KANANBEN ATISHBHAI DALAL,AHMEDABAD vs. THE INCOME TAX OFFICER,WARD-1(2)(3), AHMEDABAD

The grounds of appeal are as under:- “Addition on account of Long Term Capital Gain earned on sale of shares as unexplained credit u/s. 69A of the Act - Rs. 18,12,843/- 1. The learned CIT(A) has grievously erred in confirming the addition made by the AO of the NFAC u/s. 69A of the Act on account of Long-Term Capital Gain on sale of shares earned by the appellant on the basis of the observations/findings given in the appellate order and without proper consideration and appreciation of the facts of the case.

The assessee is an individual and filed return of income for assessment year 2013-14 on 11-08-2014 declaring income of Rs. 4,62,620/-. The assessee declared income from business and income from partnership firm. From the information received from DDIT, Investigation, search action u/s. 132 was conduced on 11-09-2018 in the case of Sanjay Shah and Jignesh Shah. The search resulted into seizure of unaccounted cash of Rs. 19.37 crores related to accommodation entry and commission earned there on. It was found that the assessee is one of the beneficiaries and made transaction in the share scrip of Sufal Herbs Ltd. for assessment year 2013-14. The total trade valuation in the said scrip in the name of assessee was found at Rs. 18,25,120/- during the year under consideration. The assessee had entered into share transaction of Rs. 18,25,120/- to show long term capital gain as exempt u/s. 10(38) of the Act. Proceedings u/s. 147 were initiated and statutory notices were issued to the assessee. The assessee filed reply on 02-8-2021 and 08-02-2022 and also asked for cross-examination of Sanjay Shah and Jignesh Shah. After going through the the same, the Assessing Officer made addition of Rs. 18,12,843/- as unexplained credit u/s. 69A of the Act.

Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A), the CIT(A) dismissed the appeal of the assessee.

The ld. A.R. submitted that the CIT(A) erred in confirming the addition made by the Assessing Officer u/s. 69A of the Act on account of long term capital gain on sale of shares earned by the assessee merely on the observations/findings of the Assessing Officer not taken the cognizance of the evidences. The ld. A.R. submitted that the Assessing Officer failed to evaluate the material/evidences filed by the assessee in support of the long term capital gain earned on sale of shares in fair and judicious manner. Comparing the total credit entry into bank 3 account with returned income of the assessee and terming the same as turnover of the assessee was grossly validly done by the CIT(A) as well as by the Assessing Officer. The ld. A.R. submitted that both the revenue authorities ignored the factual aspect along with evidences.

The ld. D.R. relied upon the assessment order and the order of the CIT(A).

I have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the Assessing Officer as well as CIT(A) has not co-related the purchase made in the earlier year and in fact the relevant details filed by the assessee was also not taken into account about the purchases and the sale of the said shares. Therefore, it will be appropriate to remand back this matter to the file of the CIT(A) for proper verification of the evidences and adjudication of the issue on merits as per Income Tax Act, 1961. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice.

In the result, the appeal of the assessee is partly allowed for statistical purpose.

Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,