ABHISHEK RAJESH MEHTA ,MUMBAI vs. INCOME TAX OFFICER WARD 13(3)(4), MUMBAI

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ITA 2238/MUM/2026Status: DisposedITAT Mumbai23 September 2026AY 2013-147 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal noted that this was the second round of litigation and that the assessee had failed to utilize the opportunities granted by the Tribunal and the CIT(A) to present their case and furnish documentary evidence. However, the Tribunal also acknowledged that substantial additions were made and that the assessee had now filed additional evidence before the Tribunal which had not been examined by the lower authorities. Considering the quantum of additions, the nature of the dispute, and the additional evidence, the Tribunal decided to grant one final opportunity to the assessee to present their case on merits. The impugned order of the CIT(A) was set aside, and the matter was restored to the file of the CIT(A) for de-novo consideration, including the additional evidence. This restoration was made subject to the payment of a cost of Rs. 11,000/- to the Prime Minister's Relief Fund, as a measure to address the assessee's repeated non-compliance. The Tribunal clarified that this was a final opportunity in the interest of justice and not an approval of the assessee's past conduct. The appeal was allowed for statistical purposes.

What were the facts?

The assessee, Shri Abhishek Rajesh Mehta, engaged in share trading and investments, is in the second round of appeal before the ITAT for Assessment Year 2013-14. The initial appeal before the CIT(A) was decided ex parte. The ITAT had restored the matter to the CIT(A) for a fresh decision, directing the assessee to present their case within 60 days. In the second round, the assessee failed to present their case within the stipulated time and did not furnish necessary documentary evidence, leading the CIT(A) to uphold the Assessing Officer's additions. The Assessing Officer had reopened the assessment based on information from the Investigation Wing regarding alleged penny-stock transactions in M/s Acclaim Industries Ltd. for providing accommodation entries. The AO treated sale proceeds of Rs. 2,85,12,168/- as unexplained credit under Section 68 and added Rs. 5,70,243/- as commission.

What were the issues?

1. Whether the learned Commissioner of Income Tax (Appeals) erred in confirming the action of the Assessing Officer in reopening the assessment under Section 147 and issuing notice under Section 148 of the Income Tax Act, 1961? The assessee contended that the reopening was erroneous, while the revenue's arguments are not recorded. 2. Whether the learned Commissioner of Income Tax (Appeals) erred in confirming the action of the Assessing Officer in passing the Assessment Order under Section 144 read with Section 147 without granting the assessee a reasonable and sufficient opportunity of being heard? The assessee argued for a lack of proper opportunity, and the revenue's arguments are not recorded. 3. Whether the learned Commissioner of Income Tax (Appeals) erred in confirming the action of the Assessing Officer in treating the sale proceeds of shares amounting to Rs. 2,85,12,168/- as unexplained credit under Section 68 on the basis of presumption and surmises? The assessee argued against the addition, and the revenue's arguments are not recorded. 4. Whether the learned Commissioner of Income Tax (Appeals) erred in not allowing deduction for the cost of shares and subjecting the gross sale proceeds to tax? The assessee argued for the deduction of cost, and the revenue's arguments are not recorded. 5. Whether the learned Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs. 5,70,243/- on account of commission and brokerage without any basis? The assessee argued against the commission addition, and the revenue's arguments are not recorded. 6. Whether the learned Commissioner of Income Tax (Appeals) erred in confirming the initiation of penalty proceedings under Section 271(1)(c)? The assessee prayed for deletion of penalty, and the revenue's arguments are not recorded.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 144,Section 68,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI

Before: SHRI OM PRAKASH KANT & SHRI SIDDHARTHA NAUTIYAL

For Respondent: Shri Surendra Mohan ( SR. DR. )

आदेश / ORDER

PER SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:

This appeal is filed by the Assessee against the order of Ld. NFAC vide order dated 25-Feb-2026 for the Assessment Year 2013-14. The Assessee has raised the following grounds of appeal:

1.

On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in reopening the assessment u/s.147 of the Act and issuing notice u/s.148 of the Income Tax Act, 1961.

2.

On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in passing the Assessment Order under section 144 r.w.s. 147 of the I.T Act without granting the assessee reasonable and sufficient opportunity of being heard. 3. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in considering the amount of Rs.2,85,12,168 being sale proceeds of shares as unexplained credit in the assessee's books of account only on the basis of presumption and surmises. 4. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer Without prejudice to Ground No. 2 in not allowing deduction for cost of the shares and subjected to tax the gross amount of sale proceeds of shares. 5. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition of Rs.5,70,243 on account of commission and brokerage without any basis and purely on presumption. 6. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in initiating penalty proceedings u/s 271(1)(c) of the of the Income Tax Act, 1961. 7. It is therefore prayed that the above penalty may please be deleted as learned members of the tribunal may deem it proper. 8. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal.

2.

The brief facts of the case are that the assessee, Shri Abhishek Rajesh Mehta, is engaged in the business of share trading as a sub-broker and is also engaged in making investments in shares and other securities. The present proceedings are in the second round of litigation before the learned CIT(A). In the earlier round, the appeal of the assessee had been decided ex parte. The Tribunal, in ITA No. 101/Mum/2024 for A.Y. 2013-14 vide order dated 11.10.2024, found that the earlier Ld. CIT(A) order was passed ex parte and was not a reasoned order. The matter was therefore restored to the file of the learned CIT(A) with a direction to decide the appeal afresh after giving due opportunity of hearing to the assessee. The assessee was also directed to present his case before the learned CIT(A) within 60 days.

3.

In the second round, the learned CIT(A) noted that the assessee did not present his case within the period of 60 days as directed by the Tribunal. The CIT(Appeals) issued notices on 03.10.2025 and 29.10.2025. According to the learned CIT(A), the assessee filed only partial submissions/requests for adjournment and did not furnish necessary documentary evidence required to support the grounds raised in appeal.

4.

The learned CIT(A) also noted that there was a delay of 5 years, 3 months and 13 days in filing the original appeal against the assessment order. Though the CIT(Appeals) observed that the delay had not been satisfactorily explained, he took a lenient view in the interest of natural justice and condoned the same. Thereafter, while deciding the matter in the second round pursuant to the directions of the Tribunal, the learned CIT(A) noted that the assessee had still not furnished the supporting documents relating to the purchase and sale of shares, demat account, contract notes and bank transactions. In the absence of such evidence, the learned CIT(A) upheld the additions made by the Assessing Officer and dismissed the appeal.

5.

Coming briefly to the assessment proceedings, the assessee had originally not filed his return of income for the year under consideration. The Assessing Officer received information from the Investigation Wing that the assessee was one of the beneficiaries of transactions in the shares of M/s Acclaim Industries Ltd., which according to the Investigation Wing was a penny-stock company used for providing accommodation entries in the form of exempt long-term capital gains. The Assessing Officer issued notice under section 148 of the Act.

In response, the assessee filed his return of income in which the assessee claimed exempt long-term capital gain arising from the share transactions.

6.

During the reassessment proceedings, the Assessing Officer asked the assessee to furnish purchase and sale bills, demat account statements, bank statements and other documentary evidence with respect to to the transactions in the shares of M/s Acclaim Industries Ltd. According to the Assessing Officer, despite several notices, the assessee did not furnish the required details. The Assessing Officer therefore proceeded on the basis of the material available with him. The Assessing Officer treated the sale consideration of ₹2,85,12,168/- on sale of shares as unexplained cash credit under section 68 of the Act and also made addition of ₹5,70,243/-, being 2% of the sale consideration, towards commission paid for obtaining the accommodation entry. The Ld.AO computed the total income at ₹2,94,72,971/-.

7.

The assessee is in appeal before us against the order passed by the learned CIT(A) dismissing the appeal of the assessee.

8.

We have heard the rival submissions and perused the material available on record. We have also taken note of the fact that this is the second round of proceedings. In the first round, the Tribunal had already restored the matter to the learned CIT(A) with a specific direction to provide an opportunity of hearing to the assessee. However, the assessee did not make use of the opportunity granted by the Tribunal and even in the second round before the learned CIT(A), the assessee did not furnish the required documentary evidence.

9.

At the same time, the assessee has now filed additional evidences before the Tribunal in support of the share transactions which was the subject matter of the additions. These evidences were not examined either by the Assessing Officer or by the learned CIT(A). The additions involved are also substantial, being ₹2,85,12,168/- under section 68 of the Act and a further addition of ₹5,70,243/- towards commission. In our view, the issues should be decided on the basis of the relevant evidence and on their own merits rather than merely on account of the earlier failure of the assessee to properly prosecute the proceedings.

10.

Considering the quantum of the additions, the nature of the dispute and the additional evidences now placed before us, we are of the view that one final opportunity may be granted to the assessee to present his case on merits. At the same time, the repeated non-compliance of the assessee cannot be ignored. The relief being granted by us should therefore be subject to payment of reasonable cost.

11.

Accordingly, in the interest of justice, we set aside the impugned order of the learned CIT(A) and restore the entire matter to his file for de-novo consideration. The additional evidences filed by the assessee before us shall also be considered by the learned CIT(A) in accordance with law.

12.

However, considering that this is the second round of proceedings and the assessee did not avail the opportunities granted earlier, the above restoration is made subject to payment of cost of ₹11,000/- to the Prime Minister's Relief Fund. The assessee shall deposit the said amount and furnish proof of payment before the learned CIT(A).

13.

We make it clear that the present restoration is being granted as a final opportunity in the interest of justice and should not be understood as approving the earlier conduct of the assessee in not properly prosecuting the proceedings.

14.

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

Order pronounced in the open court on 23.09.2026.

Sd/- Sd/- OM PRAKASH KANT SIDDHARTHA NAUTIYAL ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai Dated: 23.09.2026 KRK, Sr. PS Copy to: ABHISHEK RAJESH MEHTA , HARI OM SEVASANG APPAPADA KURAR 1 VILLAGE MALAD EAST, MUMBAI-400097, MAHARASHTRA

INCOME TAX OFFICER WARD 13(3)(4), 2 AAYAKAR BHAVAN, M.K ROAD,, MUMBAI-400020, MAHARASHTRA

3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAIBENCH 5 GUARD FILE

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