AVI AGGARWAL, H.NO. 171-R, MODEL TOWN, LUDHIANA,PUNJAB vs. ASSESSMENT UNIT NFAC, DELHI, JAO ITO WARD6(1), AAYAKAR BHAWAN, RISHI NAGAR, LUDHIANA, PUNJAB
आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “ए” , चǷीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH
ŵी राजपाल यादव, उपाȯƗ एवं ŵी कृणवȶ सहाय, लेखा सद˟
BEFORE: SHRI. RAJPAL YADAV, VP & SHRI. KRINWANT SAHAY, AM
आयकर अपील सं./ ITA No. 971/Chd/2024
िनधाŊरण वषŊ / Assessment Year : 2012-13
Avi Aggarwal,
H.No. 171-R, Model Town,
Ludhiana, Punjab-141002
बनाम
The ITO
Ward -6(1),
Ludhiana
˕ायी लेखा सं./PAN NO: AMJPA7843C
अपीलाथŎ/Appellant
ŮȑथŎ/Respondent
( PHYSICAL HEARING )
िनधाŊįरती की ओर से/Assessee by : Shri Sudhir Sehgal, Advocate
राजˢ की ओर से/ Revenue by : Shri Manav Bansal, CIT, DR
सुनवाई की तारीख/Date of Hearing
:
07/05/2025
उदघोषणा की तारीख/Date of Pronouncement :
23.06.2025
आदेश/Order
PER KRINWANT SAHAY, AM:
This is an appeal filed file by the Assessee against the order of the Ld. CIT(A)/NFAC, Delhi dt. 05/08/2024 pertaining to Assessment
Year 2012-13. 2. In the present appeal Assessee has raised the following grounds:
1. a). That the Ld. CIT(A) has erred in confirming the order of Assessing Officer both with regard to reopening of the case u/s 148
and also confirming of income as assessed by the Assessing Officer at Rs. 5,09,20,374/-, against the returned income of Rs. 10,97,901/-.
b). That the confirming the action of the Assessing Officer in reopening the case u/s 148 is bad in law, since the case of the assessee has been reopened only on borrowed satisfaction without there being any independent application of mind by the Assessing
Officer concerned.
c). That the Ld. CIT(A) has failed to appreciate that there was no nexus of the alleged information as available with the Assessing
Officer viz-a-viz conclusion to be drawn.
d). That the Ld. CIT(A) has erred in giving a finding with regard to the reopening of the case in para 5.2.2 of his order.
2. That the Ld. CIT(A) has erred in confirming the addition of Rs.
4,98,22,473/- u/s 68 and disallowing the exemption as claimed at Rs.
4,98,22,473/- u/s 10 (38) of the Income Tax Act.
3. That the Ld. CIT (A) has failed to appreciate the documentary as provided to Assessing Officer during assessment proceedings and has only confirmed the addition on the basis of report of the Inv. Wing, Kolkata.
4. That no opportunity of cross examination of the statements recorded at the back of the assessee of various persons have been provided to the assessee and, as such, as per binding judgement of Hon'ble Apex Court in the case of Andaman Timber Industries, the very basis of addition as confirmed by the Ld. CIT(A) is not in order.
5. That the Ld. CIT(A) has failed to appreciate that when the documentary evidences have been furnished in respect of earning of long term capital gain and confirmation of addition only on surmises and conjectures, is wholly unjustified and not considering the number of case laws as cited before him.
6. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.
The facts as gathered from the assessment order and order of CIT(A) are that the assessee had filed the original return of income for the assessment year under consideration on 31.03.2013, disclosing business income and long-term capital gain, which was claimed as exempt u/s 10 (38) of the I.T. Act. The said return was accepted as it is, u/s 143(1). Later on, certain information was received from the DDIT, Inv. Wing Kolkata, about the list of beneficiary of bogus long term capital gain from the sale of shares of 'Twenty First Century India Ltd. As per information, it was found that the assessee had sold 1,55,800/- shares of 'Twenty First Century India Ltd.' for Rs. 5,05,29,200/- and, accordingly, notice u/s 148, dated 30.03.2019 was issued and served upon the assessee. In response to that, the assessee filed the return of income on 3
04.2019, declaring the same income as per the original return of income. 4. The assessee has taken ground of appeal 1 (a) (b) (c) & (d), with regard to the reopening of the case u/s 148 and, for that, the Ld. Counsel pointed out to us, copy of the reasons as recorded by the Assessing Officer. He argued that the bare reading of such reasons, it transpires that it is a routine sharing of information by the Inv. Wing, Kolkata. It is merely an allegation, that the company, "M/s Twenty First Century India Ltd." is engaged in providing accommodation entries and is paper company, Further, it has been argued that as per reasons, the purchase of shares were made by the assessee in the year 2009-10 on the basis of contract note, issued by Sh. S.K. Khemka. He has given a statement, that these were only accommodation entries provided to the beneficiary and it was further mentioned, in the reasons that with this modus operandi, the beneficiary handed over unaccounted cash to the operator. The said amount is received through accommodation entries to the beneficiary concerned, i.e. assessee. It was further argued that in the reasons, it has been mentioned that the shares were sold @ 324.35 per share and, thus, the Assessing Officer formed a reason to belief that the income chargeable to tax to the tune of Rs. 5,05,29,200/- have escaped assessment, within the meaning of provisions of section 147 of the Act as the assessee had sold entire number of shares to the tune of Rs. 1,55,800/-. 5. The Ld. Counsel of the assessee then referred to the objections as filed by the assessee before the Assessing Officer, in 4
which, it was contended that the transactions of shares had duly been discussed in the return of income as filed originally and also on all such dealings in shares, the 'security transaction tax' had been paid. It proves the genuineness of transaction. Further, it was stated in the objections that during the year under consideration, the assessee had sold shares numbering 17140 as per detail submitted during assessment proceedings and such transactions have duly been disclosed by the assessee. Further, it was stated in the objections that it was a routine information and there was no specific name of the assessee. The case has been reopened only for the purposes of 'investigation' and on the basis of 'borrowed satisfaction'. There was no independent application of mind by the AO and it was further requested in the reasons that opportunity to cross examine, the statement of Mr. Khemka as referred in the reasons, should be afforded to the assessee.
6. It was further brought to our notice that such objections in detail were disposed off without assigning any reasons. The objections were disposed off by mentioning as under: -
"Thus, your all objection is disposed off now."
7. It was further argued by Ld. Counsel that the shares of "Twenty First Century India Ltd." numbering 40360 were sold in Asstt.
Year 2013-14, for which, copy of the assessment order, dated
22.05.2023 have been placed before us and our attention was invited to particularly, where the addition of long-term capital gain on account of shares numbering 40360/ of same company was made at Rs. 1,27,29,593/-. Thus, it was vehemently argued that, still the Assessing Officer proceeded with the information from 'Investigation Wing' and made an addition of Rs. 5,05,29,200/- of the shares of Twenty First Century India Ltd. and of another concern 'DLS Export Ltd.' to the tune of Rs. 1,11,11,519/-. The assessee, denied having dealt with such shares at all and it was finally argued that, how, the Assessing Officer had arrived at the figure of Rs.5,05,29,200/- and Rs. 1,11,11,519/- is not clear in the assessment order or in the order of CIT(A).
8. The Ld. Counsel of the assessee also referred to the 'demat account' statement of the assessee where after selling shares in Asstt. Year 2012-13, totaling to 17140 and 40360 shares in Asstt.
Year 2013-14, equivalent to 57,500/-. Deducting the same from the total number of shares of 155800/-, the balance shares left are 98300 as per copy of D-mat account.
9. The Ld. Counsel on the basis of above said facts argued vehemently that from the above facts, it is very much clear, that wrong reason to believe have been formed by the AO by blindly relying upon the letter of the Investigation Wing, Kolkata without any enquiries. He relied upon on various judgments of Gujarat
High Court, ITAT, Chandigarh Bench, Amritsar Bench on this wrong reason to believe as under:- i). Sunbare Tradelink (P.) Ltd. vs. Income-tax Officer. Ward-4(1)(2)
[20161 74 taxmann.com 16 (Gujarat) ii). KMV Collegiate Sr. Sec. School vs. ITO (2017) 163 ITD 653 (Asr.)
(Trib.) iii). [2024]165 taxmann.com 197 (Amritsar - Trib.) IN THE ITAT AMRITSAR
BENCH Sukhvir Singh v. Income-tax Officer iv) Smt. Monika Rani in ITA no. 582/CHD/2019 dated 28.02.2020
v).
Fortune Metaliks Limited vs. DCIT. ITA No. 1090/Chd/2019 dated
12.01.2021 – CHD Trib.
Central Circle-1. Ludhiana in ITA No. 407/CHD/2023
It was also argued that the reopening has been made on 'wrong reasons' to believe and on incorrect facts. It was further argued that even there was no tangible material and it was merely a change of opinion. There was no nexus of the conclusion sought to be drawn and the information as received from the 'Investigation Wing'. He relied upon the judgment of Hon'ble 'Apex Court' in Sh. Lakhmani Mewal Dass, reported in 103 ITR 437. It was further argued that no reopening could be made on borrowed satisfaction, for which, reliance was made on the following judgments: - i). Holyfaith International Pvt. Ltd. Vs DCIT of ITAT Amritsar Bench in ii). PCIT Vs G & G Pharma Ltd. as reported in [2017] 81 taxmann.com 109 (Delhi iii). CIT Vs. Fair Finvest Limited as reported in [2014] 44 taxmann.com 356 (DEL-HC) iv). PCIT vs. Meenakshi Overseas Pvt. Ltd. as reported in [2017] 82 taxmann.com 300 (Del-HC) v). Judgment in the case of Signature Hotels (P) Ltd. vs. ITO as reported in [2012] 20 taxmann.com 797 (Del-HC).
1 Further it was argued that there has to be a live link between the tangible material and formation of reason to believe that the income has escaped assessment and reference was made in the 7
following judgements:
i).
Signature Hotels P.Ltd. Vs ITO [2011] 338 ITR 151 (Delhi
High Court) ii).
Pr.CIT Vs RMG Polyvinyl (I) Ltd. [2017] 396 ITR 5 (Delhi
Well Trans Logistics India Pvt. Ltd. Vs ACIT in W.P. ©
13273/2018, judgment, dated 02.09.2024. 11. It was further argued that there was no incriminating material, except the statement recorded at the back of assessee of Sh. Anil
Kumar Khemka and on that also, no reopening could be made.
Lastly, it was argued that though, the original assessment was framed u/s 143(1) still there has to be a reason to belief. Since the assessment is sought to be reopened, beyond four years. The Counsel relied upon the judgement in the case of 'Samrat Plywood Ltd.' in ITA No. 514/Chandi/2017 vide order dated 25.01.2021. He further, relied upon the judgment of M/s. Amit Engineers vs. ACIT reported in 156 ITD 556 and of 'Shiva Exports' of Chandigarh Bench of ITAT, reported in (2009) 28 SOT 512. He also relied on Delhi High Court in the case of 'Orient Craft' reported in 350 ITR 536, for the preposition that that even for reopening of the case, where the assessment has been framed u/s 143(1), there has to be proper reason to believe that the income of the assessee has escaped assessment which is lacking in this case.
The Ld. Counsel of the assessee relied upon the judgment of ITAT, Delhi Bench “C” in the case of Kavya Satija in ITA No. 944/Del/2024, in which, similar issue was there with regard to the Long Term Capital Gain on the shares where the assessee had 8
claimed exemptions u/s 10(38) of the Income Tax Act. Later on, on the basis of certain information received from Investigation
Wing regarding that the Long-Term Capital Gain as disclosed by the assessee is in the nature of accommodation entries. After recording the reasons u/s 148 and relying upon the information as received from the Investigation Wing, the Assessing Officer disallowed the exemption u/s 10(38) and made the addition being in the nature of penny stock. The CIT (A) confirmed the addition. When the matter was taken to the ITAT, both on the issue of reopening of the case u/s 148 and on merits, the appeal of the assessee was allowed.
14. On merits, it was argued that the facts, which are borne out from the reasons that the assessee purchased 4100 shares of 'Sarthi Dealers' and, thereafter, the above company alongwith three other companies were amalgamated into 'Twenty first
Century (India) Ltd.' The assessee was allotted 38 shares of TFCIL in lieu of one share of amalgamation and this amalgamation was approved by the Hon'ble Kolkata High Court on 26.09.2011, where the department was also party to the said amalgamation and it had submitted 'no objection' for such amalgamation.
15. It has also been brought on record that the merger of the Company was approved by the Hon'ble High Court on 24.12.2010. Key points considered by High Court before approving the Amalgamation of Companies are as following:
1. Compliance with Legal Procedures:
Proper filing of application/petition under the relevant provisions
(e.g., Sections 230-232 of the Companies Act, 2013).
Approval of the scheme by requisite majority of shareholders and creditors.
Report from the