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Facts
The assessee appealed an order from the NFAC upholding the AO's addition of Rs. 6,20,000 as unexplained money from an unsecured loan. The assessee claimed the loan was out of their bank account, supported by FDR maturity proceeds. Another issue involved the CIT(A) sustaining an addition of Rs. 14,10,142 based on recalculating the fair market value of shares sold. Finally, the disallowance of brokerage charges of Rs. 3,85,002 was contested.
Held
The tribunal held that the AO and CIT(A) misunderstood the explanation regarding the FDR maturity proceeds, remitting the issue for verification. Regarding the share valuation, the tribunal found the AO exceeded jurisdiction and directed the addition to be deleted. For brokerage charges, the tribunal found no basis for restricting it to 0.5% and allowed the assessee's claim of 1%.
Key Issues
Whether the additions made on account of unsecured loan, share valuation, and brokerage charges are justified.
Sections Cited
69A, 143(3), 11UA
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Income Tax Appellate Tribunal, DELHI BENCH ‘E’’ : NEW DELHI
Before: SHRI MAHAVIR SINGH, HON’BLE & SHRI S. RIFAUR RAHMAN, HON’BLE
PER MAHAVIR SINGH, VICE PRESIDENT :
This appeal has been filed by the Assessee is arising out of the order of Ld. National Faceless Appeal Centre (NFAC), Delhi in Appeal No. NFAC/2021- 22/10345198 dated 26.6.2025. Assessment was framed by ACIT, Circle2(1)(1), Ghaziabad for the assessment year 2022-23 u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred the Act) vide order dated 31.3.2024.
The first issue in this appeal by the assessee is as regards to the order of the Ld. CIT(A) confirming the action of the AO for making addition on account of unsecured loan as unexplained money amounting to Rs. 6,20,000/- u/s. 69A of the Act.
We have heard the rival contentions and gone through the facts and circumstances of the case. We noted that assessee before the AO explained that the amount of Rs. 6,20,000/- being amount of loan given on 16.8.2021 of Rs. 4,00,000/- and Rs. 2,20,000/- on 30.8.2021 was out of the assessee’s bank maintained with Kotak Bank which is enclosed at Assessee’s Paper Book at pages 20-21. Ld. Counsel for the assessee drew our attention towards the entry dated 16.8.2021 wherein, an amount of Rs. 4 lacs was received on account of maturity of FDR and another amount of Rs. 2.20 lacs on 31.8.2021 was also proceeds of maturity of FDR. Ld. Counsel explained that the AO as well as CIT(A) misunderstood the explanation and their entire premise for making addition was that the amount has not been out of the outstanding amount against Rs. 63,89,698/-. Ld counsel for the assessee stated that this amount is explained. When this fact was confronted to the Ld. Sr. DR she argued that this aspect of FDR was never examined by the AO, hence, the matter can be remitted back to the file of the AO for verification of the proceeds received on maturity of FDR on 16.8.2021 amounting to Rs. 4 lacs and on 31.8.2021 amounting to Rs. 2.20 lacs. After hearing both the sides, we find that assessee has explained the source of these two amounts as proceeds FDR, but these were never verified by the AO, hence, for verification purposes only, this issue is remitted back to the file of the AO. Accordingly, the ground no. 2 raised by the Assesee is allowed for statistical purposes.
The next issue raised in this appeal of the assessee is as regards the order of the CIT(A) sustaining the addition made by the AO amounting to Rs. 14,10,142/- as unexplained money u/s. 69A of the Act by recalculating the FMV of the purchase cost of shares which were sold during the year.
We have heard the rival contentions and gone through the facts and circumstances of the case. We note that the AO as well as CIT(A) added the difference valuation made by the AO and assessee under Rule 11UA being the value of purchase of shares as unexplained expenditure u/s. 69A of the Act. We 2 | P a g e noted that in the order of the AO as well as CIT(A), both the authorities relied on the valuation made under Rule 11UA. The assessee has substracted the other current liability of Rs. 7,89,133.50 and short term provisions of Rs. 18,50,300/-, but without reasoning. We are of the view that these liabilities are allowable substructions as per Rule 11UA of the Income Tax Rules, as these liabilities and provisions are not of contingent nature nor there is any provision for disallowance of the same. The assessee has claimed Index cost of purchase of shares of Rs. 7,50,612/-, but the AO has recalculated the indexed cost of Rs. 14,10,142/- as unexplained money u/s. 69A of the Act by changing the valuation of shares without any basis. We find that AO has exceeded this jurisdiction in recalculating the value without any basis. In terms of above, we direct the AO to allow the claim of assessee, hence, the addition made by the AO u/s. 69A of the Act is deleted.
Accordingly, the ground no. 3 is allowed.
The next issue in this appeal is as regards the order of the CIT(A) in confirming the action of the AO in disallowing expenses of brokerage charges of Rs. 3,85,002/-.
We have heard the rival contentions and gone through the facts and circumstances of the case. We noted that the assessee has claimed brokerage expenses of Rs. 7.25 lacs, but the CIT(A) and AO allowed only Rs. 3.39 lakh which is 50% of the brokerage expenses. The CIT(A) and AO both noted that as per RERA, the brokerage allowable is 0.5% in property deals. Now before us, ld.
Counsel for the assessee stated that the total transaction for purchase of property is 3 | P a g e Rs. 7,24,99,998/- and assessee has claimed brokerage expenses @1%. In our view, there is no basis in restricting the brokerage of 0.5% and according to us, the assessee has rightly and reasonably claimed @1% of the brokerage for purchase of property. Accordingly, we reverse the orders of the authorities below and allow the ground no. 4 raised by the Assessee.
In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the Open Court on 12.02.2026.
Sd/- Sd/- (S. RIFAUR RAHMAN) (MAHAVIR SINGH) ACCOUNTANT MEMBER VICE PRESIDENT SRBhatnagar Date: 13-02-2026 Copy forwarded to: - 1. Appellant 2. Respondent 3. DIT 4. CIT (A) 5. DR, ITAT TRUE COPY By Order,
Assistant Registrar, ITAT, Delhi Bench
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