NALINI VIJAY SHAH,SATELLITE V. WARD 3(1)(2) AHMEDABAD, AHMEDABAD

ITA 1539/AHD/2024

AI Insights

The case involves appeals by Nalini Vijay Shah against the orders of the Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre, Delhi, which upheld the additions made by the Assessing Officer for the assessment years 2015-16 and 2017-18. The additions were made on account of alleged bogus transactions under Section 68 of the Income Tax Act, and penalties were imposed under Section 271(1)(c). The Tribunal found that the assessee was not given adequate opportunity to present her case, as the orders were passed ex-parte under Section 144. The Tribunal noted the assessee's claim that the stocks in question were held for a substantial period, suggesting they were not merely bogus accommodation entries. The Tribunal decided to restore the matter to the Assessing Officer for a fresh examination, emphasizing the need for a fair hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473807 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2015-2016
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEEJU GUPTA
• Assessee Lawyers: VIVEK CHAVDA
• Keywords: Opportunity of being heard; Additional evidence; Salary income; Capital Gains; Principle of natural justice; Bogus
• Section: 147; 144; 250; 271(1)(c); 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER & SHRI MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER I.T.A. Nos.1539 to 1542/Ahd/2024 (Assessment Years: 2015-16 & 2017-18) Nalini Vijay Shah, 104, Prerna Tirth Part-II, Jodpur Char Rasta, Satellite, Gujarat-380015 Vs. Income Tax Officer, Ward-3(1)(2), Ahmedabad [PAN No.AJBPS2299B] (Appellant) .. (Respondent) Appellant by : Shri Vivek Chavda, A.R. Respondent by: Ms. Neeju Gupta, Sr. DR Date of Hearing 12.03.2025 Date of Pronouncement 13.03.2025 O R D E R PER BENCH: These appeals have been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(E)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide orders dated 07.08.2024 both in respect of quantum additions and consequential penalty proceedings under Section 271(1)(c) of the Act for A.Ys. 2015-16 and 2017-18. 2. The Assessee has taken the following grounds of appeal:- ITA No. 1539/Ahd/2024 “1.1 The order passed u/s. 250 on 07.08.2024 for A.Y.2015-16 by CIT(A)- NFAC, Delhi upholding the addition of Rs.2,20,32,156 made by AO is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering full and properly the eccentric facts and evidence available with regard to the impugned additions. 1.3 The Ld. CIT(A) has grievously erred in law and on facts in not carrying out any inquiry with regard to the applicability of the provisions of Income tax Act ITA Nos. 1539 to 1542/Ahd/2024 Nalini Vijay Shah vs. ITO Asst.Years –2015-16 & 2017-18 - 2– and thereby violated the principle of natural justice. Therefore, the appellant shall be granted opportunity to produce additional evidences. 2.1 The Ld. CIT(A) has grievously erred in law and or on facts in upholding the reopening the case under section 147. 2.2 That in the facts and circumstances of the case and in law, the reopening upheld by the CIT(A) was wholly illegal, unlawful and against the principle of natural justice which deserves to be quashed as it is out of jurisdiction. 2.3 The Ld. CIT(A) has erred in law and/ or on facts in not considering the legal position that the reopening cannot be initiated for rowing and fishing inquiry. It is a well settled position of law that provisions of Section 147 cannot be used merely to inquire a transaction. 2.4 That in the facts and circumstances of the case, the Ld. CIT(A) has erred in upholding the invocation of the provisions of Section 147 merely because the AO received information from investigation wing. The AO has acted mechanically on the information which is against the principle of law. 3.1 The Ld. CIT(A) has grievously erred in law and or on facts in upholding the addition of Rs.2,20,32,156 with regard to share transactions of Prerna Infrabuild Ltd. 3.2 That the Ld. CIT(A) ought not to have upheld addition of Rs.2,20,32,156 tagging the script of Prerna Infrabuild Ltd. as penny script without carrying out proper inquiries. 4.1 The Ld. CIT(A) has grievously erred in law and or on facts in not set a siding the assessment as per Section 251(l)(a) as the assessment was concluded ex parte under section 144. 4.2 That in the law and/or on facts, the Ld. CIT(A) ought to have set a side the assessment as per Section 251(l)(a) as the assessment was concluded ex parte under section 144. 5.1 The Ld. CIT(A) has grievously erred in law and / or on facts in upholding the invocation of the provisions of Section 115BBE 5.2 That in the law and/or on facts, the Ld. CIT(A) ought not to have upheld the invocation of the provisions of Section 115BBE without passing a speaking order and / or granting opportunity of being heard on the invocation of the specific provision.” ITA No. 1540/Ahd/2024 “1.1 The order passed u/s. 250 on 07.08.2024 for A.Y. 2015-16 by CIT(A)- NFAC, Delhi upholding the penalty of Rs.74,86,465 made by AO is wholly illegal, unlawful and against the principles of natural justice. ITA Nos. 1539 to 1542/Ahd/2024 Nalini Vijay Shah vs. ITO Asst.Years –2015-16 & 2017-18 - 3– 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the eccentric facts and evidence available with regard to the impugned additons. 1.3 The Ld. CIT(A) has grievously erred in law and on facts in not carrying out any inquiry with regard to the applicability of the provisions of Income tax Act and thereby violated the principle of natural justice. Therefore, the appellant shall be granted opportunity to produce additional evidences. 2.1 The Ld. CIT(A) has grievously erred in law and or on facts in upholding penalty of Rs.74,86,465/- u/s 271(1)(c). 2.2 The Ld. CIT(A) ought not to have upheld penalty u/s 271(1)(c) of Rs.74,86,465. 3.1 That in the facts and circumstances of the case, the Ld. AO as well as the CIT(A) has failed to record satisfaction qua inaccurate particulars of income or concealment of income while concluding the assessment order. 3.2 The Ld. AO as well as the CIT(A) has failed to understand that an order of penalty without recording satisfaction at the time of assessment proceedings is illegal and deserves to be quashed.” ITA No. 1541/Ahd/2024 “1.1 The order passed u/s. 250 on 07.08.2024 for A.Y.2017-18 by CIT(A)- NFAC, Delhi upholding the addition of Rs.4,91,50,247 made by AO is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the eccentric facts and evidence available with regard to the impugned additions. 1.3 The Ld. CIT(A) has grievously erred in law and on facts in not carrying out any inquiry with regard to the applicability of the provisions of Income tax Act and thereby violated the principle of natural justice. Therefore, the appellant shall be granted opportunity to produce additional evidences. 2.1 The Ld. CIT(A) has grievously erred in law and or on facts in upholding the reopening the case under section 147. 2.2 That in the facts and circumstances of the case and in law, the reopening upheld by the CIT(A) was wholly illegal, unlawful and against the principle of natural justice which deserves to be quashed as it is out of jurisdiction. 2.3 The Ld. CIT(A) has erred in law and/ or on facts in not considering the legal position that the reopening cannot be initiated for rowing and fishing inquiry. It is a well settled position of law that provisions of Section 147 cannot be used merely to inquire a transaction. 2.4 That in the facts and circumstances of the case, the Ld. CIT(A) has erred in upholding the invocation of the provisions of Section 147 merely because the ITA Nos. 1539 to 1542/Ahd/2024 Nalini Vijay Shah vs. ITO Asst.Years –2015-16 & 2017-18 - 4– AO received information from investigation wing. The AO has acted mechanically on the information which is against the principle of law. 3.1 The Ld. CIT(A) has grievously erred in law and or on facts in upholding the addition of Rs. 4,91,50,247 with regard to share transactions of Prerna Infrabuild Ltd. 3.2 That the Ld. CIT(A) ought not to have upheld addition of Rs. 4,91,50,247 tagging the script of Prerna Infrabuild Ltd. as penny script without carrying out proper inquiries. 4.1 The Ld. CIT(A) has grievously erred in law and or on facts in not set a siding the assessment as per Section 251(1)(a) as the assessment was concluded ex parte under section 144. 4.2 That in the law and/ or on facts, the Ld. CIT(A) ought to have set a side the assessment as per Section 25 1(1) (a) as the assessment was concluded ex parte under section 144. 5.1 The Ld. CIT(A) has grievously erred in law and / or on facts in upholding the invocation of the provisions of Section 115BBE. 5.2 That in the law and /or on facts, the Ld. CIT(A) ought not to have upheld the invocation of the provisions of Section 115BBE without passing a speaking order and / or granting opportunity of being heard on the invocation of the specific provision.” ITA No. 1542/Ahd/2024 “1.1 The order passed u/s. 250 on 07.08.2024 for A.Y.2017-18 by CIT(A)- NFAC, Delhi upholding the penalty of Rs.37,96,856 made by AO u/s 271AAC(1) is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the eccentric facts and evidence available with regard to the impugned additions. 1.3 The Ld. CIT(A) has grievously erred in law and on facts in not carrying out any inquiry with regard to the applicability of the provisions of Income tax Act and thereby violated the principle of natural justice. Therefore, the appellant shall be granted opportunity to produce additional evidences. 2.1 The Ld. CIT(A) has grievously erred in law and or on facts in upholding penalty of Rs.37,96,856 u/s 271AAC. 2.2 The Ld. CIT(A) ought not to have upheld penalty u/s 271AAC of Rs.37,96,856. 3.1 That in the facts and circumstances of the case, the AO has failed to pass a speaking order enumerating all the allegation for levy of such a huge penalty u/s 271AAC(1) and Ld. CIT(A) failed to upheld the same. ITA Nos. 1539 to 1542/Ahd/2024 Nalini Vijay Shah vs. ITO Asst.Years –2015-16 & 2017-18 - 5– 3.2 The Ld. CIT(A) has failed to understand that a mechanical order of without, enumerating the specific charge is wholly illegal and” 3. The brief facts of the case are that the assessee is an individual and earned income from salary, house property, capital gains and income from other sources. The case of the assessee was reopened under Section 147 of the Act and certain additions were made on account of bogus transactions under Section 68 of the Act. 4. Before us, at the time of hearing the Counsel for the assessee submitted that both the assessment order as well as CIT(A) order were passed on an ex-parte basis where the assessee did not get an adequate opportunity to present it’s case on merits. It was submitted that the assessment order for both the impugned assessment years under consideration was passed on ex-parte basis under Section 144 of the Act, whereas Ld. CIT(A) refused to condone the delay in filing of appeal before him, for both the assessment years and therefore, the appeals of the assessee for both the assessment years under consideration before us were dismissed by Ld. CIT(A) without granting an opportunity of hearing and without going into the merits of the case, and against the principle of natural justice. 5. In response, Ld. D.R. submitted that despite multiple opportunities of hearing provided to the assessee, he has maintained a non-compliant and evasive attitude throughout the course of proceedings, both before the Assessing Officer as well as before Ld. CIT(A). Accordingly, Ld. D.R. placed reliance on the observations made in the assessment order and order passed by Ld. CIT(A). 6. We have heard the rival contention and perused the material on record. ITA Nos. 1539 to 1542/Ahd/2024 Nalini Vijay Shah vs. ITO Asst.Years –2015-16 & 2017-18 - 6– 7. On facts, we observe that substantial additions have been made in the hands of the assessee under Section 68 of the Act for both the assessment years under consideration. Consequential penalty under Section 271(1)(c) of the Act has also been levied on the assessee for the impugned years under consideration. The Counsel for the assessee submitted that it is not a case of bogus accommodation entry on sale of penny stock, since the stock has been held by the assessee for a period of approximately four years, and therefore, it cannot be concluded that the assessee had taken a bogus accommodation entry. Accordingly, looking into the quantum of additions, and the assurance given by the Ld. Counsel for the assessee that if given an opportunity of hearing, the assessee shall duly / promptly comply with all notices of hearing, in the interest of justice, the appeal of the assessee, both with respect to appeals relating to quantum additions as well as appeals relating to imposition of penalty proceedings under Section 271(1)(c) of the Act, are hereby restored to the file of Assessing Officer, for de-novo consideration. However, it is hereby directed that in case there is further non-compliance by the assessee in response to notices issued by the Tax Authorities, then the Assessing Officer shall be at liberty to pass appropriate orders, on the basis of material available on record, in accordance with law. 8. In the result, all appeals filed by the assessee are allowed for statistical purposes. This Order pronounced in Open Court on 13/03/2025 Sd/- Sd/- (MAKARAND V. MAHADEOKAR) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 13/03/2025 TANMAY, Sr. PS TRUE COPY ITA Nos. 1539 to 1542/Ahd/2024 Nalini Vijay Shah vs. ITO Asst.Years –2015-16 & 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(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 12.03.2025 2. Date on which the typed draft is placed before the Dictating Member 13.03.2025 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S 13.03.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement 13.03.2025 6. Date on which the fair order comes back to the Sr.P.S./P.S 13.03.2025 7. Date on which the file goes to the Bench Clerk 13.03.2025 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Dispatch of the Order…………………………………… "