ANOOP JAIN HUF,DELHI vs. DCIT/ACIT, CENTRAL CIRCLE - 1, NOIDA

The issues involved in all captioned appeals are common, therefore, they have been heard together and accordingly, adjudicated by a common order.

First we take appeal of the assessee in ITA No.5962/Del/2025 for Assessment Year 2011-12 in the case of Anoop Jain HUF.

Brief facts of the case are that the assessee has filed the return of income on 29.09.2011, declaring total income of INR Page | 2 2,03,90,462/-. The assessment was completed u/s 143(2) of the Act in terms of the order passed on 27.02.2014 wherein after examining the income declared under the head “Income from Business and Income from Capital Gain and Income from Other Sources” were duly examined and after verification, returned income was accepted. Thereafter, based on the information received from the Investigation Wing, Mumbai that assessee has sold shares of SVC Resources Ltd. (“SVCRL”) for a consideration of INR 1,85,23,911/- and the said company was found to be a penny stock company, therefore, in terms of para 8.2 of the reasons, AO has recorded the satisfaction that assessee has failed to disclose truly and fully all the material facts to the extent of income of INR 1,85,23,911/- that has escaped assessment and accordingly notice u/s 148 was issued on 30.03.2018 after obtaining the approval of Ld.PCIT-18, New Delhi. Thereafter, in terms of the order passed u/s 143(3) r.w.s 147 dated 25.12.2018, AO had made the addition of INR 1,70,15,294/- as unexplained credit u/s 68 of the Act and further made addition of INR 8,50,764/- by alleging that the assessee has paid commission @ 5% for obtaining the accommodation entry of capital gain on the sale of shares of SVCRL.

Against the said order, assessee filed an appeal before Ld. CIT(A) who vide order dated 29.07.2025, dismissed the appeal of the assessee.

Aggrieved by the order of Ld.CIT(A), assessee is in appeal before the Tribunal by taking following grounds of appeal:-

Ground of appeal No.1 raised by the assessee is general in nature, hence not adjudicated.

Ground of appeal Nos. 2 & 3 raised by the assessee challenging the re-opening of completed assessment u/s 147 of the Act.

Before us, Ld.AR for the assessee submits that as per section 147 of the Act, AO must have reason to believe of escaped income and that believe must be raised on tangible material having live-link with the alleged escapement and not on mere change of opinion. In the instant case, assessment has already been completed u/s 143(3) after making all the necessary enquiries and verification of the Page | 4 income declared by the assessee under various heads of income. AS per ld. AR, the notice u/s 148 was issued after the expiry of four year form the end of the relevant assessment year and therefore, as per first proviso to section 147 of the Act, AO should record the satisfaction that assessee has failed to disclosed fully and truly all material facts necessary for the assessment.

Ld. AR submits that during the course of assessment proceedings completed u/s 143(3) of the Act, the AO has made detailed enquiries about the income declared by the assessee under the head Income from Business where the assessee has declared income from trading in derivatives. Further under the head Income from Capital gains, assessee has declared short term and long terms capital gains and filed all the evidences of purchases and sales of share which are available on records. As per ld. AR the AO has recorded the satisfaction of escapement of income of the entire sale proceeds and not of the capital gain declared. Ld.AR submits that during the course of original assessment proceedings, all the details were filed which included the financial statement, details of capital gain etc. and after considering these facts, AO has accepted the income returned. Ld.AR further filed written submission which reads as under:-

On the other hand, Ld. CIT DR for the Revenue submits that the case was re-opened on the basis of investigation carried out by the Investigation Wing, Mumbai and certain brokers were examined who admitted that they were acted as entry operators for providing accommodation entries in the shape of LTCG and STCG to various beneficiaries and as per the AO the assessee also taken such accommodation entry of capital gains. In their statements, the alleged entry operators admitted that certain companies were managed and controlled by them through which the accommodation entries were provided to the beneficiaries and SVCRL was identified as one of such company. Ld. CIT DR further submits that since the assessee has declared capital gain from the sale of shares of SVCRL which is a penny stock company therefore, credits received by way of sale of shares remained unexplained. Thus, the AO has rightly made the addition. Ld. CIT DR thus, submits that the Ao has rightly initiated the proceedings u/s 147 of the Act and requested for the confirmation of the same.

Heard the contentions of both the parties at length and perused the material available on record. In the instant case, the assessment was already completed u/s 143(3) of the Act wherein the AO has categorically observed in para 2 & 3 of the order as under : 2. “The assessee is engaged in dealing of derivatives and investments in shares, security and others…”. During the year under appeal, the assessee has declared income from business, capital gains and other sources. During the assessment proceedings, the AR has field necessary details and documents from time to time which have been examined and placed on record and the case was discussed with him. 3. After examination of details submitted by the assessee and discussions held that Ld.AR of the assessee, the income of the assessee for the year under consideration is assessed at INR 2,03,90,462/-.”

From the perusal of the aforesaid observations of the AO in the assessment order passed u/s 143(3), it is observed that the AO while passing the assessment order, has examined all the details with respect to the income declared under the head “capital gains” after examining the details called for from the assessee. It is the case where all the facts necessary for the assessment were truly and fully disclosed therefore, after expiry of the period of 04 years if any notice is issued u/s 148, the AO is required to state what fact was not fully and truly was disclosed which was necessary for the assessment. Page | 16

Before moving further, the provision of section 147 needs to be considered: 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year).

As could be seen that under section 147 of the Act, AO has reason to believe that income has escaped assessment for initiating the reassessment proceedings u/s 147 of the Act. It is well established that before initiating the reassessment proceedings, AO should apply his mind and must record the satisfaction of escapement of income. In the instant case, as could be seen from the perusal of the reasons recorded, as placed at pages 38 -42 of PB, the AO has recorded his satisfaction solely on the basis of the information received from Investigation Wing, Mumbai without their being any independent application of mind. The AO has not conducted any fresh enquiry before recording the reasons to believe of escapement of any income and thus such satisfaction is purely borrowed satisfaction. The AO in para 5 of the reasons recorded observed that he had examined the material placed on record with the findings given by the Investigation Wing and reached to the conclusion that there is a direct link between the material available on record and the reasons for that income has escaped assessment. It is thus evident that the AO has considered the material already available which was examined in the original assessment proceedings Further the belief is based on the borrowed satisfaction where the AO has followed the observations made by the Investigation Wing, Mumbai and no independent verification was made at his end to bring on record any live link with the claim of the assessee. The Hon’ble Jurisdictional High Court in the case of PCIT vs. Meenakshi Overseas (P.) Ltd. reported in [2017] 82 taxmann.com 300 (Delhi), the hon’ble jurisdictional high court has held as under “…Thus, the crucial link between the information made available to the Assessing Officer and the formation of belief is absent. The reasons must be self-evident, they must speak for themselves. The tangible material which forms the basis for the belief that income has escaped assessment must be evident from a reading of the reasons. The entire material need not be set out. However, something therein which is critical to the formation of the belief must be referred to. Otherwise the link goes missing. [Para 23] The reopening of assessment under section 147 is a potent power not to be lightly exercised. It certainly cannot be invoked casually or mechanically. The heart of the provision is the formation of belief by the Assessing Officer that income has escaped assessment. The reasons so recorded have to be based on some tangible material and that should be evident from reading the reasons. It cannot be supplied subsequently either during the proceedings when objections to the reopening are considered or even during the assessment proceedings that follow. This is the bare minimum mandatory requirement of the first part of section 147 (1). [Para 24] The first part of section 147(1) of the Act requires the Assessing Officer to have "reasons to believe" that any income chargeable to tax has escaped assessment. It is thus formation of reason to believe that is subject-matter of examination. The Assessing Officer being a quasi judicial authority is expected to arrive at a subjective satisfaction independently on an objective criteria. While the report of the Investigation Wing might constitute the material on the basis of which he forms the reasons to believe, the process of arriving at such satisfaction cannot be a mere repetition of the report of investigation. The recording of reasons to believe and not reasons to suspect is the pre- condition to the assumption of jurisdiction under section 147 The Page | 18 reasons to believe must demonstrate link between the tangible material and the formation of the belief or the reason to believe that income has escaped assessment [Para 26] In the present case, as already noticed, the reasons to believe contain not the reasons but the conclusions of the Assessing Officer one after the other and there was no independent application of mind by the Assessing Officer to the tangible material which forms the basis of the reasons to believe that income has escaped assessment. The conclusions of the Assessing Officer are at best a reproduction of the conclusion in the investigation report. Indeed it is a 'borrowed satisfaction'. The reasons fail to demonstrate the link between tangible material and the formation of the reason to believe that income had escaped assessment." [Para 36]”

The Hon’ble Delhi High Court in the case of Sanjay Kaul vs ITO reported in [2025] 175 taxmann.com 384 (Del.) also expressed the same view and observed as under:- 26. This Court has analyzed the following information based on the reasons rendered by the AO for the issuance of the impugned notice, in addition to the submissions made by the parties: • The Petitioner's case was reopened based on the information received from the Office of the Assistant Director of Income Tax(Inv.) - Unit 3(1), New Delhi vide letter dated 14.03.2018, which revealed that the BSE listed penny stock of IISL has been rigged in a synchronized way so as to provide accommodation entry to multiple beneficiaries. • Further, an Investigation Report circulated from the office of the Principal Director of Income Tax(Inv.), Kolkata had identified the scrips of SRK as one of the BSE listed penny stocks. • Thereafter, the Statement of Mr. Anil Kedia was recorded on oath wherein he accepted that his brokerage firm was involved in the manipulation of trading of shares, in order to provide bogus accommodation entry to various beneficiaries. It is noted that Mr. Anil Kedia also provided a list of penny stock companies in which shares were rigged, which includes both IISL and SRK. • During the relevant year under consideration, the Petitioner had traded in the scrips of both IISL and SRK, which led to short term capital loss.

The Hon'ble Delhi High court in the case of Pr. CIT vs. RMG Polyvinyl (P) Ltd. reported in 83 taxmann.com 348 has held as under: "..where information was received from investigation wing that the assessee was beneficiary of accommodation entries but no further inquiry was undertaken by Assessing Officer, said information could not be said to be tangible material per se and, thus, reassessment on said basis was not justified.”

The AO has not conducted any independent inquiry to corelate the information in his possession with the transactions of the appellant. The AO failed to establish the nexus between the tangible material available and the reason to believe that income has escaped the assessment. Even the statements of the persons involved in the modus operandi recorded on which the AO has relied upon, the AO couldn't bring on record co-relation with the income escaped in the hands of the appellant and if the name of appellant was explicitly surfaced from the statements.

In the case of Well Trans Logistics India (P.) Ltd. v. Addl. Commissioner of Income-tax reported in [2024] 166 taxmann.com 72 (Delhi), the Hon’ble Jurisdictional High Court has held as under “.... there is no close nexus" or live link between tangible material and the reason to believe that income has escaped assessment. The information received from the Investigating Unit of the revenue cannot be the sole basis for forming a belief that income of the assessee has escaped assessment. Having received information from the Investigating Wing, it was incumbent upon the Assessing Officer to take further steps, make further enquiries and garner further material and if such material indicate that the income of the assessee has escaped assessment and then form a belief that the income of the assessee has escaped assessment. [Para 25] Page | 21 Clearly, in this case, the Assessing Officer has not acquired any material to form such belief. There is not even a line of reason which may justify the formation of the belief. Consequently, reopening of assessment for the assessment year in question by the Assessing Officer does not satisfy the requirement of law in terms of sections 147 and 148." [Para 26].”

In the case of Movish Realtech (P.) Ltd. vs. Deputy Commissioner of Income-tax reported in [2023] 152 taxmann.com 666 (Delhi), in the head note of the decision it was held as under “Section 68, read with sections 147 and 148, of the Income-tax Act, 1961 - Cash credits (Loan)- Assessment year 2019-20 - Pursuant to a search conducted at 'Oneworld group entities', it was noted that assessee was a beneficiary of an accommodation entry provided in form of bogus loans - It was alleged by revenue that bogus accommodation entry was provided by AFL Ltd. - It was also noted that AFL was one of several entities controlled by an accommodation entry provider i.e., one, 'R' - Further based on statement of 'R' revenue zeroed down on AFL, which, supposedly, lent money to assessee - In said back drop Assessing Officer issued notice under section 148 and initiated reassessment proceedings against assessee - It was noted from record that foundation for triggering reassessment proceedings qua assessee was statement of 'R' and said statement, by itself, did not lend any clarity as to whether Assessing Officer had underlying material available with him for reaching a conclusion that income chargeable to tax qua assessee had escaped assessment.”

It is further held by the hon’ble court that”

The Hon’ble Supreme Court in the case of DCIT vs Rakesh Ramanlal Shah reported in 477 ITR 296 (SC) has held that AO Page | 22 reopened the assessment on borrowed satisfaction without establishing the live link between the information and material on record and dismissed the SLP filed by the Revenue.

As observed above in the instant case, the assessee has already filed all the details which were examined and merely on the basis of the report of the Investigation Wing without applying his mind, the AO has proceeded to re-open the completed assessment by recording the satisfaction that assessee has failed to disclose truly and fully all the material facts necessary from the assessment however, the material which has been placed reliance for recording such satisfaction is nothing but the information provided by the Investigation Wing, Mumbai and mere it is change of opinion as has been held by the Hon’ble Supreme Court in the case of CIT vs Kelvinator of India Ltd. reported in [2010] 320 ITR 561 (SC).

In view of the above discussion and respectfully following the above-mentioned decisions, it has been held AO has also failed to establish the nexus between the tangible material available and therefore, the reason to believe that income has escaped the assessment and the notice issued u/s 148 of the Act is invalid and the consequent reassessment order is bad in law.

Coming to Ground of appeal No.3 & 4 of the assessee are with respect to the merits of the addition, wherein assessee has claimed that it has declared STCG from sale of shares of SVCRL for which our Page | 23 attention is invited to the computation of income, placed at pages 25 to 37 of PB, wherein the capital gain from the sale of shares of SVCRL is forming part of the total STCG declared by the assessee and thus, any further addition tantamount to double addition.

Heard the contentions of both the parties at length and perused the material available on record. From the perusal of the computation of income, it is observed that assessee has shown total STCG from the sale of shares of INR 96,12,427/- which includes the STCG from the sale of shares of SVCRL of INR 80,68,538/- (PB page 37). The assessee has already shown the total capital gain and same has been assessed by the AO. As per the computation of income in the reassessment order, wherein income as per return of income filed at INR 2,03,90,462/- is taken and thereafter, the AO has made further addition of entire sale proceeds of INR 1,70,15,294/- from the sale of share of SVCRL as unexplained credit. Once the AO has accepted the income declared which includes STCG from the sale of shares of SVCRL declared by the assessee, any further addition for the sale consideration of the said shares would tantamount to double addition which is not permissible in the eyes of law.

Further all the details with respect to the sale of shares containing the contract note, bank statements, ledger accounts of the assessee in the books of broker, form 10DB evidencing the payment of STT, DEMAT account statements were placed before AO during the course of re-assessment proceedings and no defect was pointed out. Page | 24 The AO merely on the basis of the information received from the Investigation Wing wherein the name of the assessee was nowhere appearing as beneficiary of the sale of shares in SVCRL. Therefore, under these circumstances, we find that AO has wrongly treated the credit on account of sale of shares unexplained in the hands of the assessee.

The coordinate bench of Mumbai Tribunal in the case of Subhash Damodar Annamwar vs. ITO in ITA No. 3227/Mum/2023 order dated 22.02.2024 where in the similar situation, the addition made on account of trading in penny scrip of SVCRL was deleted. The relevant portion of the decision of the Tribunal is reproduced below:- "8. We heard the parties and perused the matter on record. The Assessee through share brokers has bought 5029 shares of Pace Electronics Ltd. The name of the said company is subsequently changed to M/s. SVC Resources Ltd. Out of 5029 shares bought the Assessee sold 1377 shares on various dates during the year under consideration. The Assessee has claimed exemption under section 10(38) of the gain arising from the said transaction. The AO relied on the investigation report in which the script names M/s. SVC Resources Ltd., was held to be a Penny Stock and accordingly, reopened the assessment of the Assessee for the reason that the Assessee has transacted in the said script. We noticed that the reason for AO to make addition in the hands of the Assessee is that the price of the script is jacked up within a short period of time and that the financial performance of the company does not support the increase in the share prices. We further, noticed that the AO though has elaborated on the modus operandi for how Penny Stock companies are used for converting cash, has not recorded any specific findings to incriminate the Assessee or to establish that the assessee in any way is involved in rigging the price of the shares. The assessee in order to support the genuineness of the transaction has submitted all the relevant documents in the form of broker bill, contract summary, bank statement, etc. (page 39 Page | 25 66,125,and 149 of paper book) It is also relevant to note that the lower authorities have not recorded any adverse finding with regard to the various documents submitted by the Kishor Jethalal Morbia assessee. From the perusal of the broker statement with the list shares held by the assessee in various companies (page 53 of paper book) we noticed that the assessee is holding investments in various companies to the tune of Rs. 39,35,416/- which includes 9738/- shares of M/s. SVC Resources Ltd. Therefore, we see merit in the contention of the ld. AR that the assessee is a regular investor and that in his normal course of operation has sold a part of his investments made in M/s. SVC Resources Ltd. The fact that the assessee continues to hold the portion of shares also goes to substantiate the claim that assessee is a regular investor."(emphasis is made by us).”

Therefore, even on the merits, the assessee succeeds. Since we have held the transaction of sale of shares of SVCRL as genuine transaction, no addition could be made on account of commission alleged as paid to obtain the accommodation entry of bogus capital gains. Thus, the addition made towards the alleged commission as unexplained expenditure u/s 69C of the Act is hereby deleted. Accordingly, Grounds of appeal Nos.3 & 4 raised by the assessee are allowed.

In the result, appeal of the assessee is allowed.

Before us, both the parties have fairly admitted that facts involved in this appeal are identical in the facts as existed in ITA No.5962/Del/2025 in the case of Anoop Jain HUF where the assessment in the case was also completed u/s 143(3) of the Act and Page | 26 during the course of assessment proceedings, the AO has made all the necessary queries for verification of the Income declared under the head Income from capital gains and assessee has also filed all the details with respect to the capital gains declared. The facts remained that the AO has proceeded to re-open the assessment on the basis of material/information supplied by the Investigation Wing, Mumbai and no independent inquiry or investigation was carried out before reaching to the satisfaction of escapement of income thus, by following observations made hereinabove in ITA No.5962/Del/2025 with respect to the borrowed satisfaction, we hold that the re-opening of assessment in the instant case is bad in law and the consequent reassessment order passed is hereby, quashed.

Now we take Ground of appeal Nos. 3 & 4 of the assessee on account of confirming the addition in respect of genuine sale proceeds of share and alleged commission expenses.

Further since the STCG from the sale of shares was accepted even in the reassessment order thus any further addition with respect to entire sale proceeds would be double addition. Further the assessee has filed all the necessary details to prove the genuineness of the transaction of purchases and sale of shares of SVCRL and no doubts were raised in the same by the AO who has made the addition merely on the basis of report of Investigation wing Mumbai. Since all the facts are identical to the facts of case of Anoop Jaun HUF for AY 2011-12 thus, by following the observations made herein above in Page | 27 this regard while allowing the appeal in ITA NO. 5962/Del/2025 which are Mutatis Mutandis applicable to the facts of the present case, the instant appeal is also allowed.

In the result, appeal of the assessee is allowed.

Ground of appeal No.1 raised by the assessee is general in nature hence, not adjudicated.

Ground of appeal No.2 raised by the assessee is with respect to borrowed satisfaction without independent inquiries and application of mind.

Before us, both the parties have fairly admitted that facts involved in this appeal are identical in the facts as existed in ITA No.5962/Del/2025 in the case of Anoop Jain HUF for AY 2011-12 and only different in the instant case is that assessment was completed u/s 143(1) and not u/s 143(3) of the Act. However, the facts remained that the AO has proceeded to re-open the assessment on the basis of material/information supplied by the Investigation Wing, Mumbai and no independent inquiry or investigation was carried out before reaching to the satisfaction of escapement of income thus, by following observations made hereinabove in ITA No.5962/Del/2025 with respect to the borrowed satisfaction, we hold Page | 28 that the re-opening of assessment in the instant case is bad in law and the consequent reassessment order passed is hereby, quashed.

Now we take Ground of appeal Nos. 3 & 4 of the assessee on account of confirming the addition in respect of genuine sale proceeds of share and alleged commission expenses.

The facts are identical to the facts as existed in ITA No.5962/Del/2025 of Anoop Jain HUF. In the present case also, the AO has added the entire amount of sale proceeds from the sale of SVCRL as unexplained by ignoring the fact that the assessee has incurred loss from the sale of the shares and such loss has been accepted as part of the income declared therefore, once the AO has not disputed the loss declared by the assessee from the sale of shares, the sale consideration cannot be held as unexplained credit. More particularly when all the details with respect to the sale of shares containing the contract note, bank statements, ledger accounts of the assessee in the books of broker, form 10DB evidencing the payment of STT, DEMAT account statements were placed before AO during the course of re-assessment proceedings and no defect was pointed out. The AO merely on the basis of the information received from the Investigation Wing wherein the name of the assessee was nowhere appearing as beneficiary of the sale of shares in SVCRL.

Since all the facts of the instant case are identical to the facts of case of Anoop Jaun HUF for AY 2011-12 thus by following the observations made herein above in this regard while allowing the appeal in ITA No. 5962/Del/2025 which are Mutatis Mutandis applicable to the facts of the present case, the instant appeal is also allowed.

In the result, appeal of the assessee is allowed.

Brief facts of the case are that the assessee has filed the return of income on 30.09.2012, declaring total income of INR 33,32,410/-. The case of the assessee was re-opened for the reason that assessee has declared the capital gain from the scrip namely Unisys Software and Holding Ltd. (“USHL”) which as per information provided by the Investigation Wing, was held as a penny stock company and used for providing accommodation entries of capital gains to various beneficiaries. The AO alleged that the assessee is one of the beneficiaries who had benefitted by exempted income in the shape of bogus LTCG from the sale of shares of USHL. Accordingly, the addition was made u/s 68 of the Act of INR 80,91,870/- and further an addition of INR 1,61,839/- was made as commission paid @ 2% for obtaining accommodation entries of bogus LTCG in the grab of penny scrip. In first appeal, the addition was confirmed by Ld. CIT(A) therefore, the assessee is in appeal before the Tribunal.

Before us, Ld.AR for the assessee submits that satisfaction has been recorded for re-opening the assessment was solely on the basis of information provided by Investigation Wing which is general in nature and mechanically applied to the facts of the present case of the assessee. The assessee name was nowhere appearing in the information so provided nor any information supplied referred the assessee’s name as one of the beneficiaries. The assessee placed reliance on the judgement of Hon’ble Delhi High Court in the case of Sanjay Kaul reported in 175 taxmann.com 384 (Del.) and Co- ordinate Bench of Tribunal in the case of Marvelous Cement Pvt.Ltd. vs ITO in ITA No.4153/Del/2019 wherein the Co-ordinate Bench has followed the judgement of Hon’ble Delhi High Court in the case of Signature Hotels Ltd. vs ITO reported in [2010] 338 ITR 51 (Del.). It is thus, submitted by the assessee that the AO has solely relied upon the information received from the Investigation Wing and therefore, the proceedings initiated u/s 147 of the Act are on the basis of borrowed satisfaction therefore the same deserves to be quashed.

On merits of the additions, Ld.AR submits that during the course of assessment proceedings, assessee has filed all the relevant details with respect to the transaction carried out which comprises of the following documents:- Page | 31 (i) Copy of Form 10DB for the FY 2011-12 (ii) Copy of broker ledger for the FY 2011-12 (iii) Copy of ledger account of Unisys Software (the alleged script) for the FY 2011-12 (iv) Copy of Demat account reflecting movement of shares (v) Copy of Investment Summary as on 31.03.2011 (vi) Copy of the bank statement for the period from 01.04.2011-31.03.2013 (vii) Copy of the contract for purchase of shares (viii) Copy of the contract notes for sale of shares (ix) Copy of the ledger accounts of broker (x) Copy of the form 10DB certificate issued by the stock exchange with respect to STT paid. All these documents are available in page 40 to 64 filed before us.

Ld.AR for the assessee submits that said details have been doubted solely on the basis of the report of Investigation Wing and no specific error was pointed out in the assessment order which is very cryptive. Ld.AR further drew our attention the case of the Co- ordinate Bench of the Tribunal in Meenu Goel vs ITO reported in [2018] 94 taxmann.com 158 (Del. Trib.) wherein Co-ordinate Bench has held the trading results in the share of USHIL as genuine and held the capital gain as valid. He therefore requested that no addition should be made by hooding the trading in USHIL solely on the report of Investigation Wing without bringing on record any contrary material.

Heard the contentions of both the parties at length and perused the material available on record. With respect to Ground of appeal No.1 of the assessee is that the reasons recorded were available for re-opening of assessment based on the borrowed satisfaction. Before us, both the parties have fairly admitted that facts involved in this appeal are identical in the facts as existed in ITA No.5962/Del/2025 in the case of Anoop Jain HUF for AY 2011-12 and only different in the present appeal is that assessment was completed u/s 143(1) and not u/s 143(3) of the Act. However, the facts remained that the AO has proceeded to re-open the assessment on the basis of material/information supplied by the Investigation Wing, Mumbai and no independent inquiry or investigation was carried out before reaching to the satisfaction of escapement of income thus, by following observations made hereinabove in ITA No.5962/Del/2025 with respect to the borrowed satisfaction, we hold that the re-opening of assessment in the instant case is bad in law and the consequent reassessment order passed is hereby, quashed.

Ground of appeal No.2 raised by the assessee is with respect to treating the sale consideration of scrip i.e. Unisys Software Holding Ltd. as unexplained u/s 68 of the Act. It is observed that during the year under appeal, the assessee has sold the shares of this company. It is further observed that it is not only the solitary Page | 33 transaction carried out by the assessee rather he is making regular investments in the shares and securities and declared STCG and LTCG on regular basis. The assessee has filed following documents before the AO with respect to the sale of shares of Unisys:- (i) Contract note or purchase of shares (ii) Copy of bank statements (iii) Copy of DEMAT account statements (iv) Copy of investments summary as on 31.03.2011 (v) Copy of assessee’s account in the ledger of broker (vi) Copy of sales bills (vii) Copy of Form 10DB for payment of STT. 48. Copies of all these details are placed before us at pages 40 to 68 of the Paper Book. From the perusal of the observations of AO and Ld. CIT(A), it is observed that nowhere in the information supplied by the Investigation Wing, name of the assessee was referred by any of alleged entry provider or by any intermediaries to allege that assessee was one of the beneficiaries of bogus accommodation entries of STCG/LTCG. The assessee has declared LTCG from sale of USHL and claimed the same as exempt u/s 10(38) of the Act. However, the AO has made the addition of the entire amount of the sale consideration by alleging the same as unexplained income of the assessee. It is observed that in the case of Meenu Goel vs ITO, the Co-ordinate Bench of the Tribunal has held that the transaction in the shares of USHL is genuine transaction and deleted the additions made therein. Relevant observations of the order passed by Co-ordinate Bench of Tribunal in para 6 to 7 are as under:- Page | 34

It is further observed that in many cases of Transfer Pricing, M/s Unisys Software Holding Ltd. was treated as a valid comparable for determination of ALP thus it cannot be said that the said company is penny script. Some of the cases are as under: (i) Turner International India (P.) Ltd. v. ACIT [2020] taxmann.com taxmann.com (Delhi (Delhi Trib.) where the TPO accepted Unisys as a genuine comparable in the arm's-length analysis. (ii) Sony Pictures Networks India (P.) Ltd. v. DCIT [2020] 117 taxmann.com 464 (Mum. Trib.) : In this case also, the TPO has accepted Unisys's transactions as arm's-length. (iii) Commault Systems (India) (P.) Ltd. v. DCIT [2021] 126 taxmann.com 287 (Mum. Trib.) : In this case also Unisys again accepted as a legitimate software company.

From the above discussion, it is observed that the Revenue has taken the company Unisys Software Holding Ltd. as a valid comparable for determination of ALP and on the other hand, held the said company is a penny stock company. The Co-ordinate Bench of the Tribunal in the case of Anoop Jain vs JCIT has held that the Page | 38 information provided by the Investigation Wing, alleging some operators and brokers connected with USHIL however, it does not contain the name of appellant as participants therefore, by placing reliance on such generalized investigation report without any specific reference of the appellant and moreover no direct link was established by the Revenue and accordingly, no additions could be made on account of LTCG by alleging the same as bogus.

In the instant case, Revenue has failed to make out a case that assessee is being identified as beneficiary by the intermediaries / brokers/operators before the Investigation Wing based on which it could be held that he was benefitted with the accommodation entry of bogus LTCG. Moreover, when no material was placed on record to controvert the specific and relevant evidence/material placed by the assessee therefore, in our opinion, no additions could be made on this score. Thus, by respectfully following the aforesaid judgements, we delete the additions made of INR 80,91,870/-.

Since we have held the capital gain as genuine, the addition made on account of commission for obtaining such alleged LTCG has no legs to stand. Accordingly, the same is hereby deleted.

In the result, appeal of the assessee is allowed.

Before us, both the parties fairly agreed that the facts in the present appeal are similar to the facts in ITA No. 6008/Del/2025 for AY 2012-13, thus, by following the aforesaid observations in ITA No. 6008/Del/2025 for AY 2012-13 which are Mutatis Mutandis applicable to the facts of this case also, the reopening on the basis of borrowed satisfaction is held as invalid Furthe the addition made on account of Capital gain in the present appeal is also deleted. accordingly, all Grounds of appeal raised by the assessee in the captioned appeal, are allowed.

In the result, appeal of the assessee is allowed. ITA No.6009/Del/2025 [Assessment Year 2015-16] [Anoop Jain HUF]

The facts of the case are that the assessee has e-filed its return of income, declaring total income of INR 1,40,44,401/- on 30.11.2015. The case was selected through compulsory scrutiny for various reasons whereas once of the reasons is suspicious sale transaction in shares in LTCG thereafter, the AO based on the information available in Insight Portal has held that assessee has disclosed capital gain of INR 2,02,15,516/- from trading of shares of Green Crust Financial Services Ltd. (“GCFSL”) as bogus LTCG and made the addition of the same. The AO in the assessment order has referred the findings of the Investigation Wing, Kolkata carried out 84 scrips including GCFSL and observed that capital gain declared by the assessee was bogus LTCG. The AO in the order, has referred the SEBI inquiry and the modus operandi and further the profile of the company GCFSL and the statement of the broker thereafter, AO has held the profit from the sale of shares as unexplained credit u/s 68 of the Act and made the addition of entire sale consideration of INR 2,05,75,516/- and further made the addition of INR 10,287/- as commission allegedly paid for obtaining such accommodation entry. The AO has also attached the report of Investigation Wing alongwith the assessment order as Annexure-A.

Aggrieved by the said order, the assessee filed an appeal before Ld. CIT(A) who dismissed the appeal of the assessee and confirmed the additions made by the AO.

Aggrieved by the order of Ld. CIT(A), the assessee is in appeal before the Tribunal by taking various Grounds of appeal mentioned in the appeal memo.

All the Grounds of appeal raised by the assessee are with respect to the addition of INR 2,05,75,516/- made u/s 68 of the Act and further INR 10,287/- as commission for obtaining such bogus LTCG therefore, they are taken together for consideration.

Before us, Ld.AR submits that the assessee is a regular investor in the shares and having portfolio of more than 24 crores invested in Page | 41 shares and debentures/mutual funds. Besides this, assessee is also engaged in the trading of derivatives and declared income from such trading as business income. Ld. AR submits that it is not a solitary transaction of sale of shares of GCFSL alleged as bogus rather the assessee had entered into regular transactions in shares and securities which could be seen from the perusal of the portfolio maintained by the assessee. He further submits that investment made in the shares of GCFSL in previous year where the assessments were completed u/s 143(3) of the Act and no doubts were raised with respect to the investment made. During the year under appeal, he has sold the shares which were purchased through the member broker and sole through member-broker in Mumbai Stock Exchange. The assessee has filed following details with respect to the genuineness of the transactions:- (i) Share application form for purchase of shares (ii) Copy of prospectus for providing placement filed before Registrar of company (iii) Copy of the representation made by the company for providing placements. (iv) Copy of bank statements for making investment (v) Details of investment summary as on 31.03.2013 wherein investments in the shares of GFSL trading. (vi) Copy of DEMAT account statement (vii) Copy of evidence of stock splits (viii) Copy of contract notes for sale of shares (ix) Copy of ledger accounts in the books of brokers Page | 42 (x) Copy of bank statement evidencing the payments received (xi) Copy of Form 10DB certificate regarding payment of STT.

Ld.AR submits that none of the aforesaid evidence was held as ingenuine nor any doubts were raised with respect to the evidence so filed.

Ld.AR submits that the assessee has fulfilled all the conditions for claiming the LTCG as exempt. Ld.AR drew our attention to the judgement of Co-ordinate Bench of ITAT, Mumbai Bench in the case of DCIT vs Nisha Shantaram Pokle reported in [2024] 166 taxmann.com 552 (Mum. Trib) wherein at para 9 of the order, the Co-ordinate Bench has referred the copy of the SEBI order dated 29.06.2022 wherein SEBI has referred the company GCFSL and its Directors as defaulters and levied penalty in their cases and nowhere the name of the assessee is appearing as one of the person responsible for price rigging for which penalty could be levied by SEBI. He further submits that in the said order, the trading in the shares of GCFSL is held as genuine and Long term capital gain declared from the sale of shares of GCFSL was treated as genuine capital gain. Ld.AR submits that assessee is a genuine and regular investors in shares and had made the investment in the shares of GCFSL therefore, the same cannot be held as ingenuine capital gain and he accordingly, requested for the deletion of the addition made.

On the other hand, Ld.CIT DR for the Revenue vehemently supported the order of AO and submits that AO has made the addition after making elaborate discussion with respect to the investigation carried out by the Department wherein it was found that the company, GCFSL was a penny stock company and therefore, he requested for the confirmation of the addition made by AO.

Heard the contentions of both the parties at length and perused the material available on record. The issue in the case is with respect to the capital gain of INR 2,05,75,561/- earned from the sale of shares of GCFSL. It is observed that during the course of assessment proceedings, the assessee has filed all the relevant details with respect to the sales of shares, its holding for more than a period of one year, the copy of DEMAT account statement, copies of bank statements with respect to the payments made at the time of purchase of shares and receipts of sales consideration, copy of prospectus for preferential issue of shares, the contract note for broker, copies of the assessee’s account for the books of the brokers etc.

It is observed that the assessee is a regular investor and is having investment portfolio for more than INR 24 crores and GCFSL is one of the shares purchased by him which was sold during the year.

In the case of DCIT vs Nisha Shantaram Pokle (supra), the Co-ordinate Bench of ITAT, Mumbai has considered the decision of the SEBI with respect to the inquiries carried out in the case of GFSL and made following observations in para 9 of the order as under:-

It is observed that in the aforesaid order, the Co-ordinate Bench has held that the investment made in the shares of GCFSL, and the LTCG earned from the sale of such shares as genuine.

The Co-ordinate Bench of Tribunal has followed the judgement of Yogesh P.Thakkar vs DCIT in ITA No.1612/Mum/2021 dated 03.02.2023 wherein the Co-ordinate Bench has observed that name of the assessee was not appearing in the list of the final order passed by SEBI as defaulter involved in price rigging of shares and held that the trading in shares was genuine.

Since in the instant case, the allegation of the AO is based on the Investigation Wing report and SEBI order however, name of assessee was nowhere appeared in the report of Investigation Wing nor in the SEBI order and the assessee has filed each and every details as demonstrated that the assessee and neither the assessee nor his broker was ever alleged as part of illegitimate beneficiaries to bogus LTCG in any of the alleged statements of the operators / brokers / order of SEBI or report of investigation wing.

In view of the overall discussions made herein above and considering the facts and circumstances of the case, we are of the considered opinion that addition made by the AO and confirmed by Ld. CIT(A) are heavily guided by surmises and conjectures of presumptions and therefore, has no legs to stand. Accordingly, the addition made is hereby, deleted.

Since we have held that the assessee made on account of bogus LTCG is genuine, the addition on account of commission thereof, is also deleted.

In the result, appeal of the assessee is allowed.

In the final result, appeals of the assessee in ITA No. 5962/Del/2025 [Assessment Year 2011-12, Anoop Jain HUF], ITA No. 5970/Del/2025 [Assessment Year 2014-15, Ritu Jain] and ITA No. 6040/Del/2025 [Assessment Year 2011-12, Anoop Jain] and ITA No.6009/Del/2025 [Assessment Year 2015-16, Anoop Jain HUF], and ITA No.6008/Del/2025 [Assessment Year 2012-13, Anoop Jain HUF] and ITA No. 6041/Del/2025 [Assessment Year 2012-13, Anoop Jain] are allowed.