ACIT-24(1), MUMBAI, PIRAMAL CHAMBER V. ARVIND SHANTILAL SHAH, ANDHERI WEST

ITA 5903/MUM/2024

AI Insights

The case involves an appeal by the Revenue against the decision of the Ld. Commissioner of Income Tax (Appeals) - National Faceless Appeal Centre, which had deleted an addition of Rs. 95.15 lakhs made by the Assessing Officer (AO) under section 69A of the Income Tax Act, 1961. The addition was based on alleged transactions with Shri Jignesh Shah, an accommodation entry provider. The assessee, Arvind Shantilal Shah, denied any such transactions and requested details from the AO, which were not provided. The CIT(A) found that the AO had not substantiated the addition with necessary details or materials, leading to the deletion of the addition. The Tribunal upheld this decision, emphasizing the need for the AO to provide credible evidence and confront the assessee with the material relied upon for making the addition.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 32144 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Other Referred Cases: Andaman Timber Industries v/s Comm. Of Central Excise, CIT v/s Sunita Dhadda, H R Mehta v/s ACIT, Kishanchand Chellaram v/s CIT, CIT v/s JMD Communications Pvt. Ltd., R.W. Promotions Pvt. Ltd. v/s ACIT, Sunil Aggarwal v/s CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM KRISHN KEDIA
• Keywords: Accommodation entries
• Section: 64; 69A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “A” BENCH : MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI ANIKESH BANERJEE, JUDICIAL MEMBER ITA No. 5903/Mum/2024 Assessment Year : 2015-16 ACIT-24(1), 6th Floor, Piramal Chamber, Parel, Mumbai vs. Arvind Shantilal Shah, 206, Krishna CHS Ltd., 212/6 Cross Road, Mumbai PAN : AAPPS5253A (Appellant) (Respondent) For Assessee : NONE For Revenue : Shri Ram Krishn Kedia, Sr.DR Date of Hearing : 10-02-2025 Date of Pronouncement : 10-02-2025 O R D E R PER B.R. BASKARAN, A.M : The Revenue has filed this appeal challenging the order dt.25-09-2024 passed by the Ld. Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [„Ld.CIT(A)‟] and it relates to AY. 2015-16. The Revenue is aggrieved by the decision of the Ld.CIT(A) in deleting the addition of Rs. 95.15 lakhs made by the AO u/s.69A of the Income Tax Act, 1961 („the Act‟) on account of transactions alleged to have been entered with Shri Jignesh Shah, an accommodation entry provider. 2. None appeared on behalf of the assessee. Hence, we proceed to dispose of the appeal ex-parte, without the presence of the assessee. 2 ITA No. 5903/Mum/2024 3. We heard the Ld.DR and perused the record. The assessee has filed its original return of income for the year under consideration admitting a total income of Rs.34.04 lakhs.The AO subsequently, received information that the assessee has entered into certain high value transaction with a person, named, Shri Jignesh Shah, who was alleged to have been providing accommodation entries. Hence, the AO reopened the assessment of the year under consideration. Before the AO, the assessee submitted that he has not entered into any transaction with the concerns belonging to Shri Jignesh Shah. The assessee further submitted that he is a regular trader in the stock exchange platform and has duly offered income arising share transactions. He also requested the AO to furnish the details of transactions, which were claimed to have been not disclosed by the assessee. However, the AO did not furnish those information and assessed the sum of Rs. 95,15,952/-, alleged to have been entered by the assessee with Jignesh Shah Group as un-explained money u/s. 69A of the Act. 4. In the appellate proceedings, the Ld.CIT(A) deleted the addition and hence, the Revenue filed this appeal before the Tribunal. 5. We heard Ld DR and perused the record. We notice that the Ld.CIT(A) has taken note of the fact that the assessee has denied before the AO of entering into any transaction with the concerns controlled by Shri Jignesh Shah. Further the assessee has also asked the AO to provide the materials, which were relied upon by the AO to make the addition. However, the admitted fact is that the AO has not furnished the relevant materials/details. Hence, the Ld.CIT(A) has taken the view that the AO could not have made the addition without confronting the material that were relied upon by him to make the impugned addition. The relevant observations made by the Ld.CIT(A) are extracted below:- 3 ITA No. 5903/Mum/2024 “7.5 In the present case, looking to the assessment order, it is seen that the A.O reopened the case on the basis of information received that the assessee had entered into share transactions with the concerns controlled by Shri Jignesh Shah. However, during the assessment proceedings, the assessee had from the very outset denied the fact that he had entered into any concerns controlled by Shri Jignesh Shah to the tune of Rs.95,15,952/-. He stated that he had had no dealings with Choice Equity Broking Pvt Ltd or any other concerns of Jignesh Shah. During the assessment proceedings and the Video Conference, the assessee requested the A.O to provide the names of the concerns and companies controlled by Shri Jignesh Shah, with whom his assessee had made transaction, if any. The assessee also requested to the A.O to provide the full details of the transactions by way of amounts and the nature of the financial dealings with concerns of Shri Jignesh Shah as alleged. From the assessment order it is apparent that the A.O was unable to provide any details of the transactions carried out with the concerns of Shri Jignesh Shah. The A.O failed to mention any factual details and evidence of the alleged share trading other that the basic information received on the basis of which the case was reopened. There is nothing brought on record by the A.O regarding the breakup of this amount of Rs.95,15,952/-, ie. which scrips were traded in, volumes, amounts and with which concerns. There is no indication in the assessment order as to any enquiries carried out by the A.O to gather any further information on the basis of which the additions could have been made. The reasoning of the A.O for making the addition is that the assessee had not furnished any valid explanation for non-inclusion of this transaction in the share profit and loss account along with supporting material evidence. The A.O concluded that since the assessee had not filed any explanation or documentary evidence in respect of source for the transaction, this amount of Rs.95,15,952/-. was considered as unexplained money u/s.69A and added to the returned income. However, in the first instance, it was for the A.O to provide the necessary details of the alleged transaction to the assessee and then seek his explanation regarding the same. The fact that the transactions were not reflected in the financial statements of the assessee, and in the absence of any evidence in this regard being brought on record by the AO that the assessee had infact entered into such transactions, the conclusion drawn by the A.O and the consequent addition made, is without any basis. If the information was gathered on the basis of any statement of Jignesh Shah where the assessee’s name was mentioned, the same was required to be provided to the assessee to furnish his explanation. However, the assessment order does not mention any such evidence or statement or any other documentary evidence to corroborate the alleged share transactions of Rs.95,15,952/-. 7.6 As per the judicial decisions referred to above, the A.O is required to provide credible evidence and information to the assessee and then seek his explanation. It is only then that the onus shifts on the assessee and he is required to discharge the same. In this case and for the reasons given in the preceding paragraph, it is apparent that no credible information and evidence was provided to the assessee that the transactions actually took place and hence the assessee could not be 4 ITA No. 5903/Mum/2024 expected to discharge an onus with regard to transactions which he had denied and which the A.O had not provided any information or details in the first instance. Accordingly, the addition of Rs.95,15,952/- made by the A.O u/s 69A of the Act is deleted. The Ground of Appeal is Allowed.” 5.1. On going through the order passed by the Ld.CIT(A), we are of the view that the First Appellate Authority (FAA) has followed the legal principles laid down by Hon‟ble Apex Court and High Courts in the cases of Andaman Timber Industries v/s Comm. Of Central Excise (Civil Appeal No. 4288/2006), CIT v/s Sunita Dhadda (ITA – 197/2012 (SC), H R Mehta v/s ACIT (Bom), Kishanchand Chellaram v/s CIT (125 ITR 713 (SC), CIT v/s JMD Communications Pvt. Ltd. (320ITR17(st)(SC), R.W. Promotions Pvt. Ltd. v/s ACIT (Bom-HC), Sunil Aggarwal 64 taxmann.com 107(Del-HC). In the above said cases, it has been held by Hon‟ble Courts that the AO is not entitled to make any addition on the basis of materials which were collected behind the back of the assessee and not confronted with the assessee. In the instant case, the AO did not furnish the details/materialsrelating to the impugned addition to the assessee calling for his explanation. As observed by the Ld.CIT(A), the details relating to the addition of Rs.95,15,952/- were also not mentioned in the assessment order. Accordingly, we are of the view that the Ld.CIT(A) has rightly deleted the addition and accordingly, we do not find any infirmity in the order passed by the Ld.CIT(A). 6. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open court on 10-02-2025 Sd/- Sd/- [ANIKESH BANERJEE] [B.R. BASKARAN] JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 10-02-2025 TNMM 5 ITA No. 5903/Mum/2024 Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, ITAT, Mumbai 5) Guard file By Order Dy./Asst. Registrar I.T.A.T, Mumbai "