JIGNYA DHANESH PADHYA, MUMBAI V. ITO-33(2)(1), MUMBAI

ITA 587/MUM/2023

AI Insights

The case involves Jignya Dhanesh Padhya, the appellant, who appealed against the order of the National Faceless Appeal Centre (NFAC), which had dismissed his appeal without deciding the issue on merits. The appellant contested the additions made by the Assessing Officer (AO) regarding non-genuine losses and unexplained expenditure related to Client Code Modification (CCM). The Tribunal considered the additional evidence submitted by the appellant, which was not available during the earlier proceedings, and decided to set aside the CIT(A)'s order and remand the case back to the AO for a fresh decision on merits.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 300053 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-04-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 26-02-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: USING CCM FACILITY OBTAINED
• Keywords: Principle of natural justice; Transactions in derivatives; Additional evidence
• Section: 69C; 142(1); 250; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHIR PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA No. 587/Mum/2023 (A.Y: 2009-10) Jignya Dhanesh Padhya D-416, Kamla Vihar, Mahavir Nagar, Dahanukarwadi, Kandivali (W), Mumbai-400067. Vs. ITO – 33(2)(1) Kautilya bhavan, Bandra Kurla Complex Bandra (E), Mumbai-400051. PAN/GIR No. : AKHPP4378B Appellant .. Respondent Appellant by : Ms.Neelam Jadhav.AR Respondent by : Ms. Jayashree Thakur.DR Date of Hearing 26.04.2023 Date of Pronouncement 28.04.2023 आदेश / O R D E R PER PAVAN KUMAR GADALE JM: The assessee has filed the appeal against the order of National Faceless Appeal Centre (NFAC), Delhi / CIT(A) passed u/sec 250 of the Act. The assessee has raised the following grounds of appeal: 1. Ex-Parte Order -Violation of principle of natural justice. 1On the facts and circumstance of the case, National Faceless Appeal Centre erred in dismissing the appeal without deciding the issue under appeal on merits. ITA Nos. 587/Mum/2023 Jignya Dhanesh Padhya, Mumbai. - 2 - 2 On the facts and circumstance of the case, National Faceless Appeal Centre failed to appreciate that though the assessee has not submitted the submission or attended in response to notice, National Faceless Appeal Centre ought to have decided on merits in accordance with law. 3. Without prejudice to above, on the facts and circumstance of the case, National Faceless Appeal Centre failed to appreciate that, at the time of filling an appeal before the National Faceless Appeal Centre, the Appellant has mentioned Tax Consultant's Number as well as E-mail ID for the sake of convenience however, due to the death of the Tax Consultantsduring covid period 2021, the notices issued on the email id, and the Appellant was not aware about the appellate proceedings, hence could not submit any reply before the National Faceless Appeal Centre. Hence, the ex parte order passed by the National Faceless Appeal Centre, may be set aside and directions may be given to decide on merits. Without prejudice to the above, II. Addition of Rs.16,13,733/- as non-genuine losses shifted by using CCM (Client Code Modification) 4The Learned National Faceless Appeal Centre erred in confirming the addition of Rs.16,13,733/- on the basis of information received from the Investigation Wing stating that the Assessee by using CCM facility obtained accommodation entries and shifted non genuine losses, without appreciating the fact that the appellant has not ITA Nos. 587/Mum/2023 Jignya Dhanesh Padhya, Mumbai. - 3 - claimed and loss in the computation of income, hence the addition is on notional basis and may be directed to be deleted. 5 The Learned National Faceless Appeal Centre failed to appreciate that, the Appellant has neither received any benefits nor gain due to client code modification by broker, hence addition cannot be made on notional basis in the hands of appellant. III Addition u/s. 69C as Unexplained Expenditure of Rs.16.137/- as Commission paid for CCM (Client Code Modification) 6. The National Faceless Appeal Centre erred in confirming the estimated addition of Rs.16,137/- as unexplained expenditure for alleged commission paid, on the basis of information received from the DDIT (Inv.) stating that 1% value of the 16,13,733/- has been charged for shifting losses on F&O transaction, without appreciating the facts that appellant has not done any transaction. Hence, addition of Rs.16,137/- may be directed to be deleted IV. Natural Justice 7. The National Faceless Appeal Centre erred in relying on the information from the investigation wing without giving the copy of the information and opportunity of cross examination of the Broker, hence addition made may be directed to be deleted. ITA Nos. 587/Mum/2023 Jignya Dhanesh Padhya, Mumbai. - 4 - 8. The appellant craves leave to add, amend, alter or delete any of the above grounds of appeal. 2. The brief facts of the case are that the assessee is engaged in the business. The Assessing Officer(AO) has received the information from the ADIT (Investigation), Ahmadabad that the assessee was engaged in obtaining loss in client code modification facility in sale and purchase of securities and derivates after the trades are conducted and is the beneficiary. The Assessing Officer(AO) has reason to believe that the income has escaped assessment and issued notice u/s 148 of the Act. The assessee has filed a letter dated 13.07.2016 to treat the return of income filed as due compliance. Subsequently the A.O has issued notice u/s 143(2) and 142(1) of the Act. In compliance to the notice, the assessee has filed the details. The AO has considered the submissions of the assessee and has dealt on the facts with respect to client code modification (CCM) facility and modus operandi of the transcations. Further the AO has issued a show cause notice stating that the non genuine loss was shifted to client code modification facility and the explanation were called, but there was no compliance ITA Nos. 587/Mum/2023 Jignya Dhanesh Padhya, Mumbai. - 5 - and therefore the AO has made addition of Rs.16,13,733/-. Similarly the A.O has estimated expenditure @ 1% on the disputed amount which worked out to Rs.16,137/- and assessed the total income of Rs.19,57,470/- and passed the order u/s 143(3) r.w.s 147 of the Act dated 15.12.2016. 3. Aggrieved by the order the assessee has filed an appeal with the CIT(A). The CIT(A) considered the grounds of appeal and findings of the AO but there was no compliance to the notices and has confirmed the action of the AO and dismissed the assessee appeal. Aggrieved by the order the assessee has filed an appeal before the Tribunal. 4. At the time of hearing the Ld. AR submitted that the CIT(A) has erred in confirming the addition by the AO overlooking the factual information filed in the assessement proceedings. Further the Ld.AR submitted that the assessee has a good case on merits and has filed an application for admission of the additional evidence under Rule 29 of ITAT rules. Per contra, the Ld.DR submitted that the transactions were not ITA Nos. 587/Mum/2023 Jignya Dhanesh Padhya, Mumbai. - 6 - established with evidences before the lower authorities and the Ld. DR supported the order of the CIT(A). 5. Heard the rival submissions and perused the material on record. The sole crux of the disputed issue that the CIT(A) has erred in confirming the addition by the A.O. as the transactions are not supported with the documentary evidences. The Ld.AR emphasized that the assessee has submitted the details as called for by the authorities.The assessee is filling the application for admission of additional evidences under Rule 29 of ITAT rules with the script transactions details, contract bills, and scrip wise trading which were not available earlier and could not produce before the lower authorities. Further the evidences play important role in decision making in the adjudicating proceedings. Therefore considering the facts, circumstances and additional evidences and the assessee should not suffer for non filing of material information, as the evidences played vital role in decision making and admit the additional evidence. Accordingly, to meet the ends of justice, set aside the order of the CIT(A) and restore the entire disputed issue along with the additional evidence to the file of ITA Nos. 587/Mum/2023 Jignya Dhanesh Padhya, Mumbai. - 7 - the assessing officer to decide afresh on merits and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information. Accordingly, allow the grounds of appeal of the assessee for statistical purposes. 6. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 27.04.2023 Sd/- (PAVAN KUMAR GADALE) JUDICIAL MEMBER Mumbai, Dated 27.04.2023 KRK, PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT (Judicial) 4. The PCIT 5. DR, ITAT, Mumbai 6. Guard File आदेशान ु सार/ BY ORDER, //True Copy//() 1. ITA Nos. 587/Mum/2023 Jignya Dhanesh Padhya, Mumbai. - 8 - ( Asst. Registrar) ITAT, Mumbai