AMIT RAJNIKANT JOSHI,AHMEDABAD, GUJARAT V. THE DEPUTY COMMISSIONER OF INCOME TAX, AHMEDABAD, GUJARAT

ITA 367/AHD/2024

AI Insights

The case involves Amit Rajnikant Joshi, the appellant, who contested the additions made to his income by the Deputy Commissioner of Income Tax (DCIT) under Sections 143(3) and 147 of the Income Tax Act, 1961. The additions were based on allegations of trading in shares of Dhwanil Chemicals Ltd., a penny stock used for bogus Long-Term Capital Gains (LTCG) transactions. The DCIT's assessment was challenged at the CIT(A), which was dismissed ex-parte due to the appellant's non-appearance, attributed to his mother's critical illness. The Tribunal found the non-appearance justified and restored the case to the CIT(A) for a fresh hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 29612 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIGNESH DAS
• Assessee Lawyers: PRASHANT SHRIVASTAV
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Unexplained cash credit; Capital Gains; Principle of natural justice; Accommodation entries; Bogus
• Section: 147; 143(3); 68

Judgement Text

" आयकर अपीलीय अिधकरण, अहमदा बा द \u0012ा यपीठ “सी“, अहमदा बा द । IN THE INCOME TAX APPELLATE TRIBUNAL “ C ” BENCH, AHMEDABAD सु\u0017ी सुिच\u0019ा का \u001aले, \u0012ा ियक सद एवं \u0017ी मकरंद वसंत महा देवकर, लेखा सद क े सम\"। ] ] BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER आयकर अपील सं /ITA No.367/Ahd/2024 िनधा \u0010रण वष\u0010 /Assessment Year : 2012-13 Amit Rajnikant Joshi C-29, Aryaman Bungalows Opp. Anand Niketan School Thaltej, Shilaj Road Ahmedabad – 380 059 बनाम/ v/s. The Dy.CIT Anand Nagar Prahaladnagar Road Ahmedabad – 380 05 \u0014थायी लेखा सं./PAN: ABMPJ 6798 F अपीलाथ%/ (Appellant) &' यथ%/ (Respondent) Assessee by : Shri Prashant Shrivastav, AR Revenue by : Shri Rignesh Das, Sr.DR सुनवाई की तारीख/Date of Hearing : 07/01/2025 घोषणा की तारीख /Date of Pronouncement: 09/01/2025 आदेश/O R D E R PER MAKARAND V. MAHADEOKAR, AM: This appeal by the assessee is directed against the order dated 22/12/2023 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”], for the Assessment Year 2012-13. The order of the CIT(A) arises out of the assessment order passed by the Deputy Commissioner of Income Tax (DCIT), Circle-2(1)(2), Ahmedabad [hereinafter referred to as “AO”], dated 27/12/2019, under Section 143(3) read with Section 147 of the Income Tax ITA No. 367/Ahd/2024 Amit Rajnikant Joshi vs. DCIT Asst. Year : 2012-13 2 Act, 1961 [hereinafter referred to as “the Act”], wherein the AO assessed the total income at ₹63,92,323/- as against the returned income of ₹10,12,560/-. Facts of the Case: 2. The assessee filed his return of income for the year under consideration declaring income at ₹10,12,560/-. The assessment was reopened under Section 147 of the Act based on information received from the DDIT (Inv.), Ahmedabad, indicating that the assessee had traded in shares of Dhwanil Chemicals Ltd., a penny stock allegedly used for bogus Long-Term Capital Gains (LTCG) transactions. The AO noted that a search conducted on the premises of Sanjay Shah and Jigar Shah revealed a well-planned modus operandi involving synchronized trading, accommodation entries, and receipt of unaccounted cash in exchange for fictitious gains. The AO concluded that the transactions in Dhwanil Chemicals Ltd. were pre- arranged and lacked genuine intent. The company had weak financials, no real operations, and displayed a cyclic rise and fall in prices, indicating price manipulation. The AO observed significant cash deposits in the bank account of the assessee. The assessee explained that the deposits were sourced from earlier withdrawals; however, the AO rejected the explanation, citing inconsistencies in the cash book and frequent withdrawals of small amounts. The AO added unsecured loans received from three parties - K.D. Zala, Multitech Enterprises, and Reema S. Bhandari—to the total income as unexplained cash credits under Section 68, due to the absence of ITR acknowledgments, bank statements, and other supporting documents from the lenders. ITA No. 367/Ahd/2024 Amit Rajnikant Joshi vs. DCIT Asst. Year : 2012-13 3 3. The assessee filed an appeal before the CIT(A), raising several grounds challenging the additions made by the AO. The assessee contended that the LTCG was genuine and that the additions related to cash deposits and unsecured loans were unwarranted. The assessee submitted that all necessary documents, including the cash book and loan confirmations, were provided during the assessment proceedings, but the AO failed to appreciate the same. However, the CIT(A) passed an ex-parte order dismissing the appeal due to non-appearance by the assessee. 4. Aggrieved by the order of the CIT(A), the assessee is in appeal before us with following grounds of appeal: a. The Ld. CIT(A) erred in confirming the order of the AO making addition u/s 68 on account of bogus long term capital gain of Rs.9,68,248/-. b. The Ld. CIT(A) erred in confirming the order of the AO making addition under section 68 on account of unexplained cash deposit of Rs.17,11,515/-. c. The Ld. CIT(A) erred in confirming the order of the AO making addition under section 68 on account of unexplained cash credit of Rs.27,00,000/-. d. Any other ground which may be urged before or during the time of hearing of the appeal. 5. It was observed that there was a delay of 7 days in filing appeal before us. The assessee filed an application for condonation of delay supported by an affidavit, explaining that the delay was caused due to the critical illness of his mother, who was suffering from Koch’s C5 with quadriparesis, hypothyroidism, and Parkinsonism. The medical certificates corroborating ITA No. 367/Ahd/2024 Amit Rajnikant Joshi vs. DCIT Asst. Year : 2012-13 4 the medical condition of the assessee's mother have been submitted. The Authorized Representative (AR) of the assessee submitted that the delay was unintentional and prayed for condonation in the interest of substantial justice. The Departmental Representative (DR) raised no objection to the condonation of delay. We have considered the submissions and find that the cause of delay is genuine and reasonable. There are judicial precedents where it was held that courts should adopt a liberal approach when considering applications for condonation of delay, especially when the delay is not due to negligence or malafide intent. Accordingly, in the interest of justice and equity, we condone the delay of 7 days and admit the appeal for hearing. During the course of the hearing, the AR of the assessee submitted that the non-appearance before the CIT(A) was due to the critical illness of the assessee’s mother, who was suffering from serious health conditions. The AR submitted medical certificates to substantiate this claim and requested that the matter be restored to the CIT(A) for a fresh hearing. The DR raised no objection to the request for restoring the matter to the CIT(A) for a fresh decision. 6. We have considered the submissions of both parties and perused the material available on record. It is noted that the order of the CIT(A) was passed in the absence of the assessee, resulting in an ex-parte dismissal due to non-prosecution. The reason cited by the assessee for non-appearance, i.e., the critical illness of his mother, is supported by relevant medical evidence. In our considered opinion, the non-appearance of the assessee was due to reasonable and sufficient cause. ITA No. 367/Ahd/2024 Amit Rajnikant Joshi vs. DCIT Asst. Year : 2012-13 5 6.1. The principles of natural justice demand that the assessee be provided with an opportunity to present his case on merits. Denying such an opportunity would result in a miscarriage of justice. 6.2. In view of the above, we set aside the order of the CIT(A) and restore the matter to his file for adjudication de novo. The CIT(A) is directed to provide a reasonable opportunity of being heard to the assessee and thereafter pass a reasoned order on merits in accordance with law. The assessee is also directed to co-operate in the appellate proceedings and avoid any undue delay. 7. In the result, the appeal filed by the assessee is treated as allowed for statistical purposes. Order pronounced in the Open Court on 9th January, 2025 at Ahmedabad. Sd/- Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER अहमदाबाद/Ahmedabad, िदनांक/Dated 09/01/2025 टी.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS आदेश की #ितिलिप अ$ेिषत/Copy of the Order forwarded to : 1. अपीलाथ% / The Appellant 2. #&थ% / The Respondent. 3. संबंिधत आयकर आयु' / Concerned CIT 4. आयकर आयु' ) अपील ( / The CIT(A)-(NFAC), Delhi 5. िवभागीय #ितिनिध , आयकर अपीलीय अिधकरण , राजोकट/DR,ITAT, Ahmedabad, 6. गाड\u0010 फाईल / Guard file. आदेशानुसार/ BY ORDER, स&ािपत #ित //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad "