MALAY SHAILESHBHAI PATEL,AHMEDABAD vs. THE ITO, WARD-5(3)(1), AHMEDABAD

The assessee is an individual engaged in trading of wheat, rice, and food items. For the A.Y. 2018-19, the original return of income was filed u/s. 139(4) of the Act on 28.01.2019 declaring income of Rs.3,96,590/-. Subsequently, a notice u/s 148A(b) of the Act was issued on 23.03.2022 to initiate reassessment proceedings. The AO passed the reassessment order u/s.147 r.w.s. 144B on 22.03.2023 assessing the total income at Rs.1,77,75,146/-. In the reassessment order, the AO made an addition of Rs.1,66,32,866/- u/s 69A of the Act treating the entire transaction claimed as short-term capital gain from trading in shares of Appu Marketing Ltd. (later renamed Ejecta Marketing Ltd.) as unexplained money. The AO observed that the assessee purchased 95,000 shares through Khajanchi & Gandhi Stock Broking Pvt. Ltd. for Rs.60,75,250/- and 1,47,042/- shares through Arham Share Consultants Pvt. Ltd. for Rs.1,05,57,616/- and sold them shortly thereafter at marginal gains. The AO held that the scrip of Ejecta Marketing Ltd. was a penny stock with no sound financials or genuine business activity and was earlier suspended by BSE and flagged by SEBI as a shell company. The AO relied on SEBI’s action dated 07.08.2017, various judicial precedents and the principle of human probabilities to disbelieve the genuineness of the transactions. The AO held that the assessee routed unaccounted income through accommodation entries. The AO also disallowed the assessee’s claim of short-term capital loss of Rs.5,64,910/- arising from transactions in the Futures & Options (F&O) segment for want of proper scrip-wise and date-

The assessee filed an appeal before CIT(A) and raised various legal and factual grounds. The main contention was that the AO passed the order u/s 147 r.w.s. 144B of the Act without granting adequate opportunity of being heard. It was submitted that the SCN issued on 11.03.2023 was to be replied by 16.03.2023, giving only 4 working days. A request for adjournment was also filed on 17.03.2023. However, the order was passed without considering the submissions. The assessee also contested the additions on merits, contending that the purchases were genuine, made via account payee cheques and routed through SEBI-registered brokers, and were supported by contract notes and bank statements. Despite these grounds, the Ld. CIT(A) dismissed the appeal in limine by observing that the appellant did not furnish compliance to notices dated 13.09.2024, 01.10.2024, and 26.10.2024. The Ld. CIT(A) invoked the principle “Vigilantibus et non dormientibus jura subveniunt” (The law aids those who are vigilant, not those who sleep upon their rights.) and relied on some judicial precedents to hold that the assessee failed to pursue the appeal. Consequently, the appeal was dismissed without

Aggrieved by the order of CIT(A) the assessee in appeal before us raising following grounds of appeal: 1, Ld. CIT (A) (NFAC) erred in law and on facts in dismissing the appeal filed by the appellant in absence of primary response to the appeal notices.

Ld. CIT (A) (NFAC) erred in law and on facts in confirming huge addition of Rs.1,66,32,866/- as unexplained money u/s 69A and Rs. 5, 64, 910/-disallowance of short-term capital loss made by AO.

Ld. CIT (A) (NFAC) erred in law and on facts not considering the fact that assessment order u/s 147 r w s 144B was passed by AO without providing adequate opportunity of being heard to the appellant.

Levy of interest u/s 234A/234B & 234C of the Act is unjustified.

Initiation of penalty proceedings u/s 271AAC (1) of the Act for addition made u/s 69A rw s 115BBE of the Act is unjustified.

Initiation of penalty proceedings-u/s 270A of the Act is unjustified.

During the course of hearing, the ld. Authorized Representative (AR) of the assessee submitted that the CIT(A) has committed an error in law by not deciding the appeal on merits, despite stating in para 4 that the “grounds of appeal are adjudicated”. It was submitted that no speaking order was passed, and the appeal was dismissed solely on the ground of non-

The Id. DR fairly agreed that the CIT(A) has not passed a speaking order on the grounds of appeal and left the matter to the discretion of the Bench.

We have considered the rival submissions and perused the material on record. The undisputed fact is that the Ld. CIT(A) has dismissed the appeal without deciding the grounds on merits. Although it is stated in para 4 of the order that “the grounds of appeal are adjudicated”, there is no discussion,

In view of the above facts and in the interest of justice, we deem it fit to restore the matter back to the file of the CIT(A) for fresh adjudication on all grounds of appeal after granting adequate opportunity of being heard to the assessee. The assessee is also directed to cooperate in the proceedings and furnish necessary submissions and evidence as required.

In the result, the appeal of the assessee is allowed for statistical