MITESH SURESH SHAH,MUMBAI vs. ITO INTERNATIONAL TAXATION WARD 4(2)(1), MUMBAI

VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE 3.1 It is submitted that, in the facts and the circumstances of the case, and in law, the directions issued by the Ld. DRP as well as the final assessment order so framed, pursuant to the directions of DRP, is bad and illegal, as the same were framed in gross and flagrant breach of the principles of Natural Justice.

ADDITION OF Rs. 71,05,040/- u/s. 68 OF THE ACT AS ALLEGED UNEXPLAINED CASH CREDIT 5.1 It is submitted that, in the facts and circumstances of the case and in law, the A.O. erred in making addition of the amount of Rs. 71,05,040/- u/s. 68 of the Act, pursuant to the directions of the Ld. DRF, by treating the alleged sale consideration of share transactions carried out by another "Mr. Mitesh Shah' by misusing the PAN of the Appellant as alleged unexplained cash credit in the name of the Appellant. 5.2 While doing so, the A.O./Ld. DRP erred in: (1) Basing his action only on surmises, suspicion and conjecture; (ii) Taking into account irrelevant and extraneous considerations; (iii) Ignoring relevant material and considerations as submitted by the Appellant; (iv) failing to appreciate that the PAN of the Appellant was misused by another "Mr. Mitesh Shah' residing at Nagpur, and (v) failing to appreciate that the Appellant had never traded in shares and securities during the previous year and, therefore. 5.3 Without prejudice to the above, in any case, the A.O. has deleted the addition, made by him on identical facts, in the immediately preceding year (A.Y. 2015-2016) based on the enquiry report received from the police. 5.4 It is submitted that in the facts and the circumstances of the case, and in law, no such addition was called for.

ADDITION OF Rs. 98,500/- u/s. 69 OF THE ACT AS ALLEGED UNEXPLAINED INVESTMENT 6.1 It is submitted that, in the facts and circumstances of the case and in law, the A.O. erred in making addition of the amount of Rs. 98,500/- u/s. 69 of the Act, pursuant to the directions of the Ld. DRP, by treating purchase consideration of alleged share transactions carried out by another 'Mr. Mitesh Shah" by misusing the PAN of the Appellant as alleged unexplained investment in the name of the Appellant. 6.2 While doing so, the A.O. erred in: (i) Basing his action only on surmises, suspicion and conjecture; (ii) Taking into account irrelevant and extraneous considerations; (iii) Ignoring relevant material and considerations as submitted by the Appellant; (iv) failing to appreciate that the PAN of the Appellant was misused by another 'Mr. Mitesh Shah' residing at Nagpur, and (v) failing to appreciate that the Appellant had never traded in shares and securities during the previous year. 6.3 Without prejudice to the above, in any case, the A.O. has deleted the addition, made by him on identical facts, in the immediately preceding year (A.Y. 2015-2016) based on the enquiry report received from the police. 6.4 It is submitted that in the facts and the circumstances of the case, and in law, no such addition was called for.

LIBERTY The Appellant craves leave to add, alter, delete or modify all or any the above ground at the time of hearing.”

We have heard the counsels for both the parties, perused the material placed before us, the judgments cited before us, and the orders passed by the Revenue authorities. From the records, we noticed that initially the impugned assessment order dated 03.01.2023 passed by the Assessing Officer u/s 147 r.w.s. 144C(13) of the Act was passed pursuant to the direction issued by the Dispute Resolution Panel u/s 144C(5) of the Act was challenged before the Hon’ble Bombay High Court.

The Hon’ble Bombay High Court, vide its order dated 18.08.2025, passed the following directions, and the same are reproduced herein below:

We have passed this order in the peculiar facts and circumstances of this case because in fact for the earlier Assessment Year, namely, for the Assessment Year 2015-2016, the Assessing Officer itself has. come to the conclusion that the PAN of the Petitioner was misused by some third party and therefore, has not made any addition in relation of the income of the Petitioner for the said Assessment Year. In the Assessment Year in the present case, namely, Assessment Year 2016-

The Writ Petition is accordingly disposed of, and there shall be no orders as to costs.

In view of the above direction of the Hon’ble Bombay High Court, it is clear that liberty was granted to the assessee to challenge the order of the AO by filing an appeal before the Tribunal. The Hon’ble Bombay High Court has also considered the fact that in the earlier assessment year, i.e., AY 2015–16, the AO himself had come to the conclusion that the PAN of the assessee was misused by some third party and, therefore, had not made additions in relation to the income of the assessee for the said assessment year.

It was also mentioned that in the assessment year under consideration, i.e., AY 2016–17, the same problem has arisen. Thus, for this reason, the Hon’ble High Court had granted a stay of recovery proceedings.

Consequently, in view of the decision of the Hon’ble High Court, the assessee had preferred the present appeal and reiterated the same arguments as were raised by him before the

We also noticed that the assessee had placed on record the assessment order for AY 2015–16, the operative portion of which is contained in para no. 4 and the same is reproduced here below: 4. It is pertinent to mention here that similar transactions were reported in the case of the assessee for AY 2016-17 also. Accordingly, the case of the assessee for AY 2016-17 was reopened u/s. 147 of the IT Act. During the assessment proceedings of AY 2016-17 the assessee was reiterating that his PAN has been misused for the subject transaction. However, in absence of documentary evidence with regard to the misuse of the PAN, the assessing officer passed the order without considering the claim of the assessee of his PAN Card being misused. The assessee went in DRP against the order and simultaneously filed complaint with the police station with regard to the misuse of his PAN card. Further, DRP confirmed the action of the AS against which assessee has filed writ before the Hon'ble Bombay High Court Meanwhile, Vakola Police Station sent an enquiry report to the assessee stating that the PAN was used by the name shake resident of Nagpur whose PAN is DMUPS7919R. In view of the enquiry report of police coupled with the statement of the assessee the underlying transaction reported thereof is considered to be not undertaken by the assessee. Accordingly, the income of the assessee is assessed at 55,590/- Mitesh Suresh Shah 9. In view of the above facts, we noticed that no addition was made for AY 2015–16 by the concerned AO on the ground that Vakola Police Station had sent an inquiry report to the assessee stating that the PAN of the assessee was used by a namesake resident of Nagpur whose PAN is DMUES7919R. Thus, in view of the inquiry report of the police coupled with the statement of the assessee, the underlying transaction reported therein was considered to have not been undertaken by the assessee.

Although we have considered the assessment order of the AO for AY 2015–16, but no inquiry report of the police was placed on record before us by the assessee as mentioned in the assessment order of AY 2015–16. We are of the view that the police themselves had inquired and reached to the conclusion that the PAN of the assessee was used by the namesake resident of Nagpur. Therefore, the transaction of that year was considered to be not undertaken by the assessee. For this limited purpose of ascertaining the facts, the matter is restored back to the file of the AO to verify the inquiry report of Vakola Police Station with regard to any findings concerning the year under consideration. If the Assessing Officer finds that the inquiry report contains facts relevant to the year under consideration, then in that eventuality AO is directed to delete the impugned additions.

Other grounds raised by the assessee are academic in nature and do not require any adjudication.

In the result, the appeal filed by the assessee stands partly allowed with no order as to cost.