INCOME TAX OFFICER , AHMEDABAD V. KETU MADHUKANT SHETH, AHMEDABAD

ITA 691/AHD/2024

AI Insights

The case involves an appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals)-13, Ahmedabad, which had deleted certain additions made by the Assessing Officer under the Income Tax Act, 1961 for the Assessment Year 2011-12. The Revenue challenged the deletion of additions related to unexplained investments and cash credits. The assessee, Ketu Madhukant Sheth, filed a cross-objection arguing the maintainability of the Revenue's appeal based on CBDT Circulars and supported the CIT(A)'s decision on merits. However, the assessee later opted for the DTVSV Scheme, leading to the withdrawal of his appeal and settlement of tax dues, which prompted the dismissal of both the Revenue's appeal and the assessee's cross-objection.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472265 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: WAGHE PRASAD RAO
• Assessee Lawyers: DHRUNAL BHATT; GULAB THAKOR; ARS
• Keywords: Unexplained cash credit; Unexplained investment; Tax effect; Penny stocks; Bogus
• Section: 147; 143(3); 68; 92

Judgement Text

" आयकर अपीलीय अिधकरण, अहमदाबाद \u0011ायपीठ “डी“,अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD \u0015ी टी.आर. से\u0019\u001aल क ुमार, \u0011ाियक सद\u001c एवं \u0015ी मकरंद वसंत महादेवकर, लेखा सद\u001c क े सम\"। ] ] BEFORE SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER & SHRI MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER आयकर अपील सं /ITA No. 691/Ahd/2024 - िनधा \u0010रण वष\u0010 /AY 2011-12 AND Cross Objection No.11/Ahd/2024 - िनधा \u0010रण वष\u0010 /AY 2011-12 (in ITA No.691/Ahd/2024 – AY 2011-12) The Income Tax Officer (Intl.Taxn)-1, Ahmedabad – 380 014 बनाम/ v/s. Ketu Madhukant Sheth 10, Gyan Mandir Society Nr. Vasna Telephone Exchange Vasna Ahmedabad - 380 007 \u0014थायी लेखा सं./PAN: BPXPS 5222 K अपीलाथ%/ (Appellant) ….. &' यथ%/ (Respondent) & Cross Objector) Assessee by : Shri Dhrunal Bhatt & Shri Gulab Thakor, ARs Revenue by : Shri Waghe Prasadrao, Sr.DR सुनवाई की तारीख/Date of Hearing : 26 /02/2025 घोषणा की तारीख /Date of Pronouncement: 27 /02/2025 आदेश/O R D E R PER MAKARAND V. MAHADEOKAR, AM: The Revenue has filed an appeal against the order of the Commissioner of Income Tax (Appeals)-13, Ahmedabad [hereinafter referred to as “CIT(A)”] dated 16.02.2024 for Assessment Year (AY) 2011-12, challenging the deletion of additions made by the Assessing Officer [hereinafter referred ITA No.691/Ahd/2024 (By Revenue) & CO No.11/Ahd/2024 (By Assessee) The ITO vs. Ketu Madhukant Sheth Asst. Year : 2011-12 2 to as “AO”] under Section 143(3) read with Section 147 of the Income Tax Act, 1961 [hereinafter referred to as “The Act”]. 2. The assessee has also filed a cross-objection (CO) challenging the maintainability of the Revenue’s appeal based on CBDT Circular No.17/2019 dated 08.08.2019 and Circular No.5/2024 dated 15.03.2024 and further supporting the CIT(A)’s decision on the merits. 3. The Revenue, in its appeal, challenges the deletion of additions made by the AO, contending that the CIT(A) erred in deleting the addition of Rs.37,79,452/- towards unexplained investment in shares of Vax Housing Finance Co. Ltd. (VHFCL), which was allegedly involved in accommodation entries. Further, the Revenue disputes the deletion of Rs.51,30,000/- treated as unexplained cash credits under Section 68 of the Act, arguing that the assessee failed to establish the creditworthiness of lenders. Additionally, the Revenue asserts that the CIT(A) wrongly quashed the reassessment proceedings without considering the merits of the case. 4. The assessee, in his cross-objection, primarily contends that the Revenue’s appeal is not maintainable as the tax effect is below the threshold prescribed under CBDT Circular No. 17/2019, and the case does not fall within the exceptions outlined in CBDT Circular No. 5/2024. The assessee further argues that the AO’s additions were not related to bogus LTCG/STCL through penny stocks and, therefore, do not qualify as an organized tax evasion case under the CBDT exceptions. On merits, the assessee asserts that the CIT(A) correctly deleted the additions, as the AO failed to substantiate ITA No.691/Ahd/2024 (By Revenue) & CO No.11/Ahd/2024 (By Assessee) The ITO vs. Ketu Madhukant Sheth Asst. Year : 2011-12 3 the assessee’s ownership of the shares and did not conduct proper inquiries regarding the unsecured loans, making the additions unsustainable. 5. During the course of the hearing before us, the assessee submitted an application requesting withdrawal of the appeal, as he has opted for the Direct Tax Vivad Se Vishwas (DTVSV) Scheme, 2024. 5.1. The assessee has furnished the following documentary evidence in support of his withdrawal request: - Form-2 (Certificate under Section 92 of the Finance Act, 2024), issued by the Designated Authority on 20.01.2025, certifying the determination of tax dues. - Form-3 (Intimation of Payment under Section 92 of the Finance Act, 2024), acknowledging payment of Rs.10,16,626/- on 31.01.2025 and confirming withdrawal of appeal. - Proof of Withdrawal (submitted electronically on 03.02.2025). 6. The Departmental Representative (DR) has not raised any objections to the withdrawal application filed by the assessee. 7. Considering the assessee’s request for withdrawal of appeal under the DTVSV Scheme, 2024 and in the absence of any objection from the Revenue, the appeal filed by the Revenue is dismissed, as the tax liability has been settled under the DTVSV Scheme, 2024, making the proceedings academic in nature. Assessee’s cross-objection is dismissed as infructuous. ITA No.691/Ahd/2024 (By Revenue) & CO No.11/Ahd/2024 (By Assessee) The ITO vs. Ketu Madhukant Sheth Asst. Year : 2011-12 4 8. In the result, Revenue’s appeal is dismissed and assessee’s cross- objection is dismissed as infructuous. pronounced in the Open Court on 27th February, 2025 at Ahmedabad. Sd/- Sd/- (T.R. SENTHIL KUMAR) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER अहमदाबाद/Ahmedabad, िदनांक/Dated 27/02/2025 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)-13, Ahmedabad 5. िवभागीय #ितिनिध , अिधकरण अपीलीय आयकर , 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 1. Date of dictation (word processed by Hon’ble AM in his laptop) : 26.2.2025 2. Date on which the typed draft is placed before the Dictating Member. : 26.2.2025 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 27.2.25 7. Date on which the file goes to the Bench Clerk. : 27.2.25 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar for signature on the order. : 10. Date of Despatch of the Order : "