O R D E R

PER KESHAV DUBEY, JUDICIAL MEMBER:

This appeal at the instance of the assessee is directed against the order of ld. CIT(A)/NFAC dated 09.09.2025 vide DIN & Order No. ITBA/NFAC/S/250/2025-26/1080477258 (1) passed u/s. 250 of the Income Tax Act, 1961 (in short “the Act”) for the AY 2016-17.

2. The assessee has raised the following grounds of appeal:-

1. The impugned order passed by the National Faceless Assessment Centre (NFAC) under section 147 r.w.s. 144B to the extent which is against the Appellant is opposed to law, weight of evidence, probabilities, facts and circumstances of the case and the learned Commissioner appeals erred in upholding the same.

2. The learned assistant commissioner of income tax, Circle 1(1)(1), Bangalore [Ld.AO] erred in initiating/continuing the reassessment proceedings in law and facts, without satisfying the preconditions applicable thereto and hence all the consequential proceedings are bad in law and the learned Commissioner appeals erred in upholding the same.

3. The Ld. NFAC erred in making an addition of Rs. 1,62,26,016/- in the order in law, and facts.

4. The Ld. Officers below erred by not appreciating the fact that the Appellant and the M/s JM Mutual Financial Assets Management Ltd. (JMFAML) is promoted by one of the reputed Public Financial Institution. Both Appellant and JMFAML are two independent entities and are not interrelated in any manner and does not have common key management personnel/Trustee and no mutual interest exists between the two.

5. The Ld. Officers below erred in the order by not appreciating the manner in which the mutual fund house operates, which is incorporated as an independent Trust and regulated by extant laws of SEBI and Stock Exchanges with regard to the allocation of Units, Dividend Declaration, Pay-outs, NAV computation, Redemption etc. and none of the operating decisions of the Fund house is controlled by the Appellant and hence the allegation that the Appellant has incurred a pre-planned and fictitious loss is incorrect without any material.

6. The Ld. Officers below failed to appreciate that, Appellant had invested in the units of mutual funds which are open to General Public and the underlying value i.e. Net Annual Values [NAV] of the units are independently derived as per the extant guidelines laid by SEBI/ mechanism prescribed by the Stock Exchange and also the market price of the net assets are based on Mark to Market value (M-T-M) of underlying assets and market price is also the result of various market forces and investors sentiments and not based upon the Appellant and hence in the absence of any positive materials which suggests that the Appellant is indulged in manipulation of NAV of the Mutual funds, recharacterizing the Real Loss incurred as deemed capital Gain is incorrect.

7. The Ld. Officers below erred by not rebutting the specific confirmation dated 31.05.2022 issued by the M/s JMFAML wherein it was asserted that they are in compliance of the extant laws of the SEBI and they are also in compliance of Accounting Standards while declaring the dividends, the dividends in the Schemes were paid out of the Distributable Surplus and no Unit Premium Reserve [UPR] was used for the distribution of dividend and the same remains uncontroverted.

8. The Ld. Officers below erred by making the addition on facts the Appellant has produced the Audited Financials and Statutory Audit report issued by the Independent Chartered Accountant of M/s JMFAML wherein it was stated that the said M/s JMFAML is in compliance of the SEBI Regulations and it's financials are in conformity of the Accounting Standards and the Ld. Officers below, has not rebutted the same with any other tangible material.

9. The Ld. Officers below failed to note that the Appellant has purchased the units of Mutual Fund and sold the same at the prevailing market prices i.e. published NAV as applicable to any general public in the open market and the units are routed through Demat Acco