DEPUTY COMMISSIONER OF INCOME -TAX, CENTRAL CIRCLE-1(1), AHMEDABAD, AHMEDABAD vs. PRAKASH MISRIMAL SANGHVI, AHMEDABAD

ITA 1150/AHD/2024Status: DisposedITAT Ahmedabad18 February 2025AY 2015-1676 pages
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What did the Tribunal hold?

The Tribunal held that the approach of the CIT(A) in confirming the addition of Rs. 33,83,370/- on account of peak credit in other ledgers and deleting the addition of Rs. 13,14,035/- in respect of receipts from family members (found to be protective) was logical and rational. The Tribunal found no fault with the CIT(A)'s decision to tax only the undisclosed income and not the entire undisclosed receipts, stating that the AO's initial addition of Rs. 196.80 crores on gross credit was not justified. The AO himself, in the remand report, had proposed an addition of only Rs. 33,83,370/- for 'Other ledgers'. The CIT(A) rightly considered the peak credit for miscellaneous transactions, excluding those already accounted for in identified heads, and confirmed the addition to that extent. The Revenue failed to controvert the CIT(A)'s findings regarding the protective nature of the family member receipts. Therefore, the Revenue's ground of appeal concerning these deletions was dismissed. The Tribunal did not expressly leave any issue undecided.

What were the facts?

The Income Tax Appellate Tribunal (ITAT) heard 18 appeals filed by the assessee, Prakash Misrimal Sanghvi, and the Revenue against the combined order of the CIT(A) for Assessment Years (AY) 2013-14 to 2021-22. A search action under Section 132 of the Income Tax Act, 1961, was conducted on 23.11.2021, covering the assessee's premises. Incriminating handwritten diaries and loose documents detailing cash transactions were seized. The assessee admitted these were his books of account for unrecorded cash transactions. The Assessing Officer (AO) issued notices under Section 148 for AY 2013-14 to 2020-21 and completed assessments under Section 143(3) r.w.s. 147 for those years and under Section 143(3) for AY 2021-22, making additions based on seized materials. The CIT(A) granted partial relief to the assessee.

What were the issues?

1. Whether the notice issued under Section 148 of the Income Tax Act, 1961, and the consequential assessment order under Section 147 are bad in law, illegal, and void-ab-initio, as argued by the assessee? 2. Whether the additions made by the AO based on the seized diaries, which the assessee claims do not pertain to him, are valid, as argued by the assessee? 3. Whether the CIT(A) erred in confirming additions related to interest on 'Shree Vyaaj Khaate', profit on land trading, profit on share trading, profit on 'Shree Maal Khaate', peak credit under 'Other Trading' invoking Section 115BBE, and disallowing commission and other expenses and bad debts, as argued by the assessee? 4. Whether the CIT(A) erred in deleting additions on account of accrued interest, land trading, share trading, and 'maal khate'/'Shree Maal Khate', as argued by the Revenue? Assessee's contentions: The notice under Section 148 and assessment under Section 147 are bad in law. The seized diaries do not belong to the appellant. The CIT(A) erred in confirming various additions and disallowing expenses/bad debts. The assessment order violated principles of natural justice. Revenue's contentions: The CIT(A) erred in deleting additions related to accrued interest, land trading, share trading, and 'maal khate'/'Shree Maal Khate'.

Which sections of the Income-tax Act were involved?

Section 132,Section 143(3),Section 147,Section 148,Section 69A,Section 115BBE,Section 28

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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD

Before: SHRI T.R. SENTHIL KUMAR & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri S. N. Soparkar, Sr. Advocate &, Shri Parin Shah, A.R, Shri A. P. Singh, CIT-DR
For Respondent: Shri A. P. Singh, CIT-DR
Pronounced: 21/11/2024

PER BENCH: These 18 appeals are filed by the assessee & the Revenue against the combined order of the Commissioner of Income Tax (Appeals)-11, Ahmedabad (in short ‘the CIT(A)'

The order continues below.

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