Raju Bababhai Desai Vs ITO (ITAT Ahmedabad)
Penny Stock & Accommodation Entry Addition of ₹9.16 Crore Remanded — ITAT Directs Verification Whether Income Already Taxed in Entry Operator’s Hands
Ahmedabad Bench of the ITAT condoned the delay and dealt with an appeal arising from an ex-parte assessment under section 144, wherein a massive addition of ₹9.16 crore was made under section 68 on account of alleged penny stock transactions and accommodation entries routed through Tamil Nadu Mercantile Bank.
The assessee contended that he was merely a conduit and that the entire bank transactions had already been owned up and taxed in the hands of the alleged entry operator, Shri Sanjay Shah, including through proceedings under section 153A and a settlement order under section 245D(4). It was further argued that the CIT(A) failed to adjudicate multiple grounds, denied effective opportunity of hearing, and ignored documentary evidence already placed on record.
The ITAT observed that if the same income arising from the impugned bank transactions has already been assessed in the hands of the entry operator, no addition can be sustained again in the assessee’s hands. Since this crucial factual verification was not properly carried out by the AO or CIT(A), the Tribunal remanded the matter back to the Assessing Officer with a direction to examine the assessment records of Shri Sanjay Shah and verify whether the amounts were already brought to tax elsewhere.
Accordingly, the entire issue was restored to the AO for fresh examination, and the appeal was allowed for statistical purposes
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
