RAJU BABABHAI DESAI ,AHMEDABAD V. THE ITO, WARD-3(3)(4), AHMEDABAD

ITA 2051/AHD/2024

AI Insights

This case involves an appeal by Raju Bababhai Desai against the order of the Commissioner of Income-tax (Appeals), which confirmed additions made by the Assessing Officer under Section 68 of the Income-tax Act, 1961, for the Assessment Year 2013-14. The additions pertained to unexplained cash credits amounting to approximately Rs. 9.16 crore, linked to transactions in penny stocks and accommodation entries through Tamilnadu Mercantile Bank Ltd. The Tribunal noted procedural lapses, including the non-consideration of certain grounds of appeal and the lack of a personal hearing due to technical issues, leading to the decision to remand the case for further examination.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 827652 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 05-12-2024
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALPESH PARMAR
• Assessee Lawyers: M. K. PATEL
• Keywords: Unexplained cash credit; Accommodation entries; Source of fund; Assessment record
• Section: 144; 153A; 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER I.T.A. No. 2051/Ahd/2024 (Assessment Year: 2013-14) Raju Bababhai Desai, 2, Varvabhai-Ni-Chali, Opp. Memnagar Gram Panchayat, Memnagar, Ahmedabad-380052 [PAN : AOFPD 7087 P] Vs. Income Tax Officer, Ward 3(3)(4), Ahmedabad (Appellant) .. (Respondent) Assessee by : Shri M.K. Patel, AR Revenue by: Shri Alpesh Parmar, CIT-DR Date of Hearing 05.01.2026 Date of Pronouncement 07.01.2026 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT : Delay condoned. This appeal has been filed by the assessee against the order of the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as \"CIT(A)\" for short) dated 20.09.2024, passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as \"the Act\" for short], for Assessment Year (AY) 2013-14. 2. The assessee has raised following grounds:- “I. Assessment u/s 144 of the Act and Non-Granting of adequate opportunity of hearing by the Assessing Officer. Printed from counselvise.com ITA No. 2051/Ahd/2024 Raju Bababhai Desai Vs. ITO Asst. Year : 2013-14 - 2– 1. The learned CIT(A) has erred in law and on facts in observing that there is only one issue in all the grounds of appeal raised by the appellant l.e. addition u/s. 68 of the Act at Rs.9,16,14,31/- In spite of the fact that the appellant has raised as many as 3 grounds in the 'Grounds of Appeal\" out of which 2 Grounds have not ben dealt by the CIT(A) of the NFAC in his appellate order. 2. The learned CIT(A) has erred in law and on facts in not adjudicating the grounds raised by the appellant in relation to completion of assessment u/s. 144 of the Act, not carrying out the cross enquiries as requested by the appellant, non-furnishing of details for which the additions have been made in the assessment order and non-granting of further personal hearing by the AO through Video Conferencing which cannot took place due to technical glitches. П. Addition on account of transaction in penny stock Rs. 4,41,52,811/-and accommodation entry through Tamilnadu Mercantile Bank Ltd - Rs. 4,74,61,580/- as unexplained cash credit u/s. 68 of the Act aggerating to Rs.9,16,14,391/- 1. The learned CIT(A) has grievously erred in law and on facts in confirming the addition on account of transaction in Penny stock at Rs.4,41,52,811/- and accommodation entry through Tamilnadu Mercantile Bank at Rs.4,74,61,850/-i.e. both source of funds and its application as unexplained cash credit u/s. 68 of the Act without proper consideration and appreciation of the facts of the case. In view of facts of the case, the impugned addition requires to be deleted. 2. The learned CIT(A) has erred in law and on facts in confirming the addition of Rs. 9,16,14,391/-. However, in view of the facts and explanations and evidences filed during the course of assessment proceedings, the impugned addition made by AO and confirmed by the learned CIT(A) is wholly unjustified and bad in law and thus requires to be deleted. 3. The learned CIT(A) has grievously erred in law and on facts in confirming the above addition while observing that the \"appellant failed to substantiate his claim that Sri Sanjay Shah had offered the income on the impugned transactions of the appellant\" in spite of the fact that the appellant has furnished the assessment order of Sri Sanjay Shah passed by the DCIT Central Circle 1(2) Ahmedabad u/s. 153A of the Act in support of his contentions that above Bank A/c and its related transactions are in fact owned up by him and Printed from counselvise.com ITA No. 2051/Ahd/2024 Raju Bababhai Desai Vs. ITO Asst. Year : 2013-14 - 3– department has assessed income arising from such transactions in the hands of Sanjay Shah. Hence, observation of the learned CIT(A) is factually incorrect and thus addition made by the AO deserves to be deleted. 4. The learned CIT(A) has grievously erred in law and on facts in failing to consider the fact that the above Bank A/cs of the appellant with Tamilnad Mercantile Bank Ltd and transactions carried out through the said Bank A/cs is owned up by Sanjay Shah during the Investigation proceedings and has offered the income arising from such transactions in his settlement application filed before the Hon'ble Settlement Application for which IBS 1 New Delhi has already passed the order u/s. 245D(4) of the Act accepting such facts. Hence the impugned addition in the hands of appellant is bad in law and requires to be quashed. 5. The learned CIT(A) has grievously erred in law and on facts in not appreciating the fact that since the DCIT Central Circle 1(2) Ahmedabad, being the AO of Sanjay Shah, while passing the order u/s.153A of the Act assessed the income arising from the above transactions in the hands of Sanjay Shah, the addition made by AO in the hands of appellant is bad in law and requires to be quashed. In view of the above, the addition of Rs.9,14,16,391/- made by the AO u/s. 68 of the Act and confirmed by the learned CIT(A) as unexplained cash credit in the hands of appellant deserves to be deleted.” 3. The Ld. CIT(A) passed an ex-parte order. The assessment order was also passed based on the information received from the Investigation Wing on account of accommodation entries and penny stock trading. It was submitted that the assessee is one of the conduits of the penny stock and accommodation entries along with 47 other persons. It was submitted that the amounts in the bank account of the assessee stands assessed in the hands of Shri Sanjay Shah, the entry operator. In this regard, it was incumbent upon the assessee to produce Shri Sanjay Shah along with his assessment records before the Assessing Officer to discharge the onus. Accordingly, the Assessing Officer is required to examine Printed from counselvise.com ITA No. 2051/Ahd/2024 Raju Bababhai Desai Vs. ITO Asst. Year : 2013-14 - 4– Shri Sanjay Shah - the entry operator, and verify his assessment records of Shri Sanjay Shah and examine whether the amounts reflecting in the bank accounts in the name of the assessee Raju Bababhai Desai have been assessed in the case of Shri Sanjay Shah or not. If proven to be assessed in the hands of Shri Sanjay Shah, no addition would be called for in the hands of the assessee. 4. The matter stands remanded back to the Assessing Officer. In the result, the appeal of the assessee is allowed for statistical purposes. The order is pronounced in the open Court on 07.01.2026 Sd/- Sd/- (T.R. SENTHIL KUMAR) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 07/01/2026 **btk आदेश की \u0007ितिलिप अ ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0007 / The Appellant 2. \b थ\u0007 / The Respondent. 3. संबंिधत आयकर आयु\u0015 / Concerned CIT 4. आयकर आयु\u0015(अपील) / The CIT(A)- 5. िवभागीय \bितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad Printed from counselvise.com "