MRUGESH KANTILAL SHAH,AHMEDABAD vs. THE DY.CIT, CIRCLE-3(1)(1), AHMEDABAD

The brief fats of the case are that the assessee is a proprietor of Mishika Impex and had declared net profit of Rs. 1,36,71,559/- at17.18%. The assessee has also derived income from Mutual Funds and shares trading which Short Term Capital Gains. The assessee filed the return of income for A.Y. 2018-19 on 29.09.2018 declaring total income of Rs. 2,02,01,400/-. The case was selected for complete scrutiny on the issue of Short Term Capital Gains under Section 111A and details of assets and liabilities. The return was processed under Section 143(1) of the Act. The statutory notices under Section 143(2) of the Income Tax Act was issued on 22.09.2019. Further notice under Section 142(1) along with questionnaire were issued on 13.11.2020, 20.01.2021 and 06.02.2021. The assessee filed reply on 06.02.2021 and 08.02.2021, after taking cognizance of the assessee’s reply the Assessing Officer observed that as per the details, the return of income as shown TDS deducted by the assessee under Section 194A, 194C, 194H, 194J of the Act in total Rs. 93,84,525/-. Apart from this, the assessee should have deducted TDS on Vakil Fees amounting to Rs. 1,02,000/-, consultation fees amounting to Rs. 7,62,120/-, commission expenses amounting to Rs. 4,50,000/- and sales tax payment amounting to Rs. 24,19,566/- which was disallowed under Section 37 of the Act. The Assessing Officer further made addition of Rs. 50,97,926/- in respect of the claim of the assessee regarding bank interest charges wherein the assessee has not shown bifurcation. The Assessing Officer further observed that assessee also has added loan and house to his assets, but did not maintain separate books of account for the Mrugesh Kantilal Shah vs. DCIT Asst.Year–2018-19 income from proprietary concern M/s. Mishika Impex and his individual income, thus, the Assessing Officer made addition of Rs. 19,18,000/- towards unexplained investment under Section 69B of the Act. The Assessing Officer further made addition of Rs. 29,42,112/- under Section 68 of the Act as cash credit in respect of the claim of the assessee where short term capital gains were claimed at 15% regarding sale of mutual funds.

Being aggrieved by the assessment the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.

The Ld. AR submitted that as regards Ground No. 1(a) relating to disallowance of Rs. 6,10,500/- made under Section 40(a)(ia) out of Rs. 8,64,120/- made by the Assessing Officer. The assessee has filed Form 26Q wherein all the details was not shown to the Assessing Officer and the CIT(A). Thus, the Ld. AR submitted that the matter may be remanded back on this issue to the file of Assessing Officer for proper verification and allowing the said TDS credit.

We have heard both the parties and perused all the relevant materials available on record. As per the details filed before us at Page 33-46 the same was not before the Assessing Officer as well as before the CIT(A). From 26Q has categorically given the amount and that the same need verification. Asst.Year–2018-19

As regards Ground No. 1(b) relating to disallowance of interest paid to bank of Rs. 50,97,926/-. The assesee has given details of assets which was for the business purposes as mentioned in Page 10 of the assessment order and the loan thereof. Thus, the source of asset purchase for the business was there before the Page No. 21, 22, 24 and 26 was there before the Assessing Officer as well as the CIT(A) but the same was totally ignored by the Assessing Officer as per the submissions of the Ld. AR.

The Ld. DR relied upon the assessment order and the order of the CIT(A).

We have heard both the parties and perused all the relevant materials available on record. The CIT(A) in Para 7.3 has mentioned that the assessee’s Balance Sheet of the earlier year as on 3.103.2017, the outstanding balance on account of secured loan in the nature of OD Account and Kotak Mahindra Office Loan was at Rs. 8,27,90,099/- as against which as per the Balance Sheet of the relevant previous year i.e. 31.03.2018, the balance outstanding is at Rs. 2,16,77,342/-. The assessee has not established the nexus of funds received on liquidation of investment with the investment in land and house as per the observation of the CIT(A). From the perusal of records, it appears that the assessee has given the details of Balance Sheet as on 31.03.2017 in respect of secured loans and unsecured loans and needs to that extent this needs verification, therefore, the matter is remanded back to the file of the Assessing Officer for proper verification of the details and adjudicate the issue as per Income Tax Act. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Thus, Asst.Year–2018-19

As regards Ground No. 1(c) relating to addition of Rs. 19,80,000/- made under Section 69 of the act. The Ld. AR submitted that the assessee has maintaining the books of accounts, therefore, Section 69 will not come into account. Further, the Ld. AR submitted that the details of all the relevant credit entries was given along with purchase of residential house which appears in regular books of accounts. Thus, it cannot be taken as unexplained.

The Ld. DR relied upon the assessment order and the of the CIT(A).

We have heard both the parties and perused all the relevant materials available on record. The CIT(A) categorically mentioned in Para 8.2 that the assessee has recorded the new house purchased during the relevant previous year in the books. The source of purchase of this asset was specifically asked but the assessee could not explain the source of investment. Therefore, the details submitted before us should be placed before the Assessing Officer. Thus, it will appropriate to remand back this issue to the file of the Assessing Officer for proper verification and adjudication. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Thus, Ground No. 1(c) is partly allowed for statistical purposes.

In the result, the appeal of the assessee is partly allowed for statistical purposes. This Order pronounced in Open Court on 27/04/2026 (NARENDRA P. SINHA) JUDICIAL MEMBER Ahmedabad; Dated 27/04/2026 TANMAY, Sr. PSITA No. 1469/Ahd/2025 Asst.Year–2018-19 आदेश की "ितिलिप अ"ेिषत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant

""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. आदेशानुसार/ BY ORDER,