INCOME TAX OFFICER-42(2)(3), KAUTILYA BHAVAN, BKC V. KAUSHIK BALUBHAI MADHWANI, GIRGAON, MUMBAI

ITA 2645/MUM/2023

AI Insights

The case involves an appeal by the Revenue against the order of the Commissioner of Income-tax (Appeals) which had deleted additions made by the Assessing Officer regarding unexplained investments and undisclosed income related to transactions in penny stocks. The primary contention was whether the sale consideration from these transactions was bogus and whether the exemptions claimed on long-term capital gains were valid. The Income Tax Appellate Tribunal dismissed the appeal as infructuous because the original assessment order had been set aside by the Principal Commissioner of Income Tax, thus nullifying the basis for the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 32067 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2015-2016
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BISWANATH DAS
• Assessee Lawyers: SHARWAN KUMAR JHA
• Keywords: Set aside; Opportunity of being heard; Unexplained investment; Accommodation entries; Bogus
• Section: 147; 143(3); 263; 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAJ KUMAR CHAUHAN (JUDICIAL MEMBER) ITA No. 2645/MUM/2023 Assessment Year: 2015-16 Income Tax Officer-42(2)(3) Kautilya Bhavan, G-Block, BKC, Bandra Kurla Complex, Bandra East Mumbai-400051 Vs. Kaushik Balubhai Madhwani 364, Cigaratewala bldg, S.V.P. Rd., Girgaon, Mumbai- 400004 PAN NO. AETPM 0755 P Appellant Respondent Assessee by : Mr. Sharwan Kumar Jha Revenue by : Mr. Biswanath Das, Sr. DR Date of Hearing : 19/03/2025 Date of pronouncement : 20/03/2025 ORDER PER OM PRAKASH KANT, AM This appeal by the revenue is directed against order dated 30/05/2023 passed by the Ld. Commissioner of Income-tax (Appeals)-National faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2015-16, raising following grounds: (i) “On the facts and the circumstances of the case and in law, Ld. CIT(A) is right in deleting the addition of Rs. A.O. on account of unexplained investment made in the penny stock company M/s. Luminaire Technologies Lid\" (ii) \"On the facts and the circumstances of the case, Ld.CIT(A) is right in deleting the addition of Rs. 12,93,50,749/ fact that the sale consideration of Rs. 12,93,50,749/ sale of shares of company M/s. Luminaire Technologies Ltd. are bogus and exemption claimed on such LTCG should not be allowed to the assesse\". (iii) \"On the facts and deleting the addition of Rs. 12,93,50,749/ fact that the addition was made on account of undisclosed income on the basis of the statement recorded ws132(4) of the accommodation entry provider, which is an evidence as per Section 132(4) of the Income-Tax Act.\" (iv) \"The appellant craves leave to ame new ground.\" 2. The brief facts of the case Section 143(3) read with Section 1961 (hereinafter referred to as 22.12.2017, wherein the addition under transactions of the assessee. 3. Upon appeal, the (Appeals) [Ld. CIT(A)] the Income Declaration Scheme (IDS), 2016 commission income at the rate of 1% were paid. Consequently, the Kaushik Balubhai Madhwani ITA No. On the facts and the circumstances of the case and in law, Ld. CIT(A) is right in deleting the addition of Rs. 12,93,50,749/- made by the A.O. on account of unexplained investment made in the penny stock company M/s. Luminaire Technologies Lid\" \"On the facts and the circumstances of the case, Ld.CIT(A) is right in deleting the addition of Rs. 12,93,50,749/- without appreciating the fact that the sale consideration of Rs. 12,93,50,749/- derived from the sale of shares of company M/s. Luminaire Technologies Ltd. are bogus and exemption claimed on such LTCG should not be allowed to \"On the facts and the circumstances of the case, Ld.CIT(A) is right in deleting the addition of Rs. 12,93,50,749/- without appreciating the fact that the addition was made on account of undisclosed income on the basis of the statement recorded ws132(4) of the accommodation entry provider, which is an evidence as per Section 132(4) of the \"The appellant craves leave to amend or alter any ground or add a brief facts of the case are that an assessment under Section 143(3) read with Section 147 of the Income Tax Act, (hereinafter referred to as \"the Act\") was completed on , wherein the Assessing Officer (AO) addition under Section 68 of the Act, attributing the accommodation entries allegedly provided by Upon appeal, the Learned Commissioner of Income Tax (Appeals) [Ld. CIT(A)] observed that the assessee had opted for Income Declaration Scheme (IDS), 2016 and had declared commission income at the rate of 1%, upon which due taxes d. Consequently, the Ld. CIT(A) directed the AO Kaushik Balubhai Madhwani 2 ITA No. 2645/MUM/2023 On the facts and the circumstances of the case and in law, Ld. CIT(A) made by the A.O. on account of unexplained investment made in the penny stock \"On the facts and the circumstances of the case, Ld.CIT(A) is right in ut appreciating the derived from the sale of shares of company M/s. Luminaire Technologies Ltd. are bogus and exemption claimed on such LTCG should not be allowed to the circumstances of the case, Ld.CIT(A) is right in without appreciating the fact that the addition was made on account of undisclosed income on the basis of the statement recorded ws132(4) of the accommodation entry provider, which is an evidence as per Section 132(4) of the or alter any ground or add a are that an assessment under Income Tax Act, ) was completed on Assessing Officer (AO) made an of the Act, attributing the accommodation entries allegedly provided by Learned Commissioner of Income Tax observed that the assessee had opted for and had declared , upon which due taxes Ld. CIT(A) directed the AO to verify the assessee’s claim and grant appropriate relief. Aggrieved by the said order, the Revenue has preferred the present appeal, raising the grounds as reproduced above. 4. We have considered the relevant material on record assessee brought to our attention that subsequent to the impugned assessment order dated 22.12.2017 Principal Commissioner of Income Tax (Ld. PCIT) jurisdiction over the case, providing an opportunity of being heard to the assessee aside the impugned the Act on 24.02.2021 assessment order DR. 5. The relevant findings of the \"Under the circumstances delineated above, the action of the Assessing Officer with regard to the identification of the component of 'Entry Operator Charges' and its taxation, without conducting the requisite enquiries, has to be regarded as erroneous in s interests of the revenue, within the meaning of Section 263 of the Act. Accordingly, the assessment order dated 22.12.2017 passed by the AO under Section 143(3) of the Act is set aside as per the provisions of Explanation Kaushik Balubhai Madhwani ITA No. verify the assessee’s claim and grant appropriate relief. Aggrieved by the said order, the Revenue has preferred the , raising the grounds as reproduced above. We have considered the rival submissions and perused the relevant material on record. The learned counsel for the brought to our attention that subsequent to the impugned assessment order dated 22.12.2017 Principal Commissioner of Income Tax (Ld. PCIT) risdiction over the case, called for the records opportunity of being heard to the assessee the impugned assessment order under 24.02.2021, with a direction to pass a assessment order. This fact has not been disputed by the ld The relevant findings of the Ld. PCIT are reproduced as under: \"Under the circumstances delineated above, the action of the Assessing Officer with regard to the identification of the component of 'Entry Operator Charges' and its taxation, without conducting the requisite enquiries, has to be regarded as erroneous in so far as it is prejudicial to the interests of the revenue, within the meaning of Section 263 of the Act. Accordingly, the assessment order dated 22.12.2017 passed by the AO under Section 143(3) of the Act is set aside as per the provisions of Explanation Kaushik Balubhai Madhwani 3 ITA No. 2645/MUM/2023 verify the assessee’s claim and grant appropriate relief. Aggrieved by the said order, the Revenue has preferred the , raising the grounds as reproduced above. and perused the learned counsel for the brought to our attention that subsequent to the impugned assessment order dated 22.12.2017, the Learned Principal Commissioner of Income Tax (Ld. PCIT), having called for the records and, after opportunity of being heard to the assessee, set under Section 263 of , with a direction to pass a fresh fact has not been disputed by the ld are reproduced as under: \"Under the circumstances delineated above, the action of the Assessing Officer with regard to the identification of the component of 'Entry Operator Charges' and its taxation, without conducting the requisite enquiries, has to o far as it is prejudicial to the interests of the revenue, within the meaning of Section 263 of the Act. Accordingly, the assessment order dated 22.12.2017 passed by the AO under Section 143(3) of the Act is set aside as per the provisions of Explanation 2 to Section 263(1) of the Act. The Assessing Officer is directed to conduct the requisite enquiries to arrive at a correct conclusion as per law and frame a order, keeping in mind the observations made in the foregoing paragraphs. Needl opportunity of being heard shall be afforded to the assessee to file details and furnish its explanation.\" 6. The impugned order of the Ld. CIT(A) to the order of the Ld. PCIT under Section 263 of the Act However, the Ld. CIT(A) failed to take into consideration fact that the impugned assessment order had already been set aside by the Ld. PCIT. Since the assessment order itself longer survives, any appellate proceedings arising from it are rendered infructuous 7. Accordingly, the present dismissed as infructuous 8. In the result, appeal of the revenue is dismissed. Order pronounced in the open Court on Sd/- (RAJ KUMAR CHAUHAN JUDICIAL MEMBER Mumbai; Dated: 20/03/2025 Disha Raut Kaushik Balubhai Madhwani ITA No. Section 263(1) of the Act. The Assessing Officer is directed to conduct the requisite enquiries to arrive at a correct conclusion as per law and frame a de novo assessment , keeping in mind the observations made in the foregoing paragraphs. Needless to add, adequate opportunity of being heard shall be afforded to the assessee to file details and furnish its explanation.\" impugned order of the Ld. CIT(A) was passed to the order of the Ld. PCIT under Section 263 of the Act Ld. CIT(A) failed to take into consideration impugned assessment order had already been set by the Ld. PCIT. Since the assessment order itself , any appellate proceedings arising from it are infructuous. Accordingly, the present appeal filed by the Revenue dismissed as infructuous. In the result, appeal of the revenue is dismissed. nced in the open Court on 20/03 Sd/ RAJ KUMAR CHAUHAN) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Kaushik Balubhai Madhwani 4 ITA No. 2645/MUM/2023 Section 263(1) of the Act. The Assessing Officer is directed to conduct the requisite enquiries to arrive at a correct de novo assessment , keeping in mind the observations made in the ess to add, adequate opportunity of being heard shall be afforded to the assessee to file details and furnish its explanation.\" was passed subsequent to the order of the Ld. PCIT under Section 263 of the Act. Ld. CIT(A) failed to take into consideration the impugned assessment order had already been set by the Ld. PCIT. Since the assessment order itself no , any appellate proceedings arising from it are appeal filed by the Revenue is In the result, appeal of the revenue is dismissed. /03/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Kaushik Balubhai Madhwani ITA No. Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Kaushik Balubhai Madhwani 5 ITA No. 2645/MUM/2023 BY ORDER, Registrar) ITAT, Mumbai "