NARENDRAKUMAR SHANKARBHAI PATEL,AHMEDABAD V. THE ITO, WARD-3(3)(10), AHMEDABAD

ITA 830/AHD/2025

AI Insights

This case involves an appeal by Narendrakumar Shankarbhai Patel against the order of the National Faceless Appeal Centre (NFAC), Delhi, concerning the assessment year 2011-12. The primary issues in the appeal were the legality of the notice issued under Section 148 of the Income Tax Act based on an investigation report, the reopening of the assessment under Section 147, and the addition of Rs. 30,50,000 as an accommodation entry. The Tribunal upheld the reopening of the assessment but found merit in the assessee's argument regarding the nature of the Rs. 30,50,000 transaction, leading to the allowance of that part of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 793563 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 21-04-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KAMAL DEEP SINGH
• Assessee Lawyers: DHINAL SHAH
• Keywords: Income from undisclosed sources; Tax effect; Accommodation entries; Tangible material; Bogus
• Section: 147; 148

Judgement Text

"THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH Before Dr. BRR Kumar, Vice President And Ms. Suchitra Kamble, Judicial Member Narendrakumar Shankarbhai Patel, Prop. Of M/s. Parmi Traders, 18, Surabhi Apartments, 2nd Floor, Nr. Parth Sarthi Tower, Gulab Tower, Thaltej, Ahmedabad-380054 PAN: AQGPP6422R (Appellant) Vs The ITO, Ward-3(3)(10) Ahmedabad (Respondent) Assessee by: Shri Dhinal Shah, A.R. Revenue by: Shri Kamal Deep Singh, Sr. D.R. Date of hearing : 09-07-2025 Date of pronouncement : 23-09-2025 आदेश/ORDER Per Suchitra Kamble, Judicial Member: This is an appeal filed against the order dated 19-03- 2024 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment year 2011-12. 2. The grounds of appeal are as under:- ITA No. 830/Ahd/2025 Assessment Year 2011-12 Printed from counselvise.com I.T.A No. 830/Ahd/2025 Narendrakumar Shankarbhai Patel, A.Y. 2011-12 2 “1. The learned AO has erred in issuing notice under Section 148 based on Investigation Report and alleged incriminating material found during search in as much notice under Section 153C only could have been issued on facts and hence notice issued under Section 148 is bad in law. 2. The learned CIT(A) has erred in confirming the reopening of the assessment under Section 147 based on the information received from ADIT (Investigation), Unit 2(3), Ahmedabad and without any independent tangible material in the case of the assessee company or any other evidences which would result into escapement of income and that the conditions of reopening the assessment are not fulfilled. 3. The learned CIT(A) has erred in confirming the addition of alleged accommodation entry of Rs. 30,50,000 as transaction with Shri Chandrakant P Patel, Prop. Shiyon Enterprise based on the information received from ADIT (Investigation), Unit-2(3), Ahmedabad in as much as the amount received is genuine and therefore no addition ought not have been made. Total tax effect Rs. 17,39,060 plus Interest” 3. As per the information received by the Department, the assessee’s case was reopened u/s. 147 of the Act on 28-03- 2018 after recording the reasons. The notice u/s. 148 of the Act was issued and served upon the assessee on 30-03- 2018. In response to the notice, the assessee filed letter dated 03-10-2018 along with copy of return of income declaring income at Rs. 5,91,650/- and requested to provide the reasons recorded for reopening. The Assessing Officer provided the copy of reasons for reopening and subsequently issued notice u/s. 143(2) u/s. 143(2) of the Act on 01-11-2018. Vide the response dated 06-12-2018, the assessee furnished copy of bank statement, cash book and source of cash deposit and also vide letter dated 06-12- 2018 objected the reopening of the assessment for assessment year 2011-12. The Assessing Officer observed Printed from counselvise.com I.T.A No. 830/Ahd/2025 Narendrakumar Shankarbhai Patel, A.Y. 2011-12 3 that during the course of inquiry proceedings in the name of Shri Chandrakant P. Patel, the proprietor of M/s. Shiyon Enterprises, the said Mr. Chandrakant P. Patel was not traceable in all known addresses. From the pattern of entries reflecting in the bank statements, it appears that Shri Chandrakant P. Patel involved in providing accommodation entries/bogus bills without actual supply of any goods or services. The Assessing Officer called upon the assessee thereby show caused as to why the amount of Rs. 30,50,000/- being accommodation entry made with Shri Chandrakant P. Patel, proprietor of M/s. Shiyon Enterprises should not be treated as unaccounted income of the assessee. The Assessing Officer also disposed all assessee’s objection raised against the reopening rejecting the same vide order dated 07-12-2018. The Assessing Officer observed that there is a nexus between the assessee and Shri Chandrakant P. Patel and KYC and other details furnished by the Union bank of India revealed that the bank account of permit traders was opened with the entry of M/s. Shiyon Enterprises and the said arrangement between the said two entities proves that there is a modus operandi to transact accommodation entries. Thus, the Assessing Officer made addition of Rs. 30,50,000/-. 4. The ld. A.R. submitted that the issuance of notice u/s. 148 based on investigation report and alleged incriminating material found during search and in as much as notice u/s. 153C only could have been issued on facts and hence notice u/s. 148 is bad in law. Printed from counselvise.com I.T.A No. 830/Ahd/2025 Narendrakumar Shankarbhai Patel, A.Y. 2011-12 4 5. The ld. D.R. submitted that the notice u/s. 148 of the Act is properly issued notice, as the assessee is not challenging the authority who has approved the reopening as well as has not pointed out any discrepancies in the reasons recorded. 6. We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the Assessing Officer has taken proper approval for reopening proceedings before issuing the notice u/s. 148 and there is no discrepancy pointed by the assessee/ld. A.R. to that effect. There is reasons recorded by the Assessing Officer upon which the assessee was reopened. Thus, ground nos. 1 & 2 are dismissed. 7. As regards ground no. 3, ld. A.R. submitted that the CIT(A) was not right in confirming the addition of the accommodation entry of Rs. 30,50,000/- as transaction with Shri Chandrakant P. Patel, Prop of M/s. Shiyon Enterprises based on the information received from DIT, Investigation, Ahmedabad in as much as the amount received is genuine and therefore no addition ought to have been made. The ld. A.R. submitted that the assessee has furnished the details of bank statements, the copy of accounts of the assessee from the books of Shri Chandrakant P. Patel and the copy of account of Shri Chandrakant P. Patel from the books of account. The ld. A.R. submitted that there is credit balance of Rs. Printed from counselvise.com I.T.A No. 830/Ahd/2025 Narendrakumar Shankarbhai Patel, A.Y. 2011-12 5 9,84,53,052/- as on 01-04-2010. The assessee repaid the said credit by making payment by cheque from time to time and that the assessee received Rs. 30,50,000/- on 11-01- 2011. The said entries are reflected in the bank statement. The ld. A.R. submitted that the assessee has not made any purchases or sales from Shri Chandrakant P. Patel, therefore, the question of non-supply of the goods or services does not arise as recorded in the reasons. There is no withdrawal in cash which was pointed out from the bank statement. Thus, the A.R. submitted that the Assessing Officer has only presumed that the assessee entered into the transactions of accommodation entries with Shri Chandrakant P. Patel. 8. The ld. D.R. relied upon the assessment order and the order of the CIT(A). 9. We have heard both the parties and perused all the relevant materials available on record. The assessee has demonstrated from the books of accounts as well from the books of Shri Chandrakant P. Patel, that the assessee has taken loan during financial year 2010-11 from M/s. Shiyon Enterprises, Prop Shri Chandrakant P. Patel and which was subsequently repaid in the very next assessment year i.e. financial year 2011-12. The bank entry also reflected the same and thus the assessee has co-related the amount taken as loan with the repayment as well. This crucial evidence was totally ignored by the Assessing Officer as well Printed from counselvise.com I.T.A No. 830/Ahd/2025 Narendrakumar Shankarbhai Patel, A.Y. 2011-12 6 as by the CIT(A). Hence, the appeal of the assessee is allowed. 10. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 23 -09-2025 Sd/- Sd/- (Dr. BRR Kumar) (Suchitra Kamble) Vice President Judicial Member Ahmedabad : Dated 23/09/2025 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद Printed from counselvise.com "