SANJAY PRATAPRAI MEHTA,BHAVNAGAR vs. THE DY.CIT., CENTRAL CIRCLE-1(1),, AHMEDABAD

ITSSA 34/AHD/2022Status: DisposedITAT Ahmedabad20 March 2024AY 2019-2035 pages
AI SummaryPartly Allowed

What were the facts?

The Income Tax Appellate Tribunal (ITAT) heard cross-appeals filed by the Assessee (Sanjay Prataprai Mehta) and the Revenue (D.C.I.T.) against the order of the CIT(A) concerning assessment orders passed under Section 153A of the Income Tax Act, 1961, for Assessment Years 2019-20 and 2020-21. The core issue involved a search operation conducted on 19/11/2019, which led to the recovery of an agreement cum MOU dated 26/06/2018. This MOU detailed the transfer of three partnership firms and one private limited company (collectively referred to as 'business entities') owned by the assessee and his family to the Kothi Steel group for a gross consideration of Rs. 40,00,00,000/-, after accounting for loan liabilities taken over. The Assessing Officer (AO) made an addition of Rs. 4,55,21,727/- to the assessee's income, representing his share of the net consideration.

What did the Tribunal hold?

The Tribunal decided on the issue concerning the addition on account of cash receipt from Kothi Steel group. The Tribunal noted that the assessee had not pressed grounds 2 and 3 of its appeal. The primary issue was the addition of Rs. 26,81,727/-. The Tribunal's detailed reasoning for this specific issue is not fully captured in the provided excerpt, as it refers to paragraphs 11 and 12 of the order for related decisions in the case of Shri Sanjay P Mehta. However, the combined result table indicates that for IT(SS)A No. 34/Ahd/2022 (Assessee's appeal for AY 2019-20), the appeal was 'partly allowed'. Similarly, for IT(SS)A No. 36/Ahd/2022 (Assessee's appeal for AY 2019-20), the appeal was also 'partly allowed'. The Revenue's appeals related to this transaction were generally dismissed. The operative direction for the assessee's appeals appears to be a partial allowance, implying some part of the addition was deleted or confirmed.

What were the issues?

1. Whether the Tribunal had to decide on the confirmation of an addition amounting to Rs. 26,81,727/- by the Ld. CIT(A) on account of cash receipt from Kothi Steel group, as argued by the assessee. The assessee contended that no amount was received from Kothi Steel, as the capital of partners in the firms was negative and the private limited company had a negative net worth, making payment unlikely. The assessee also argued that Section 45(4) of the Act was not applicable as the firms were not dissolved. The Revenue, through the AO, disagreed, observing that the total consideration of Rs. 18,59,54,766/- was attributable to the transaction and should be distributed among shareholders, leading to the addition in the assessee's hands. The assessee further argued that Rs. 17.00 crores were payable by Kothi family to Priya Blue Industries Ltd., as per the MOU, and that no cash payment was received by the assessee. The Revenue did not record specific arguments in this regard, relying on the AO's findings.

Which sections of the Income-tax Act were involved?

Section 153A,Section 45(4),Section 132(2),Section 127

AI-generated summary — verify with the full judgment below

आयकरअपीलीयअधिकरण, अहमदाबादनयायपीी IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’ B’’ BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER And Ms. MADHUMITA ROY, JUDICIAL MEMBER Assessment Sr. IT(SS)A No. Name of Appellant Name of Respondent Year No. Sanjay Prataprai Mehta, 1563/A, Aashirwad D.C.I.T., 2019-20 Rupani, No.34 & Central Circle-1(1), & 1-2. 30/Ahd/2022 Sardarnagar Road, 2020-21 Ahmedabad. Bhavnagar-364001. PAN: AABPM2791D Sanjay Prataprai Mehta, 1563/A, Aashirwad D.C.I.T., Rupani, No.55 & 2019-20 Central Circle-1(1), 3-4. 38/Ahd/2022 & Sardarnagar Road, 2020-21 Ahmedabad. Bhavnagar-364001. PAN: AABPM2791D Smt. Trupti Sanjay Mehta, 1563/A, Aashirwad D.C.I.T., Rupani, 2015-16 Nos.22 & Central Circle-1(1), 5-6 & Sardarnagar Road, 23/Ahd/2022 2017-18 Ahmedabad. Bhavnagar-364001. PAN: AIVPM0988N Smt. Trupti Sanjay Mehta, 1563/A, Aashirwad Rupani, Sardarnagar Road, D.C.I.T., Bhavnagar-364001. Central Circle-1(1),

7.

No.35/Ahd/2022 2019-20 Ahmedabad. PAN: AIVPM0988N

IT(SS)A nos.34 & 55/AHD/2022 with 11 others Asstt. Year 2019-20 2

Smt. Trupti Sanjay Mehta, 1563/A, Aashirwad Rupani, D.C.I.T., Sardarnagar Road, Central Circle-1(1),

8.

Nos.56/Ahd/2022 2019-20 Bhavnagar-364001.

The order continues below.

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