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BIREN HARISHCHANDRA VAKHARIA ,SURAT vs DCIT, CIRCLE-1(3), SURAT | BharatTax

BIREN HARISHCHANDRA VAKHARIA ,SURAT vs. DCIT, CIRCLE-1(3), SURAT

ITA 485/SRT/2024Status: DisposedITAT Surat23 January 2025AY 2018-19Bench: Dr. DINESH MOHAN SINHA (Judicial Member), SHRI BIJAYANANDA PRUSETH (Accountant Member)1 pages

AI SummaryAllowed

Facts

The assessee filed an income tax return for AY 2018-19, and the case was reopened based on information that the assessee availed accommodation entries amounting to Rs. 22,50,000/-. The Assessing Officer (AO) finalized the assessment by adding this amount to the assessee's total income. The CIT(A) partly allowed the assessee's appeal.

Held

The Tribunal observed that the case was not properly adjudicated, noting that the AO did not investigate the issue sufficiently and did not provide the assessee with adequate time or opportunity for cross-examination. The Tribunal also questioned the legal basis for treating accommodation entries as total income.

Key Issues

Whether the addition of Rs. 22,50,000/- as accommodation entries was correctly made without proper investigation and adherence to legal procedure, and whether the assessee was afforded sufficient opportunity to present their case.

Sections Cited

147, 148, 143(2), 142(1), 270A, 148A(d), 44AD

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT

Before: Dr. DINESH MOHAN SINHA&SHRI BIJAYANANDA PRUSETH

For Appellant: Shri P M JAGASETH, CA

For Respondent: Shri AJAY UKE, SR. DR

Hearing: 18/12/2025Pronounced: 23/01/2025

Appellant by : Shri P M JAGASETH, CA Respondent by : Shri AJAY UKE, SR. DR Date of Hearing : 18/12/2025 Date of Pronouncement : 23/01/2025 आदेश/ O R D E R PER Dr. DINESH MOHAN SINHA, JM:

Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2018-19, is directed against the order passed by the National Faceless Appeal Centre (NFAC) vide order dated 04.03.2024, which in turn arises out of an assessment order passed by Income Tax Department / Assessing Officer under section (u/s.) 147 r.w.s 144B of the Income Tax Act, 1961 vide order dated 20.03.2023.

ITA-485/SRT/2024 Biren Harishchandra Vakharia

2.

Grounds of appeal

raised by the assessee, are as followed:

1. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in reopening the assessment u/s 147 of the Act and notice u/s 148 of the Act was issued.

2. On the facts and in the circumstances of the case as well as the law on the subject. the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in not considering the facts of the case and made addition without any base.

3. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition of Rs.22,50,000/- on account of alleged accommodation entries from the bogus entities run by Kamal J. Zaveri treated as income.

6.

We heard the rival contention of both the parties and perused the material available on record. We note that the assesse has filed income Tax return for A.Y. 2018-19 claiming total income of Rs 4,90,190/-. We further note that the assesse has calculated income u/s 44AD of the Act @ 6% on total turnover of Rs 28,29,150/- which includes Rs 22,50.000/- which is a part of sale proceed of ~ 3 ~ ITA-485/SRT/2024 Biren Harishchandra Vakharia goods of the appellant. The return of Income has been accepted by the AO without any modification, we further note that the AO by issuing notice asked from the appellant to explain the purpose of the transaction with supporting documentary evidence like bills, challans etc. However, No satisfactory explanation with supportive document were furnished. We further note that 143(2) notice was issued on 02.03.2023 to be complied with on 03.03.2023 and further show cause notice was issued on 03.03.2023 to be complied on 09.03.2023 the same was complied with on 09.03.2023, we further note that the assesse was not given sufficient time to explain the case before AO. The assesse has asked to provide the copy of statement given by Shri Kamal J. Zaveri and the same was not provided. No opportunity for cross examination of Kamal J. Zaveri was provided to the assesee . We further note that the AO has reopened the case and decided the case only on the basis of information received through investigation branch The AO has not tried to investigate the issue by issuing notice u/s 133(6) to collect more information in order to ascertain the correct total income of the assesse. We further note that while approving the order of AO wherein the assesse has requested for supply of impounded material gathered against the assesse and also provide the relevant material of the case. The Hon’ble CIT has observed the following observation:- “ With regard to appellant's request to the A.O. to provide copy of approval of PCIT, Surat-1 as mentioned in notice issued u/s. 148 of the I. T. Act the A.O. has already informed the appellant to refer to the order passed u/s. 148A(d) of the I. T. Act dated 27.03.2022 which is passed after necessary approval of the competent authority, therefore this objection raised by the appellant is also not tenable.” We further note the AO made an addition in income on account of accommodation entry of Rs 22,50,000/- being approved by ld. CIT. We are unable to understand that there is no provision of law to consider the accommodation entry to be the total income and taxed accordingly. The judgements relied by the AO are having no application as are on different facts.