INCOME TAX OFFICER, WARD-1 HIMATNAGAR, HIMATNAGAR V. HARDIK JAYPRAKASH SHAH, IDAR

ITA 925/AHD/2024

AI Insights

The case involves an appeal by the Revenue against the CIT(A)'s decision to delete the addition of Rs.99,00,000 made by the Assessing Officer (AO) for the Assessment Year 2018-19. The AO had reopened the assessment based on alleged transactions involving the assessee and entities linked to accommodation entries and bogus transactions. The CIT(A) found the additions unjustified, leading to the Revenue's appeal. The Tribunal examined the evidence and submissions, concluding that the CIT(A) had correctly deleted the additions as the AO failed to provide substantial evidence to support the allegations.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314137 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TRUPTI PATEL
• Assessee Lawyers: ASEEM THAKKAR
• Keywords: Set aside; Principle of natural justice; Bogus
• Section: 147; 148; 142(1)

Judgement Text

"आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ ‘D’ अहमदाबाद। अहमदाबाद। अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD ] ] BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER AND SHRI MAKARAND V.MAHADEOKAR, ACCOUNTANT MEMBER ITA No.925/Ahd/2024 Asstt.Year : 2018-19 ITO, Ward-1 Himatnagar. Hardik Jayprakash Shah 1-1-250, Matavali Fali Banglaw Vistar, Idar Sabarkantha 383 430. PAN : CHMPS 4836 B (Applicant) (Responent) Assessee by : Shri Aseem Thakkar, AR Revenue by : Smt.Trupti Patel, Sr.DR सुनवाई क तारीख/Date of Hearing : 08/05/2025 घोषणा क तारीख /Date of Pronouncement: 09/05/2025 आदेश आदेश आदेश आदेश/O R D E R PER MAKARAND V.MAHADEOKAR, AM: This appeal by the Revenue is directed against the order passed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”], dated 07.03.2024 for the Assessment Year 2018–19, whereby the CIT(A) deleted the addition of Rs.99,00,000/- made by the Assessing Officer (AO) under section 69A r.w.s. 115BBE of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] vide order dated 24.03.2023 passed under section 147 rear with section 144B of the Act. ITA No.925/Ahd/2024 2 Facts of the Case 2. The assessee had filed his return of income for A.Y. 2018–19 on 14.08.2018, declaring income of Rs.3,54,770/-. The return was processed under section 143(1) of the Act. Subsequently, based on information available the Assessing Officer reopened the assessment under section 147 by issuing notice under section 148 on 31.03.2022. The reason recorded was that the assessee had entered into the following transactions during the relevant financial year: i. A transaction of Rs.90,00,000/- with M/s Dishman Pharmaceuticals & Chemicals Ltd., alleged to be an accommodation entry provider connected with Dahyalal Thakker of Jalaram Group; and ii. A transaction of Rs.9,00,000/- with M/s Mainak Comtrade Pvt. Ltd., an entity allegedly associated with Jignesh Shah, also involved in bogus transactions. 3. The assessee filed a return in response to notice under section 148 on 29.04.2022. Notices under sections 143(2) and 142(1) were issued. In response to the show cause notice dated 01.03.2023, the assessee, vide reply dated 09.03.2023, categorically denied having entered into any transaction with M/s Dishman Pharmaceuticals & Chemicals Ltd., and submitted that no such sum of Rs.90,00,000/- was either received or paid during the relevant financial year. To substantiate this claim, the assessee furnished copies of bank statements from Bank of India and HDFC Bank and requested the Assessing Officer to provide the specific material or information relied upon before making any addition, emphasizing that the principles of natural justice required such material to be confronted. As regards the sum of Rs.9,00,000/- transacted with M/s Mainak Comtrade Pvt. Ltd., the assessee clarified that the amount was a part-repayment of ITA No.925/Ahd/2024 3 a loan of Rs.30,00,000/- originally taken in F.Y. 2014–15 and that the repayment was made during the year under consideration out of the advance received from Smt. Maya N. Gohil towards sale of immovable property. In support of this, the assessee submitted the ledger accounts and bank statements evidencing both the original loan and its repayment. The assessee further submitted that, even assuming the transaction was in doubt, any addition could only be made in the year of acceptance of the loan and not in the year of repayment. Lastly, the assessee requested a personal hearing through video conferencing to present oral submissions, but the same was not effectively granted due to technical difficulties and lack of rescheduling by the Assessing Officer. 4. The AO observed that the assessee failed to produce conclusive evidence or documentary proof to rebut the information available with the Department. The AO held that the information gathered from search operations constituted credible material, and despite being afforded opportunity (including a video conference scheduled on 15.03.2023), the assessee failed to attend or submit further clarification. The explanation furnished by the assessee in respect of both transactions was considered unsubstantiated and lacking documentary proof, particularly in relation to the Rs.90,00,000/- alleged to have been routed through Dishman Group entities. Accordingly, the AO treated the total amount of Rs.99,00,000/- (Rs.90,00,000 + Rs. 9,00,000) as unexplained money under section 69A and brought the same to tax under section 115BBE of the Act. The AO concluded by initiating penalty proceedings under section 271AAC(1) separately and determining the total assessed income at Rs.1,02,54,770/-. ITA No.925/Ahd/2024 4 5. The assessee challenged the above additions before the CIT(A). The CIT(A), after obtaining a remand report from the AO and considering the written submissions and rejoinder filed by the assessee, deleted both additions. 6. Aggrieved by the order of CIT(A) the assessee is in appeal before us raising following grounds of appeal: 1. Whether on facts and circumstances and in law, the Ld. CIT(A) has erred in deleting addition of Rs.99,00,000/- u/s. 69A of the Act without appreciating the facts of the case. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring the fact that the assessee has transacted with M/s Mainak Comtrade Pvt.Ltd., which is one of the entities of accommodation entry operator, i.e. Dishman Group? 3. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary. 4. It is, therefore, prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Officer be restored. 7. The learned DR referred to the assessment order and reiterated that the AO had relied upon credible information from search and investigation in the case of Dishman Group and Jignesh Shah. It was submitted that the assessee failed to produce conclusive evidence to rebut the allegations and did not attend the VC hearing on 15.03.2023. Therefore, the addition under section 69A was justified, and the CIT(A) erred in deleting it. 8. The learned AR relied on the well-reasoned findings of the CIT(A) and referred to the assessee’s submissions reproduced at page 3 of the CIT(A)’s order. He emphasized that no transaction of Rs. 90,00,000/- with Dishman Group existed, which was substantiated ITA No.925/Ahd/2024 5 by complete bank statements. The AR further stated that Rs. 9,00,000/- was a genuine repayment of a loan taken in F.Y. 2014–15, funded by advance from Maya N. Gohil on sale of immovable property. The AR also stated that after repeated requests the AO had failed to produce any verifiable information even in the remand report. The AR also pointed out that the request for rescheduling of VC hearing due to technical failure was ignored by the AO. 9. We have heard the rival contentions and perused the material available on record, including the assessment order, appellate order, remand report, and the assessee’s written submissions. As regards the addition of Rs.90,00,000/-, we find that the assessee denied the transaction and furnished corroborative bank statements. The AO neither furnished the alleged information nor rebutted the assessee’s claim with any independent enquiry or third-party confirmation. The remand report was vague and merely reproduced the original allegation without substantiation. We also observe that there is a complete absence of tangible evidence to justify the addition. In absence of any material any additions based merely on some information, which is even not furnished to the assessee the impugned addition cannot be sustained. 10. As regards the addition of Rs.9,00,000/-, the repayment of loan is clearly evidenced by ledger accounts and bank statements. The repayment source was out of advance from sale of property which was also verified in proceedings for A.Y. 2019–20, where reassessment was dropped after verification. The AO failed to refute these facts either in the original proceedings or in remand. 11. In view of the above, we find no infirmity in the order passed by the CIT(A) in deleting the additions of Rs.90,00,000/- and ITA No.925/Ahd/2024 6 Rs.9,00,000/-, aggregating to Rs. 99,00,000/-, made under section 69A r.w.s. 115BBE. The Revenue has not brought any fresh material or evidence to justify interference with the CIT(A)'s decision. 12. In the result, the appeal of the Revenue is dismissed. Order pronounced in the Court on 9th May, 2025 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER Ahmedabad, dated 09/05/2025 "