TaxTMI 
TaxTMI 
2025 (10) TMI 1333
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....ted 31.12.2024 of the Ld. CIT(A) / NFAC, Delhi for assessment years 2013-14 and 2014-15 respectively. The assessee has filed CO Nos. 5, 3, 4 & 2/PUN/2025 against the appeals filed by the Revenue for assessment years 2013-14 to 2015-16 and 2018-19 respectively. Since common issues are involved in all these appeals and the COs, therefore, these were heard together and are being disposed of by this common order for the sake of convenience. 2. First we take up ITA No. 1561/PUN/2024 for assessment year 2015-16 in the case of Sidharth Ratanlal Bafna as the lead case. 3. Facts of the case, in brief, are that the assessee is an individual and derives income from business profits being partner in the firms M/s. Bafna Builders and Land Developers, Jalgaon and M/s. United Buildcon, Pune. He also derives salary from M/s. R.C. Bafna Jewellers, a proprietary concern of Smt. Taradevi Ratanlal Bafna. A search action u/s 132 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') was conducted in the case of the assessee on 10.09.2014. Accordingly notice u/s 153A of the Act was issued to the assessee in response to which the assessee filed his return of income on 23.10.2015....
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....CG exemption using the abnormal rise in the share price of PFLIL. The statement of Shri. Naresh Jain was also recorded on 13.10.2017. The statement of Shri Naresh Jain has been reproduced by the Assessing Officer in para 24.6 of his order wherein Mr. Jain has accepted that he has orchestrated the stock market manipulation to rig the prices of PFLIL and explained the modus operandi of converting unaccounted money of the beneficiaries into LTCG using the Share Market. According to the Assessing Officer, the answers of Shri Naresh Jain in response of Q Nos 10-23 reveal the complete modus operandi of scheme of conversion of unaccounted cash into bogus LTCG using the mechanism of stock exchange. The Assessing Officer also recorded the statements of the assessee and the accountant of family concern with respect to justification for investment in the shares of M/s PFIL. The Assessing Officer rejected the contention of the assessee that the transactions done were genuine and backed by documentation such as D- MAT account, contract notes, bank accounts etc. Taking into considerations all the facts and reply of the assessee and relying on various decisions, the Assessing Officer held the LTC....
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....rinciples of natural justice. The appellant argued that the impugned order passed against such principles of natural justice is liable to be quashed. 7.3 The assessing officer simply brushed aside the request of the appellant to provide a copy of the statement of person(s) used during the assessment, saying that the addition is not solely based on statement recorded. Further, the assessing officer maintained that the statement of Naresh Jain need not be given to the appellant, as it was reproduced in the draft assessment order communicated to the appellant in the form of show cause notice dated 24/09/2021. Apart from the statement of Shri Naresh Jain, the assessing officer mentioned about the statements of Shri P Amresh Kumar, Managing Director of M/s. PFL Infotech Ltd. and Sri Abhinandan Jain at para 24.5 (page 18) of the impugned order. The assessing officer is bound to supply even the statements of these persons to the appellant, as he relied on them to extent that they led him to Shri Naresh Jain. As regards the request for cross examination of third parties, the assessing officer maintained that the statement of Naresh Jain has been used only as a corroborative eviden....
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....hanNoorkham Pathan v. State of Maharashtra & others reported in (2013) 4 SCC 465, has inter alia held that the opportunity of cross-examination be made available, but it should be one of effective cross-examination, so as to meet the requirement of the principles of natural justice. In the absence of such an opportunity, it cannot be held that the matter has been decided in accordance with law, as cross examination is an integral part and parcel of the principles of natural justice. The Constitution Bench of the Hon'ble Supreme Court of India in Stat e of M.P. v. SadashiuvaVishampayan reported in AIR 1961 SC 1623, has also confirmed the that, principle the rules of natural justice require that a party should be given the opportunity of cross-examining a witness. 7.7 In addition, the following judgments advocate the above proposition : ● Pr.CIT-3 vs. DKB Infrastructure Pvt. Ltd., ITA 458 /2016 dated 27/07/2016 (Delhi) ● CIT vs. Sanjeev Kumar Jain (2009) 310 ITR 178 (P&H) ● Laxman Bhai S. Patel vs CIT, ITR No. 41 of 1997 (Gujarat) ● Prakash Chand Nahta vs. CIT (2009) 40 SITC 466 (MP) ● ACIT vs. Sh....
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....er at the assessment stage that pertain to the sale and purchase of the shares of M/s PFL Infotech Ltd., like DEMAT account statement, copy of bank statement reflecting the sale and purchase transactions of the above scrip, relevant contract/broker notes showing the on-line transactions relating to the sale and purchase of the scrip, details of STT paid, audited books of account, statement showing the computation of short term capital gain, details of trade order, trade name, security quantity etc. These details are also produced before me as part of the Paper Book. The appellant during the year under consideration bought the shares of above scrip through authorised broker, viz., SMC Global Securities Ltd., who is a member of Bombay Stock Exchange, as reflected in Contract note and the DMAT accounts. The appellant sold part of these shares after holding for less than one year during the year under consideration on the online platform. All the purchase and sale transactions were carried out through banking channels and authorised stock broker. 8.2 The assessing officer stated in para 8 of the impugned order that the appellant did not submit the complete details of scrip-wis....
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....Wing and has not done any further enquiry to confirm the information. The report of investigation wing was never shared with the appellant, despite specific request. Further statements of third parties relied upon by the assessing officer to draw adverse inference were also not shared with the appellant, in spite of specific request. The assessing officer held that the scrip of M/s. PFL Infotech Ltd. is a penny stock. However, I have noticed that the said scrip is being traded even today from the internet search. Further, the appellate has purchased and sold the said shares on real time basis on on-line platform through a SEBI approved broker. The contract note cum bill issued by the broker is on record. The delivery of shares was made by DEMAT instruction slip and directly transferred from the DEMAT account of the seller. The AO himself noted that the shares were received in the DEMAT account of the appellant. The modus operandi mentioned by the assessing officer at pages number 10 of his order is general in nature and doesn't bring out any specific conduct of the appellant which warrants addition in his case. Further, the assessing officer has not solved the conundrum regardi....
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....survey on assessee. On revenue's appeal, High Court confirmed order of Tribunal. The SLP filed by the Department was dismissed by Hon'ble Supreme Court holding that there was no reason to interfere with the order passed by High Court. 8.8 Among others, the appellant placed his reliance on the decision of Hon'ble Jurisdictional Bombay High Court in Pr.CIT-31, Mumbai vs. Indravadan Jain, HUF in INCOME TAX APPEAL NO. 454 OF 2018 dated 12/07/2023 to canvas his contention that there was no reason to add the impugned capital gains as unexplained cash credit under Section 68 of the Act. Relevant extract from the decision of Hon'ble High Court is as under: "4. The A.O. did not accept respondent's claim of long term capital gain and added the same in respondent's income under Section 68 of the Act. While allowing the appeal filed by respondent, the CIT[A] deleted the addition made under Section 68 of the Act. The CIT[A] has observed that the A.O. himself has stated that SEBI had conducted independent enquiry in the case of the said broker and in the scrip of RFL through whom respondent had made the said transaction and it was conclusively proved tha....
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.... and legal issues brought out in the foregoing paragraphs, I allow the claim that the income in question is a bonafide LTCG arising from the sale of M/s. PFL Infotech Ltd. shares, which is exempt from income-tax u/s. 10(38) of the Act. Therefore, Ground No. 5 and 6 succeed. 10. Since the Ld. CIT(A) / NFAC deleted the addition made u/s 10(38) of the Act, he also deleted the addition made by the Assessing Officer u/s 69C of the Act being the commission @ 3% paid for accommodation entries taken. 11. Aggrieved with such order of the Ld. CIT(A) / NFAC the Revenue is in appeal before the Tribunal by raising the following grounds: 1. On the facts and in the circumstances of the case, the decision of Ld. CIT(A), NFAC, New Delhi is not justified as the addition made by the then AO is based on specific information received from Investigation Wing and the thorough inquiry was made by then AO before confirming the addition. 2. On the facts and in the circumstances of the case and in law, the order of the Ld. CIT(A), NFAC, be cancelled on the above issue and that of the A.O, be restored, as the addition was not made solely on the basis of the statements. 3. On t....
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....submitted that this information was backed by statements of various persons involved in the stock market manipulation to rig the prices of PFLIL and converting unaccounted money of the beneficiaries into long term capital gain which is exempt u/s 10(38). 14. Referring to the decision of Hon'ble Calcutta High Court in the case of PCIT vs. Swati Bajaj reported in (2022) 446 ITR 56 (Calcutta), he submitted that the Hon'ble High Court in the said decision has discussed in detail one such action taken by Directorate of Income Tax (Investigation) at Kolkatta which identified 84 BSE listed companies which were used for tax evasion using the penny stock rigging modus operandi. The Hon'ble High Court has noted that as per the report total 84 BSE listed penny stocks were identified after which several search and survey operations were conducted in office premises of more than 32 share broking entities who have accepted that they were actively involved in bogus long term capital gain / short term capital gain scam. He submitted that one such action was carried out in the case of M/s PFLIL, a Hyderabad based company on which survey u/s 133A was carried out by the department and ....
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....ice rigging through synchronized trade a money laundering exercise involving serious violation of Income tax, Securities law, Corporate Laws, banking laws and several other economic law." 17. He submitted that the facts of this case should be appreciated in this background. He submitted that the assessee in financial year 2014-15 has sold 1,11,926 shares of M/s PFLIL for a total consideration of Rs. 8,21,96,621/- earning Long Term capital gain of Rs. 7,68,24,174/-. This is an extraordinary profit earned in a short span of 2-3 years. On being questioned by the Assessing Officer, the assessee has merely stated that he was doing this on the advice of broker and market sentiment. 18. Referring to the movement of shares price of M/s PFIL, he submitted that the price of this company rose from Rs.14.28 in April 2010 to Rs. 825/- in May, 2014 and this meteoric rise in the prices of shares is not matched by the financials of the company. He submitted that the analysis of trade data obtained from BSE shows that the total trade volume between 01.04.2010 to 31.03.2017 is Rs. 972/- crores. It has further been found that out of total trade 50 sellers sale volume is 41% and 52% of the sale ....
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....e Bench of the Tribunal in the case of Narendra Shrikishan Agarwal Vs. ACIT vide ITA No.257/PUN/2019 order dated 05.11.2019, he submitted that the Tribunal in the said decision has rejected the assessee's long term capital gain exemption claim on sale of penny stock of a pharma company (Lifeline Drugs & Pharma Limited -LD&PL) during assessment year 2015-16. The Tribunal in the said decision has held that it is a predetermined action with a specific intention to derive Long Term Capital Gain by dubious method. It also noted that in spite of having no revenue from operations, having no major corporate announcements, the assessee made huge investment of Rs. 15 lakhs in LD&PL and held that this could only be possible that the suspected entities and its promoters such as the assessee beneficiary, paper company like LD&PL, exit provider DTPL and the brokers were hand in glove with each other. 24. Referring to the decision of the Mumbai Bench of the Tribunal in the case of Hitendra C. Ghadia Vs. DCIT reported in TS-189-ITAT-2023 (Mumbai), he submitted that the Tribunal in the said decision has held that where the assessee failed to prove the genuineness of his share dealing transac....
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.... order, trade name, security quantity etc. The shares were purchased through authorized broker namely SMC Global Security Ltd., who is a member of Bombay Stock Exchange. All the transactions were routed through proper banking channel and the authorized stock broker. Further, the shares of PFL were not acquired through any preferential allotment but were purchased through legitimate means on open market. He submitted that neither the assessee nor his family members have any connection of any nature whatsoever with the promoters of PFL, the company whose share transactions are under consideration. Further, during the course of 153A assessment proceedings the then Assessing Officer had asked about the long term capital gains and short term capital gains and the assessee vide letter dated 21.11.2016, copy of which is placed at pages 62 to 65 of the paper book, had submitted the details and no adverse view was taken. He submitted that the company PFL was incorporated on 22.01.1993 as a public limited company registered with the Registrar of Companies, Hyderabad and is listed on the Bombay Stock Exchange under the scrip code 531769. As of 13.08.2025, the share price of PFL Infotec Ltd. w....
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....case, the SEBI has not issued any notice to the assessee or broker of the assessee in relation to synchronised trades or matched trades Further, the penalty imposed by the SEBI on its Independent director was set aside by the Securities Appellate Tribunal Mumbai vide order dated 07.06.2023 in Appeal no. 129 of 2023 (page no. 72-99 of Annexure to Written Submission) wherein the SAT dropped the penalty against the independent director of the company. 3 In paragraph 2.4 of the written submission, the revenue referred to the decision of the Hon'ble ITAT, Mumbai, in the case of Naresh Jain, dated 31.08.2023, specifically citing paragraph 16 of the said judgment. It is submitted that the Hon'ble Bombay High Court, vide its order dated 18.10.2023 in Writ Petition (L) No. 27193 of 2023, quashed and set aside the matter, remanding it for fresh de novo adjudication. (page no. 100-103 of Annexure to Written Submission). The Hon'ble ITAT in cases of Naresh Manakchand Jain for AY 2011-12 & 2013-14 to 2017 in ITA Nos. 247 & 240 to 244/MUM/2023 (page no. 104-132 of Annexure to Written Submission) deleted the addition made by the Ld. AO. 4 In paragraphs 2.6 to 2.9 of ....
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....e on the third- party statement without allowing cross- examination is unjustified and violates principles of natural justice Accordingly, the order of the Commissioner of Income Tax (Appeals) sustaining the assessee's position should be upheld, as the ground for denying cross- examination of a third party is not tenable in the absence of any proven link with the assessee. 7 Narendra Shrikrishan Agarwal Vs. ACIT ITA 257/Pun/2019 The case cited by the revenue is different from the facts of the assessee case. In the Narendra Agarwal case, the share were bought from company directly through preferential allotment whereas in the assessee case, the share were bought from stock exchange through registered stock broker. 8 Hitendra C Ghadia Vs. DCIT CC-1(1) ITA 621/Mum/2021 In this case, the assessee purchased shares of Company A, which subsequently merged with Company B, after which the shares were dematerialized and listed on the stock exchange. Given these facts, the assessee's case is distinct from the revenue's cited case, rendering it inapplicable to the present situation. 9 Hersh W Chadha VS DCIT 1(1), International taxation 9 taxmann.com 1 (De....
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....note dated 18.12.2012 and 12000 equity shares vide contract dated 04.03.2013. The purchases have been made through registered share broker from recognised stock exchange platform and the shares have been received in the Demat account of the assessee immediately after the purchase. Page 32 of the paper book is the Demat account statement which confirms this fact. After holding the Equity shares in the Demat account for less than a year, assessee sold 6000 Equity shares on 03.10.2012 and 10000 Equity shares on 07.02.2014 which was again through recognised stock exchange and shares transferred through the Demat account. The consideration was received through the stock broker itself and there is no evidence putforth by the Revenue authorities that assessee was having any direct connection with the person purchasing/selling the alleged Equity shares. It is also an admitted fact that when the transactions took place, there was no restriction by the SEBI on the purchase and sale of Equity shares of Blazon Marbles Limited. Accordingly the order of Ld. CIT(A) was set aside and the addition made by the Assessing Officer was deleted. 30. Referring to the decision of the Mumbai Bench of the....
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....rovide specific evidence linking the assessee to any alleged bogus transactions rather than relying solely on generalized investigation reports and third party statements. He submitted that without concrete or corroborative evidence such as adverse statements from stock exchange authorities or proof of assessee's involvement in price manipulation, additions made by the Assessing Officer are unsustainable and should not be added to income of assessee. He accordingly submitted that the order passed by the Ld. CIT(A) / NFAC being in accordance with law should be upheld and the grounds raised by the Revenue be dismissed. 35. So far as the grounds raised by the assessee in the CO are concerned, the Ld. Counsel for the assessee did not press ground No.1 for which the Ld. DR has no objection. Accordingly the same is dismissed as 'not pressed'. 36. So far as the remaining grounds challenging the validity of re-assessment proceedings are concerned, he submitted that once the Assessing Officer in the order passed u/s 153A of the Act has considered an issue on the basis of submissions made by the assessee, the Assessing Officer could not have reopened the assessment under th....
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....listed stock of penny stock company as against credible and definite information that all transactions in shares of penny stock company were sham transactions and there was no indication that this information was applicable or related in any manner to assessee, impugned notice was to be set aside. 40. Referring to pages 219 to 220 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to the reasons recorded by the Assessing Officer where he himself has stated as under: "As per the information in possession of this office, the assessee had sold his investment in penny stocks of M/s PFL Infotech Ltd, Hyderabad (PFLIL) during FY 2014-15. Further it was stated that the company PFLIL is a penny stock company and has facilitated various beneficiaries to claim bogus STCG, STCL or LTCG exempt from tax under section 10(38) of the Act. The assessee is one of the beneficiaries of this penny stock company listed on BSE Script Code 531769. It was stated that this company has been used to facilitate introduction of unaccounted income of members or beneficiaries in the form of exempt capital gain or short Term Capital Loss in their books of accounts. The a....
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.... is escapement of income. He accordingly submitted that the grounds raised by the assessee in CO be allowed and the appeal filed by the Revenue be dismissed. 44. The Ld. DR on the other hand submitted that the reopening has been made on the basis of new information received by the Assessing Officer after conclusion of the regular proceedings, therefore, it could not be said to be a change of opinion. He submitted that the theory of change of opinion is applicable only when on same set of facts the re-assessment is initiated. However, in the instant case new facts have emerged due to information received from the Investigation Wing. The Assessing Officer after due application of mind to the information so received and after carrying out his own independent verification from the records of the assessee recorded reasons and thereafter had issued notice u/s 148, therefore, such re- assessment proceedings are in accordance with law. 45. Referring to the decision of the Hon'ble Delhi High Court in the case of AGR Investment Ltd. vs. Addl. CIT (2011) 333 ITR 146 (Del), he submitted that the Hon'ble High Court in the said decision has held that where the Assessing Officer had....
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....er and nothing has been brought on record by the Assessing Officer to controvert the evidence furnished by the assessee. He also held that non-granting of cross-examination despite being specifically sought by the assessee and non providing the copies of statements of third parties which were the basis for addition vitiates the entire assessment proceedings being violation of principles of natural justice. The observations of the Ld. CIT(A) / NFAC have already been reproduced in the preceding paragraphs. 48. It is the submission of the Ld. DR that when the case of the assessee was reopened on the basis of specific information obtained from the Investigation Wing which was backed by the statements of various persons involved in the stock market manipulation to rig the prices of PFL and converting unaccounted money of beneficiaries into long term capital gain claimed as exempt u/s 10(38) of the Act, the Ld. CIT(A) / NFAC should not have deleted the addition. It is also his submission that denial of cross-examination cannot be a ground to delete the addition. 49. It is the submission of the Ld. Counsel for the assessee that the Ld. CIT(A) / NFAC while deleting addition has relie....
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....transactions relating to the sale and purchase of scrip, details of STT paid, details of trade order, trade name, security quantity etc., therefore, we do not find any infirmity in the order of the Ld. CIT(A) / NFAC deleting the addition made by the Assessing Officer. 51. So far as the decision of Hon'ble Calcutta High Court in the case of PCIT vs. Swati Bajaj (supra) relied on by the Ld. DR is concerned, we find the above case is related to the transactions involving purchases of scrips made either by preferential allotment or through off market. However, in the instant case, both purchases and sales are done on the stock exchange through a registered broker. Therefore, the said decision in our opinion is not applicable to the facts of the present case. 52. So far as the reliance on SEBI Order dated 28.11.2022 by the Ld. DR, according to which the prices of PFL were manipulated through fraudulent trades is concerned, we find in the present case, the SEBI has not issued any notice to the assessee or broker of the assessee in relation to synchronised trades or matched trades. Further, the penalty imposed by the SEBI on its Independent director was set aside by the Securiti....
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....he facts are distinct and different from the facts of the present case. Therefore, the same in our opinion, is not applicable to the facts of the instant case. The various other decisions relied on by the Ld. DR are also not applicable to the facts of the present case. 57. We find the Ld. CIT(A) / NFAC while deleting the addition has relied on the decision of Hon'ble jurisdictional High Court in the case of PCIT vs. Indravadan Jain (supra) and various other decisions. The decision of the Hon'ble jurisdictional High Court is binding on the Tribunal. 58. We find the Hon'ble Bombay High Court in the case of CIT vs. Shyam R. Pawar (supra) has held that where DMAT account and contract note showed details of share transaction and the Assessing Officer had not proved said transaction as bogus, capital gain earned on said transaction could not be treated as unaccounted income under section 68. The relevant observations of the Hon'ble High Court read as under: "5. We have perused the concurrent findings and on which heavy reliance is placed by Mr.Sureshkumar. While it is true that the Commissioner extensively referred to the correspondence and the contents of ....
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....ques have been referred extensively by the Tribunal in para 10. A copy of the DMAT account, placed at pages 36 & 37 of the Appeal Paper Book before the Tribunal showed the credit of share transaction. The contract notes in Form-A with two brokers were available and which gave details of the transactions. The contract note is a system generated and prescribed by the Stock Exchange. From this material, in para 11 the Tribunal concluded that this was not mere accommodation of cash and enabling it to be converted into accounted or regular payment. The discrepancy pointed out by the Calcutta Stock Exchange regarding client Code has been referred to. But the Tribunal concluded that itself, is not enough to prove that the transactions in the impugned shares were bogus/sham. The details received from Stock Exchange have been relied upon and for the purposes of faulting the Revenue in failing to discharge the basic onus. If the Tribunal proceeds on this line and concluded that inquiry was not carried forward and with a view to discharge the initial or basic onus, then such conclusion of the Tribunal cannot be termed as perverse. The conclusions as recorded in para 12 of the Tribunal's o....
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....IT(A) has specifically held that there is no adverse comment in the form of general and specific statement by the Pr. Officer of stock exchange or by the company whose shares were involved in these transactions and he held that Assessing Officer only quoted facts pertaining to various completely unrelated persons whose statement were recorded and on the basis of unfounded presumptions. He further held that the name of the appellants were neither quoted by any of such persons nor any material relating to the assessee was found at any place where investigation was done by the investigation Wing. The ld. CIT(A) relying on various orders of Lucknow Benches and other Benches has allowed relief to the assessee by placing reliance on the evidences filed by the assessee before Assessing Officer. I do not find any adversity in the order of ld. CIT(A) specifically keeping in view the fact that Lucknow Benches in a number of cases after relying on the judgment of Hon'ble Delhi High Court in the case of Krishna Devi and others had allowed relief to various assessee." 6. The concurrent findings of fact has been recorded by the first appellate authority and the ITAT. Thus, no substa....
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....same in respondent's income under Section 68 of the Act. While allowing the appeal filed by respondent, the CIT[A] deleted the addition made under Section 68 of the Act. The CIT[A] has observed that the A. O. himself has stated that SEBI had conducted independent enquiry in the case of the said broker and in the scrip of RFL through whom respondent had made the said transaction and it was conclusively proved that it was the said broker who had inflated the price of the said scrip in RFL. The CIT[A] also did not find anything wrong in respondent doing only one transaction with the said broker in the scrip of RFL. The CIT[A] came to the conclusion that respondent brought 3000 shares of RFL, on the floor of Kolkata Stock Exchange through registered share broker. In pursuance of purchase of shares the said broker had raised invoice and purchase price was paid by cheque and respondent's bank account has been debited. The shares were also transferred into respondent's Demat account where it remained for more than one year. After a period of one year the shares were sold by the said broker on various dates in the Kolkata Stock Exchange. Pursuant to sale of shares the said brok....
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....ion of Hon'ble AP High Court in the case of M/s. Manidhari Stainless Wire (P.) Ltd. vs. Union of India (supra). However, the said decision in our opinion is not applicable to the facts of the present case. In that case the petitioner was subject to a search by the Central Excise Department, and the assessee sought cross-examination of their own factory manager and production manager who provided specific statements against the petitioner. However, in the instant case, the statements relied on by the Assessing Officer pertains to third party to the transaction. Further, the 3rd party neither mentioned the name of the assessee nor any link between the assessee and the said 3rd party was established by the department. Therefore, without providing the statement of such 3rd party or allowing cross examination of said 3rd party despite specific request of the assessee violates the principles of natural justice which the Ld. CIT(A) / NFAC has examined thoroughly and deleted the addition for such violation. We, therefore, uphold the order of the Ld. CIT(A) / NFAC on this issue also. 63. Even otherwise also, we find during the 153A assessment proceedings the Assessing Officer had ....
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....alna 431 203 Email:[email protected] Mo. No. 9422219414 Ph. No.248 2230539 Sir, Sub : Reasons for proceedings u/s 147 of the Income-tax Act, 1961-reg Your request letter dated 21.04.2016 received in this office on 23.04.2018 Ref: Please refer to the above mentioned subject and reference. As per your request, the reasons recorded for initiating proceedings u/s 147 in your case for AY 2011-12 is as under: "The assessee is an individual having income from salary, house property, business and profession and other sources. A search action u/s 132 was conducted in the card of the assessee on 02.05.2013 and accordingly a notice u/s 153A was issued to the assessee in response to which the assessee filed his return of income on 28.02.2014 declaring total income of Rs. 15,00,324/-. Thereafter, assessment under section u/s 143(3) r.w.s 153A wat completed on 22.03.2016 assessing total income at Rs. 16,79,227/-. The office has received information from the office of the DDIT (Inv), Unit 8(3), Mumbai on 23.03.2018. As per the information received, the assessee has sold his investment in penny stock of M/s Nivyah Infrastruc....
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....ure & Telecom Services Ltd. to convert his own unaccounted money into accounted one, in the form of exempt LTCG in lieu of commission with a view to evade paying taxes thereon. As discussed above, the assessee Shri Ashish Omprakash Mantri las derived income from LTCG purchase and sale of penny stuck of M/s Nivya Infrastructure & Telecom Services Ltd which is as penny stock company and exemption an LTCG has been claimed u/s 10(38) of the Act thereby doing away with the requirement of paying taxes on this Income. This LTCG is not real and the whole mechanism of earning exempt LTCG has been created with a view to convert his own unaccounted money into accounted income. Hence, I have reasons to believe that the LTCG earned via this mechanism to the extent of Rs. 1,60,30,716.35/- has escaped assessment due to failure on the part of the assessee to truly and fully disclose the material facts necessary for his assessment. As per information received in this office the assessee has earned LTCG via penny stock and has claimed exemption u/s 10(38) of the Act. This being the mechanism of converting unaccounted money into accounted, or needs to be examined thoroughly as the s....
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....te full and true disclosure of all material facts necessary for assessment has not been made as noted above. It is pertinent to mention here that even though the assessee has produced book of accounts, annual report, audited profit and loss account and balance sheet or other evidence at mentioned above, the requisite material Facts of the case, in brief, are that the assessee as noted above in the reasons for reopening were embedded in such a manner that material evidence could not be disclosed by the AO and could have been discovered with due diligence accordingly attracting provisions of explanation 1 of section 147 of the Act. For aforestated reasons, it is not a case of change of opinion by the AO. In this case more than four years have lapsed from the end of the assessment year under consideration. Hence, necessary sanction / approval to issue notice u/s 148 has been obtained from the Pr. Commissioner of Income-tax (Central), Nagpur as per the provisions of section 151 of the Act". Yours faithfully, Sd/- (Dr. Shushan Patil) Asstt. Commissioner of Income tax, Central Circle-1, Aurangabad" 30. We find when the assessee objected to the reasons rec....
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....he return was taken up for scrutiny assessment by the Assessing Officer. On 1.11.2013 the Assessing Officer passed an order under section 143 (3) of the Act enhancing the petitioner's income to Rs. 20.14 lacs. 4. Thereafter on 29.3.2018, the Assessing Officer issued the impugned notice seeking to re-open assessment for A.Y.2011-12. The reasons in support of the impugned notice as communicated to the petitioner reads thus: - "Reasons for reopening u/s 148 for A.Y.2011-12 is provided as under : 1. The information has been received from DDIT (Inv) Unit 8 (3) Scindia House, Mumbai-38 vide their letter dated 23-3-2018 which is received in this office on 28-03-2018. 2) The DDIT (Inv) Mumbai has received information that M/s Nivyah Infrastructure & Telecom Services Ltd is a penny stock listed do in BSE with scrip code (517634) and this company has been used to facilitate introduction of unaccounted income of members of beneficiaries in the form of exempt capital gain or short term capital loss in their books of accounts. It was noticed that share price of M/s Nivyah Infrastructure & Telecom Services Ltd rose from Rs.39 in 21st July 2009 to Rs.2050 o....
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....ome for the year under consideration has escaped assessment because of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the year under consideration. It is pertinent to mention here that reasons to believe that income has escaped assessment for the year under consideration have been recorded in paragraph 2 above. 4. In this case more than four years have lapsed from the end of assessment year under consideration. Hence, necessary sanction to issue the notice u/s 148 has been obtained separately from the Pr. Commissioner of Income Tax as per the provisions of section 151 of the Act. 5. Notice u/s 148 was issued with prior approval of Pr. Commissioner of Income Tax-6 Mumbai." 5. On receipt of above reasons on 9.8.2018, the petitioner filed its objections to the reasons in support of the impugned notice and in particular pointed out that the assessee had dealt with a company called "S.V. Electricals Ltd" and not with M/s Nivyah Infrastructure & Telecom Services Ltd. The name of company "S.V. Electricals Ltd" had subsequently changed on 14.2.2012 to M/s Nivyah Infrastructure and Telecom Ltd. I....
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....to escapement of income. On receipt of information, the least that is expected of the Assessing Officer is to examine the same in the context of the facts of this case and satisfy himself whether the information received does prima facie lead to a reasonable belief that income chargeable to tax has escaped assessment. In this case, the reasons indicate that the Assessing Officer has not carried out such exercise and accepted the report of the Deputy Collector of Income Tax (Investigation) Mumbai to conclude that the petitioner had dealt with Nivyah Infrastructure and Telecom Services Ltd during the previous year relevant to the assessment year 2011-12. Admittedly, there was no company by name "M/s Nivyah Infrastructure & Telecom Services Ltd" in existence during that year for consideration. This clearly shows that the Assessing Officer acted on the satisfaction of the Deputy Collector of Income Tax (Investigation) that income chargeable to tax has escaped assessment. It must also be borne in mind that the impugned notice is issued beyond the period of four years from the end of the relevant assessment year in a case, where the assessment was completed under section 143 (3) of the A....
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....issued on 25th February 2022 which led to filing of this Petition. 5. Since the impugned notice u/s 148 of the Act has been issued after the expiry of four years from the end of the relevant AY, Respondents have to show that the jurisdictional requirement is satisfied that there was failure to truly and fully disclose material facts as decided by this Court in Ananta Landmark (P.) Ltd. v. Dy. CIT (2021) 131 taxmanın.com 52/283 Taxman 462/439 ITR 168. 6. We have examined the reasons recorded annexed to the Petition that are evidently premised on 'seen from the assessment records'. The Assessing Officer (AO) records that the assessee claimed to have purchased shares of the penny stock scrips for a total of Rs.33,09,976 and sold for a consideration of Rs. 1,15.90,280/-. Therefore he held that the long term capital gain would be unexplained investment/income from other sources and not a capital gain as claimed by the assessee on the premise that entire transaction of purchase and sale of shares were a part of accommodation entry and represents unexplained investment made by assessee in cash to obtain an equivalent amount of bogus profit on sale of shares.....
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....sent appeal is with regard to deletion of some amount which was added by the Assessing Officer on the allegation of penny stock. 4. The appeal of the respondent - assessee was allowed against the assessment order. The appeal filed by the assessee was allowed by the CIT (Appeal). Against the appellate order the Revenue had filed the aforesaid Income Tax Appeal which has been dismissed by the ITAT. 5. After detailed discussion, the ITAT has recorded the following findings of fact : "The above findings recorded by ld. CIT(A) are quite exhaustive whereby he has discussed the basis on which the Assessing Officer had made the additions. While allowing relief to the assessee, the ld. CIT(A) has specifically held that there is no adverse comment in the form of general and specific statement by the Pr. Officer of stock exchange or by the company whose shares were involved in these transactions and he held that Assessing Officer only quoted facts pertaining to various completely unrelated persons whose statement were recorded and on the basis of unfounded presumptions. He further held that the name of the appellants were neither quoted by any of such perso....
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....Tribunal, therefore, we hold that such reopening of assessment in absence of any fresh tangible material is not in accordance with law and has to be quashed. We, therefore, allow the grounds raised by the assessee in CO challenging the validity of re-assessment. Thus, the appeal filed by the Revenue is dismissed and the ground raised by the assessee in the CO are partly allowed. 66. Identical grounds have been raised by the Revenue in ITA Nos. 1555, 1560, 1565/PUN/2024 and CO Nos. 5, 3 and 2/PUN/2025 for assessment years 2013-14, 2014-15 and 2018-19 respectively. Since we have already decided the issue and the grounds raised by the Revenue have been dismissed and the COs filed by the assessee have been partly allowed, therefore, following similar reasonings, the appeals filed by the Revenue are dismissed and the COs filed by the assessee are partly allowed. 67. After hearing both sides, we find the grounds raised by the Revenue are identical to the grounds raised in ITA No.1561/PUN/2024. We have already decided the issue and the grounds raised by the Revenue have been dismissed. Following similar reasonings, the grounds raised by the Revenue are dismissed. The appeals filed b....
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....pital gain or short Term Capital Loss in their books of accounts. The assessee was one such beneficiary. 3. As per the information, the share price of PFLIL rose from Rs. 14.28 in April 2010 to Rs.825/- in May 2014 and dipped to Rs.4.58 in April 2017. However, financials of the company for the relevant period did not show any substantial change so as to support such huge share price movement. The company does not have business to justify the sharp rise in market prices of the shares. The sharp rise in the market price of this entity is not supported by financial fundaments of the company. Both the purchase and sale of shares are concentrated within few persons/ entities. The exit providers do not have credit worthiness. They are either non-filers or have filed nominal return of income and have not paid tax. 4. Subsequent to the above information, the online data and old assessment records were analysed. This led to a conclusion that the assessee was dealing in shares of a penny stock company, namely, PFL Infotech Ltd. ALGPB5972R- SIDHARTH RATANLAL BAFNA A.Y. 2015-16 ITBA/AST/F/17/2020-21/1027880815(1) . 5. The assessee had been purchasing shares of PFLIL for various ....