed to assessee AY 2018-19. Ld. CIT(A) noted that the AO has just relied upon the report of the investigation wing and has not applied his mind independently to the facts of the case. Ld. CIT(A) also noted that the addition made by the AO u/s.69A of the Act on account of unexplained money and further noted that the said section is applicable only in respect of such money, assets, articles or things which are not recorded in the assessee’s books of account and are reportedly made on the receipt from a creditor. Further, contrary to that in the present case the sale consideration was recorded in the books of account. Ld.CiT(A) also noted that the PAN and address of the creditor as well as ledger account copies of the creditor in the assessee’s books of account have also been filed before the AO and, 3 therefore, the ld. CIT(A) deleted the addition by holding that the addition made u/s.69A of the Act is not sustainable.
After hearing the rival submissions of the parties and perusing the material available on record, we find that in this case the assessee has sold the investment during the year for a consideration of Rs.2,37,75,000/- in the form of equity shares which was held right from the assessment year 2014-2015 and were also accepted by the revenue and no adverse inference was drawn either during the year of purchase of investment or thereafter. Accordingly, we are of the view that when the purchase of investment is accepted, the corresponding sales in the subsequent years cannot be doubted, which are genuine. Moreover, the ld. CIT(A) has recorded a clear cut finding on the issue that the provision of Section 69A of the Act is not applicable as the provisions are applicable only in respect of such monies, assets, articles or things which are not recorded in the books of account of the assessee but contrary to this in the present case the consideration received by the assessee was duly shown in the books of account of the assessee. Therefore, we do not find any infirmity in the order of the ld. CIT(A) and accordingly we uphold the same and dismiss the appeal of the revenue.
In the result, appeal of the revenue is dismissed. Order pronounced in the open court on 26/08/2025. (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) न्यधनयक सदस्य / JUDICIAL MEMBER लेखा सदस्य/ ACCOUNTANT MEMBER कोलकाता Kolkata; ददनाांक Dated 26/08/2025 Prakash Kumar Mishra, Sr.P.S.