ITO Vs Gunjan Gupta Batra (ITAT Agra)
Capital Balance Explained Through Earlier Year’s ITR – ITAT Agra Upholds Deletion of ₹2.35 Cr Addition
Revenue challenged CIT(A)’s order deleting an addition of ₹2.35 crore made by AO as unexplained capital u/s 68. AO held that Assessee had shown sudden capital introduction of ₹2.35 crore in A.Y. 2016-17, whereas no capital was reflected in A.Y. 2015-16 ITR.
CIT(A) accepted Assessee’s explanation that the amount represented accumulated savings from prior years, duly assessed & taxed, & not fresh introduction. He relied on the scrutiny assessment of A.Y. 2014-15, where closing capital was ₹2.24 crore, forming the opening balance for 2016-17. The absence of capital in the A.Y. 2015-16 ITR was explained since the return was filed in ITR-2, which had no column for balance sheet or capital disclosure.
ITAT found that Assessee’s reconciliation of savings, income, & drawings across years (2014-15 to 2016-17) was supported by records, & AO had ignored the evidence. CIT(A) had rightly appreciated these facts.
Accordingly, Tribunal upheld deletion of ₹2.35 crore addition, confirming that the capital shown was carried forward from earlier years, not unexplained investment.
FULL TEXT OF THE ORDER OF ITAT AGRA
1. The assessee has filed appeal against the order of the ld. Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [“Ld. CIT (A)”, for short] dated 05.03.2025 for the Assessment Year 2016-17.
