ANITA DEVI BAGADIA,KOLKATA V. I.T.O., WARD - 1(1), ASANSOL

ITA 1542/KOL/2025

AI Insights

The case involves Anita Devi Bagadia, who appealed against the order of the Commissioner of Income Tax (Appeals), which confirmed the addition of Rs. 43,07,629 as unexplained cash credit under Section 68 of the Income Tax Act. This amount was initially claimed as exempt long-term capital gain (LTCG) under Section 10(38) from the sale of shares in GCM Securities Limited, a company identified as a penny stock. The Income Tax Officer (ITO) had added this amount to the assessee's income, treating it as bogus LTCG based on information from the DDIT (Inv.), Kolkata. The ITAT's decision to quash the reassessment was based on the lack of jurisdiction of the NFAC at the time the reassessment was completed, as the relevant legal framework for such assessments was only established later in 2022.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 846771 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Kolkata
• Assessment Year: 2015-2016
• Appeal Filed On: 16-07-2025
• Other Referred Cases: John Chhetri Vs. ITO Ward 1(2), Ghy, MD Mahimud SK Vs. ITO, Nabiul Industrial Metal Pvt. Ltd., Paschim Medinipur VS. I.T.O.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANAS MONDAL
• Assessee Lawyers: MIRAJ D SHAH
• Keywords: Corroborative evidences; Unexplained cash credit; Earning of tax free income; Bogus
• Section: 147; 148; 144; 142(1); 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, KOLKATA SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA Nos. 1542/KOL/2025 Assessment Year : 2015-2016 Anita Devi Bagadia, 1 C/o. Sajay Trader, 2nd Floor, Roop Chand Roy Street, Kolkata, West Bengal - 700007 [PAN: ARHPS6324F] Vs. ITO, Ward 1(1), Asansol, Room No. 03, Ground Floor, Aayakar Bhawan, 116, Vivekanand Sarani, Knyapur, Asansol- 713341 APPELLANT RESPONDENT Assessee by : Miraj D Shah, AR Revenue by : Manas Mondal, Sr. DR Date of hearing : 12.03.2026 Date of Pronouncement : 25.03.2026 O R D E R This is an appeal filed by the assessee against the order passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, [hereinafter referred to as “the Ld. CIT(A)] dated 10.07.2024, DIN & order No. ITBA/NFAC/S/250/2024- 25/1066567281(1) on the following grounds of appeal: “1. For that the order passed by the CIT(A), NFAC dated 10-07-2024 is unwarranted, arbitrary, invalid and bad-in-law, in so far as they are against the interest of the appellant. 2. For that the Hon'ble CIT(A) erred in law as well as in facts in confirming the addition of Rs.43,07,629/- made by the AO, NFAC treating the LTCG earned Printed from counselvise.com 2 ITA No. 1542/KOL/2025 Anita Devi Bagadia from sale of 59200 shares of GCM Securities Limited as unexplained cash credit u/s 68 of the I. T. Act which the assessee claimed exempted u/s 10(38) of the I. T. Act. 3. For that the Hon'ble CIT(A) erred in law as well as in facts in confirming the addition of Rs 43,07,629/- on the alleged ground that the M/s GCM Securities Limited, a quoted company, is a penny stock company in which the transactions are pre-arranged accommodation entry in the form of bogus LTCG on the basis of the general findings of the DDIT (Inv.), Kolkata, statement of operators, brokers and other persons ignoring the creditworthy supporting evidences 4. That the appellant craves leave to add or amend or Alter any grounds of appeal.” 2. Briefly stated the facts of the case are that the assessee filed return of income on 22.12.2015 declaring total income of Rs. 2,08,850/- and claimed exempt income of Rs. 43,07,629/- from long term capital gain on sale of shares in the return of income u/s 10(38) of the Act as per the information received from the DDIT (Inv.) Unit 1(3), Kolkata, vide letter No. 1150 dated 01.02.2019 as very credible information, the assessee has received long term capital gain on sale of penny stock company’s shares through stock exchange and payment has been received in the bank account of the assessee. After examining the detail of the assessee of transaction through banking channels it was held that the assessee had received bogus long term capital gain on sale of penny stock shares. Accordingly, various notices were issued to the assessee but there was no response from the assessee side. Accordingly, he added the entire long term capital gain claimed as exempt u/s 10(38) of the Act and reassessed income at Rs. 45,16,480/- and reassessment was completed u/s 147 Printed from counselvise.com 3 ITA No. 1542/KOL/2025 Anita Devi Bagadia r.w.s. 144, r.w.s. 144B of the Act on 14.09.2021 by NFAC, Delhi with DIN No. ITBA/AST/S/147/2021-22/1035538018(1). 4. Aggrieved from above order, the assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A) dismissed the appeal of the assessee exparte for non-prosecution by the assessee and upheld the order of AO observed as under: “10.2 Hence, the AO has given categorical finding that LTCG claimed by the appellant is not genuine and hence, degree of onus is higher on the appellant to furnish supporting documents in support of her grounds of appeal that LTCG claimed by her is genuine which the appellant failed to discharge. It is observed that no evidences were submitted by the appellant during the course of the assessment proceedings as well as appellate proceeding to establish genuineness of transaction. The onus that was cast on the appellant was of a greater degree in the present case due to the facts of the case wherein the AO was in possession of information received from the DDIT (Inv) Unit-1(3), Kolkata indicating strongly that the LTCG claimed by the appellant was not genuine. The Hon'ble Rajasthan High Court in the case of Indian Woolen Carpet Factory (178 CTR 420) has held that if investigation carried out by the Department raises suspicion about genuineness of a transaction, the assessee has to discharge the onus by producing supporting evidences. However, despite an opportunity being provided by the AO as well as during appellate proceedings, the appellant failed to furnish documentary evidence to prove genuineness of transaction. Hence, it is held that the appellant failed to prove that LTCG claimed by her is genuine and hence the same is held as undisclosed income of the appellant introduced in the books of account in the guise of LTCG. Hence, the addition made by the AO is confirmed and Ground No. 1 to 3 of the appellant on the issue are dismissed.” 5. Aggrieved from the above order, the assessee filed appeal before the ITAT. 6. The Ld. Counsel submitted that the order passed by the NFAC, Delhi dated 14.09.2021 containing DIN No. ITBA/AST/S/147/2021- Printed from counselvise.com 4 ITA No. 1542/KOL/2025 Anita Devi Bagadia 22/1035538018(1) is beyond jurisdiction. Since the NFAC got jurisdiction after the notification issued dated 29.03.2022. 7. During the course of hearing before him the Ld. Counsel further raised one legal issue that the assessment completed by the NFAC under e-Assessment of Income Escaping Assessment Scheme-2020 was enforced from the 29.03.2022. In this regard, the Ld. Counsel placed notification No. S.O. 1466(E) [No. 18/2022/F. No. 370142/16/2022-TPL (Part 1) dated 29.03.2022, whereas the assessment was completed on 14.09.2021 by the NFAC which is beyond jurisdiction of the NFAC. Since section 151A of the Act was notified on 29.03.2022 vide Notification No. 18/2022/F.No. 370142/16/2022-TPL (Part 1) which are as under: “NOTIFICATION S.O. 1466(E) [NO. 18/2022/F. NO. 370142/16/2022- TPL(PART1) E-ASSESSMENT OF INCOME ESCAPING ASSESSMENT SCHEME, 2022 NOTIFICATION S.O. 1466(E) (NO. 18/2022/F. NO. 370142/16/2022- TPL(PART1), DATED 29-3-2022 In exercise of the powers conferred by sub-sections (1) and (2) of section 151A of the Income-tax Act, 1961 (43) of 1961), the Central Government hereby makes the following Scheme, namely Short title and commencement 1. (1) This Scheme may be called the e-Assessment of Income Escaping Assessment Scheme, 2022 (2) It shall come into force with effect from the date of its publication in the Official Gazette Definitions 2. (1) In this Scheme, unless the context otherwise requires, - (a) \"Act\" means the Income-tax Act, 1961 (43 of 1961), Printed from counselvise.com 5 ITA No. 1542/KOL/2025 Anita Devi Bagadia (b) \"automated allocation\" means an algorithm for randomised allocation of cases, by using suitable technological tools, including artificial intelligence and machine leaming, with a view to optimise the use of resources. (2) Words and expressions used herein and not defined, but defined in the Act, shall have the meaning respectively assigned to them in the Act. Scope of the Scheme 3. For the purpose of this Scheme, (a) assessment, reassessment or recomputation under section 147 of the Act. (b) issuance of notice under section 148 of the Act, shall be through automated allocation, in accordance with risk management strategy formulated by the Board as referred to in section 148 of the Act for issuance of notice, and in a faceless manner, to the extent provided in section 1448 of the Act with reference to making assessment or reassessment of total income or loss of assessee. 8. On the other hand, the Ld. DR relied on the order of lower authorities and submitted that the assessee obtained bogus long term capital gain, therefore, the addition made by the AO is correct. 9. Considering the rival submissions, I noted that the NFAC passed reassessment order on 14.09.2021 vide DIN No. ITBA/AST/S/147/2021-22/1035538018(1) u/s 147 r.w.s. 144 r.w.s. 144B of the Act. A similar legal issue raised by the assessee counsel has been decided by the Co-ordinate Bench of the Tribunal in the case of John Chhetri Vs. ITO Ward 1(2), Ghy dated 02.09.2025 in which it has been held as under: 02. The ld. DR on the other hand submitted that the assessment have been framed by the NFAC after notice u/s 143(2) of the Act and show cause notice were issued as the Provisions of Section 151A of the Act was brought on the statute book with effect from 1.11.2020. Therefore, the legal issue raised by the assessee may kindly be dismissed. Printed from counselvise.com 6 ITA No. 1542/KOL/2025 Anita Devi Bagadia 03. After hearing the rival contentions and perusing the materials available on record, we find that the Section 151A of the Act deals with the faceless as- sessment or income escaping assessment and was brought on the statue book by taxation and other law (relaxation and amendment of certain pro- visions) Act, 2020, with effect from 01.11.2020 which was notified on 29.03.2022 vide notification no.18/2022/F. No. 370142/16/2022- TPL(Part)]. Therefore, the issuance of notice u/s 143(2) of the Act and show cause notice and thereafter farming of assessment by the NFAC, in our opin- ion, is without jurisdiction as the Provisions of Section 151A of the Act were with effect from 29.03.2022. In considered opinion the assessment framed is without jurisdiction and cannot be sustained. The case of the assessee is squarely covered by the decision of the co-ordinate in case of MD Mahimud SK Vs. ITO in ITA no. 2230 & 2229/KOL/2024 vide order dated 04.03.2025, wherein the co-ordinate Bench has decided the issue by ob- serving and holding as under: - “11. We have perused the section of Section 151A of the Act, which deals with the faceless assessment of income escaping assessment and was brought on the statute book by taxation and other law (realization and amendment of certain provi- sions) Act, 2020, with effect from 01.11.2020 which was noti- fied on 29.03.2022 vide notification no.18/2022/F. No. 370142/16/2022-TPL(Part)]. Therefore, the assessment pro- ceedings were taken by the National Faceless Assessment Centre, Delhi by issuing notice u/s 142(1) dated 09.02.2022 and thereafter the assessment was framed accordingly after issuing show cause notice which in our opinion is without ju- risdiction. The provision of Section 151A of the Act were brought on the statute book with effect from 01.11.2020. However, the same were made effective and applicable with effect from 29.03.2022 vide notification no. when the CBDT notified the new scheme for assessment of income escaping assessment scheme, 2022. In our considered view the assessment framed is without jurisdiction and cannot be sustained. The case of the assessee find force from the decision of Nabiul Industrial Metal Pvt. Ltd., Paschim Medinipur VS. I.T.O., in ITA no. 1328/KOL/2024 for A.Y. 2017-18, the order dated 15.10.2024, wherein a similar issue has been decided in favor of the assessee. For the sake of ready reference, the notice is- sued u/s 142(1) dated 09.02.2022 and show cause notice dated 17.03.2022, are extracted below:- Printed from counselvise.com 7 ITA No. 1542/KOL/2025 Anita Devi Bagadia Printed from counselvise.com 8 ITA No. 1542/KOL/2025 Anita Devi Bagadia Printed from counselvise.com 9 ITA No. 1542/KOL/2025 Anita Devi Bagadia Printed from counselvise.com 10 ITA No. 1542/KOL/2025 Anita Devi Bagadia 12. Considering the above facts and legal position, we are of the considered opinion that the order passed by the NFAC, Delhi is without jurisdiction and is hereby quashed. The appeal of the assessee is allowed. 13. The additional ground raised in ITA No. 2230/Kol/2024 A.Y.2017-18 is similar to one as decided by us in ITA No. 2229/Kol/2024 A.Y. 2015-16. Therefore, our decision would, mutatis mutandis, apply to this appeal as well. The ap- peal of the assessee is allowed. 14. In the result, the appeal of the assessee is allowed.” 04. In view of the above facts and circumstances, we are inclined to quash the assessment framed by the ld. AO/ NFAC. 05. In the result, the appeal of the assessee is allowed.” 10. The facts case of the assessee regarding date of passing of reassessment order is squarely covered by the above decision of the coordinate Bench noted (supra), since the NFAC has passed the order before notifying by the CBDT as observed in the above judgment at Printed from counselvise.com 11 ITA No. 1542/KOL/2025 Anita Devi Bagadia various places. Therefore, respectfully following the above judgment, I allow the appeal of the assessee. 11. In the result, appeal of the assessee is allowed. Order pronounced on 25.03.2026. Sd/- (Laxmi Prasad Sahu) Accountant Member Dated: 25.03.2026 AK, Sr. P.S. Copy of the order forwarded to: 1. Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. CIT(DR) //True copy// By order Assistant Registrar, Kolkata Benches Printed from counselvise.com "