INCOME TAX OFFICER, WARD - 3(3)(5), AHMEDABAD, PANJARAPOLE, AHMEDABAD V. VIKASH MORE, BODAKDEV, AHMEDABAD

ITA 1036/AHD/2024

AI Insights

The case involves an appeal by the Income Tax Officer against Vikash More concerning the assessment year 2016-17. The primary issues were the additions made by the Assessing Officer regarding unexplained money from the sale of shares and undisclosed commission expenses. The CIT(A) had deleted these additions, which the Revenue challenged. The Tribunal examined the evidence presented, including transactions through a SEBI registered stock broker and bank statements, and found that the assessee had adequately explained the transactions. The Tribunal also noted that the SEBI report did not directly link the assessee to any malpractice with the scrip in question.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34043 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAVAN LIMBASIYA
• Assessee Lawyers: HARDIK VORA; PALAK KSHATRIYA
• Keywords: Reassessment proceedings; Unexplained expenditure; Accommodation entries; Earning of tax free income; Bogus
• Section: 147; 148; 142(1); 69C; 69A

Judgement Text

"ITA No.1036/Ahd/2024 Assessment Year: 2016-17 ITO vs. Vikash More Page 1 of 5 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER ITA No.1036/Ahd/2024 Assessment Year: 2016-17 Income Tax Officer, Ward – 3(3)(5), Ahmedabad. Vs. Vikash More, A-402, Prathishtha Apartment, Ruchir Bunglows, Judges Bunglow Road, Bodakdev, Ahmedabad – 380 015. [PAN – AKIPM 6226 G] (Appellant) (Respondent) Assessee by Shri Hardik Vora, AR & Ms. Palak Kshatriya, AR Revenue by Shri Kavan Limbasiya, Sr. DR Date of Hearing 03.02.2025 Date of Pronouncement 14.02.2025 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER: This appeal is filed by the Revenue against order dated 28.03.2024, passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2016-17. 2. The assessee has raised the following grounds of appeal :- “(a) The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.1,47,12,954/- made by AO on account of accommodation entries from sale of penny script M/s. Kushala Tradelink Pvt. Ltd. treated as unexplained money u/s.69A r.w.s. 115BBE of the Act. (b) The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.4,41,388/- made by AO on account of undisclosed commission expenses under Section 69C of the Act. ITA No.1036/Ahd/2024 Assessment Year: 2016-17 ITO vs. Vikash More Page 2 of 5 3. The assessee filed return of income on 13.10.2016 declaring total income at Rs.17,43,870/- for Assessment Year (A.Y.) 2016-17. On the basis of information received from the Insight Portal of ITBA, the case of the assessee was reopened and notice under section 148 of the Income Tax Act, 1961 was issued to the assessee on 31.03.2021. The assessee furnished his return of income under Section 148 of the Act on 29.04.2021. The copy of reasons recorded for reopening of the assessment was forwarded to the assessee on 08.11.2021. Various notices under Section 142(1) of the Act were issued to the assessee. The assessee submitted the documentary evidences relevant to the reassessment proceedings. The Assessment Order was passed under Section 147 read with Section 144B of the Act dated 30.03.2022 thereby making addition of Rs.1,47,12,954/- as unexplained money under Section 69A of the Act which was claimed by the assessee on sale of shares of M/s. Kushal Tradelink Pvt. Ltd. The Assessing Officer also made addition of Rs.1,68,98,212/- as unexplained expenditure under Section 69C of the Act towards payment of commission on account of accommodation entry. 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. The Ld. DR submitted that the CIT(A) was not right in deleting the addition of Rs.1,47,12,954/- on account of accommodation entries for sale of penny scrip of M/s. Kushal Tradelink Pvt. Ltd. which was treated as unexplained money under Section 69A read with Section 115BBE of the Act. The Ld. DR submitted that the assessee sold the shares of M/s Kushal Tradelink Pvt. Ltd. on account of transfer of shares at Rs.1,35,72,928/- as claimed as LTCG and the same was claimed as exempt income under Section 10(38) of the Act. The Ld. DR submitted that the Assessing Officer rightly made addition under Section 69A of the Act as the assessee could not establish the sale consideration received by the assessee on transfer of shares and of M/s. Kushal Tradelink Pvt. Ltd. The Assessing Officer has categorically mentioned that there was SEBI order from which modus operandi of price manipulation in the scrip of M/s Kushal Tradelink Pvt. Ltd. for the period was categorically mentioned by the Assessing Officer. In fact, the said scrip was defunct in case of Ketan Parikh dated 14.07.2013 and there was manipulation prior to purchase of the scrip of M/s Kushal Tradelink Pvt. Ltd. and after the scrip was sold at that time also the pricing of this ITA No.1036/Ahd/2024 Assessment Year: 2016-17 ITO vs. Vikash More Page 3 of 5 share was manipulated. In fact, the beneficiary was aware about the booking price of the period upon which the assessee will incur loss/gain. Thus, the Ld. DR submitted that the Assessing Officer has made addition correctly as the assessee could not explain the said transaction of the scrip and its manipulation. Thus, the Ld. DR submitted that the CIT(A) was not right in deleting this entire addition without any reference to the SEBI proceedings in the said order. As regards to the addition of Rs.4,41,388/- on account of undisclosed commission expense under Section 69C of the Act, the Ld. DR relied upon the Assessment Order and submitted that the accommodation entries from sale of penny scrip has certainly gained commission expenses and, therefore, the addition was rightly done by the Assessing Officer. 6. The Ld. AR submitted that the CIT(A) has rightly taken into account that the reasons recorded was mainly on the basis that the assessee has received accommodation entries from Kushal Group amounting to Rs.1,47,12,954/- but in fact during the year under consideration the assessee has purchased and sold shares of M/s Kushal Tradelink Pvt. Ltd. for which the assessee has received payment amounting to Rs.1,46,79,424.85 during the year under consideration through Bank. Both purchase and sale of shares was carried out by SEBI registered stock brokers Sharekhan Limited through DMAT account was properly recorded in books of the assessee. The CIT(A) has rightly taken cognisance of the evidences and, therefore, has rightly deleted this addition. 7. As regards ground no.2 of the Revenue’s appeal, the Ld. AR submitted that the question of earning commission which is undisclosed commission expenses was not established by the Assessing Officer and has rightly deleted. The Ld. AR relied upon the order of the CIT(A). 8. We have heard both the parties and perused all the reverent material available on record. It is pertinent to note that the assessee during the assessment proceedings has given copy of bills of stock broker Sharekhan Limited for the scrip of M/s Kushal Tradelink Pvt. Ltd., Trading chart comparison, Bank statement reflecting receipts of the share/scrip, D-mat holding and transaction statement reflecting purchase and sale of shares of Kushal Tradelink. The Ld. AR also pointed out the order passed by the SEBI dated 22.12.2017 and 31.05.2019. From the perusal of the records, it appears ITA No.1036/Ahd/2024 Assessment Year: 2016-17 ITO vs. Vikash More Page 4 of 5 that the assessee has very well transacted thereby purchasing and selling of the scrip of M/s Kushal Tradelink Pvt. Ltd. From the perusal of the records, the transaction was properly established by the assessee and there was no doubt expressed by the Assessing Officer in the Assessment Order that the transaction of purchase and sale is bogus. The order of the SEBI related to the scrip of M/s Kushal Tradelink Pvt. Ltd. will not be the sole and whole criteria for making addition under Section 69A read with Section 115BBE of the Act as the assessee whether actually has given the accommodation entries through its regular books of accounts or outside the books of account, this case was not established by the Assessing Officer/revenue. Thus, the CIT(A) has rightly held that the assessee has explained his transaction through the evidences and, therefore, it cannot be treated as unexplained money. The base of the Assessment Order was solely on the SEBI report and the SEBI orders which does not deal with the assessee’s linkage with this scrip malpractice, therefore, the CIT(A) has rightly deleted this addition. The question of undisclosed commission expenses also will not arise as the assessee has given brokerage to its broker company and that cannot be held as unexplained/undisclosed commission expenses. Thus, ground nos.(a) & (b) of Revenue’s appeal are dismissed. 9. In the result, appeal filed by the Revenue is dismissed. Order pronounced in the open Court on this 14th February, 2025. Sd/- Sd/- (NARENDRA PRASAD SINHA) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 14th February, 2025 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File ITA No.1036/Ahd/2024 Assessment Year: 2016-17 ITO vs. Vikash More Page 5 of 5 By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad "