SHOBHANA GARG,INDORE vs. COMMISSIONER, INDORE

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 a

second appeal .The Assessee is aggrieved by the order

bearing No:-ITBA/NFAC/S/250/2025-26/1081500060(1)

dated 07.10.2025 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 year is 2015-16 and the corresponding previous year period is from 01.04.2014 to

31.03.2015.

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

147 RWS 144/144B of the Act, the total income of the

Assessee was computed & assessed at Rs. 44,89,810/-. The

total income as per the return of income was at Rs.

4,85,680/-. The addition of Rs.38,87,500/- was made as

unaccounted money in the guise of exempted LTCG. The

transaction was held to be a sham and a make believe

arrangements. It was held that paper work was got done to

give a colour of authenticity to the transaction so as to

create a facade of legitimate transaction. Yet another

addition was made at Rs. 1,16,625/- on account of

commission at prevailing rate of commission of 3 % and

same was added u/s 69C of the Act. That the aforesaid

assessment order bears no: - ITBA/AST/S/147/2021-

22/1041333298(1) and that the same is dated 23.03.2022 which is hereinafter 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 first appeal of the Assessee on the

grounds & reasons stated therein. The core grounds &

reasons for the dismissal of the first appeal were as under:- 2.3 That the Assessee being Aggrieved by the “Impugned

Order” has preferred the instant second appeal before this

Tribunal and has raised the following grounds of appeal in

the form No. 36 against the “Impugned Order” which are as

under:-

“1. That on the basis of facts, circumstances and in law learned AO has grossly erred in assuming jurisdiction u/s 147 and making assessment therein on borrowed satisfaction without recording sufficient reasons to believe or there being any relevant material which could lead to formation of requisite "reason to believe" a prerequisite to make assessment. Thus the order passed by Ld. AO is arbitrary, bad in law and on facts. 2. That on the basis of facts, circumstances and in law learned AO has grossly erred in passing order u/s 147 r.w.s. 144, when the Appellant had duly responded to all the notices and without taking on record the submissions so made during the Assessment proceedings. 3. That on the facts and circumstances of the case, the Ld. AO has erred in making an addition of Rs.3887500/- u/s 68 of the Act: 3.1 When section 68 is not applicable on the transaction entered into by the Appellant, 3.2 In considering the script from which the Appellant has earned Long Term Capital Gain as "Penny Stock", a term nowhere define under the Income Tax Act as any other law for the time being in force. 3.3 By grossly applying the results of enquiries made by the Investigation Wing of the Income Tax Department to the case of Appellant without proving any nexus between the Appellant and such enquiries. 3.4 Without bringing any material on record to depict that the purchase and sale of shares is bogus/ doubtful or to prove that the Assessee channelized his unaccounted income/assets to arrange the long term gains. 3.5 By disallowing of claim of exempted income based on wrong analysis of the financials and prices of the shares on a wrong notion that the Company has no business turnover and without considering that the Company being alleged as penny stock is still being traded on BSE and no restriction is being laid on it by the SEBI on its trading. 3.6 By assuming that that the investment in share market is only done after analysing the elaborate fundamentals, growth and potential of the Company disregarding the basic demand and supply phenomenon and investment made on market sentiments/tips 3.7 By alleging without any evidence that the assessee has collusion with Company and/or brokers to earn bogus LTCG 3.8 By not considering and in summarily rejecting the various documents, evidence and details submitted during the course of assessment 3.9 By not allowing the Appellant a proper opportunity of being heard and denying the natural justice by making the impugned addition without conducting proper enquiries and taking on record the submissions made 4. That on the facts and circumstances of the case, the Ld. AO has erred in making an addition of Rs.116625/- under section 69C, being Commission at 3% of trade value without any evidence against the Appellant 5. The Appellant craves to add/alter any of the grounds of appeal on or before the date of hearing.”

3.1 The hearing in the matter took place before this Tribunal

on 22.04.2026 when the Ld. AR for & on behalf of the

Assessee appeared before us & interalia contended that the

“Impugned Order” is bad in law, illegal & not Proper. It is in

the violation of the principles of natural justice. It therefore

deserves to be set aside. In brief the Ld. AR submitted that

the “Impugned Order” of the Ld. CIT (A) is an ex-parte order.

The broad issue’s of penny stock which is the core allegation

of the Dept. of Income tax. It was submitted that while it is

true that number of the opportunities notice(s) were issued

to the assessee which we have tabulated above the last two

notice(s) dated 07.05.2025 and the final notice dated

12.08.2025 were not replied to by the assessee and hearing

opportunities could not be availed off. It was additionally

submitted that assessee had to change her email address too.

The “Impugned Assessment Order” is u/s 144 of the act

rws 147. ROI was filed u/s 148 but the same could not be

got validated while e-filing the same. On page 2,3 & 4 of the

“Impugned Assessment Order” assessee submission are recorded by the Ld. AO. The Ld. AO considered the

submissions. With regard to the “Impugned Order” it was

submitted that same be set aside and remanded back to the

Ld. CIT (A) for De novo adjudication. Per contra the Ld. DR

for and on behalf of the Revenue submitted that Dept. of

Income tax has no objection if this tribunal deems fit to

remand the case back to the file of CIT (A). Hearing was over

and closed.

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 & further

upon examining the rival contentions of the Ld. AR & the Ld.

DR canvassed before us, are of the considered opinion that

the “impugned order” is an ex-parte order and is not

meritorious too. It is passed in the breaches of the principle of natural justice. We therefore in order to meet the ends of justice

set aside the “Impugned Order” as and by way of remand. We

find both the Ld. AR and the Ld. DR are at ad idem on the issue

of remand to the Ld. CIT (A).

4.4 In view of the premises drawn up by us we set aside the

“Impugned Order” as and by way of remand to the Ld. CIT

(A) on De novo basis.

5 Order

5.1 In the result the “Impugned Order” is set aside as and by

way of remand back to the file of the Ld. CIT (A) on De novo basis

who shall now pass a meritorious order which should be a

speaking and a reasoned one.

5.2 Appeal of Assessee allowed for statistical purpose.

Pronounced in open court on 30.04.2026.

Sd/- Sd/-

(BHAGIRATH MAL BIYANI) (PARESH M JOSHI) ACCOUNTANT MEMBER JUDICIAL MEMBER Indore Dated : 30/04/2026 Patel/Sr. PS 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