TaxTMI 
TaxTMI 
2026 (7) TMI 198
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.... passed u/s 143(3) r.w.s. 147 without proper appreciation of evidence and applicable judicial precedents. GROUND NO. 2: VALIDITY OF REOPENING u/s 147/148 2.1 The Ld. CIT(A) erred in not adjudicating the validity of the reopening which was based solely on information received from the Investigation Wing. Ahmedabad, without any independent application of mind by the AO. 2.2 The notice u/s 148 dated 27.03.2019 was issued on "borrowed satisfaction" from the Investigation Wing report regarding Safal Herbs Ltd., without the AO examining the appellant's trading records, broker ledger, demat account, or bank statements. 2.3 The foundational reason for reopening - that the appellant was a beneficiary of bogus LTCG / accommodation entries is factually incorrect, as the appellant never claimed any LTCG or exempt income. The entire share trading income was declared as business income. The very basis of reopening having collapsed, the reassessment is without jurisdiction. Reliance: Shri Dinesh Kumar Sharma vs. ITO (ITAT Jaipur) - Reopening on Investigation Wing inputs without independent verification held unsustainable. GROUND NO. 3: ADD....
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....ase laws cited by the appellant including ITO vs. Aditya Agrawal (ITAT Jabalpur), Sejal Jignesh Shah vs. ITO, Sonal Snehal Shah vs. ITO, and Shri Dinesh Kumar Sharma vs. ITO; (e) consider the fundamental legal error of adding gross trade value (Rs. 2,55,662/-) instead of net profit (Rs. 2,307.75). Reliance: Kranti Associates (P) Ltd. vs. Masood Ahmed Khan [2010] 9 SCC 496 (SC); CIT vs. Sahara India (Firm) [2008] 300 ITR 403 (SC). GROUND NO. 6: MISAPPLICATION OF SWATI BAJAJ 6.1 The Ld. CIT(A) erred in relying on PCIT vs. Swati Bajaj [2022] 446 ITR 56 (Cal) which is clearly distinguishable because: a) Swati Bajaj involved investors claiming exempt LTCG on penny stocks purchased off-market, whereas the present appellant is a regular trader who offered all income as business income, (b) Swati Bajaj has been distinguished by the ITAT Mumbai in Sejal Jignesh Shah vs. ITO (20.01.2025), clarifying that the ratio applies only where there are off-market purchases, broker confessions, or direct evidence of manipulation. GROUND NO. 7: DIRECTLY APPLICABLE ITAT PRECEDENTS-SAFAL HERBS SPECIFIC 7.1 The ITAT Jabalpur Bench (Vic....
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....e proved through documentary evidence, AO must rebut by independent enquiry. GROUND NO. 9: CONSEQUENTIAL RELIEF ON PENALTY 9.1 The penalty proceedings u/s 271(1)(c) initiated consequentially to the addition u/s 68 deserve to be dropped upon deletion of the substantive addition. GROUND NO. 10: SAVING CLAUSE 10.1 The appellant craves leave to add to, amend, alter, modify, substitute, and/or withdraw any of the above grounds of appeal at or before the final hearing of the appeal, with the permission of the Hon'ble Tribunal." 2. The brief facts of the case are that the assessee had e-filed, his return of income on 04.09.2013, declaring total income at Rs. 3,26,620/-. Subsequently, the case of assessee was re-opened u/s. 147. Accordingly, notice u/s. 148 was issued on 27th March, 2019. The reason for re-opening was that certain information from was received from the DDIT investigation, Ahmedabad regarding accommodation entries and commission by transacting in a particular script namely "Safal Herbs Limited" and the assessee herein was the beneficiary of such accommodation entries to the tune of Rs. 2,55,662/-. Such transactions were operated by....
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.... uncalled for. The Ld. CIT(A) decided the issue with the observations that there can be no meters to judge the truth, the same has to be culminated out of the surrounding circumstances and have to be inferred, there may not be clinching evidences but if at various places, if the circumstances are doubtful the natural corollary suggests that such transaction was only paper transaction and cannot accord acceptability of such make belief transactions. The Ld. CIT(A) thereafter accepted the intent and findings of the Ld. AO and has upheld the addition u/s. 68. 4. Being dis-satisfied with the aforesaid findings by the Ld. CIT(A), the assessee has preferred the present appeal before us. 5. At the outset, the Ld. AR of the assessee reiterated the facts of the case and has submitted that the transactions of the assessee in the alleged share was a small portion in proportionate to total turnover of the assessee, where the assessee has undertaken only 0.045% of the total volume in the alleged script. It is also submitted that the assessee has gained a profit of Rs. 2,318/- and a loss of Rs. 11/- only from the said transactions. Since the transactions are squared up within one day and t....