The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) has held that inadequate opportunity for hearing in appeal proceedings and remand matter back to Commissioner Income Tax (Appeal) for fresh adjudication.
The appellant, Sangitaben Chetankumar Doshi had purchased 5000 shares of Kappac Pharma Ltd at 20/-per share in physical form by making a payment of Rs. 1,00,000/-in cash. The said shares were later sold by the assessee for Rs. 12,43,000/-. The AO based on the inquiry report of the Director of Investigation, Kolkata found that M/s Kappac Pharma Ltd was a penny stock company and was being used to launder money by providing accommodation entry.
The AO added an amount of Rs. 11,43,000/- to the returned income of the assessee. On appeal, CIT(Appeals) passed an ex parte order confirming the addition. The aggrieved assessee filed an appeal before the ITAT.
The counsel for the appellant submitted that there is no specific information in respect of the involvement of the assessee in engaging in any sham transaction and the order passed by the Revenue is based on conjectures and surmises. The appellant further submitted that he has validly held the shares for more than 12 months before disposing of the same. All the transactions were made through banking channels and there is no allegation that the assessee has been involved in any accommodation entry.
The Coram of Mr. Waseem Ahmed, Accountant Member, and Mr. Siddhartha Nautiyal, Judicial Member has observed that an inadequate opportunity of hearing was provided by the CIT(Appeals) in appeal proceedings and the assessee was not granted an opportunity of presenting his case on merits and the order was passed on ex-parte basis without allowing assessee to present his case.
The Tribunal has held that “the CIT(Appeals) passed ex parte order confirming the additions made by the Assessing Officer. In our view, in the interests of justice, we are restoring the matter to the CIT(Appeals) for adjudication of the case on merits after giving opportunity of hearing to the assessee”.
Mr. Vipul Khandhar and Mr. R.R. Makwana appeared for the appellant and revenue respectively.
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