INCOME TAX OFFICER-42(2)(3), KAUTILYA BHAVAN, BKC vs. KAUSHIK BALUBHAI MADHWANI, GIRGAON, MUMBAI

Present for: Assessee : Shri Sharwan Kumar Jha, Adv. (Virtually appeared) Revenue : Shri RiteshMisra, CIT DR Date of Hearing : 10.06.2025 Date of Pronouncement : 24.07.2025 O R D E R

PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:

2. Grounds taken by the Revenue are reproduced as under:

Kaushik BalubhaiMadhwani AY 2014-2015 "1. Whether on the facts and the circumstances of the case and in law, LdCIT(A) is right in deleting the addition of Rs. 30.31. 974 made by the A.0 on account of unexplained investment made in penny stock company M/s. Sunrise Asian Lid and commission paid? Date: 14.08.2023 .

2. Whether on the facts and the circumstances of the case, LdCIT(A) is right in deleting the addition of Rs. 29,43,664/- without appreciating the fact that the sale consideration of Rs. 29,43,664/- derived from the sale of shares of company M/s. Sunrise Asian Ltd. are bogus? 3. Whether on the facts and the circumstances of the case. LdCIT(A) is right in deleting the addition of Rs. 29,43, 664/- without appreciating the fact that the addition was made on account of undisclosed income on the basis of the statement recorded u/s. 132(4) of the accommodation entry provider, which is evidence as per section 132(4) of the Income Tax Act? 4. Whether on the facts and the circumstances of the case, Ld.CIT(A) is right in holding the assessee an entry provider without appreciating the fact that the assessee himself admitted that he was an Investor and had invested in the company M/s. Sunrise Asian Ltd. through Some other broker and the assessee did not even raise this ground during the assessment proceedings? 5. On the facts and in the circumstances of the case, the Hon'ble ITAT is requested to entertain this appeal, though, the tax effect is below the monetary limit prescribed in the CBDT Circular no. 17/2019 dated 08.08.2019 r.w. Circular No. 3/2018 dtd. l1.07.2018 as amended on 20.08.2018 as the case falls under the purview of CBDT Circular No. 23 of 2019 dated 06-09-2019 and O.M. dated 16/09/2019 ".

Scrip Name: Sunrise Asian Ltd [former known as SantoshimaTradelinks Ltd.] Buy Sell Date of Quantity Rate Amount Quantity Rate Amount Gain purchase/sale average 12.09.13 416157 503.15 205325786 Sunrise Asian 6000 503.45 2943664 Ltd. 2.1. In the course of assessment, enquires were made and explanations were called in respect of the said long term capital gain which were duly replied by the assessee along with furnishing relevant documentary evidences. However, ld. Assessing Officer took an adverse view and considered the sale proceeds on sale of shares amounting to Rs.29,43,664/- as unexplained cash credit and made the addition u/s.68. Further addition was made of Rs. 88,310/- towards commission on the said alleged transaction of long term capital gain. Assessee went in appeal before the ld. CIT(A) contesting the additions so made.

2.2 From the perusal of the order of the ld. CIT(A), it is noted that he has divulged himself from the issues raised by the assessee and has directed the ld. Assessing Officer to compute the commission at the rate of 1% on the total debit entries as determined from the bank accounts of the assessee. The finding arrived at by himis in total divergence to the grounds raised by the assessee in his appeal. It is an order which in no way deals with the issue contested by the assessee in respect of addition of sale proceeds on sales of shares of Sunrise Asian for which addition was made u/s.68 by the ld. Assessing Officer. The addition of commission made by the ld. Assessing Officer is in respect of arrangement of accommodation entries made by the assessee towards long term capital gain. The order of ld. CIT(A) in no way deals with the said issue and is one liable to be set aside not dealing with the merits.

Kaushik BalubhaiMadhwani AY 2014-2015 It is required that the first appellate authority viz. CIT(A) will appreciate the evidence, consider the arguments and apply the law on the given set of facts and circumstances and arrive at findings.

Order is pronounced in the open court on 24th July, 2025