AMEY PRAVINBHAI BHAHMBHATT,AHMEDABAD V. THE ITO, WARD-7(1)(5), AHMEDABAD

ITA 1587/AHD/2024

AI Insights

The case involves Amey Pravinbhai Brahmbhatt, the appellant, who filed an appeal against the order of the NFAC for the Assessment Year 2011-12. The appeal was primarily concerned with additions made by the Assessing Officer (AO) regarding unexplained income and investments following a reassessment under section 147 of the Income Tax Act. The AO had initially reopened the case based on information about share transactions in penny stocks, which led to additions in the assessee's income. The CIT(A) provided partial relief, which led to the current appeal. The Tribunal's decision focused on the legality of the additions made outside the scope of the recorded reasons for reopening the assessment.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 25306 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 21-11-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 04-09-2024
• Other Referred Cases: CIT vs. Mohmed Juned Dadani (2013) 355 ITR 172 (Guj)
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUDHAKAR VERMA
• Assessee Lawyers: DIVYANG SHAH
• Keywords: Unexplained investment; Reopening of assessment
• Section: 147; 148

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 1587/Ahd/2024 (Ǔनधा[रण वष[ / Assessment Year : 2011-12) Amey Pravinbhai Brahmbhatt C/o. Divyang J Shah 201, 2nd Floor, Devashish Complex, Nr. Regenta Central Antarim Hotel, Off. C. G. Road, Ahmedabad - 380006 बनाम/ Vs. ITO Ward-7(1)(5), Ahmedabad èथायी लेखा सं./जीआइआर सं./PAN/GIR No. : AELPB9923J (Appellant) .. (Respondent) अपीलाथȸ ओर से /Appellant by : Shri Divyang Shah, A.R. Ĥ×यथȸ कȧ ओर से/Respondent by : Shri Sudhakar Verma, Sr. DR Date of Hearing 21/11/2024 Date of Pronouncement 05/12/2024 O R D E R PER SHRI NARENDRA PRASAD SINHA, AM: This appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi, (in short ‘the CIT(A)’), dated 27.07.2024 for the Assessment Year 2011-12. 2. The brief facts of the case are that the return of income for A.Y. 2011-12 was filed on 18.07.2011 declaring income of Rs.3,87,630/-. Subsequently, an information was received by the AO that the assessee had made share transactions of Rs.49,10,402/- in penny stock scrip, namely M/s. Swarna Sarita ITA No. 1587/Ahd/2024 [Amey Pravinbhai Brahmbhatt Vs. ITO] A.Y. 2011-12 - 2 – Gems Ltd., and that the assessee had obtained accommodation entry by trading in this share. It was further noticed that the assessee had made certain share transactions and income/loss arising on such transactions was not reflected in the return of income. Therefore, the AO recorded his reason for escapement of income and initiated proceeding u/s.147 of the Act. The re- assessment was completed u/s.144 r.w.s. 147 of the Act on 14.12.2018 at total income of Rs.11,05,630/-. 3. Aggrieved with the order of the AO, the assessee had filed an appeal before the First Appellate Authority, which has been decided vide the impugned order, wherein the assessee was allowed part relief. 4. Now, the assesse is in second appeal before us. The following grounds have been taken in this appeal: “1. Whether, on facts and in circumstances of the case and in law, Ld. CIT(A) has erred in confirming addition of Rs.81,000/- as undisclosed /unexplained Income? 2. Whether on facts and in circumstances of the case and in law, Ld. CIT(A) has erred in confirming addition of Rs. 6,37,000/- as unexplained investment? 3. Whether, on facts and in circumstances of the case and in law, Ld. Assessing officer has erred in issuing notice u/s. 148 of the act? 4. Whether, on facts and in circumstances of the case and in law, Ld. Assessing officer erred in making any addition while passing order u/s.147 of the Act?” 5. The first ground taken by the assessee is against the addition of Rs.81,000/- on account of unexplained cash deposit. In the course of assessment, the AO had found that the assessee had made cash deposit of Rs.81,000/- in the account with ITA No. 1587/Ahd/2024 [Amey Pravinbhai Brahmbhatt Vs. ITO] A.Y. 2011-12 - 3 – Corporation Bank, the source of which was not explained. It is found that the Ld. CIT(A) had allowed relief in respect of this addition made by the AO. A finding has been given by the Ld. CIT(A) that the assessee had withdrawn cash from his bank account and that the same amount was redeposited in the bank account. Considering the explanation and documentary evidences filed by the assessee, the Ld. CIT(A) had deleted the addition of Rs.81,000/- made by the AO on account of cash deposits. Since, Ld. CIT(A) has already allowed relief to the assessee in respect of cash deposits, the ground taken by the assessee in this regard is infructuous and is, therefore, dismissed. 6. The next ground pertains to addition of Rs.6,37,000/- on account of unexplained investment. In the course of assessment, the AO found that the assessee had paid sum of Rs.6,37,000/- to KIFS Trade Capital Pvt. Ltd. for transaction in shares. The assessee had not explained the source of this payment and the bank detail/statement relating to share transactions were also not furnished. Therefore, the AO had made the addition, which was upheld by the Ld. CIT(A). Shri Divyang Shah, the Ld. AR of the assessee submitted that the case was reopened by the AO to examine the alleged accommodation entry of Rs.49,10,402/- in respect of transaction in shares of M/s. Swarna Sarita Gems Ltd. However, no addition was made in respect of this transaction as the assessee had never entered into any such transaction. The Ld. AR submitted that where no addition was made by the AO on the ground on which case was reopened, it was not open for the AO to make addition in respect of any other ground which did not ITA No. 1587/Ahd/2024 [Amey Pravinbhai Brahmbhatt Vs. ITO] A.Y. 2011-12 - 4 – form part of the reason as recorded by the AO. In this regard, he has placed reliance on the judgment of the Hon’ble Gujarat High Court in the case of CIT vs. Mohmed Juned Dadani (2013) 355 ITR 172 (Guj). 7. Per contra, Shri Sudhakar Verma, Ld. Sr. DR relied upon the orders of AO and Ld. CIT(A). 8. We have carefully considered the rival submissions. A copy of the reason for reopening u/s.147 of the Act has been brought on record. It is found that the case was reopened for escapement of income in respect of accommodation entry of Rs.49,10,402/- by entering into transaction in shares of penny stock of M/s. Swarna Sarita Gems Ltd. In the assessment order there is no discussion of alleged accommodation entry of Rs.49,10,402/- taken by the assessee and no such addition has been made by the AO. Under the circumstances, when the reason on which the case was reopened was found to be incorrect, the reopened assessment proceeding should have been dropped. The Hon’ble Jurisdictional High Court in the case of Mohd. Juned Dadani (supra) has categorically held that a very incongruent situation would come about if the Assessing Officer were to drop the ground on which notice for reopening had been issued but to chase some other grounds not so mentioned for issuance of the notice. Further that when on ground on which the reopening of assessment was based, no addition was made by the AO; he could not make addition on some other grounds which did not form part of the reasons recorded by him. Respectfully following the ratio of the said decision, we are of the considered opinion that the AO was not ITA No. 1587/Ahd/2024 [Amey Pravinbhai Brahmbhatt Vs. ITO] A.Y. 2011-12 - 5 – correct in making addition in respect of unexplained investment in shares, which did not form part of the reason as recorded by the AO, particularly when no addition was made in respect of accommodation entry of Rs.49,10,402 for which the case was reopened and also for income/loss arising in share transactions. Accordingly, the addition of Rs.6,37,000/- in respect of unexplained investment is deleted. The ground taken by the assessee is allowed. 9. The next two grounds pertain to reopening the case u/s.147 of the Act. Since, the assessee has been allowed relief on merits, the grounds raised by the assessee are only academic in nature and are, therefore, not adjudicated. 10. In the result, the appeal of the assessee is partly allowed. This Order pronounced on 05/12/2024 Sd/- Sd/- (SUCHITRA KAMBLE) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 05/12/2024 S. K. SINHA True Copy आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. Ĥ×यथȸ / The Respondent. 3. संबंͬधत आयकर आयुÈत / Concerned CIT 4. आयकर आयुÈत(अपील) / The CIT(A)- 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड[ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलȣय अͬधकरण, अहमदाबाद / ITAT, Ahmedabad "