Appellate allowance of explained investments and loans upheld; Assessing Officer's additions for unexplained investments quashed

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....The HC upheld the appellate authority's allowance for the assessee, disallowing the Assessing Officer's addition for unexplained investments and loans. The court found the AO erred by treating the balance-sheet figure as a terminal investment without accounting for the preceding year's closing investments and the documented sale of equity shares reducing the holding. The HC accepted the assessee's explanation that funds derived partly from the sale proceeds and partly from a fresh unsecured loan from related private companies; those loans were evidenced through banking channels and the creditors were registered, taxable private companies. Consequently, additions on account of unexplained investments and loans were quashed in favour of the assessee.....