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Facts
The assessee declared long-term capital gains on the sale of shares of Indian Infotech and Software Ltd. The Assessing Officer (AO) reopened the assessment, considering these gains as bogus accommodation entries. The AO made additions under sections 68 and 69C of the Income Tax Act, 1961.
Held
The Tribunal held that the assessee failed to provide necessary documentary evidence, such as contract notes and demat account details, to substantiate the claim of long-term capital gains exemption. Consequently, the AO's additions were deemed justified, and the CIT(A)'s decision to set aside the matter was not interfered with.
Key Issues
Whether the reopening of assessment under section 147 was justified and whether the additions made by the AO on account of alleged bogus long-term capital gains were sustainable without proper documentary evidence.
Sections Cited
147, 148, 143(1), 143(2), 142(1), 68, 69C, 10(38)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, SURAT “DB” BENCH, SURAT
Before: Dr. BRR Kumar, Hon’ble & Ms. Suchitra Kamble
आदेश/ORDER Per Suchitra Kamble, Judicial Member:
These two appeal are filed against the order dated 31- 03-2025 & 08-04-2025 passed by National Faceless Appeal Centre(NFAC), Delhi for assessment years 2013-14 & 2014- 15.
The grounds of appeals are as under:- ITA No. 635-Srt-2025 A.Y. 2013-14 “1. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of assessing officer in re- opening assessment u/s. 147 by issuing notice u/s. 148 of the I.T. Act, 1961. 2. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of assessing officer in passing the order u/s 147 r.w.s. 144 even though all the submission were made and assessee responded to all the notices.
I.T.A Nos. 635 & 703 /Srt/2025 Pista Rajmal Jain,2013-14 & 2014-15 A.Y.
On the facts and circumstances of the case as well as law on the subject, the learned assessing officer has erred in making an addition of Rs. 89,28,612/-u/s. 68 being LTCG on sale of shares of Indian Infotech and Software Ltd considering it as accommodation entry without taking into account various documentary evidences and explanations submitted during the course of the reassessment.
On the facts and circumstances of the case as well as law on the subject, the learned assessing officer has erred in making an addition of Rs. 44,645/- as unrecorded payment of commission u/s. 69C without any evidences and base purely on guess work.
On the facts and circumstances as well as law on the subject, the learned CIT(A) has erred in setting aside the matter to the file of assessing officer for deciding afresh under the proviso to Section 251(1)(a) of the Act effective from 01.10.2024.
It is therefore prayed that assessment framed u/s. 147 r.w.s. 144 may please be quashed and/or addition made by the assessing officer may please be deleted.
Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.”
ITA No. 703-Srt-2025 A.Y. 2014-15 1. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of assessing officer in re- opening assessment u/s. 147 by issuing notice u/s. 148 of the I.T. Act, 1961.
On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of assessing officer in passing the order u/s 147 r.w.s. 144 even though all the submission were made and assessee responded to all the notices.
On the facts and circumstances of the case as well as law on the subject, the learned assessing officer has erred in making an addition of Rs. 35,49,075/-u/s. 68 being LTCG on sale of shares of Indian Infotech and Software Ltd considering it as accommodation entry without taking into account various documentary evidences and explanations submitted during the course of the reassessment.
On the facts and circumstances of the case as well as law on the subject, the learned assessing officer has erred in making an addition of Rs. 17,750/- as unrecorded payment of commission u/s. 69C without any evidences and base purely on guess work.
On the facts and circumstances as well as law on the subject, the learned CIT(A) has erred in setting aside the matter to the file of assessing officer for deciding afresh under the proviso to Section 251(1)(a) of the Act effective from 01.10.2024.
It is therefore prayed that assessment framed u/s. 147 r.w.s. 144 may please be quashed and/or addition made by the assessing officer may please be deleted.
Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.” 2
I.T.A Nos. 635 & 703 /Srt/2025 Pista Rajmal Jain,2013-14 & 2014-15 A.Y.
We are firstly taking ITA No. 635-Srt-2025 for assessment year 2013-14. The assessee filed return of income for assessment year 2013-14 on 31-03-2014 declaring income at Rs. 10,13,190/-. The same was processed u/s. 143(1) of the Act on 15-07-2014. In the return of income, the assessee had shown nature of business as trading (retailers). No regular assessment was made in this case for assessment year 2013-14. The Assessing Officer initiated for reopening the assessment of the assessee after recording reasons. Notice u/s. 148 of the Act was issued on 31-03-2021. The assessee filed return of income in response to notice u/s. 148 on 19-04-2021 declaring income of Rs. 10,13,190/-. Notice u/s. 143(2) dated 09-10-2011 was issued to the assessee but no reply was filed. Notice u/s. 142(1) were issued along with questionnaire. The assessee filed submissions on 15-03-2022. The Assessing Officer observed that as per the information, the assessee was involved in trading of penny stock of Indian Infotech Software Ltd. (hereinafter INDINFO). The assessee has traded the said penny scrip as under:- FIN. YEAR SCRIP NAME Sale_TRADE_VALUE
2012-13 INDINFO Rs. 1,31,32,450/- & 2013-14
As per the investigation report, the Assessing Officer observed that the assessee traded in the said scrip with trading value of Rs. 1,31,32,450/- and the assessee claimed long term capital gain exemption of Rs. 81,29,612/- from the said share trading. As established by the Investigation Directorate of Income Tax
I.T.A Nos. 635 & 703 /Srt/2025 Pista Rajmal Jain,2013-14 & 2014-15 A.Y.
Department on the basis of findings/documents, the Assessing Officer observed that the assessee had traded in the scrip of INDINFO which is penny scrip. The inquiries were made and the Assessing Officer has given the finding that the assessee has been found one of the said beneficiaries who had been provided accommodation entry of bogus long term capital gain to bring the unaccounted income into their books in garb of long term capital gain without paying any taxes by claiming it as exempt income. After taking into account, the assessee’s submissions, the Assessing Officer made addition of Rs. 89,28,612/- u/s. 68 of the Act as unexplained cash credit.
The assessee filed appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee for statistical purpose.
The ld. A.R. submitted that the notice u/s. 148 of the Income Tax Act, 1961 was not justified. The ld. A.R. further submitted that the Assessing Officer was not right in making addition of Rs. 89,28,612/- u/s. 68 being long capital gain on sale of shares of Indian Infotech and Software Ltd. considering it as accommodation entry without taking into account various documentary evidences and explanations submitted during the course of the re-assessment. The ld. A.R. further submitted that the addition of Rs. 44,245/- as un-recorded payment of commission u/s. 69C without any evidences and was purely based on guess work. Ground No. 6 of the assessee in Form 36 is that the assessment framed u/s. 147 r.w.s. 144 may be quashed and/or addition made by the Assessing Officer may be deleted. Ground no. 5 is also related to setting aside the matter to the file of the Assessing Officer for deciding afresh under the
I.T.A Nos. 635 & 703 /Srt/2025 Pista Rajmal Jain,2013-14 & 2014-15 A.Y.
proviso to section 254(1)(a) of the Act effective from 01-10-2024 therefore, the CIT(A) should have not done same.
The ld. D.R. relied upon the assessment order and the order of the CIT(A).
We have heard both the parties and perused all the relevant material available on record. From the perusal of records, the assessee has only filed objections to the reasons for reopening and besides that there was no other details filed belated to the purchase of the said scrip, contract note for purchase, the demat account related to purchase and sale of the said scrip INDINFO. The Assessing Officer has categorically mentioned the submissions which lacked the details for establishing the exempt income claimed by the assessee in respect of long term capital gain. Thus, the Assessing Officer has rightly made the addition and as per the prayer of the assessee only the CIT(A) has set aside the assessment order with the direction to the Assessing Officer to complete the assessment after giving fresh opportunity to the assessee. There is no need to interfere with the said findings and in fact before us also the assessee has not filed the evidences as required to establish the genuineness of the claim of exemption for long term capital gain u/s. 10(38) of the Act. Thus, the appeal of the assessee being ITA No. 635/Srt/2025 for assessment year 2013-14 is dismissed.
I.T.A Nos. 635 & 703 /Srt/2025 Pista Rajmal Jain,2013-14 & 2014-15 A.Y.
As regards the ITA No. 703/Srt/2025 for assessment year 2015-16 as well, the assessee has not filed any details related to purchases of the said scrip or sale of the said scrip, the contract note and the other details of relevant details to establish the claim of the CIT(A) has rightly set aside the matter to the file of the Assessing Officer. There is no need to interfere with the findings of the CIT(A). Thus, ITA No. 703/Srt/2025 is dismissed.
In the result, both the appeals filed by the assessee are dismissed.
Order pronounced in the open court on 08-04-2026
Sd/- Sd/- (Dr. BRR Kumar) (Suchitra Kamble) Vice President Judicial Member Ahmedabad : Dated 08/04/2026 a.k. आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Surat 6. Guard file. By order, Assistant Registrar, Income Tax Appellate Tribunal, Surat