NAND GOPAL KHAITAN,KOLKATA, WEST BENGAL vs. THE DEPUTY COMMISIONER OF INCOME TAX, CIRCLE 29 KOLKATA, GARIAHAT, KOLKATA, WEST BENGAL

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ITA 1372/KOL/2026Status: DisposedITAT Kolkata24 August 2026AY 2015-169 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings under Section 147 were invalid as they were based on a 'change of opinion' and incorrect assumptions of fact. The AO had already examined the issue in the original assessment, and there was no fresh tangible material to justify reopening.

What were the facts?

The assessee's appeal was delayed by 73 days. The original assessment for AY 2015-16 had examined share transactions in GSCL, and the income was offered as business income. Later, a notice under Section 148 was issued based on information that the assessee had derived bogus LTCG from GSCL.

What were the issues?

Whether the reassessment proceedings initiated under Section 147 were valid when the issue was already examined in the original assessment, and if the AO can make other additions when the primary reason for reopening was not sustained.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM

For Appellant: Shri Akkal Dudhewala, AR
For Respondent: Shri Pradeep Dung Dung, DR
Hearing: 15.07.2026Pronounced: 24.08.2026

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 28.11.2025 for the AY 2015-16.

2.

At the outset, we note that the appeal of the assessee is barred by limitation by 73 days. At the time of hearing the counsel of the assessee explained the reason for delay in filing the appeal. The Ld. D.R did not raise any objection in condoning the delay. After hearing the rival contentions and perusing the materials available on record, we find that the delay is for bonafide and

ITA No.1372/KOL/2026 NAND GOPAL KHAITAN; A.Y. 2015-16 genuine reason, hence, we condone the delay and adjudicate the appeal.

3.

The issue raised in Ground Nos. 2 & 3 of the appeal relates to the validity of reopening of assessment u/s 147 of the Act. Since this legal issue goes to the root of jurisdiction, we consider it fit to adjudicate the same first.

4.

The brief facts are that the assessee is an individual who had filed his return of income for A.Y. 2015-16 on 31.10.2015 declaring total income of ₹9,44,58,210/-. The case of the assessee was selected for regular scrutiny. Statutory notice u/s 143(2) of the Act was issued, which was complied with by the assessee. It is noticed that notice u/s 142(1) of the Act dated 06.11.2017 was issued wherein the assessee was required to provide the details of suspicious transactions in shares of penny stock appearing in ITS tab and provide the details of capital gain/loss derived therefrom. The assessee in his letter dated 21.11.2017 submitted that he had not claimed any capital loss or exempt LTCG in any penny stock transactions during the year. The AO passed the assessment order u/s 143(3) dated 23.12.2017 in which he is noted to have examine the transactions conducted by the assessee in the shares of M/s Greencrest Capital Services Ltd (‘GSCL’) and observed that the assessee had offered business income in relation to the traded value to the extent of ₹8,19,79,840/- as against the trade value of ₹8,21,88,242/- appearing in ITS data and thus, added the difference of ₹2,08,402/- to the total income of the assessee.

5.

The assessee had contested the addition in appeal, but later on settled the issue under DTVSV Scheme 2020, and the copy of Page | 2

ITA No.1372/KOL/2026 NAND GOPAL KHAITAN; A.Y. 2015-16 Form 5 issued by the PCIT is found placed at Page 18 of paper book. Thereafter, the assessee was in receipt of notice u/s 148 of the Act dated 30.03.2021. According to the recorded reasons, a search action on Lundia Group had revealed that M/s GSCL was a scrip traded on BSE which was being used to facilitate bogus LTCG to various beneficiaries. The information suggested that the assessee had derived income out of the alleged transaction of sale of shares at Rs.97,67,850/- which had escaped assessment. The assessee, both in his objections to the recorded reasons and in the course of re-assessment, submitted that, he had not claimed any exempt LTCG in his return of income for AY 2015-16 and that the gain of Rs.8,10,69,842/- was derived from the sale of shares of GSCL, which was offered to tax at full rates by way of ‘Business Income’. It was shown that, this issue had been examined by the AO in the original assessment and the gains from this scrip had been assessed to tax and thus there was no income escaping assessment, and that the reasons recorded was based on non-application of mind and incorrect facts.

6.

It is noticed that the AO in the reassessment order dated 30.03.2022 acknowledged the fact that the gain derived from the sale of shares of GSCL had indeed been offered to tax by the assessee. Except for altering the head under which the gains was taxable viz., ‘Other Sources’ instead of ‘Business Income’, the AO did not make any further addition on this count. It was brought to our notice that, the tax rate under both the heads also remained the same and therefore there was no additional tax liability, which was also acknowledged by the AO at Para 20 (Page 28) of the assessment order. Though no Page | 3

ITA No.1372/KOL/2026 NAND GOPAL KHAITAN; A.Y. 2015-16 addition was made in relation to the issue which was the subject matter of reopening, the AO held that he was still empowered to add other issue(s) which came to his notice in the course of reassessment and thus proceeded to add estimated unexplained commission expenditure of Rs.24,32,095/- to the total income of the assessee.

7.

In the appellate proceedings, the Ld. CIT(A) confirmed the action of the AO and dismissed the appeal.

8.

Aggrieved by the order of ld. CIT (A), the assessee is in appeal before us.

9.

The Ld. AR for the assessee firstly submitted that the subject matter of reason to believe recorded by the ld. AO for invoking the provisions of section 148 of the Act had already been dealt with by the ld. AO in the original assessment proceeding completed u/s. 143(3) of the Act vide order dated 23.12.2017. It was shown to us that, the assessee had already offered the gain of Rs.8,10,69,842/- derived from sale of shares of GSCL by way of business income, and later on upon examination, the AO had made further addition of Rs.2,08,402/- on this count to the total income and therefore the entire traded value had already been taxed in the original assessment. The Ld. AR thus submitted that there was no new tangible material which justifies the reopening of the assessment already completed u/s. 143(3) of the Act as the subject matter was duly examined and also assessed to tax by the ld. AO in the original assessment. He further pointed out that the reasons recorded proceeded on incorrect assumption of fact that the assessee had claimed bogus LTCG of Rs.97,67,850/-, which was Page | 4

ITA No.1372/KOL/2026 NAND GOPAL KHAITAN; A.Y. 2015-16 evidently untrue. He took us through the computation of income of the assessee, which formed part of the original assessment records, to show that no such LTCG exemption had been claimed, and thus he asserted that the reopening being based on non-application of mind deserves to be held as invalid. The Ld. AR lastly contended that, when no addition was ultimately made on the issue of gain from sale of shares of GSCL, then ld. AO has no jurisdiction to make other addition by way of unexplained expenditure in the reassessment proceedings. The Ld. AR relied on series of decision namely, Ranbaxy Laboratories Ltd. Vs. CIT[2011] 12 taxmann.com 74 (Delhi), CIT Vs. Jet Airways (I) Ltd.[2021] 133 taxmann.com 233 (Bom) & CIT Vs. M/s. Infinity Infotech Parks Ltd. in GA No. 1736 of 2014 dated 15.11.2022.

10.

The ld. DR relied on the orders of the lower authorities. He submitted that in the original assessment made u/s. 143(3) of the Act, the gain earned on sale of shares of GSCL had been taxed by way of regular business income and not unexplained cash credit and thus, the reasons to believe so recorded by the Ld. AO subsequent to the original assessment exhibit live nexus on the escapement of income relating to GSCL which was identified as a penny stock. According to him, the reopening of the case and its reassessment was legally valid.

11.

After hearing the rival contentions and perusing the materials available on record, we find that "change of opinion" by the ld. AO while initiating the proceeding u/s 148 r.w.s 147 of the Act. The factual position in respect of reasons to believe recorded by the Ld. AO in respect of income escaping assessment on the sale transaction of shares of GSCL is that assessee has already Page | 5

ITA No.1372/KOL/2026 NAND GOPAL KHAITAN; A.Y. 2015-16 offered the gains earned on the transaction of shares of GSCL at full rate by way of ‘Business Income’ in the original return filed by him which was subjected to assessment u/s. 143(3) of the Act. As noted earlier, the AO had found certain unreconciled difference in traded value, which was also added and taxed at full rates in the assessment order. Also, the appeal filed by the assessee against the aforesaid addition, had later on been settled in DTVSV Scheme, resulting in attainment of finality qua the aforesaid issue. Now, upon reading of the recorded reasons, it is observed that, the ld. AO at proceeded on a mistaken assumption of fact that the assessee was a beneficiary of bogus LTCG on the shares of GSCL and that the assessee has not included gain of ₹97,67,850/- against selling of shares of GSCL, alleged as penny stock. In this respect, ld. AR for the assessee has evidently demonstrated from the material placed on record that this income has already been offered in the original return and subjected to assessment u/s. 143(3) of the Act on which due taxes were paid at 30%.

11.1. We also take note of the queries raised by the Ld. AO in the course of original assessment proceedings wherein Ld. AO had identified this scrip as suspicious sale transaction (penny stock TAB in ITS) for the purpose of his enquiry. We have also taken note of the observation and conclusion drawn by the Ld. AO from the assessment order passed u/s. 143(3) which demonstrates that ld. AO had examined the issue under consideration relating to transaction of sale of shares giving rise to business income which has been duly reported in the original return of income. In the reasons to believe recorded for the reassessment proceedings which are under challenge before Page | 6

ITA No.1372/KOL/2026 NAND GOPAL KHAITAN; A.Y. 2015-16 us, the ld. AO has noted that he was in receipt of information that the assessee has sold shares of penny stock having scrip named GSCL and is in receipt of LTCG of Rs.97,67,850/-. From these observations of the ld. AO, both in the original assessment and in the recorded reasons, it is observed that this information was already available in the ITS of the Department which suggests us that ld. AO cannot now turn around and reopen the case for the same issue on which enquiry has been made earlier in original assessment and without bringing any new tangible information/material on record, which clearly amounts to 'change of opinion'. According to us therefore, there was no fresh tangible material with the Ld. AO at the time of recording of impugned reasons to believe. There has been unanimity of the hon'ble courts on the issue that in absence of fresh tangible material indicating escaped income, the AO cannot assume jurisdiction to re-open already conclude d assessment. The case of the assessee is thus found to be squarely covered by the following decision of the jurisdictional Calcutta High Court, in the case of PCIT vs. Manish Parasrampuria (ITAT No. 283 of 2023, IA No. GA/2/2023) wherein it was held as under:-

“The short issue which falls for consideration in the instant case is whether the reopening of the assessment done by the assessing officer under Section 148 of the Act was justified. The learned Tribunal has examined the factual position and found that the assessee has demonstrated from materials placed on record that the income has already been applied in the original return subject to scrutiny assessment under Section 143(3) of the Act on which taxes at special rate under Section 111A of the Act have been paid. The learned counsel appearing for the respondent/assessee has produced the copy of the paper book filed before the Tribunal and we find that the share transaction in respect of the said company, namely, AMML was reflected in the original return and was considered by the assessing officer and the factual conclusion arrived at by the learned Tribunal stating that the reopening was change of opinion cannot be faulted. For the above reasons, we find no substantial question of law arises for consideration.” Page | 7

ITA No.1372/KOL/2026 NAND GOPAL KHAITAN; A.Y. 2015-16

11.2. We also find that the reasons recorded proceeded on incorrect assumption of fact that the assessee had claimed bogus LTCG, which we find was absent in the present case. Accordingly, the reasons were also based on non-application of mind to the material already available on record. Further, given the fact, that there was no addition made for the escaped income of Rs.97,67,850/- as per the reasons recorded, then the AO has no jurisdiction to make any other addition in respect of item of income which has escaped assessment as discovered by the AO during the assessment. The case of the assessee finds support from the decision of Hon'ble jurisdictional High Court in the case of M/s. Infinity Infotech Parks Ltd. (supra) wherein the Hon'ble Calcutta High Court has held by following the decision of Hon'ble Bombay High Court in the case of CIT Vs. Jet Airways (I) Ltd. (supra) and also Hon'ble Delhi High Court decision in the case of Ranbaxy Laboratories Vs. CIT (supra) that where the income the escapement of which was the foundation for recording of reasons to believe, is not assessed or reassessed in the order u/s. 147, then it is not opened to the AO to independently assess any other income, which comes to his notice subsequently during the course of re- assessment proceedings.

11.3. Considering the facts and circumstances of the case, discussion narrated above and in the light of judicial pronouncements (supra), we hold that there was no valid reason for initiation of reassessment proceedings u/s. 147 of the Act. Accordingly, the legal grounds raised by the assessee in this respect are allowed. Page | 8

ITA No.1372/KOL/2026 NAND GOPAL KHAITAN; A.Y. 2015-16

12.

Since, we have allowed the appeal on legal issue, other grounds raised on merit are not being adjudicated at this stage and are left open to be decided if need arises for the same in future.

13.

In the result, the appeal of the assessee is allowed.

Order pronounced on 24.08.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 24.08.2026 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy//

(Manish Bhoi) Dy. Registrar Income Tax Appellate Tribunal, Kolkata

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