PAVAN PRABHUDYAL BHADADA,SHAHIBAUG, AHMEDABAD V. INCOME TAX OFFICER, WARD 1(3)(1), AHMEDABAD, INCOME TAX OFFICE, VEJALPUR, AHMEDABAD

ITA 620/AHD/2024

AI Insights

The case involves an appeal by Pavan Prabhudyal Bhadada against the order of the Principal Commissioner of Income Tax, Ahmedabad-1, which was passed under section 263 of the Income Tax Act. The PCIT's order was based on findings from a search at the premises of Shri Renuka Mata Multi State Urban Co-operative Society, where incriminating documents and data related to the assessee were found. The PCIT contended that the Assessing Officer had erred in not adding the unexplained cash deposits to the assessee's income during the assessment for the year 2016-17. The Tribunal dismissed the appeal, supporting the PCIT's decision and emphasizing the need for a thorough examination of the deposits, which were initially accepted as genuine without proper scrutiny.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474043 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R.N. DSOUZA
• Assessee Lawyers: PRAKASH D SHAH
• Keywords: Reassessment proceedings; Unexplained investment; Principle of natural justice; Assessment record; Revision of order; FORM 26AS
• Section: 147; 142(1); 263

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.620/Ahd/2024 (Assessment Year: 2016-17) Pavan Prabhudyal Bhadada, 29, Shahibaug Society, Opp. Police Commissioner Officer, Shahibaug, Ahmedabad-380004 Vs. Income Tax Officer, Ward-1(3)(1), Ahmedabad [PAN No.ARSPB7208E] (Appellant) .. (Respondent) Appellant by : Shri Prakash D Shah, A.R. Respondent by: Shri R. N. Dsouza, CIT DR Date of Hearing 18.12.2024 Date of Pronouncement 22.01.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Principal Commissioner of Income Tax, (in short “Ld. PCIT”), Ahmedabad-1 vide order dated 29.02.2024 passed for A.Y. 2016-17. 2. The assessee has taken the following grounds of appeal:- “1. That the revision order passed u/s 263 of the Act by the learned PCIT, Ahmedabad-1 is bad in law and facts and therefore the impugned order passed by Ld. PCIT is required to be quashed and the direction made therein are to be dropped. 2. That your appellant craves a leave to add, alter or amend any grounds at or before the time of hearing.” 3. The brief facts of the case are that Principal CIT observed that during a search at the premises of Shri Renuka Mata Multi State Urban Co-operative Society, various incriminating documents and soft data were ITA No. 620/Ahd/2024 Pavan Prabhudyal Bhadada vs. ITO Asst.Year –2016-17 - 2– found and seized, including data related to the assessee. The analysis of data revealed that the assessee had made deposits in an account maintained with the aforesaid society, amounting to Rs. 1,27,75,311/-. On perusal of assessment order, Principal CIT observed that while passing the assessment order the Assessing Officer accepted to the assessee’s claim that the assessee had no knowledge of transactions with M/s Renuka Mata Multi State Urban Co-operative Credit Ltd. and therefore such deposits were accepted as genuine by the Assessing Officer and no additions were made during the course of assessment proceedings. However, upon review of available information, Principal CIT observed that the assessee had made significant unexplained cash deposits into the society’s account, which were not disclosed in the books. In light of these findings, Principal CIT was of the view that the Assessing Officer erred in failing to add this amount to the income, which was an unaccounted investment. Principal CIT was also of the view that the assessment order was passed without proper examination of these issues. Accordingly, Principal CIT held that the Assessing Officer’s failure to make the necessary additions resulted in a loss of revenue, rendering the assessment order erroneous and prejudicial to the interests of the Revenue. 4. The assessee is in appeal before us against the order passed by Principal CIT, setting aside the assessment order as being erroneous and prejudicial to the interests of the Revenue. Before us, the Counsel for the assessee submitted that the present appeal concerns an order passed under section 263 of the Act, which was invoked in relation to a reassessment ITA No. 620/Ahd/2024 Pavan Prabhudyal Bhadada vs. ITO Asst.Year –2016-17 - 3– order passed under section 147 of the Act. In the reassessment proceeding after considering the submissions made by the assessee, the Assessing Officer accepted the return of income filed by the assessee. The Counsel for the assessee submitted that since the reassessment order was passed based on the submission made by the assessee, it cannot be said that the order of the A.O. was erroneous, and therefore, invoking section 263 of the Act is incorrect and not in accordance with the law. Secondly, the Counsel for the assessee submitted that initiating the present 263 proceedings for the same issue more than once constitutes a multiplicity of proceedings, which is impermissible. Thirdly, the Counsel for the assessee submitted that during the reassessment proceedings, the A.O. issued a notice under section 142(1) to inquire about the relevant issue in response to which the assessee filed reply dated 07.03.2022, submitting the necessary information, including Form 26AS, Part-E, and details of AIR transactions from the Insight Portal. After reviewing this information, the A.O. held that the assessee’s contention appeared genuine, and as per the assessment order, the A.O. had applied his mind to the issue. Therefore, the order passed by the A.O. cannot be considered erroneous. Fourthly, the Counsel for the assessee submitted that Principal CIT did not grant a personal hearing nor requested any further information after the assessee’s submission dated 14/2/2024. Therefore, the 263 order was passed in violation of the principles of natural justice. Lastly, the Counsel for the assessee submitted that the transactions in the said bank accounts were actually undertaken by the father of the assessee without any information ITA No. 620/Ahd/2024 Pavan Prabhudyal Bhadada vs. ITO Asst.Year –2016-17 - 4– and knowledge of the assessee and to support this, necessary Affidavits from both the assessee and his father have been submitted. 5. In response, the Ld. DR placed reliance on the observations made by the principal CIT in the 263 order. 6. We have heard the rival contentions and perused the material on record. On going through the case records and the arguments of the counsel for the assessee, we observe that a new argument has been taken before us during the course of appellate proceedings, wherein it was submitted that the aforesaid bank account was never operated by the assessee. The counsel for the assessee submitted that it was the father of the assessee who was operating the bank account, without the knowledge of the assessee and the assessee had no information regarding the deposits which were made in the aforesaid bank account. However, we note that this crucial aspect was not enquired by the assessing officer during the course of assessment proceedings and on going through the notice of hearing issued by the assessing officer, we are of the considered view that there was an evident lack of enquiry with regard to the source of deposits in the aforesaid bank account. Further, we also observe that neither during the course of assessment proceedings and nor during the course of 263 proceedings, any submission with regard to this crucial aspect regarding the operation of the bank account by father of the assessee was submitted before any of the Tax Authorities. In our view, there was a clear certain omissions with regard to the enquiry done by the assessing officer. Further on going through the case records, we observe that only one notice of ITA No. 620/Ahd/2024 Pavan Prabhudyal Bhadada vs. ITO Asst.Year –2016-17 - 5– hearing was issued by the assessing officer and no discussion on this crucial aspect is forming part of the assessment records. This is an aspect which has been submitted before us for the first time during the entire proceedings. Accordingly, in view of the above facts, we find no infirmity in the order of Principal CIT so as to call for any interference. 7. In the result, the appeal of the assessee is dismissed. This Order is pronounced in the Open Court on 22/01/2025 Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 22/01/2025 TANMAY, Sr. PS TRUE COPY 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 20.01.2025(Dictated over dragon software by Hon’ble Member) 2. Date on which the typed draft is placed before the Dictating Member 20.01.2025 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S 20.01.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement 22.01.2025 6. Date on which the fair order comes back to the Sr.P.S./P.S 22.01.2025 7. Date on which the file goes to the Bench Clerk 22.01.2025 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…………………………………… "