RAJU BABABHAI DESAI ,AHMEDABAD vs. THE ITO, WARD-3(3)(4), AHMEDABAD

The learned CIT(A) has grievously erred in law and on facts in confirming the addition on account of transaction in Penny stock at Rs.4,41,52,811/- and accommodation entry through Tamilnadu Mercantile Bank at Rs.4,74,61,850/-i.e. both source of funds and its application as unexplained cash credit u/s. 68 of the Act without proper consideration and appreciation of the facts of the case. In view of facts of the case, the impugned addition requires to be deleted.

The learned CIT(A) has erred in law and on facts in confirming the addition of Rs. 9,16,14,391/-. However, in view of the facts and explanations and evidences filed during the course of assessment proceedings, the impugned addition made by AO and confirmed by the learned CIT(A) is wholly unjustified and bad in law and thus requires to be deleted.

The learned CIT(A) has grievously erred in law and on facts in confirming the above addition while observing that the "appellant failed to substantiate his claim that Sri Sanjay Shah had offered the income on the impugned transactions of the appellant" in spite of the fact that the appellant has furnished the assessment order of Sri Sanjay Shah passed by the DCIT Central Circle 1(2) Ahmedabad u/s. 153A of the Act in support of his contentions that above Bank A/c and its related transactions are in fact owned up by him and Raju Bababhai Desai Vs. ITO Asst. Year : 2013-14 - 3– department has assessed income arising from such transactions in the hands of Sanjay Shah. Hence, observation of the learned CIT(A) is factually incorrect and thus addition made by the AO deserves to be deleted.

The learned CIT(A) has grievously erred in law and on facts in failing to consider the fact that the above Bank A/cs of the appellant with Tamilnad Mercantile Bank Ltd and transactions carried out through the said Bank A/cs is owned up by Sanjay Shah during the Investigation proceedings and has offered the income arising from such transactions in his settlement application filed before the Hon'ble Settlement Application for which IBS 1 New Delhi has already passed the order u/s. 245D(4) of the Act accepting such facts. Hence the impugned addition in the hands of appellant is bad in law and requires to be quashed.

The learned CIT(A) has grievously erred in law and on facts in not appreciating the fact that since the DCIT Central Circle 1(2) Ahmedabad, being the AO of Sanjay Shah, while passing the order u/s.153A of the Act assessed the income arising from the above transactions in the hands of Sanjay Shah, the addition made by AO in the hands of appellant is bad in law and requires to be quashed.

The Ld. CIT(A) passed an ex-parte order. The assessment order was also passed based on the information received from the Investigation Wing on account of accommodation entries and penny stock trading. It was submitted that the assessee is one of the conduits of the penny stock and accommodation entries along with 47 other persons. It was submitted that the amounts in the bank account of the assessee stands assessed in the hands of Shri Sanjay Shah, the entry operator. In this regard, it was incumbent upon the assessee to produce Shri Sanjay Shah along with his assessment records before the Assessing Officer to discharge the onus. Accordingly, the Assessing Officer is required to examine Raju Bababhai Desai Vs. ITO Asst. Year : 2013-14 - 4– Shri Sanjay Shah - the entry operator, and verify his assessment records of Shri Sanjay Shah and examine whether the amounts reflecting in the bank accounts in the name of the assessee Raju Bababhai Desai have been assessed in the case of Shri Sanjay Shah or not. If proven to be assessed in the hands of Shri Sanjay Shah, no addition would be called for in the hands of the assessee.

The matter stands remanded back to the Assessing Officer. In the result, the appeal of the assessee is allowed for statistical purposes.