JAYABEN HETALKUMAR PATEL,AHMEDABAD vs. THE ITO, WARD-4(2)(1), AHMEDABAD

ITA 535/AHD/2026Status: DisposedITAT Ahmedabad28 September 2026AY 2013-145 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal noted that reassessment proceedings were initiated based on information from the Deputy Director of Income Tax (Investigation) regarding the use of Hemo Organics Limited shares for accommodation entries. The AO made an addition of INR 12,16,738 under Section 68, as the assessee allegedly failed to comply with notices. The assessee contended that assessment proceedings were hampered by the COVID-19 pandemic and family health issues, preventing proper representation. Crucially, the Tribunal found that the CIT(A) had not considered the additional documentary evidence filed by the assessee, including computation of income, ledger accounts, pass-books, contract notes, and broker bills, despite these being placed before the CIT(A) via Form 35. The Tribunal also acknowledged that the assessment proceedings occurred during the COVID-19 pandemic and that the additional evidence was not considered. Consequently, the Tribunal set aside the order of the CIT(A) and restored the issue to the file of the AO for de novo adjudication. The AO was directed to consider all documentary evidence furnished by the assessee. The assessee was also granted liberty to submit further documents. Grounds 1 to 3 were allowed for statistical purposes without findings on merits. The appeal was allowed for statistical purposes.

What were the facts?

The assessee, Jayaben Hetalkumar Patel, filed her return of income for Assessment Year 2013-2014 declaring a total income of INR 2,62,772. She disclosed a short-term capital loss of INR 17,672 and claimed to have regularly invested in shares through a registered broker on a recognized stock exchange, with all transactions routed through banking channels. During the relevant period, she invested INR 11,44,393 in shares of Dinesh Hargola (later Homo Organics Limited) and subsequently sold them for INR 6,21,966, booking a loss of INR 5,22,427. Reassessment proceedings were initiated based on information from the Deputy Director of Income Tax (Investigation) regarding the use of Hemo Organics Limited shares for providing accommodation entries. The Assessing Officer (AO) made an addition of INR 12,16,738 under Section 68 of the Income Tax Act, 1961, assessing her total income at INR 14,79,510. The assessee's appeal to the National Faceless Appeal Centre (NFAC), Delhi (CIT(A)), was dismissed, confirming the AO's addition. The assessee has now appealed to the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether the Hon'ble CIT(Appeals) erred in law and facts by confirming the AO's classification of genuine share investment transactions in Dinesh Hargola as sham and dummy transactions, thereby upholding the addition made under Section 68 of the Income Tax Act, 1961? 2. Whether the Hon'ble CIT(Appeals) erred in law and facts by confirming the addition under Section 68 of the Act, despite the transactions being supported by proper bills/contract notes and all payments/receipts being through banking channels? 3. Whether the Hon'ble CIT(Appeals) erred in law and facts by confirming the addition of Rs. 12,16,738 under Section 68 by wrongly applying the principle of preponderance of probabilities and ignoring documentary evidence? Assessee's Contentions: - The transactions were genuine, supported by bills/contract notes and routed through banking channels. - The assessment proceedings were conducted during the COVID-19 pandemic, causing distress to the family and preventing proper representation before the AO. - The CIT(A) disposed of the appeal based solely on written submissions without considering the evidence furnished. - Additional evidence, including computation of income, ledger account, pass-book, contract notes, and broker bills, was filed before the CIT(A) but not considered. - The timing of booking losses (September 2012) when there were no taxable gains, and profits (March 2013), indicated genuine transactions. Revenue's Contentions: - The AO initiated reassessment based on information that Hemo Organics Limited shares were used for providing accommodation entries for business loss/capital gains to introduce unaccounted income. - The assessee was a beneficiary of these transactions, receiving sale consideration of INR 12,16,738. - The assessee failed to comply with notices during assessment proceedings. - The addition was confirmed by the CIT(A) by applying the principle of preponderance of probabilities.

Which sections of the Income-tax Act were involved?

Section 68,Section 147,Section 144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SMC” BENCH, AHMEDABAD

Per Rahul Chaudhary, Judicial Member:

1.

The present appeal has been preferred by the Assessee against the Order, dated 30/12/2025, passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the ‘CIT(A)’] whereby the Learned CIT(A) had dismissed the appeal against the Assessment Order, dated 13/09/2021, passed under Section 147 read with Section 144B of the Income Act, 1961 [hereinafter referred to as ‘the Act’] for the Assessment Year 2013-2014. 2. The Assessee has raised following grounds of appeal

The order continues below.

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