KAUSHAL PRAVINKUMAR SHAH,AHMEDABAD V. THE ITO, WARD-3(3)(2), AHMEDABAD

ITA 885/AHD/2025

AI Insights

The case involves Kaushal Pravinkumar Shah, who appealed against the order of the Commissioner of Income Tax (Appeals), which confirmed the additions made by the Assessing Officer for the Assessment Year 2017-18. The additions were primarily based on unexplained cash deposits and non-genuine gifts. The Tribunal noted that while the CIT(A) had provided multiple opportunities to the assessee, the substantial nature of the additions and the serious issues involved warranted a fresh examination on merits. The Tribunal also considered the assessee's lack of effective prosecution due to his unfamiliarity with the digital portal and non-cooperation from his accountant, and thus decided to restore the matter to the CIT(A) with a directive for the assessee to pay a cost of Rs. 5,000.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717099 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Appeal Filed On: 25-04-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT
• Assessee Lawyers: MEHUL K PATEL
• Keywords: Condonation of delay; Business income; Corroborative evidences; Gift; Principle of natural justice; Bogus
• Section: 143(3); 142(1)

Judgement Text

" आयकर अपीलीय अिधकरण, अहमदाबाद Ɋायपीठ “ B”, अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “ B ” BENCH, AHMEDABAD ] ] BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER आयकर अपील सं /ITA No.885/Ahd/2025 िनधाŊरण वषŊ /Assessment Year : 2017-2018 Kaushal Pravinkumar Shah, D-504, Indraprasth-5, Nr. Flovour Resturant, Prahladnagar, Ahmedabad-380015. (Gujarat) बनाम/ v/s. The Income Tax Officer, Ward-3(3)(2), Ahmedabad. ̾थायी लेखा सं./PAN: FHGPS4580B अपीलाथŎ/ (Appellant) Ů̝ यथŎ/ (Respondent) Assessee by : Shri Mehul K Patel, AR Revenue by : Shri Abhijit, Sr-DR सुनवाई की तारीख/Date of Hearing : 18/08/2025 घोषणा की तारीख /Date of Pronouncement: 20/08/2025 आदेश/O R D E R PER MAKARAND V. MAHADEOKAR, AM: ] ] This appeal by the assessee is directed against the order dated 04.12.2024 passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”], for A.Y. 2017–18 arising out of assessment order passed u/s 143(3) of the Income-tax Act, 1961[hereinafter referred to as “the Act”] by the Income Tax Officer, Ward 3(3)(2), Ahmedabad [hereinafter referred to as “Assessing Officer / AO”], dated 29.10.2019. Printed from counselvise.com ITA No.885/Ahd/2025 Kaushal Pravinkumar Shah Vs. ITO Assessment Year 2017-18 2 Condonation of Delay 2. The appeal before us has been filed with a delay of 56 days. The assessee has filed an application for condonation of delay supported by an affidavit. The reasons explained are that the assessee, being not conversant with the portal and dependent upon his accountant, could not access the appellate order in time. The accountant had also left his job without intimating the assessee about the order uploaded on the portal. Considering the explanation, and since the learned Departmental Representative (DR) did not raise any serious objection, and having regard to the shortness of the delay, we are satisfied that the delay was for bona fide reasons. Accordingly, the delay of 56 days is condoned, and the appeal is admitted. Facts in Brief 3. The assessee filed his return of income for A.Y. 2017–18 on 25.01.2018 declaring income of Rs. 4,27,800/-, showing business income from trading in chemicals. The case was selected for complete scrutiny under CASS for the reason “large cash deposits during demonetisation period and business return filed for the first time.” During assessment proceedings, notices u/s 142(1) were issued calling for details of income, computation, cash book, bank statements, sale and purchase bills, and source of cash deposits. The assessee furnished certain submissions, including claims of gifts from relatives and business transactions in chemicals. 4. The Assessing Officer, after considering the submissions of the assessee and verifying the evidences, concluded that the explanations were Printed from counselvise.com ITA No.885/Ahd/2025 Kaushal Pravinkumar Shah Vs. ITO Assessment Year 2017-18 3 not acceptable. The AO held that the claim of receipt of gifts aggregating to Rs. 19,45,000/- from wife, brother and mother was an afterthought and lacked genuineness. It was observed that the alleged donors did not have sufficient capacity to advance such cash gifts and the bank accounts examined did not support the withdrawal of funds for making the gifts. With regard to the gift of Rs. 8,50,000/- received from the assessee’s wife, Smt. Anjana K. Shah, it was explained that the amount was received by her from M/s Veer Chem, a partnership firm in which she was a partner, upon sale of immovable property. The AO, however, on examination of the bank account of M/s Veer Chem, noticed that there were only circular transactions and temporary deposits, which were immediately withdrawn. There was no real fund flow from genuine business activity or sale of property which could justify the gift. The AO therefore held that the alleged gift from Smt. Anjana K. Shah was not backed by any real financial capacity and was bogus in nature. 5. Similarly, in respect of the gift of Rs. 8,50,000/- claimed to have been received from the assessee’s brother, it was also explained to have originated from M/s Veer Chem. The AO found that the firm did not have sufficient cash balance to support such withdrawal and that the bank entries did not correlate with the timing and amount of the gift. This too was held to be non-genuine. The gift of Rs. 2,45,000/- claimed from the assessee’s mother was also disbelieved on the ground that no independent source of capacity or supporting evidence was provided. 6. Further, the AO examined the alleged business activity of the assessee in trading of chemicals. Purchases were shown from M/s J. Jitendrakumar Printed from counselvise.com ITA No.885/Ahd/2025 Kaushal Pravinkumar Shah Vs. ITO Assessment Year 2017-18 4 & Co., a party which had not filed any return of income. Likewise, alleged sales to Labdhi Chemicals, Sun Chemicals and Ramesh Corporation could not be verified as no confirmations were received in response to notices issued. The AO observed that the books of account produced were merely created to give a colour of business activity, whereas in reality no genuine business was being carried on. 7. On this basis, the AO held that the assessee had routed unaccounted money through sham gifts and non-existent business transactions. Cash deposits of Rs. 56,78,600/- in Kotak Mahindra Bank, including Rs.21,56,500/- deposited during the demonetisation period, were treated as unexplained money under section 69A, taxable u/s 115BBE. In addition, disallowance of Rs. 5,92,275/- being 12.5% of unexplained bank credits was made as unverifiable. Accordingly, the total income was assessed at Rs. 66,98,675/- as against the returned income of Rs. 4,27,800/-, and penalty proceedings u/s 270A and 271AAC were separately initiated. 8. The assessee carried the matter in appeal before the CIT(A). Several notices were issued on different dates through the ITBA portal. The assessee, however, did not comply effectively. The CIT(A) recorded that though opportunities were given, the assessee failed to substantiate his grounds of appeal or rebut the findings of the AO. Referring to judicial precedents, the CIT(A) held that mere filing of appeal is not sufficient without effective prosecution. Since no evidence was furnished in support of the grounds of appeal, the learned CIT(A) dismissed the appeal ex parte and confirmed the additions made by the AO. Printed from counselvise.com ITA No.885/Ahd/2025 Kaushal Pravinkumar Shah Vs. ITO Assessment Year 2017-18 5 9. Aggrieved by the order of CIT(A), the assessee is in appeal before us raising following grounds of appeal: 1. That on facts, and in law, the learned CIT(A) NFAC has grievously erred in dismissing of appeal and confirming the assessment order with addition of Rs. 62,70,825/- 2. Having regard to the facts and circumstances of the case of your appellant, the relief claimed in Ground No. 1 is allowed. 3. Your appellant craves leave to add/alter or amend any of the grounds till the appeal is finally heard and decided. 10. The learned Authorised Representative (AR) submitted that the order passed by the CIT(A) is ex-parte and the assessee could not effectively prosecute the appeal due to lack of knowledge of portal and non- cooperation by his accountant. He fairly admitted that there was default in compliance but prayed that one more opportunity may be granted to the assessee to present his case on merits before the CIT(A). 11. The learned Departmental Representative (DR), on the other hand, submitted that adequate opportunities were already given by the CIT(A) but the assessee failed to avail them. He, therefore, supported the order of the CIT(A). 12. We have carefully considered rival submissions and perused the record. The facts are not in dispute that the CIT(A) dismissed the appeal ex parte on account of non-compliance. The DR is correct in contending that sufficient opportunities were given to the assessee which were not availed. At the same time, we note that the additions made by the AO are substantial and relate to serious issues of alleged unexplained money u/s 69A and disallowance of bank credits. The CIT(A) has not adjudicated these issues Printed from counselvise.com ITA No.885/Ahd/2025 Kaushal Pravinkumar Shah Vs. ITO Assessment Year 2017-18 6 on merits. In our considered view, principles of natural justice require that the assessee be given a final opportunity to contest the additions on merits. We, therefore, deem it fit to restore the matter back to the file of the CIT(A) for fresh adjudication on merits. While doing so, we also take note of the admission of the AR that there was default on the part of the assessee in not attending to the appellate proceedings earlier. To balance equities, we direct that the restoration shall be subject to the assessee paying a cost of Rs. 5,000/- (Rupees Five Thousand only) to the Prime Minister’s Relief Fund within 30 days from the date of this order. Proof of such payment shall be furnished before the CIT(A) at the time of hearing. 13. We also make it clear that the assessee shall cooperate fully with the proceedings before the CIT(A) and shall not seek unnecessary adjournments. In case of failure, the CIT(A) shall be at liberty to decide the appeal on the basis of material available on record. 14. In the result, the appeal of the assessee is allowed for statistical purposes, subject to payment of cost of Rs. 5,000/- to the Prime Minister’s Relief Fund as directed above. Order pronounced in the Open Court on 20th August, 2025 at Ahmedabad. Sd/- Sd/- (SANJAY GARG) JUDICIAL MEMBER (MAKARAND V.MAHADEOKAR) ACCOUNTANT MEMBER (True Copy) Ahmedabad, Dated 20/08/2025 Manish, Sr. PS Printed from counselvise.com ITA No.885/Ahd/2025 Kaushal Pravinkumar Shah Vs. ITO Assessment Year 2017-18 7 आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ ) अपील ( / The CIT(Exemption)-Ahmedabad 5. िवभागीय Ůितिनिध , आयकर अपीलीय अिधकरण , राजोकट/DR,ITAT, Ahmedabad, 6. गाडŊ फाईल /Guard file. आदेशानुसार/ BY ORDER, सȑािपत Ůित //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad Printed from counselvise.com "