RISHIT PRADIPKUMAR SHAH,AHMEDABAD vs. ITO WARD 3(3)(2) AHMEDABAD, AHMEDABAD

The assessee has raised the following grounds of appeal:

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 juri iction

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.

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

1 The Ld CIT(A) has grievously erred in law and or on facts in upholding the addition of Rs.1,09,55,972/- as unexplained loan/money without any cogent evidence

2 That the Ld. CIT(A) ought not to have upheld addition of Rs 1,09,55,972/- as unexplained loan/money without establishing the nexus between the appellant and the alleged syndicate of Jignesh Shah and Sanjay Shah

3 The Ld. AO has failed to appreciate that the bank statements and bank ledger accounts submitted by the appellant clearly demonstrate that no such entry of Rs 1,09,55,972/- exists in the bank account of the appellant and neither the name of Sanjay Shah nor Jignesh Shah appears anywhere in the appellant’s bank statement.

2 That in the facts and circumstances of the case and in law, the reopening upheld by the CITIA) was wholly illegal, unlawful and against the principle of natural justice which deserves to be quashed as it is out of juri iction

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.

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

1 The Ld CIT(A) has grievously erred in law and or on facts in upholding the addition of Rs.1,29,79,719/- as unexplained loan/money without any cogent evidence

2 That the Ld. CIT(A) ought not to have upheld addition of Rs 1,29,79,719/- as unexplained loan/money without establishing the nexus between the appellant and the alleged syndicate of Jignesh Shah and Sanjay Shah

3 The Ld. AO has failed to appreciate that the bank statements and bank ledger accounts submitted by the appellant clearly demonstrate that no such entry of Rs 1,29,79,719/- exists in the bank account of the appellant and neither the name of Sanjay Shah nor Jignesh Shah appears anywhere in the appellant’s bank statement.

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 juri iction

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.

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

1 The Ld CIT(A) has grievously erred in law and or on facts in upholding the addition of Rs.1,62,75,316/- as unexplained loan/money without any cogent evidence

2 That the Ld. CIT(A) ought not to have upheld addition of Rs 1,62,75,316 as unexplained loan/money without establishing the nexus between the appellant and the alleged syndicate of Jignesh Shah and Sanjay Shah

3 The Ld. AO has failed to appreciate that the bank statements and bank ledger accounts submitted by the appellant clearly demonstrate that no such entry of Rs 1,62,75,316/- exists in the bank account of the appellant and neither the name of Sanjay Shah nor Jignesh Shah appears anywhere in the appellant’s bank statement.

The assessee is an individual deriving income from capital gains and other sources. He filed his return of income for A.Y. 2015-16 on 20.03.2022 declaring total income at Rs. Nil. Subsequently, the case of the assessee was reopened under section 147 of the Income-tax Act, 1961 (“the Act”) on the basis of information received through the Insight Portal. It was stated by the Assessing Officer that, pursuant to a search and seizure action conducted under section 132 of the Act on 11.09.2018 in the case of the syndicate of Jignesh Shah and Sanjay Shah, accommodation transactions aggregating to Rs.19.37 crores were allegedly detected. On the basis of the information so received, the Assessing Officer treated the assessee as one of the beneficiaries of the alleged accommodation entries amounting to Rs.1,09,55,972/-. During the course of the assessment proceedings, various notices were issued through email. According to the assessee, however, the notices were sent to the email address of Smt. Bhavnaben Vyas, a former employee of the assessee. It was submitted that, owing to a dispute, the said employee had been relieved from service and, despite the change/updation of the assessee's email address, she did not intimate the assessee regarding the notices issued by the Assessing Officer or the proceedings initiated pursuant thereto. The assessee submitted that he came to know about the proceedings only subsequently upon receipt of an SMS by another member of his family from the official portal. Thereafter, the assessee filed the return of income in response to the - 6– notice issued under section 148 of the Act and furnished various documents, including bank statements, bank ledger accounts, balance sheet, demat account statement, contract notes, computation of income and return of income. It was further submitted that the aforesaid documents demonstrated that the assessee had not undertaken any bogus share transaction in the scrip of “Prerana Infrabuild Ltd.” and that there was no cogent material establishing any nexus between the assessee and the alleged syndicate of Jignesh Shah and Sanjay Shah. The assessee accordingly contended that the addition had been made merely on the basis of probabilities and without any conclusive evidence.

Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). However, there was a delay in filing the said appeal. The assessee filed an application seeking condonation of the delay and explained the circumstances leading to the delay. The Ld. CIT(A), however, was not satisfied with the explanation furnished by the assessee and declined to condone the delay. Consequently, the appeal was dismissed as not admitted without adjudicating the grounds raised by the assessee on merits.

The Ld. Departmental Representative, on the other hand, opposed the prayer for condonation of delay and supported the order of the Ld. CIT(A).

Before us, the Ld. Counsel submitted that the delay had occurred for reasons beyond the control of the assessee. It was submitted that - 7– the assessee remained unaware of the appellate proceedings as well as the order passed by the Ld. CIT(A), since the communications were again sent to the email address of Smt. Bhavnaben Vyas, a former employee of the assessee. According to the assessee, despite updation of his email ID, the said employee did not communicate the information to him. It was further submitted that the assessee came to know about the order of the Ld. CIT(A) only subsequently and, immediately thereafter, instructed his consultant to file the present appeal. The Ld. Counsel contended that the delay was neither intentional nor deliberate. Accordingly, the Ld. Counsel prayed that the delay in filing the appeal be condoned. It is further evident from the assessment order that the assessee remained non-compliant during the assessment proceedings before the Assessing Officer. Considering the explanation furnished by the assessee, the fact that the appeal before the Ld. CIT(A) was not adjudicated on merits and the fact that substantial issues arising from the assessment order remain to be examined, we are of the considered view that the interest of substantial justice, we deem it appropriate to condone the delay in filing the appeal and restore the matter to the file of the Assessing Officer for fresh adjudication in accordance with law. The Assessing Officer shall afford reasonable opportunity of being heard to the assessee before passing the order afresh. The assessee is directed to furnish all relevant bank statements, documents and explanations before the Assessing Officer in the proceedings without seeking any unnecessary adjournments.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

Since the facts and issues involved in ITA Nos. 1168/Ahd/2026 and 1169/Ahd/2026 for A.Ys. 2016-17 and 2017-18, respectively, are identical to those involved in ITA No. 1167/Ahd/2026 for A.Y. 2015-16, our decision rendered hereinabove shall apply mutatis mutandis to the said appeals.

In the combined result, all the three appeals of the assessee are allowed for statistical purposes.

""थ" / The Respondent. 3. संबंिधत आयकर आयु" / Concerned CIT 4. आयकर आयु"(अपील) / The CIT(A)- 5. िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड" फाईल / Guard file.