Smt. Nutan Pankajbhai Shah, Ahmedabad V. The Income Tax Officer, Ward-10(3), Ahmedabad

ITA 1137/AHD/2016

AI Insights

The case involves appeals by Smt. Nutan Pankajbhai Shah against the orders of the CIT(A), Ahmedabad, for the Assessment Years 2008-09 and 2009-10. The appeals were centered around the legality of the proceedings initiated under Section 147 of the Income Tax Act, 1961, and the subsequent additions made to the assessee's income as unexplained investments in shares. The Tribunal examined the jurisdictional transfer of the case and the merits of the additions made by the Assessing Officer, which were based on entries provided by a group of companies involved in share trading. The Tribunal's decision highlighted the acceptance of speculative gains and the lack of evidence to support the additions made for unexplained investments.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129635 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 20-12-2022
• Assessment Year: 2008-2009
• Appeal Filed On: 01-05-2016
• Other Referred Cases: Harakhchand K. Gada vs. Mukesh R. Marolia
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Deemed to accrue or arise in india
• Section: 147; 148; 132; 143(3)

Judgement Text

ITA Nos.1137 & 1136/Ahd/2016 A.Ys. 2008-09 & 2009-10 Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA Nos.1137 & 1136/Ahd/2016 Assessment Years: 2008-09 & 2009-10 Smt. Nutan Pankajbhai Shah, vs. Income Tax Officer, 3/4, Sweet Home Society, Ward – 10(3), Ahmedabad. Near Shreyas Foundation, Ambawadi, Ahmedabad. [PAN – AJJPS 6840 A] (Appellant) (Respondent) Assessee by : Shri Jaimin Shah, CA Respondent by : Shri M. Anand Kumar, Sr. DR Date of hearing : 21.12.2022 Date of pronouncement : 31.01.2023 O R D E R These two appeals are filed by the Assessee against two separate orders, both dated 16.02.2016, passed by the CIT(A), Ahmedabad for the Assessment Years 2008-09 & 2009-10. 2. As common grounds have been raised by the Assessee in both these appeals and, therefore, grounds raised in ITA No.1137/Ahd/2016 are being reproduced as under :- “1. That the appellant has challenged the proceedings initiated by learned A.O. U/s 147 by issuing notice U/s 148 is bad in law, illegal and void, which has been confirmed by learned CIT(Appeals) is not legal and valid in law. 2. That the legal grounds taken by the appellant bearing Sr. No.(2) to (5) have not been adjudicated by the learned CIT(A) which goes to the roof of the assessment, be decided on merits considering materials lying on the record. 3. Having regard to the peculiar facts and circumstances of the case of the appellant and without granting statement of third party and cross examination of the said party on whose statement, proceedings have been initiated and assessment completed U/s 143(3) r.w.s. 147 be held ITA Nos.1137 & 1136/Ahd/2016 A.Ys. 2008-09 & 2009-10 Page 2 of 4 as not in accordance with law and assessment be held as bad in law, illegal and void. 4. That the appellant has furnished all materials along with documentary evidences in support of investment in shares have been furnished during the course of assessment proceedings ignoring the same the investment made in purchase of shares of Rs.23,200/- held as unexplained investment and deemed income requires to be deleted. 5. That the appellant has submitted her written submissions during the course of assessment proceedings as well appellate proceedings have not been properly appreciated and order passed by learned CIT(A) without considering it in proper perspective and considering the same additions of Rs.23,200/-requires to be deleted. 6. That the learned A.O. has accepted the facts regarding purchase and sale of shares of Jet Airways through the group of companies of Mukesh Chokshi and where speculation profit is shown in the return of income filed and likewise on other companies of the same group transactions have not been accepted which is contrary to the provisions of the act and considering the same, the appeal decided by learned CIT(A) requires to be allowed. 7. That the appellant has relied on the decision of Harakhchand K. Gada filed in the Paper Book dated 8.2.2016 wherein reference of Mukesh R. Marolia is available on page 17 and the said decision is approved by Hon'ble Bombay High Court and SLP filed by the department in Supreme Court has been rejected and the facts and circumstances of the case of the appellant are identical and as such the appeal of the appellant be decided following the ratio of the said decision. 8. Having regard to the peculiar facts and circumstances of the case of the appellant and the appeal dismissed ay learned CIT(A) be allowed on merits as well as in law.” 3. Firstly we are taking up the appeal for A.Y. 2008-09 i.e. ITA No.1137/Ahd/2016. The assessee filed return of income on 30.09.2008 declaring total income of Rs.19,69,110/-. The Revenue office received information that there was search and seizure action under Section 132 of the Income tax Act, 1961 carried out in the case of M/s. Mahasagar Securities Pvt. Ltd. and also covered its group companies which were controlled by Shri Mukesh M. Chokshi at Mumbai. Shri Mukesh Chokshi admitted that all his group companies were providing entries for taking profit or loss by showing purchase or sale of the shares and securities to various parties across India on which he charged certain commission from the beneficiary parties. The information ITA Nos.1137 & 1136/Ahd/2016 A.Ys. 2008-09 & 2009-10 Page 3 of 4 contained the name of the assessee and the Assessing Officer observed that assessee’s total transaction involved Rs.38,009/- for taking fictitious entries by showing sale of shares and securities. The Assessing Officer reopened the assessment under Section 147 of the Act by issuing notice under Section 148 of the Act on 16.03.2013 after recording reasons and obtaining the nectar approval under Section 151 of the Act. The reopening notice under Section 147 was issued by the ITO, Ward - 10(4). The assessee did not respond or filed return at the initial stage but filed written submission on 14.12.2013. The Assessing Officer held that since there was no evidence filed by the assessee, the amount of Rs.23,200/- was never explained and, therefore, added the same amount as uanexplained investment. 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The Ld. AR submitted that as regards ground nos.1 & 2, the notice itself was bad in law as the notice was issued by ITO-10(34) who does not have any jurisdiction to assessee as the reasons were recorded by the ITO-10(3) and the jurisdiction lies with the ITO Ward - 0(3), Ahmedabad. 6. The Ld. DR submitted that the jurisdiction was transferred to 10(3) on 09.07.2013 and, therefore reasons, recorded on 28.10.2-013 by jurisdictional Assessing Officer was justified. 7. Heard both the parties and perused all the relevant material available on record. From the perusal of the reasons recorded, the covering letter of the same has been issued by ITO, Ward 10(4) on 16.03.2013 but the reasons were recorded by the jurisdictional ITO On 28.10.2013. Subsequent transfer cannot make the notice nullified. Therefore, ground nos.1 & 2 are dismissed. 8. As regards the merits of the case, Ld. AR submitted that the speculative gain and the profit was accepted but the purchase of shares was not accepted. These are the contrary observations by the Assessing Officer and, therefore, the addition may be deleted. 9. The Ld. DR relied upon the Assessment Order and the order of the CIT(A). ITA Nos.1137 & 1136/Ahd/2016 A.Ys. 2008-09 & 2009-10 Page 4 of 4 10. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee has given details about the purchase of shares and in fact from the perusal of the records, it can be seen that the speculative gain profit was accepted. The assessee has claimed LTCG in the next year which was also not disputed and, therefore, addition made by the Assessing Officer is not justifiable. Appeal of the assessee is partly allowed for A.Y. 2008-09. 11. As regards to the appeal ITA No.1136/Ahd/2016 filed by the assessee for A.Y. 2009-10, the issue are similar and the assessee has filed all the relevant documents including broker’s ledger. The jurisdictional issue is also identical to that of A.Y. 2008-09 and, therefore, the same observations made herein above will be applicable for A.Y. 2009-10 as well. Appeal of the assessee for A.Y. 2009-10 is thus partly allowed 12. In the result, both the appeal of the assessee are partly allowed. Order pronounced in the open Court on this 31 st day of January, 2023. Sd/- (SUCHITRA KAMBLE) Judicial Member Ahmedabad, the 31 st day of January, 2023 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad