RAJESH SHANABHAI PATEL,AHMEDABAD V. THE INCOME TAX OFFICER, WARD-3(3)(2), AHMEDABAD

ITA 1517/AHD/2024

AI Insights

This case involves an appeal by Rajesh Shanabhai Patel against the order of the CIT(A), Madurai, which upheld the addition of Rs. 12,04,960/- to the assessee's income under section 68 of the IT Act, 1961, for the assessment year 2012-13. The addition was based on the allegation that the assessee's trades in shares of Dhvanil Chemicals Ltd., a penny stock, were non-genuine. The Tribunal examined the documents and submissions provided by the assessee, which included details of the purchase and sale of shares, payment sources, and broker contract notes. The Tribunal concluded that the Assessing Officer and the CIT(A) had not properly considered these documents, leading to the decision to allow the appeal and reverse the addition made under section 68.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712786 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2012-2013
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAMAL DEEP SINGH
• Assessee Lawyers: ADJOURNMENT APPLICATION FILED
• Keywords: Unexplained cash credit
• Section: 147; 148; 68

Judgement Text

"THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH Before Dr. BRR Kumar, Vice President And Ms. Suchitra Kamble, Judicial Member Rajesh Shanabhai Patel, 45, Sarthi Bunglows, Vibhag-3, Nr. Surdhara Circle, Opp. TV Tower, Thaltej, Ahmedabad PAN: AAVPP8954H (Appellant) Vs The ITO, Ward-3(3)(2), Ahmedabad (Respondent) Assessee by: Adjournment Application Filed Revenue by: Shri Kamal Deep Singh, Sr. D.R. Date of hearing : 07-07-2025 Date of pronouncement : 29-07-2025 आदेश/ORDER Per Suchitra Kamble, Judicial Member: This is an appeal filed against the order dated 12-06- 2024 passed by CIT(A)/Addl/JCIT(A), Madurai for assessment year 2012-13. 2. The grounds of appeal are as under:- “1. The learned CIT (Appeal), NFAC, Delhi erred in law and on facts in passing the order u/s 250 of IT Act 1961 which is requested to be quashed. 2. The learned CIT (Appeal), NFAC, Delhi erred in making addition of Rs 1204960/- u/s 68 of IT Act 1961 3. Prayer ITA No. 1517/Ahd/2024 Assessment Year 2012-13 Printed from counselvise.com I.T.A No. 1517/Ahd/2024 Rajesh Shanabhai Patel, A.Y. 2012-13 2 In view of what has been mentioned above, appellant requests your honor kindly to drop the demand in the interest of law and justice. Appellant may be heard in person before taking any decision in this matter.” 3. The assessee filed return of income on 24-08-2012 declaring total income at Rs. 8,83,290/-. Information was received from DDIT, Investigation Ahmedabad that the assessee traded in the shares in the scrip of Dhvanil Chemicals Ltd. which was included as penny stock and hence the trades in this scrip is non-genuine as per the Assessing Officer. The assessee is one of the investors and traded in such penny scrips and therefore the assessee’s case was reopened by including provision of section 147 of the Act 1961. In response to the notice u/s. 148 of the Act, the assessee filed return of income on 10-04-2019 after declaring total income at Rs. 8,83,290/-. The assessee has filed the return of income along with computation of long term capital gain and claimed exemption u/s. 10(38) of the Act. After going through the details and written submissions, the Assessing Officer made addition of Rs. 12,04,960/- u/s. 68 of the Act. 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. There is a delay of 10 days in filing the present appeal, the same is condoned. 6. At the time of hearing, the assessee’s representative has filed the adjournment application dated 04-07-2025 but none appeared on the hearing date mentioned hereinabove. Eight adjournments have been granted but despite the earlier Printed from counselvise.com I.T.A No. 1517/Ahd/2024 Rajesh Shanabhai Patel, A.Y. 2012-13 3 adjournments, the assessee or assessee’s representative are not appeared on the date of hearing on earlier occasions. Thus, adjournment application is rejected. There is a written submission along with documents filed by the assessee on 16- 10-2024 and therefore we are proceeding on the same basis. 7. The ld. D.R. submitted that the addition on account of long term capital gain on sale of share of penny scrip Dhvanil Chemical Ltd. as unexplained cash credit u/s. 68 is rightly done by the Assessing Officer. The ld. D.R. relied upon the assessment order as well as the order of the CIT(A) 8. We have heard the ld. D.R. and perused all the relevant material available on record including the written submissions and documents filed by the assessee, (ITR and computation of income, share purchase and sale details as well as bank statement). From the perusal of the assessment order in para 10.7, the Assessing Officer is only citing that the transactions entered into by the assessee in the shares of Dhvanil Chemicals Ltd. but the Assessing Officer has not given the details as to how the assessee is co-related or involved in the price variation/manipulation of the said scrip. The Assessing Officer has also not given details as to how the claim of Long Term Capital Gain is not proper. The assessee has given the details in the original return of income as well as the return of income filed u/s. 148 of the Act related to the exempt long term capital gain on which the assessee has paid the Security Transaction Tax (STT). From the perusal of the purchase and sale of shares details annexed to the assessee’s paper book, it is Printed from counselvise.com I.T.A No. 1517/Ahd/2024 Rajesh Shanabhai Patel, A.Y. 2012-13 4 seen that the assessee has purchased the shares on 23-06- 2009 at the cost of Rs. 17,800/- in total and sold the same on 11-07-2011 at 9,80,780/- and 4000 shares were purchased on 23-06-2009 at the purchase value of Rs. 4000 and sold on 14-07-2011 for sale value of Rs. 2,46,000/-. The documents given by the assessee are reflecting source of payment of purchase price and the details of the broker contract note that the sale of the share as well as the purchase of the shares. Thus, the assessee has given the details which was not at all considered either by the Assessing Officer as well as the by the CIT(A). Hence, the appeal of the assessee is allowed. 9. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 29-07-2025 Sd/- Sd/- (Dr. BRR Kumar) (Suchitra Kamble) Vice President Judicial Member Ahmedabad : Dated 29/07/2025 आदेश क\u0006 \u0007\bत ल प अ\u000fे षत / 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 अपील\u0012य अ\u0013धकरण, अहमदाबाद Printed from counselvise.com "