BABITA CHELAWAT,INDORE vs. DCIT/ACIT 1(1), INDORE, INDORE

आदेश/ O R D E R

Per Paresh M Joshi, J.M.:

This is an Appeal filed by the Assessee under section 253 of the

income tax Act 1961,[ herein after referred to as the Act for the

sake of brevity] before this Tribunal as & by way of second

appeal. The Assessee is aggrieved by the order bearing Number:-

ITBA/APL/S/250/2024-25/1073334904(1) dated 17.02.2025

passed by the Ld. CIT(A) u/s 250 of the Act, which is herein after

referred to as the “Impugned order”. The relevant assessment

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year is 2012-13 and the corresponding previous year period is

from 01.04.2011 to 31.03.2012.

2.1 That as and by way of an “ Assessment order” made u/s

143(3) r.w.s. 147 of the Act, the total income of the assessee

was computed & assessed at Rs. 17,68,161/-. The total income

as per the return of income filed was at Rs. 15,37,355/- . The

addition of Rs. 2,30,806/- was made as unaccounted income by

virtue of para 8,9 & 10 of the aforesaid assessment order. That

the aforesaid “Assessment order” is dated 24.09.2019 which is

herein after referred to as the “Impugned Assessment Order”.

2.2 That the assessee being aggrieved by the aforesaid

“Impugned Assessment Order” prefers the first appeal u/s

246A of the Act before the Ld. CIT(A) who by the “Impugned Order” has dismissed the 1st appeal of the Assessee on the

grounds & reasons stated therein. The core grounds & reasons for the dismissal of the 1st appeal were as under:-

“8.0 Decision:-

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8.1 I have gone through the facts of the case, the grounds of

appeal and the submissions made by the appellant in this case.

Accordingly, the appellant has raised 10 grounds of appeal. It

is seen that Ground no. 1 is general in nature and doesn't

require a separate adjudication and will be taken care while

deciding the issue of addition vide ground no-7 taken by the

appellant. The other grounds of appeal are taken sequentially

below.

8.2 Vide Ground No. 2 and 3 are related. Vide these grounds

the appellant has challenged the re-opening of the assessment.

The appellant contends that the reopening was based on mere

suspicion rather than tangible material and that the

transactions were already disclosed. However, the contention

of the appellant is not found to be correct. The A.O has very

clearly mentioned in the reason for re-opening that there was

information available in the case of the appellant and the same

was examined by the A.O and base on examination of the data,

the A.O came to the conclusion that assessee has entered into

sham transaction. There is detailed recording of reason and on

perusal of the same, it is clear that A.O has tangible material

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and he has examined the material to arrive at prime facie

conclusion to re-open the case. Furthermore, SEBI

investigations flagged M/s Alpha Graphic as a penny stock

used for accommodation entries. It is also pertinent to note

that what is required before the re-opening the case is prime

facie belief that income has escaped assessment. The Hon'ble

Supreme Court in Raymond Woollen Mills Ltd. v. ITO [(1999)

236 ITR 34 (SC)] held that reopening is valid if the AO forms a

prima facie belief of income escaping assessment. On

examination of all the material in the case of the appellant, it

is found that A.O has tangible and sufficient material to form

the opinion that income has escaped assessment and hence he

has issued the notice for re-opening. In light of this factual and

legal position, the action of the A.O in re-opening the case is

found to be valid. Hence, these grounds of the appellant are

dismissed.

8.3 Vide ground no-4, the appellant has contended that Ld.

AO before passing the assessment order did not provide an

opportunity to the assessee to provide written or oral

submissions even when the stipulated period for providing the

response did not expire. Hence, the appellant contends that no

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opportunity of being heard was provided before passing the

order and hence is unjust. I have gone through the submission

made by the appellant and assessment order framed in this

case. It is seen from the assessment order that assessee has

been given opportunity vide notice issued under section 143(2)

of the Act, notice issued under section 142(1) of the Act.

Further, the appellant representative has attended the

assessment proceeding which is very much part of the

assessment order. It is further seen that all the submission

made by the appellant has been duly taken care of and placed

on record and has been considered by the A.O before ha has

arrived at the conclusion. The Hon'ble Supreme Court in

Magadh Sugar & Energy Ltd in civil appeal no-5728 of

2021 (SC)] has ruled that minor procedural lapses do not

invalidate an order if reasonable opportunity was provided.

Since, the A.O has provided various opportunities to the

appellant and has also considered the submission made by the

appellant, the ground of the appellant is not valid and hence

the same is dismissed.

8.4 Vide Ground No. 5 and 6, the appellant has submitted

that written submission has been ignored by the A.O. The

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primary contention of the appellant in this regard is

that AO erred in not taking cognizance of detailed written

submissions placed on record along with all the documentary

evidences supporting in the course of impugned proceedings

and giving sweeping observation on the case laws relied upon

by the appellant without specifying how they are distinguished.

The second contetion is that the order was passed without

cognizance of the stipulated period in which assessee could

provide her submission. The appellant contends that the AO

ignored detailed submissions and supporting documentary

evidence. It is seen from the assessment order that all the

submission given by the appellant has been taken on record

and well considered. Since the appellant has not provided any

new substantive evidence to contradict the AO's findings and

conclusion, it cannot be said that A.O has not taken care of the

written submission filed by the appellant. Hence, this ground

is without any merit and same deserves to be dismissed.

8.5 Vide ground no-7, the appellant has submitted thaton the

facts and circumstances of the case and applicable law, Ld.

AO erred in making an addition of Rs. 2,30,806 against the

information available with the AO by tainting the appellant as

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accommodation entry beneficiary and associating her with

general terms like accommodation entry beneficiary penny

stock without any cogent and positive material on record. The

appellant asserts that the investment was genuine and

recorded in the books and that the IDS disclosure validated the

transaction. Since, the appellant has already considered this

to be a accommodation entry and disclosed the same under

Income Disclosure scheme, the non-genuineness of th

transaction has already been accepted by the appellant. The

A.O has only added the sour of purchase of those penny stock

shares which was not offered in the IDS scheme. Hence there

is no error in the addition so made by the A.O. The reliance is

placed on Hon'ble Delhi High Court order in the case of PCIT v.

NDR Promoters Pvt. Ltd. [(2019) 410 ITR 3 (Del)], wherein it

was held that tax authorities can disregard penny stock

transactions and SLP was also dismissed by Hon'ble Supreme

Court in the above matter. Hence, the ground of appeal is

without any merit and hence the same is dismissed.

8.6 Vide Ground No. 8, the appellant has submitted that

Ld. AO erred by not serving the order for rectification request

made by the assessee for mistake apparent from record in the

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order passed u/s 143(3) rws 147. The order was uploaded on

the new income tax portal and no communication was made to

the assessee about the same. I have gone through the ground

and submission made by the appellant on this issue. The

appellant claims that the AO failed to serve the rectification

order under Section 154. However, the rectification request

does not impact the correctness of the assessment order.

Further, the department has launched a portal for easy,

transparent and effective communication with the taxpayers

and order and notices are bring served on that portal which is

a legally complaint system. Hence, there is no merit in the

ground raised by the appellant and hence the same is

dismissed

8.7 Vide Ground no. 09, the appellant has summitted that on

the facts and circumstances of the case and applicable law, Ld.

AO erred in initiating penalty proceedings under section

271(1)(c)of the Act. There was no undisclosed income as the

same had been already declared under IDS, 2016 and all

taxes on the same were paid by the assessee. Since no income

was undisclosed, no penalty proceedings u/s 271(1)(c) shall be

initiated. I have gone through the ground taken by the

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appellant. This ground pertains to initiating penalty

proceedings under section 271(1)(c)of the Act, 1961, Since, the

penalty is separate proceeding and penalty has not been

levied in the case of the appellant, the ground taken by the

appellant is pre-matured at this stage, therefore, need not to

be adjudicated. Hence, this ground of appeal of the assessee

is dismissed.

8.8 Ground no. 10 pertains to levy of interest u/s. 234A, 2348

& 234C of the I.T. Act. The charging of interest in

consequential to the income assessed/determined, the AO is

directed to charge interest u/s, 234A. 2348 & 234C of the IT

Act as per Act and decision so made in this case and after

giving the credit of prepaid taxes.

9.0 In the end, the appeal of the appellant is dismissed.”

2.3 That the assessee being aggrieved by the “Impugned

Order” has preferred the instant second appeal before this

Tribunal & has raised the following grounds of appeal in the

Form No. 36 against the “Impugned Order” which are as under:-

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“1. That on the facts and in the circumstances of the case and

in law, the reassessment order dated 24.09.2019 passed

under Section 143(3) r.w.s. 147 is bad in law, without

jurisdiction, and liable to be quashed.

2 reassessment was completed without complying with the

statutory requirements of law.

the 3 Hon. CIT(A) erred in upholding the additions made

by Ld. AO on mere conjectures, surmises and suspicions.

reassessment order dated 24.09.2019 is passed in

contravention of the principles of equity, natural justice

and fair play.

law, 5 the Ld. CIT(A) erred in not holding that the notice

issued u/s.148 dated 29.03.2019 was invalid and

unsustainable in law.

Ld. CIT-A failed to appreciate that AO could not have

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reasons to believe that the income chargeable to tax had

escaped assessment.

7 Hon. CIT(A) erred in confirming the addition of Rs.

2,30,806/-made by the AO to the income of the appellant.

vary and OR withdraw any OR all the above grounds of

appeal.

other

grounds that may be urged before OR during the hearing

of the appeal it is most humbly prayed that this respected

authority may be pleased to: 1. DLEETE the addition of Rs.

2,30,806/- made to income of the appellant. 2. Quash the

reassessment order dated 24.09.2019. 3. Accept the

returned income as filed by the appellant. 4. Any other

relief that may be deemed fit and proper by this Hon.

Tribunal.”

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3.1 The hearing in the matter took place before this Tribunal on

19.03.2026 when the Ld. AR for & on behalf of the Assessee

appeared before us & inter alia contended that the “Impugned

Order” is bad in law, illegal & not Proper. It therefore deserves to

be set aside. The Ld. AR has placed on record of this Tribunal a

paper book containing pages 1 to 96. An affidavit dated

17.03.2026 is too placed on record in support of the condonation

of delay. The Ld. AR then contended that the registry of this

Tribunal has pointed out the delay of 93 days in presenting the

instant second appeal under the Act; whereas according to the

assessee delay is of 72 days. The date of the “Impugned Order”

is 17.02.2025 whereas present appeal was filed on 11.07.2025.

With regard to the delay it was submitted that the assessee does

not possess much knowledge or understanding of computers,

internet technology & Income Tax Laws & Procedures. The

assessee is aged 59 year. When the assessee’s tax consultant

logged into her income tax e-filing account for purpose of filling

her return in July, 2025, he came across the “Impugned Order”

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u/s 250 of the Act in her case & informed the assessee.

Thereafter the instant appeal was filed. The delay is due to lack

of awareness regarding passing of he “Impugned Order” as same

was served electronically. The delay is neither intentional nor

due to any negligence or mala fide intention. Request for

condonation of delay was accordingly made & reliance was

placed on the assessee’s condonation of delay dated 17.03.2026.

Per Contra, Ld. DR for & on behalf of the Deptt. Of Income Tax

has no objection on delay aspect. After hearing both the sides &

upon perusing the Affidavit dated 17.03.2026 of the assessee,

we are of the considered view that the delay is bonafide & there

was no negligence or malafide on part of the assessee. Hence, we

condone the delay & the appeal is admitted for hearing.

3.2 The Ld. AR then submitted that his brief synopsis cum

written statement containing three pages wherein proper

correlation is made with the paper book filed be taken into

consideration. The sheet anchor of the Ld. AR argument was that

during the relevant period, the assessee had sold the shares of

M/s Alpha Graphics, a BSE listed company & disclosed exempt

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long term capital gain (LTCG) of Rs. 25,93,820/- u/s 10(38) of

the Act. The case of the assessee was reopened by DCIT/ACIT

1(1), Indore & a notice u/s 148 was issued on 29.03.2019 basis

information that the assessee had earned alleged bogus LTCG

from the sales of shares of “M/s Alpha Graphic”. However, entire

transaction of Capital gains was already disclosed by the

assessee under Income Declaration Scheme (IDS) 2016 on

29.03.2016 whereby higher income of Rs. 26,54,000/- was

offered & due taxes were paid. Forms 1 to 4 are placed on record.

Our attention was invited to page 53 of PB for IDS 2016 & pages

51-63 of PB for forms 1 to 4 under IDS. With regard to the

addition of Rs. 2,30,806/- which was made on account of alleged

unaccounted investment in the acquisition of said shares (para

6-10 of the impugned assessment order), it was submitted that

shares of M/s Alpha Graphics were purchased on 02.07.2010 &

our attention was invited to the page 44 of the PB Purchase cost-

Rs. 96200+ 1,34,606= Rs. 2,30,806/-[CoI pages 42 to 44 of PB].

It was then submitted that the relevant year under consideration

for purchase transaction is 2011-12 & not 2012-13. Our

attention was then invited to PB page 81 & 82 which is ledger

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A/C of the assessee with Pragati Shares & Stock Services

showing debit of Rs. 2,30,805/- against 5000 shares of Alpha

Graphics Ltd. (BSE)[ 02.07.2010 to 25.07.2010]. Our attention

was then invited to PB page 84 & 85 of PB which are “ Contract-

cum-Bill dt. 02.07.2010” in the name of the assessee showing

purchase price of Rs. 2,30,805/- of Pragati Shares & Stock

Services which evidences purchase of 5000 shares of Alpha

Graphics Ltd. (BSE).

3.3 Next our attention was invited to PB pages 51,52 & 53 of

PB wherein disclosure of IDS 2016 was made before PCIT, Indore.

Specific attention was invited to page 51,52 & 53 of PB wherein

there is mention of Rs. 26,54,000/- against LTCG on sale of

shares of Alpha Graphics including incidental charges [ Nature of

undisclosed income]. Save & except above no other submissions

were made by the Ld.AR, although several grounds are raised in

the Form No. 36. Per Contra, the Ld. DR appearing for & on

behalf of the revenue submitted that he leaves the issue to be

decided by this Tribunal basis it’s wisdom. Reliance was placed

on ITAT order (Lucknow Bench) dated 17.03.2016 in case of

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Shri Mahesh Chandra Chaurasia v/s DCIT (ITA No.

267/LKW/2015) & the copy of the same was tendered across bar.

Reliance was also placed on ITAT, Kolkata order dated

10.02.2026 in case of ACIT v/s Rose Life Enclave LLP (ITA

No. 1666/KOL/2025) para 7.1, copy of order not tendered

across bar. Hearing was closed then.

4.1 We have to decide the legality, validity and proprietary of the

“impugned order” basis records of the case & the rival submission

canvassed before us.

4.2 We have carefully perused the records of the case and have heard

the submissions.

4.3 We basis records of the case & after hearing & upon examining the rival contentions of the Ld. AR & the Ld. DR canvassed before us, are of the considered view that the “Impugned Order” deserve to be set aside as the assessee before us has demonstrated successfully that 5000 shares of Alpha Graphics (BSE) were indeed purchased on 02.07.2010 basis PB pages 84 & 85 which is contract-cum-bill dated 02.07.2010 of

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Pragati Shares & Stock Services in favour of the assessee Babita Chelawat for Rs. 2,30,805/- which gets corroborated with ledger A/C of the assessee maintained by Pragati Shares & Stock Services pages 81 to 83 of PB which too evidences the date of purchase by the assessee as 02.07.2010. The further corroboration is found in Form No. 4 IDS page 63 of PB evidencing undisclosed income of Rs. 26,54,000/- for LTCG. We also find on page 44 of PB (CoI) showing purchase date of Alpha Graphics Ltd. As 02.07.2010 [96200+134606=Rs.2,30,806/-]. We, therefore hold date of purchase as 02.07.2010 which falls in the AY2011-12 & not in 2012-13 the year under consideration. Consequently, addition of Rs. 2,30,806/- fails. Investment of Rs. 2,30,806/- cannot be treated as unaccounted investment in the year under consideration 2012-13. Consequently, “Impugned Order” is set aside following two authorities cited (supra) by Ld. AR.

4.4 Under the Income Tax Law there is a concept of a year & year of taxability since purchase were made in the 2011-12 same cannot be added in the year under consideration AY 2012-13. The lower authorities consequently have erred in law rendering the Impugned Order illegal and bad in law. Under the facts, we feel that the addition made is not justified. However, the

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Assessing Officer is at liberty to examine the evidence and source

of acquisition of these shares and if the assessee is not able to

explain the source, the addition may be made in the year of

purchase which may be assessment year 2011-12 by following

due process of law but no addition can be made in the present

year i.e. AY 2012-13.

4.5 In the premises drawn up by us, we set aside the impugned

order & allow the appeal of the assessee.

5 Order

5.1 The appeal of the assessee is allowed & the impugned order is set aside. [ Pronounced in open court on 27.03.2026.

Sd/- Sd/-

(BHAGIRATH MAL BIYANI) (PARESH M JOSHI) ACCOUNTANT MEMBER JUDICIAL MEMBER Indore Dated : 27/03 /2026 SN Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Senior Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore

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