DARSHAN SHAILESHKUMAR KOTHARI,BHAVNAGAR V. THE DY.CIT.,CIRCLE-1(1), AHMEDABAD

ITA 151/AHD/2024

AI Insights

The case involves Darshan Shaileshkumar Kothari, who appealed against the order of the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi, which confirmed various additions to his income for the Assessment Year 2018-19. The additions included unexplained cash credits and unexplained expenditures under various sections of the Income Tax Act, 1961. The primary contention was the lack of opportunity for the assessee to present his case, as he was undergoing treatment for severe depression and anxiety, which prevented his appearance and submission of necessary documents during the appellate proceedings. The ITAT found merit in the assessee's arguments and the medical certificate provided, leading to the decision to remand the case for a fresh evaluation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472128 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADJOURNMENT APPLICATION FILED
• Assessee Lawyers: PARIMALSINH B. PARMAR
• Keywords: Set aside; Corroborative evidences; Unexplained cash credit; Unexplained expenditure; Peak credit; Principle of natural justice
• Section: 250; 68; 69C

Judgement Text

" आयकर आयकर आयकर आयकर अपील\tय अपील\tय अपील\tय अपील\tय अ धकरण अ धकरण अ धकरण अ धकरण, , , , अहमदाबाद अहमदाबाद अहमदाबाद अहमदाबाद \u0014यायपीठ \u0014यायपीठ \u0014यायपीठ \u0014यायपीठ ‘C’ अहमदाबाद। अहमदाबाद। अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE MRS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER ITA No. 151/Ahd/2024 \u0017नधा\u0019रणवष\u0019/Assessment Year: 2018-19 Darshan Shaileshkumar Kothari, 0 Near Jain Upashray, Limbda, Bhavnagar, Gujarat-364240 [PAN : EEBPK 5909 F] Vs. Deputy Commissioner of Income-tax, Circle 1(1), Bhavnagar अपीलाथ\u001d/ अपीलाथ\u001d/ अपीलाथ\u001d/ अपीलाथ\u001d/ (Appellant) \u001f य \u001f य \u001f य \u001f यथ\u001d/ थ\u001d/ थ\u001d/ थ\u001d/ (Respondent) Assessee by : Shri Parimal Sinh B. Parmar, AR Revenue by : Adjournment application filed सुनवाई क$ तार\tख सुनवाई क$ तार\tख सुनवाई क$ तार\tख सुनवाई क$ तार\tख/Date of Hearing : 21.11.2024 घोषणा क$ तार\tख / घोषणा क$ तार\tख / घोषणा क$ तार\tख / घोषणा क$ तार\tख /Date of Pronouncement: 12.02.2025 आदेश/ आदेश/ आदेश/ आदेश/O R D E R PER SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER: This appeal has been filed by the assessee against the order of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as \"CIT(A)\" for short] dated 28.11.2023, passed under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as \"the Act\" for short], for the Assessment Year (AY) 2018-19. 2. The assessee has taken the following grounds of appeal:- “1. The Ld. CIT(A) has erred in law and on facts in passing an ex-parte order which is against the principles of natural justice. 2. The Ld. CIT(A) has erred in law and on facts in confirming the addition of Rs.1,63,55,502/- as unexplained cash credit u/s. 68 r.w.s 115BBE of the Act. 3. Alternatively, and without prejudice the Ld. CIT(A) ought to have limited the addition to peak credit amount. ITA No. 151/Ahd/2024 Darshan Shaileshkumar Kothari Vs. DCIT AY ; 2018-19 2 4. The Ld. CIT(A) has erred in law and on facts in confirming the addition of Rs.21,37,706/- as deemed commission. 5. The Ld. CIT(A) has erred in law and on facts in confirming the disallowance of Rs.20,00,000/- as unexplained expenditure u/s. 69C of the Act. 6. The Ld. CIT(A) has erred in law and on facts in confirming the disallowance of Rs.15,75,500/- as unexplained expenditure u/s. 69C of the Act. 7. The Ld. CIT(A) has erred both in law and on the facts of the case in confirming the addition in spite of the fact that the Ld. AO did not appreciate necessary supporting documents produced by the Appellant in support of his submissions, which is in violation of principles of natural justice. Both the lower authorities made such addition relying on limited books of accounts and did not even provide the Appellant with further opportunity to submit the same to substantiate his claims. 8. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the Appellant from time to time which ought to have been considered before passing the impugned order. This action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 9. The Ld. CIT(A) has erred in not considering various facts and in not appreciating the facts and law in their proper perspective. 10. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the Ld. AO in initiating penalty u/s. 270A of the Act. 11. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the Ld. AO in initiating penalty u/s. 271AAC of the Act.” 3. The brief facts of the case are that the assessee, an individual, filed his return of income for the impugned assessment year declaring total income of Rs.18,06,740/-. During the course of assessment proceedings, the assessee was asked to explain the nature of business and the modus-operandi. In response, the assessee submitted that he has done transactions of sale and purchase of bit- coins with various exchanges like zebpay, koinex and S Capital Solution, during the year under consideration. The assessee submitted that the assessee was ITA No. 151/Ahd/2024 Darshan Shaileshkumar Kothari Vs. DCIT AY ; 2018-19 3 engaged in buying and selling bit-coins on behalf of the customers, i.e. the customers had transferred the bit-coins to assessee’s account, which were then sold by the assessee to the above exchange parties and, for the above transactions, the assessee earned net commission income @ 0.50% of the transactions. The Assessing Officer asked the assessee to submit complete documents with respect to bit-coins trading done along with details of customers, brokers, agents, bit-coins trading agencies etc. In response, the assessee submitted that all the transactions of the bit-coins have been carried out through banking channels as an agent and also with other traders like Naisar Kothari, M/s. Charm Trading proprietor Varis Rupabhinda etc., during the year under consideration. The assessee submitted that bit-coin is a valued cryptocurrency, and in the absence of any specific law banning trading in bit- coins, the assessee is engaged in doing a legitimate business. However, the Assessing Officer was of the view that the assessee has not submitted any document or agreement as to why the companies have transferred such huge amounts in the assessee’s bank accounts and further the assessee had failed to substantiate his deposits with supporting documents, the nature and purpose of transactions. The Assessing Officer noted that the assessee has received substantial amounts from M/s. Pasfer Technologies Pvt. Ltd. (Rs.82.20 lakhs) and also from M/s. Defecto Technologies Pvt. Ltd. (Rs.76 lakhs), but has not been able to prove the creditworthiness of the companies from whom the assessee has received such substantial amounts. Accordingly, the assessee added a sum of Rs.1,63,55,502/- as unexplained cash credits u/s 68 of the Act. Further, the Assessing Officer also observed that the assessee had transferred certain sums to various parties viz. Naisar Kothari (Rs.20 lakhs), Varis Rupabhinda (Rs.15.75 lakhs), and accordingly the Assessing Officer was of the view that since the assessee failed to substantiate the nature of above expenditures, the same remained unexplained and hence the same were added as income of the assessee u/s 69C of the Act. ITA No. 151/Ahd/2024 Darshan Shaileshkumar Kothari Vs. DCIT AY ; 2018-19 4 4. The assessee filed appeal against the aforesaid additions before the Ld. CIT(A), who dismissed the appeal of the assessee on account of non-appearance. While passing the order, the Ld. CIT(A) made the following observations :- “6.3 I have duly perused the order of the AO and 'statement of facts' mentioned by the appellant in the appeal memo. The appellant was given enough opportunity through e-proceedings as narrated in para 5 of this order to corroborate his arguments mentioned in appeal memo. However, it is seen that even after giving 7 opportunities of hearing, appellant has failed to submit his documents/proofs/evidences in support of its claim and arguments. In view of the non-submission of supporting evidences & above facts, it cannot be concluded as to why the order of the AO is erroneous and addition should not be made. Further, it is seen that such order was passed ex-parte u/s 143 rws 144B of the 'Act' as the assessee had not furnished its submission/documents during the assessment proceedings. In view of the above discussion, I hereby, uphold the action of AO and confirm the additions made in the impugned order u/s 143(3)/144B of the 'Act' dated 20.09.2021. Accordingly, grounds of appellant are hereby dismissed.” 5. Before us, the Ld. Counsel for the assessee submitted that the Ld. CIT(A) has incorrectly observed that no written submissions were furnished by the assessee during the course of appellate proceedings; however, the assessee submitted that the assessee had filed written submissions before the Ld. CIT(A) which were omitted to be considered by the Ld. CIT(A). Further, the Ld. CIT(A) dismissed the appeal of the assessee with observation that the assessee has failed to submit documents/proof/evidences in support of his claim, but the same is also factually incorrect since the assessee had submitted detailed written submissions along with supporting documentary evidences before the Assessing Officer, which adequately proved the case of the assessee. Further, the assessee filed an affidavit before us submitting that since December 2021 the assessee was facing severe depression and anxiety for which assessee was undergoing medical treatment and, therefore, for this reason, the assessee could not cause appearance before the Ld. CIT(A) during the course of appellate proceedings. The assessee also submitted copy of certificate from the concerned medical centre stating that the assessee has been undergoing medical treatment since ITA No. 151/Ahd/2024 Darshan Shaileshkumar Kothari Vs. DCIT AY ; 2018-19 5 December 2021 for depression and anxiety. Accordingly, the Ld. Counsel for the assessee submitted that, looking into the quantum of addition and the fact that the assessee has a good case on merits, the matter may be restored to the file of the Ld. CIT(A) for de-novo consideration. 6. In response, the Ld. DR did not oppose to the matter being set aside to the file of the Ld. CIT(A) for de-novo consideration, in the interest of justice. 7. Accordingly, looking into the instant facts of the case and the affidavit of the assessee duly supported by certificate of medical treatment, in the interest of justice, the matter is being restored to the file of the Ld. CIT(A) for de-novo consideration. 8. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 12.02.2025 at Ahmedabad. Sd/- Sd/- (ANNAPURNA GUPTA) ACCOUNTANT MEMBER (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER Ahmedabad; Dated 12/02/2025 **bt आदेश क$ \u001f\u0017त+ल,प अ-े,षत आदेश क$ \u001f\u0017त+ल,प अ-े,षत आदेश क$ \u001f\u0017त+ल,प अ-े,षत आदेश क$ \u001f\u0017त+ल,प अ-े,षत/ / / /Copy of the Order forwarded to : 1. अपीलाथ\u001d अपीलाथ\u001d अपीलाथ\u001d अपीलाथ\u001d / The Appellant 2. \u001f यथ\u001d \u001f यथ\u001d \u001f यथ\u001d \u001f यथ\u001d / The Respondent. 3. संबं धत आयकर आयु/त संबं धत आयकर आयु/त संबं धत आयकर आयु/त संबं धत आयकर आयु/त / Concerned CIT 4. आयकर आयु/त आयकर आयु/त आयकर आयु/त आयकर आयु/त ) ) ) ) अपील अपील अपील अपील ( ( ( ( / The CIT(A)- 5. ,वभागीय \u001f\u0017त\u0017न ध ,वभागीय \u001f\u0017त\u0017न ध ,वभागीय \u001f\u0017त\u0017न ध ,वभागीय \u001f\u0017त\u0017न ध , , , , आयकर अपील\tय अ धकरण आयकर अपील\tय अ धकरण आयकर अपील\tय अ धकरण आयकर अपील\tय अ धकरण /DR,ITAT, Ahmedabad, 6. गाड\u0019 फाईल गाड\u0019 फाईल गाड\u0019 फाईल गाड\u0019 फाईल / / / / Guard file. आदेशानुसार आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER, TRUE COPY सहायक पंजीकार सहायक पंजीकार सहायक पंजीकार सहायक पंजीकार (Asstt. Registrar) आयकर अपील\tय अ धकरण आयकर अपील\tय अ धकरण आयकर अपील\tय अ धकरण आयकर अपील\tय अ धकरण ITAT, Ahmedabad "