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Facts
The assessee, Pari Anil Gandhi, filed her return for AY 2013-14. The Assessing Officer reopened the assessment based on information that the assessee engaged in bogus share transactions with M/s. Atlanta Infra & Finance Ltd. and M/s. We Internet Ltd., treating the capital gains as unexplained income under Section 68. The CIT(A) upheld the AO's additions.
Held
The tribunal noted that the notice under Section 148 for reopening the assessment was unsigned. It also observed that the alleged share sales occurred in November and December 2014, not the financial year 2013-14 as stated in the reopening grounds. The tribunal did not explicitly state its final decision on the merits but highlighted procedural flaws and factual discrepancies.
Key Issues
The key legal issues are the validity of the assessment reopening due to an unsigned Section 148 notice and incorrect facts, and the treatment of share transactions as bogus under Section 68.
Sections Cited
Section 68, Section 147, Section 148, Section 144B, Section 250, Section 154, Section 115BBE, Section 271(1)(c), Section 234A, Section 234B, Section 234C, Section 234D
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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: DR. ARJUN LAL SAINI & SHRI DINESH MOHAN SINHA
ORDER Per Dinesh Mohan Sinha, JM; Captioned two appeals filed by the assessee, pertaining to Assessment Year 2013-14, is directed against order passed under section 250 of the Income Tax Act, 1961 by National Faceless Appeal Centre (NFAC), Delhi/Commissioner of Income Tax (Appeals), dated 22/11/2024, which in turn arises out of an order passed by the Assessing Officer u/s 147 read with section 144B of the I.T. Act, on dated 28/03/2022.
Since, the issues involved all these appeals are common and identical; therefore, these appeals have been heard together and a consolidated order are being passed for the sake of convenience, we shall take the lead case in for Assessment Year 2013-14.
3. The Grounds of appeal raised by the assessee are as follows, -
1. The learned commissioner of income tax (appeals), national faceless appeal centre has erred in confirming the action of the assessing officer in respect of passed the order u/s.147 rws 144B of the it Act whereby assessed the total income of rs.55,32,510/- as against the returned income of rs.5,58,215/-it is totally wrong, unwarranted, unjustified and bad in law 2. The learned commissioner of income tax (appeals), national faceless appeal centre has erred in confirming the action of the assessing officer in respect of mentioned the facts in body of order which is very far away from the truth and pass the order on surmises and conjecture basis and made the high pinch assessment and initiated the demand of Rs.21,41,632/-it is totally wrong. Unwarranted, unjustified and bad in law. 3. The learned commissioner of income tax (appeals), national faceless appeal centre has erred in confirming the action of the assessing officer in respect of share transaction made with m/s Atlanta infrastructure and finance ltd Rs.23.81,700/-and share transaction made with we internet Rs.25,92,595/- i.e. Total share transaction of Rs.49,74,295/-is treated as bogus and added to the total income as per the proviso of section 68 of the it Act it is totally wrong. Unwarranted, unjustified and bad in law. 4. The learned commissioner of income tax (appeals), national faceless appeal centre has erred in confirming the action of the assessing officer in respect of initiated the penalty proceedings u/s.271(1)(c) of the it Act it is totally wrong, unwarranted, unjustified and bad in law. 5. The learned commissioner of income tax (appeals), national faceless appeal centre has erred in confirming the action of the assessing officer in respect of charging the interest u/s.234 A,B,C and d it is totally wrong. Unwarranted, unjustified and bad in law. 6. Your applicant reserves the right in addition or alteration in the grounds of appeal at the time of hearing.
1. The learned commissioner of income tax appeals national faceless appeal centre has erred in confirming the action of the assessing officer in respect of passed the rectification order u/s. 154 rws 147 of the it Act whereby applied the section 115BBE of the it Act mentioned that assessee case appear to have resulted into short levy of tax of 1 Rs.5,12,350/- and consequent levy of interest u/s.234A. 234B of the act for the period of 108 months (01.04.2013 to 31.03.2022) which works out Page | 2
1. to Rs.5.53,338/- u/s.234B and interest u/s.234A 15 worked out at Rs.5,225/- and thus aggregate revenue effect comes to Rs.10,70,913/- hence total demand raised Rs.32,12,392/- it is totally wrong, unwarranted, unjustified and bad in law.
2. The learned commissioner of income tax (appeals), national faceless appeal centre has erred in confirming the action of the assessing officer in respect of passed the order u/s.154 rws 147 whereby wrongly applied the section 115BBE of the it Act as the applicability of section 115BBE of the it act commenced from the A.Y. 2017-18 and the assessing officer has applied the section 115BBE of the it Act in the A.Y. 2013-14 and taxed at higher rate and intiated the demand of Rs.32,12,392/-it is totally wrong, unwarranted, unjustified and bad in law.
Your applicant reserves the right in addition or alteration in the grounds of appeal at the time of hearing.
Facts of the Case that the assessee Smt. Pari Anil Gandhi is an individual. The assessee has filed his return of income for the A.Y 2013-14 declaring the total income of Rs. 5,58,215/-on 13.08.2013. Relevant part of the reasons recorded by then A.O before issuing the notice u/s 148 of I.T Act, 1961. This information is available on Insight portal. As per the credible information received and available in the case of the above-mentioned assessee who is one of the beneficiaries who has carried out bogus transactions in shares of M/s. Atlanta Infra & Finance Ltd. (Erstwhile also known as Kadvani Securities Ltd.). The assessee has carried out transactions of Rs. 49,74,295/- during the year under consideration. Further, it is seen that assessee has filed return of income for the A.Y. 2013-14 declaring total income at Rs. 5,58,215/-. The purpose of introducing unaccounted cash in the books of accounts or to create fictitious losses in the return of income to avoid paying taxes due. The above mentioned assessee has, during the year relevant to Assessment Year 2013-14, carried out share transactions of Penny Stock companies which were used to providing accommodation entries in the guise of LTCG/STCG. M/s Atlanta Infra & Finance Ltd. (Erstwhile also known as Kadvani Securities Ltd.) is entry provider/penny stock company engaged Page | 3
1. in providing accommodation entries. Since, the assessee has carried out share transactions in the said script and has earned capital gain out of the transactions in the said script during the year. Since the script is a penny script, the genuineness of income earned out of the scrip as well as amount utilized for investment in shares along with its sources has remained unexplained for the period under consideration.
1. As per information received from DDIT(Inv.)-III, Indore that the assessee was involved in the entries for bogus long/short term capital gains/loss for the A.Y 2013-14 and on the basis of above reasons and obtaining the necessary approval of PCIT, then A.O, issued a notice u/s 148 of I.T Act, 1961 vide DIN& Notice no. ITBA/AST/S/148/2020- 21/1032111258(1) dated 31/03/2021 to the assessee requiring him to file the return of income for the A.Y 2013-14. In response to this notice u/s 148 of the I.T Act, 1961, the assessee filed his return of income for the A.Y 2013- 14 declaring total income of Rs. 5,58,200/-.
As per the available information, the assessee Smt. Pari Anil Gandhi is an individual. The assessee has filed his return of income for the A.Y 2013-14 declaring the total income of Rs. 5,58,215/- on 13.08.2013. As per the information shared by the DDIT(Ivn.)-III, Indore, the assessee sold her shares in the following scripts:-
However, show cause notice as to why proposed variation should not be made was issued to assessee on 26-03-2022 for filing reply by 27-03-2022. But no response filed by the assessee. It seems that assessee has nothing to submit in her favor. Accordingly, the income of the assessee is assessed as under:
Returned income = Rs. 5,58,215/- (i) addition = Rs. 49,74,295/- ------------------------------------ Assessed income = Rs.55,32,510/-
That the assessee filed an appeal against the order of assessment before Ld. CIT(A) dated on 22/11/2023, which was dismissed by the Ld. CIT(A). on 22.11.2024
That the assessee field an appeal against the impugned order dated 28.03.2022 before this Tribunal.
i). The Ld. AR Submitted that the assessment re-open is contrary to law. The addition confirmed by the Ld. CIT(A) by wrong observation. The Ld. AR submit notice u/s. 148 is unsigned the reason for re-opening of assessment were on incorrect facts. The Ld. AR submitted security purchase by the assessee in 2013 detail submitted. ii). On the contrary the Ld. DR. Relied on the order of lower authorities.
We have heard both the parties and perused the material available on record. And also perused the paper book submitted by the assessee. We note that the assessee has filed the return of income for A.Y. 2013-14 declaring net income of Rs. 49,74,295/- the assessee has also claimed the capital gain u/s. 10(38) amount of Rs. 9,74,255/- that the Assessing Officer ha re-open the assessment and issue notice U/s. 148 of I. T. Act, on the ground that assessee has carried out bogus transaction with Atlanta infra and finance Ltd. and amount of Rs. 23,81,700/-. And M/s We internet Ltd of Rs. 25,92,595/- While making an assessment, AO Page | 15 has issued notice to the assessee and the assessee has replied to the notice of Ld. AO that the assessee has obtain the amount of Rs. 49,74,295/- by share transaction the details in form of tax audit report along with the audited accounts, Ledger account of Atlanta Infra & Finance Ltd, new name (Kadvani Sec Ltd.), investment in shares, copy of Bank statements held with Union Bank of India, Ledger accounts of purchase and sales of shares, copy of purchase and sales bills of Niv yahits, Demat accounts statements, copy of statement of holdings, investors report of the appellant from Atlanta Share Shopee Ltd, and along with the replay filed by the assessee time to time which the Ld. AO was not satisfied with the genuineness of transaction. However, the assessee has explained that the information and transaction detail has be submitted and also relied on the judgement of Hon’ble Apex Court in the case of Kishan Chand Chella Ram vs CIT reported in 125 ITR 713 has held: "That the burden is on the Department to prove that the money belongs to the assessee by bringing proper evidence on record and the assessee could not be expected to call the concerned person in evidence to help the Department to discharge the burden that lay upon it".
The assessee has further objected for re-opening of an assessment and borrowed satisfaction and reopened based on incorrect fact, in support of claim the assessee has also submitted various judgements before the AO. The AO was not satisfied with the submission made by the assessee and made an assessment with an additional income of Rs. 49,76,255/- u/s. 68 of the Act. however, we noted that the assessee has replied to all notices issued by Ld. AO and submitted his transaction details. We further note that Ld. CIT(A) has confused the action of AO and give its findings that the re-opening of an assessment was justified and the addition made by the Ld. AO was sustain by Ld. CIT(A) by order dated 22.11.2024. The Ld. AR of the assessee bring to our notice that notice u/s. 148 of the Act, for re-opening of an assessment was issued by the AO on dated 31.03.2021 was un-signed. (notice placed in paper book page no. 27). We further Page | 16 perused the record and noted that the AO has credible information received. Whereby the assessee who is one of the beneficiaries who has carried out bogus transactions in shares of M/s. Atlanta Infra & Finance Ltd. (Erstwhile also known as Kadvani Securities Ltd.) The assessee has carried out transactions of Rs. 49,74,295/- during the year under consideration. Further, it is seen that assessee has filed return of income for the A.Y. 2013-14 declaring total income at Rs. 5,58, 215/-. That the assessee claimed that reopened is based on incorrect facts where by it was alleged that the shares was sold in financial year of 2013-14. The correct facts that the party, Atlanta infra and finance Ltd. and amount of Rs. 23,81,700/- . And M/s We internet Ltd the share sold on 20.11.2014 & 11.12.2014. the detail of sale was in written submission that is comply to notice u/s.142(1) of the IT Act filed on 23.02.2022. the details as undermentioned:
Your honor has required the justification regarding the period from July 7, 2013 to January 13, 2014 price of Script rose from Rs.17.10 to Rs.86.65 in this regards we have to state that we have already submitted the written submission along with entire details before your honor. Further we have to state that our above-named client is doing the business of trading and investment in shares and securities in open Market through Broker Registered under SEBI. I have no concern and no connection in Price rise of shares. This only happen stock only not supported by any of the Law. Our above-named client is a Bonafide Investor with money and made the investment from her own fund. Our above-named client has no concern with the price it is decided by the management of the company or SEBI. And also, our above-named client is not aware about the penny stocks. Shares purchased by our above-named client were open market transactions and not through black deal and therefore, transactions executed by the assessee at BSE through BSE registered stock broker. Further your honor" has mentioned in your notice that the company did not exist at its address during the relevant period in this regard under instruction from our above-named client we have to state that our above-named client has never visited the company premises hence she cannot comment on the same but the financial due differences & KYC, etc. are periodically submitted in the BSE, SEBI by the company.
The BSE, SEBI are the Statutory authority by Finance Department of Authority they have online surveillance system to monitor the market & script price and during the above period no any such reverse order/s are passed by the Government of Authorities. SEBI Suspense the tracing on the Script on 06.01.2015. During the year under consideration, the company M/s. Atlanta Infrastructure and Finance Ltd are in open market. And at that time not suspended by the SEBI. So kindly accept the same and take on records and oblige.
Considering the facts and circumstance of the case. We are of the considered opinion that in the present case, that notice was issued u/s. 148 on 31.03.2021 was in physical mode and on perusal of notice at appears that notice is not signed. We further note that all the issue related to this case was available before the AO such as purchase and sale transaction number of share details Bank details, Demate account etc. and along with the legal/technical issue such as re-opening of assessment mechanically incorrect material facts with the AO. The approval was obtained mechanically by saying yes etc. The AO has issued is show cause notice on dated 26.03.2022 (paper book page no. 75 to 89) this notice remain uncompiled with by the assessee. During the course of appellate proceedings, the before the Ld.CIT(A), the assessee filed written submission along-with entire evidences furnished of 06.06.2024, and there is no presence before Ld.CIT(A) and assessment records are not available before us to examine the fact of unsinged notice, therefore this appeal is remitted back to the file of AO for fresh assessment. We further note that during the course of argument. The assessee has never tried to place the assessment record before this Bench. in view of the above we are of the view that one more opportunity given to the assessee to comply with the direction/notice issued by AO and submit the requisite detail/information as and when asked by AO with this remark with set-aside the order of Ld. CIT(A) dated 22.11.2024 accordingly we remand this matter back to the file of AO for a fresh adjudication after giving opportunity of hearing the assessee uninfluenced by is earlier order in any matter. The assessee is also directed to ensure participant in the hearing and when only be fixed by Ld. AO and AO shall be at liberty to pass appropriate orders in accordance with law.
ITA 897/Rjt/2024 for AY 2013-14:
The assessee is in appeal before us against the rectification order u/s. 154 of the Act, we direct the AO to examine the mistake and rectify the mistake as per the provision of Act.
In the result, both the assessee’s appeals are allowed for statistical purpose.
Order pronounced in the open court on 05 / 01 /2026.