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Facts
The assessee's case was reopened under Section 147 for AY 2018-19 due to suspected involvement in accommodation entries related to Kretto Syscon Ltd shares, leading to an addition of ₹78,20,272/- under Sections 69 and 69A. The CIT(A) dismissed the assessee's appeal for non-appearance, without deciding the case on merits.
Held
The Tribunal set aside the CIT(A)'s order, noting the appeal was not decided on merits and substantial additions were involved. It restored the matter to the CIT(A) for de novo adjudication, granting the assessee a final opportunity to present the case, but imposed a cost of ₹10,000/- for non-cooperative conduct.
Key Issues
Whether the assessment order and additions under Sections 69 and 69A related to alleged accommodation entries were valid, and the propriety of the CIT(A)'s dismissal of the appeal for non-appearance.
Sections Cited
147, 250, 69, 69A, 271AAC(1), 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
Before: SHRI SIDDHARTHA NAUTIYAL & SHRI NARENDRA PRASAD SINHA
(Assessment Year: 2018-19) Devang Rajnikant Shah, Vs. Income Tax Officer, 1, Ravi Bunglows, Bhagwan Nagar Ward-5(3)(1), Tekra, Paldi, Ahmedabad-380007 Ahmedabad [PAN No.AIOPS2421D] (Appellant) .. (Respondent) Appellant by : Shri Virang Mehta, AR Respondent by: Shri Abhijit, Sr. DR 10.09.2025 Date of Hearing Date of Pronouncement 12.09.2025 O R D E R
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 15.04.2025 passed for A.Y. 2018-19.
The assessee has taken the following grounds of appeal:
“1. The assessment order passed u/s 147 of Income Tax Act by the Assessing Officer and confirmed by the first appellate authority u/s 250 is bad in law and deserved to be uncalled for.
2. The appellate authority has erred in law and on facts in making and confirming respectively the addition of Rs. 78,20,272/-, sustained by the first appellate authority. The same deserves to be deleted.
The appellant craves to reserve his right to add, alter, amend or delete any ground of appeal during the course of hearing.”
Devang Rajnikant Shah vs. ITO Asst. Year –2018-19 - 2– 3. The brief facts of the case are that the case of the assessee was reopened under section 147 of the Income Tax Act (Act) for AY 2018-19 based on information received regarding the assessee’s involvement in suspicious transactions in the scrip of Kretto Syscon Ltd (previously known as Ideal Optics Ltd/Ideal Texbuild Ltd), which were suspected to be accommodation entries. On a detailed analysis of the trading patterns in this scrip during the examination period (2016-2018), the Assessing Officer observed that price of said share was artificially manipulated, there were volume irregularities and also there was a lack of correlation with fundamental or technical indicators. The Assessing Officer accordingly held that these transactions entered into by the assessee were not genuine and were instead structured for accommodation purposes. Despite being given multiple opportunities, the assessee failed to establish that these transactions were accounted for in the audited books of accounts. The Assessing Officer noted that the assessee merely submitted self-prepared ledgers and confirmations without producing relevant books of account, trading statements, or contract notes to substantiate that the alleged purchase and sale of shares had been duly recorded. Moreover, the assessee did not provide any breakup of trading in Futures & Options (F&O), nor could the assessee reconcile losses declared in the Trading Account with those claimed in the so-called "Capital Gain Statement." The AO further noted that the scrips involved in these transactions were not reflected in the Trading Account. In light of the above observations, the purchases amounting to ₹21,43,370/- were treated as unexplained investments under section 69, of the Act and the alleged scrips/valuables amounting to ₹56,76,902/-, not recorded in the books of accounts, were treated as unexplained money under section 69A of the Act. The Assessing Officer made a total addition of ₹78,20,272/- to the returned income. The AO also rejected the assessee's argument that intraday trades did not require contract notes and held that proper documentation is essential, even for intraday transactions. The assessee's inability to produce confirmations from third parties or any loan agreement for pledged shares further weakened his claim. As a result, the Assessing Officer also initiated penalty proceedings under section 271AAC(1) read with section 115BBE of the Act.
In appeal, CIT(Appeals) dismissed the appeal of the assessee on account of non-appearance on part of the assessee despite issuance of multiple notices, with the following observations:
“7. DISCUSSION, REASON & DECISION: The following notices of hearing are issued and served on the email address of appellant as under- S. No. Date of issue Compliance date Remarks 1 05.09.2023 19.09.2023 The appellant did not respond 2 24.09.2024 09.10.2024 The appellant did not respond 3 18.03.2025 26.03.2025 The appellant did not respond There was no compliance on the part of the appellant after filing of first appeal and no communication was received from the appellant during course of this appellate proceeding till date. …. In view of the facts and legal position discussed above, it is seen that appellant is not interested in pursuing the appeal and not having any documents, explanation and evidence in support of grounds of appeal raised and thus has not discharged onus to prove the genuineness of the fact raised in grounds of appeal. It is seen that the appellant has filed Statement of facts/Grounds of appeal along with Form 35, but no written submission has been filed till date. I have carefully gone through the grounds of appeal, statement of facts, assessment order and other material on record. In response to notice of hearing issued, the appellant has not made any submissions to corroborate the Grounds of Appeal. The appellant has not submitted any documentary evidences during the Appellate proceedings. The appellant has not uploaded even a single document in response to the above notices, in spite of multiple hearing opportunities (as above). The appellant failed to substantiate the claims made in grounds of Appeal and there is nothing available on record to rebut the Assessing Officer’s findings on merits. The appellant Devang Rajnikant Shah vs. ITO Asst. Year –2018-19 - 4– has not produced any material to controvert the finding of A O. Further, from the above mentioned conduct of the appellant, it is clear that the appellant is not interested in prosecuting its appeal. As no details are uploaded by the appellant, there is nothing available on record to rebut the Assessing Officer’s findings on merits. No purpose would be served by keeping this appeal pending. As per the details available on record, there is nothing to controvert the findings of the AO and therefore, all the grounds raised in appeal are hereby dismissed. In the event, I have no reason to interfere with the findings of the AO. Hence, the order of the Assessing Officer is confirmed and the appeal is dismissed.
8. In result, appeal filed by the appellant is “dismissed”.”
5. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. Before us, the ld. counsel for the assessee submitted that similar matter for immediately previous year i.e. assessment year 2017-18 is pending adjudication before CIT(Appeals). Accordingly, the ld. counsel for the assessee submitted that looking into the quantum of additions made, the present appeal may be restored to the file of CIT(Appeals) for fresh consideration.
In response, Ld. DR placed reliance on the observations mse by the Assessing Officer and CIT(Appeals) in their respective orders.
We have heard the rival contentions and perused the material on record. We note that the appeal of the assessee was dismissed by the ld. CIT(Appeals) for non-appearance despite issuance of multiple notices, and the matter was not decided on merits. Having regard to the fact that substantial additions amounting to ₹78,20,272/- have been made by the Assessing Officer under sections 69 and 69A of the Act, and considering the nature of the issues involved, particularly the allegation of accommodation entries in the scrip of Kretto Syscon Ltd., we are of the view that the assessee deserves one final opportunity to present his case before the first appellate authority. We also note that similar matter for the immediately preceding year is stated to be pending before the CIT(Appeals), which further justifies the need for a coordinated and holistic adjudication. Accordingly, in the interest of justice, we deem it fit to set aside the impugned order of the CIT(Appeals) and restore the matter to his file for de novo adjudication, after giving due opportunity of hearing to the assessee. However, considering the non-cooperative conduct of the assessee before the CIT(Appeals), we impose a cost of ₹10,000/- on the assessee, which shall be deposited with the Prime Minister’s Relief Fund within 30 days from the date of receipt of this order. Proof of such deposit shall be filed before the CIT(Appeals) at the time of hearing of the appeal. The assessee is directed to appear before the CIT(Appeals) in response to notices issued, failing which the CIT(Appeals) shall be at liberty to decide the matter ex parte in accordance with law.
In the result, the appeal is allowed for statistical purposes. This Order is pronounced in the Open Court on 12/09/2025