INCOME TAX OFFICER, WARD-1, JALNA, JALNA V. ATUL OMPRAKASH MANTRI, JALNA

ITA 142/PUN/2024

AI Insights

The case involves a series of appeals by the Revenue against the decision of the Ld. CIT(A), which quashed the reassessment proceedings for the assessment years 2011-12 and 2012-13. The reassessment was initiated based on information from the DDIT (Inv.), Mumbai, alleging that the assessee had engaged in transactions involving penny stocks that resulted in bogus long-term capital gains (LTCG) exempt under section 10(38) of the Income Tax Act. The Tribunal examined whether the reassessment was justified, considering the original assessments and the lack of new tangible material.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708497 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Assessment Year: misc
• Other Referred Cases: South Yarra Holdings vs. ITO, PCIT vs. Smt. Krishna Devi, Chanchal Bhagwatilal Gokhru vs. Union of India, PCIT vs. Smt. Renu Agarwal, PCIT vs. Kuntala Mohapatra, CIT vs. Kelvinator of India Ltd, Calcutta Discount Co. Ltd vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMOL KHAIRNAR
• Assessee Lawyers: KISHOR B PHADKE; PLACING
• Keywords: Set aside; Difference of opinion; Change of opinion; Reassessment proceedings; Question of law; Unexplained expenditure; Unexplained investment; Salary income; Income from undisclosed sources; Cost of acquisition; Reopening of assessment; Capital Gains; Accommodation entries; Earning of tax free income; Assessment record; Reason to believe; Tangible material; Penny stocks; Bogus
• Section: 147; 148; 143(3); 142(1); 132; 153A; 68; 131; 133(6); 69C; 28

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND MS ASTHA CHANDRA, JUDICIAL MEMBER ITA Nos.140 & 141/PUN/2024 Assessment years : 2011-12 & 2012-13 ITO, Ward-1, Jalna Vs. Omprakash Asaram Mantri Abhay Oil Industries, Plot No.C-231, Old MIDC Area, Jalna – 431203 PAN: AAWPM2711J (Appellant) (Respondent) ITA Nos.142 & 143/PUN/2024 Assessment years : 2011-12 & 2012-13 ITO, Ward-1, Jalna Vs. Atul Omprakash Mantri Abhay Oil Industries, Plot No.C-231, Old MIDC Area, Jalna – 431203 PAN: ABEPM0285E (Appellant) (Respondent) ITA Nos.145 & 146/PUN/2024 Assessment years : 2011-12 & 2012-13 ITO, Ward-1, Jalna Vs. Pramila Omprakash Mantri Abhay Oil Industries, Plot No.C-231, Old MIDC Area, Jalna – 431203 PAN: ABEPM0283C (Appellant) (Respondent) ITA Nos.147 & 148/PUN/2024 Assessment years : 2011-12 & 2012-13 ITO, Ward-1, Jalna Vs. Ashish Omprakash Mantri Abhay Oil Industries, Plot No.C-231, Old MIDC Area, Jalna – 431203 PAN: AAXPM9270F (Appellant) (Respondent) Assessee by : Shri Kishor B Phadke Department by : Shri Amol Khairnar, CIT-DR 2 ITA Nos.140 to 143 & 145 to 148/PUN/2024 Date of hearing : 17-06-2025 Date of pronouncement : 17-07-2025 O R D E R PER BENCH: The above batch of 8 appeals filed by the Revenue in case of four different assessees for assessment years 2011-12 and 2012-13 respectively are directed against the separate orders dated 29.11.2023 of the Ld.CIT(A), Pune-12. Since common issues are involved in all these appeals, therefore, these were heard together and are being disposed of by this common order for the sake of convenience. 2. First we take up ITA No.147/PUN/2024 for assessment year 2011-12 in case of Ashish Omprakash Mantri as the lead case. 3. Facts of the case, in brief, are that the assessee is an individual and filed his original return of income on 26.03.2012 declaring total income at Rs.15,08,324/- and long term capital gain on sale of share at Rs.1,44,35,387/- was claimed as exempt u/s 10(38) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). A search & seizure action u/s 132 of the I.T. Act was carried out at the business and residential premises of Mantri Group of Jalna on 02.05.2013 wherein the assessee was also covered. Accordingly assessment u/s 143(3) r.w.s. 153A of the Act was completed on 22.03.2016 by determining the total income at 3 ITA Nos.140 to 143 & 145 to 148/PUN/2024 Rs.16,79,230/- and agricultural income at Rs.54,990/- against the returned income of Rs.15,08,324/-. 4. Subsequently information was received from the office of the DDIT (Inv.), Unit-8(3), Mumbai that the assessee has sold his investment in penny stocks of M/s. Nivyah Infrastructure & Telecom Services Ltd. (hereinafter referred to as ‘NITSL’) amounting to Rs.1,60,30,716/- during the assessment year under consideration. Further, it was stated that the company NITSL which is a penny stock company, has facilitated various beneficiaries to claim LTCG exempt from tax under section 10(38) of the Act. The assessee was one of the beneficiaries of this penny stock company listed on BSE with Scrip Code 517534. Also it was stated that this company has been used to facilitate introduction of unaccounted income of members or beneficiaries in the form of exempt capital gain or short term capital loss in their books of accounts. The assessee Shri Ashish Omprakash Mantri was one such beneficiary and the amount involved in his case is Rs.1,60,30,716/-. 5. After receiving the above information, the Assessing Officer carried out investigations and found that the share price of the above company i.e. NITSL rose from Rs.39/- on 21.07.2019 to Rs.2,050/- on 05.01.2011 and dipped to Rs.47.20 on 18.07.2012. However, financials of the company for the relevant period did not show any substantial change so as to support such huge share price movement. 4 ITA Nos.140 to 143 & 145 to 148/PUN/2024 The company did not have business to justify the sharp rise in market price of shares. Accordingly, a notice u/s 148 of the Act dated 28.03.2018 was issued to the assessee after recording reasons and taking necessary sanction/approval from the PCIT (Central), Nagpur as per the provisions of section 151 of the Act. In response to the notice u/s 148, the assessee filed the return of income on 20.04.2018 declaring total income at Rs.16,79,227/-. The assessee requested the Assessing Officer to provide reasons for re-opening of the case which were provided to the assessee on 10.05.2018. Further, the assessee vide letter dated 01.06.2018 objected to the reopening of the assessment proceedings u/s 147 of the Act in this case which were rejected by the Assessing Officer by passing a speaking order dated 27.08.2018. Thereafter, notices u/s 143(2) and 142(1) of the Act were issued and served on the assesse in response to which the AR of the assessee appeared before the Assessing Officer and filed various details from time to time justifying the gain of Rs.1,44,35,387/- on sale of shares during the year which had been claimed exempt u/s 10(38) of the Act. 6. Thereafter a show cause notice was issued to the assessee wherein the assessee was requested to give explanation regarding trading of the scrip of penny stock company wherein he has earned bogus LTCG. In response to the show cause notice, the assessee filed the requisite details. However, the Assessing Officer was not satisfied with the submissions made by the assessee. After considering the findings of the search/survey, inquires conducted in the case of assessee, the 5 ITA Nos.140 to 143 & 145 to 148/PUN/2024 brokers, operators and the entry providers and the nature of transaction entered into by the assesse, the Assessing Officer disallowed the claim of Long Term Capital Gain of Rs.1,44,35,387/- claimed exempt u/s 10(38) of the Act and added the same under section 68 of the Act. 7. Further, the Assessing Officer held that the accommodation entries regarding sale of shares have been obtained by the assessee after paying certain charges i.e. commission as is the case with all such penny stocks involving accommodation entries in the form of bogus LTCG/STCG. As these charges are not recorded in the books, such commission was presumed @ 2% of the sale amount of Rs.1,60,30,716/-. The amount of commission paid was accordingly arrived at Rs.3,20,614/- and was added as unexplained expenditure u/s 69C of the Act for arranging accommodation entries. The Assessing Officer accordingly passed the order u/s 143(3) r.w.s. 147 of the Act on 24.12.2018 assessing the total income at Rs.1,64,35,230/- by making addition of Rs.1,44,35,387/- on account of disallowance of capital gain u/s 10(38) of the Act and Rs.3,20,614/- on account of unexplained expenditure u/s 69C of the Act. 8. Before the Ld. CIT(A) the assessee apart from challenging the addition on merit, challenged the validity of reopening of assessment u/s 147 of the Act on the ground that in absence of any tangible material, the Assessing Officer cannot reopen the assessment beyond a period of 4 years from the end of the relevant 6 ITA Nos.140 to 143 & 145 to 148/PUN/2024 assessment year. It was argued that the original assessment was completed u/s 143(3) r.w.s. 153A of the Act where the impugned transaction has already been considered, therefore, notice for reopening of assessment u/s 148 of the Act for same transaction could not have been issued in absence of any fresh tangible material beyond a period of 4 years. 9. Based on the arguments advanced by the assessee, the Ld. CIT(A) quashed the re-assessment proceedings holding that the notice issued u/s 148 of the Act is not sustainable in law by observing as under: “5.3 I have considered the submissions filed by the appellant. As per the above submission filed by the appellant, it is seen that the learned AO is of the opinion that appellant has not disclosed full and true details w.r.t. exempt LTCG earned on sale of shares of M/s. Nivyah Infrastructure & Telecom Services Ltd. The learned AO has formed the said opinion on the basis of information received from Investigation Wing communicating that M/s. Nivyah Infrastructure & Telecom Services Ltd. is a penny stock listed on the Bombay Stock Exchange and appellant is one of the beneficiary. As per the reasons, information was received from the Investigation Wing regarding the share of M/s. Nivyah Infrastructure & Telecom Services Ltd. However, it is submitted that the appellant has not dealt with shares of M/s. Nivyah Infrastructure & Telecom Services Ltd. In fact appellant has sold shares of M/s. S. V. Electricals Ltd. during AY 2011-12. It was only from 16/03/2012, name of M/s. S. V. Electricals Ltd. was changed to M/s. Nivyah Infrastructure & Telecom Services Ltd. As such, there was no company by the name of M/s Nivyah Infrastructure & Telecom Services Ltd in existence during AY 2011-12 and the learned AO has recorded the reasons merely on the basis of information received from the Investigation Wing. As such, the notice issued u/s 148 of the ITA, 1961 is bad in law. In this regard, the appellant has placed reliance on the recent judgment of the jurisdictional Bombay High Court in the case of South Yarra Holdings Vs. ITO 104 taxmann.com 216. The Honourable Bombay High Court in the said judgement having similar facts has held that the notice u/s 148 of the ITA, 1961 issued is bad in law. Operative Para of the said judgement is reproduced below: \"8. From the reasons, it is evident that the impugned notice has been issued on the basis of information received from the Deputy Collector Income Tax (Investigation) alleging that M/s Nivyah Infrastructure & Telecom Services Ltd is a penny stock listed on the Bombay Stock Exchange and that the 7 ITA Nos.140 to 143 & 145 to 148/PUN/2024 petitioner had dealt with the same leading to escapement of income. On receipt of information, the least that is expected of the Assessing Officer is to examine the same in the context of the facts of this case and satisfy himself whether the information received does prima facie lead to a reasonable belief that income chargeable to tax has escaped assessment. In this case, the reasons indicate that the Assessing Officer has not carried out such exercise and accepted the report of the Deputy Collector of Income Tax (Investigation) Mumbai to conclude that the petitioner had dealt with Nivyah Infrastructure and Telecom Services Ltd during the previous year relevant to the assessment year 2011-12. Admittedly, there was no company by name \"M/s Nivyah Infrastructure & Telecom Services Ltd\" in existence during that year for consideration. This clearly shows that the Assessing Officer acted on the satisfaction of the Deputy Collector of Income Tax (Investigation) that income chargeable to tax has escaped assessment. It must also be borne in mind that the impugned notice is issued beyond the period of four years from the end of the relevant assessment year in a case, where the assessment was completed under section 143 (3) of the Act. Therefore, the Assessing Officer would have to examine the information received in the context of the facts on record. If such an exercise were to be done, it is likely that the Assessing Officer would have come to the conclusion that there was no failure to disclose truly and fully all material facts necessary for assessment. Thus, hit by the proviso to section 147 of the Act. However, the Assessing Officer has not applied his mind to the information received in the context of the facts on record The impugned notice is bad-in-law, as it has not been issued by the Assessing Officer on his satisfaction that there is reason to believe, that income chargeable to tax has escaped assessment.\" 5.4 In the case of the appellant, the above decision of the Hon'ble Bombay High Court squarely applies. In the above circumstances, the impugned notice u/s 148 is not sustainable in law and therefore, is quashed and set aside. Hence, the AO is directed to delete the impugned additions. Thus, the ground raised by the appellant is hereby allowed.” 10. He further noted that the notice issued u/s 148 of the Act was also not valid on the ground that the assessment was completed u/s 143(3) r.w.s. 153A of the Act by accepting the transaction as exempt long term capital gain and the reason for reopening was recorded on the basis of information received from DDIT (Inv.), Mumbai and the notice for reopening of assessment u/s 148 of the Act was issued 8 ITA Nos.140 to 143 & 145 to 148/PUN/2024 for the same transaction which was already shown by the assessee in his return of income. The relevant observations of the Ld. CIT(A) read as under: “6.3 I have considered the submissions filed by the appellant. The appellant is placing reliance on the recent judgment of the jurisdictional Bombay High Court in the case of Chanchal Bhagwatilal Gokhru Vs. Union of India [2023] 152 taxmann.com 214. The Honourable Bombay High Court has held that where addition based on penny stock transaction had already been considered while making scrutiny assessment u/s 143(3), notice for reopening u/s 148 for same transaction could not be issued as there was no fresh tangible material. Operative Para of the said judgement is reproduced below: “3. The Petitioner had filed her return of income for AY 2014-15 on 28th July 2014. The Assessing Officer (\"AO\") had passed an order u/s 143 (3) of the Act on 18th November 2016, whereby he added Rs.1,07,18,922 to the total income on account of withdrawal of exemption claimed by the Petitioner u/s 10(38) of the Act and the Petitioner paid tax on the same. Thereafter, the Petitioner was also granted waiver of penalty for the AY 2014-15 on 31st January 2018 on application u/s 273A of the Act by the PCIT-18, Mumbai. 4. Evidently a notice u/s 148 of the Act dated 26th March 2021 is issued after a period of four years following which a return of income was filed by the Petitioner on 14th April 2021. This was followed by Notice u/s 143(2) dated 10th November 2021 and notice u/s 142(1) dated 15th November 2021 seeking details to which the Petitioner filed a response dated 24th November 2021 and objected to the re-assessment by communication dated 28th January 2022. The objections were disposed of on 11th February 2022. Another notice was issued on 25th February 2022 which led to filing of this Petition. 5. Since the impugned notice u/s 148 of the Act has been issued after the expiry of four years from the end of the relevant AY, Respondents have to show that the jurisdictional requirement is satisfied that there was failure to truly and fully disclose material facts as decided by this Court in Ananta Landmark (P) Ltd v DCIT CC 5(3), Mumbai. 6. We have examined the reasons recorded annexed to the Petition that are evidently premised on 'seen from the assessment records. The Assessment Officer (AO) records that the assessee claimed to have purchased shares of the penny stock scrips for a total of Rs.33,09,976 and sold it for a consideration of Rs.1,15,90,280/-. Therefore he held that the long term capital gain would be unexplained investment/income from other sources and not a capital gain as claimed by the assessee on the premise 9 ITA Nos.140 to 143 & 145 to 148/PUN/2024 that entire transaction of purchase and sale of shares were a part of accommodation entry and represents unexplained investment made by assessee in cash to obtain an equivalent amount of bogus profit on sale of shares. 7. We find nothing to indicate failure to disclose any material fact. Upon examining the order u/s 143(3) we find that the AO has considered these very transactions and added 1,07,18,922 to the total income on which the Petitioner has already paid the tax. We find no substance in the AQ's reason to believe that income chargeable to tax has escaped assessment in as much as there is no mention of any tangible material that led to his conclusion. The entire process is triggered on a change of opinion as to the calculation of tax payable by the assesse. As stated hereinabove, it is evident that bald assertions of the transaction being \"an accommodation entry made in collusion & connivance with the entry provider\" are used to re-open the assessment. It is well settled judicial principal that, the true test of income chargeable to tax escaping assessment is whether there exists fresh \"tangible material” on the basis of which appropriate conclusion is reached. In the absence of such material the reassessment proceedings would be invalid. This principle has been upheld by the Apex Court as well as the jurisdictional High Courts in various rulings. Furthermore, this Court has held that reconsideration of the material available at the time of original assessment proceedings tantamount to change of opinion and therefore invalid. 8. In view of the settled legal position and considering the facts of the present case, we pass the following order- i. The impugned notice dated 26th March 2021 issued by Respondent No.2 for AY 2014-15 are quashed and set aside and all action in furtherance thereto is prohibited; ii. Rule made absolute in above terms. No costs 6.4 In the instant case, the above decision of the Hon'ble Bombay High Court squarely applies. The appellant had already declared & claimed the exemption u/s 10(38) in his original return of income. The Assessing Officer had also duly verified the return of income during the course of assessment proceedings and passed order u/s 143(3) r.w.s. 153A of the Act, 1961 by accepting the transaction of exempt LTCG. The reason for reopening was recorded on the basis of information received from DDIT(Inv.) Mumbai and notice for reopening u/s 148 was issued for same tangible transaction, which was already shown by applicant in his return of income. As per above Hon'ble jurisdictional Bombay High Court order in the case of Chanchal Bhagwatilal Gokhru (supra), notice for reopening u/s 148 for same transaction could not be issued as there was no fresh tangible material. Accordingly, even on this count notice u/s 148 of the Act is held to be bad in law Hence, the AO is directed to delete the impugned additions. Therefore, this ground raised by the appellant is hereby allowed.” 10 ITA Nos.140 to 143 & 145 to 148/PUN/2024 11. Since the Ld. CIT(A) quashed the assessment proceedings, he did not adjudicate the grounds challenging the addition on merit. 12. Aggrieved with such order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal by raising the following grounds: 1. Whether based on facts and circumstances of the case and on law, the CIT(A), was right in holding that notice u/s 148 of the Act is bad in law. 2. Whether on the fact and circumstances of the case and on law, the CIT(A), was right in deleting the addition by allowing exemption u/s 10(38) of the I.T Act. 13. The Ld. DR strongly opposed the order of the Ld. CIT(A) in quashing the re-assessment proceedings. He submitted that the Assessing Officer in the instant case has duly applied his mind and after the investigations had noted that the share price of the company has risen from Rs.39/- on 21.07.2019 to Rs.2,050/- on 05.01.2011 and dipped to Rs.47.20 on 18.07.2012. He had also given a finding that the financials of the company i.e. NITSL for the relevant period did not show any substantial change so as to support such huge share price movement. The company did not have business to support the sharp rise in the market price of the shares and such sharp rise in the market price of the company was not supported by the financial fundamentals of the company. Therefore, when the Assessing Officer has applied his mind duly, the Ld. CIT(A) was not justified in stating that the Assessing Officer has not applied his independent mind and there was no tangible material. Further, the Assessing Officer has also rejected the objections filed by the assessee by passing a speaking order. He further submitted that the directors of 11 ITA Nos.140 to 143 & 145 to 148/PUN/2024 the Penny stock company were absconding and no satisfactory explanation was given by the assessee to such huge long term capital gain claimed as exempt u/s 10(38) of the Act. Even the company NITSL did not respond to the notice u/s 133(6) of the Act. He accordingly submitted that the order of the Ld. CIT(A) be reversed and that of the Assessing Officer be restored. 14. The Ld. Counsel for the assessee on the other hand heavily relied on the order of the Ld. CIT(A). He submitted that during the course of 153A proceedings the assessee had given full details, according to which the assessee was allotted 2,50,000 shares of M/s. S.V. Electricals Ltd. on 01.12.2009 which were credited to the assessee’s D-MAT account maintained with Adinath Stock Broking Pvt. Ltd. on 16.02.2010. He submitted that between 10.01.2011 to 11.02.2011, 1,02,043 shares of M/s. S.V. Electricals Ltd were sold by the assesse through his D-MAT account maintained with Adinath Stock Broking Pvt. Ltd on 14.03.2012. The name of the company was changed from M/s. S.V. Electricals Ltd to M/s. Nivyah Infrastructure & Telecom Services Limited. The assessee filed his return of income on 26.03.2012 declaring total income of Rs.15,08,324/- and exempt long term capital gain of Rs.1,44,35,387/-. A search action u/s 132 of the Act was conducted in the case of Mantri group on 02.05.2013. He submitted that on 04.05.2013 the statement of Shri Atul Mantri i.e. brother of the assessee was recorded u/s 131 of the Act wherein specific questions were asked to him to which he had replied, the details of which are as under: 12 ITA Nos.140 to 143 & 145 to 148/PUN/2024 “Q. 19. On verification of the Balance Sheets of Atul O Mantri it is seen that Long Term Capital Gains on Sale of Share is credited to Capital Account, the Details are as under A.Y. 2011-12 LTCG of Rs.68,53,275/- A.Y. 2012-13 LTCG of Rs.1,27,24,855/- Please give the details of Capital Gains Earned by him i.e. Name of Asset, Date of Purchase, Cost of Purchase, Date of Sale of Asset, Amount of Sale and copies of Relevant Pass Books. Ans. In A.Y. 2010-11, I have purchase the 2,50,000 shares of Rs.10 each of S.V. Electricals Ltd. Out of the said shares I had sold 42,000 shares for Rs.73,08,000/- in A.Y. 2011-12 and Balance of 2,08,000 shares were sold in A.Y. 2012-13 for Rs.1,48,30,096/-. The capital Gains arising on sale are already reflected in my Balance Sheet. The dates of Sale and Purchase and copies of relevant Pass Books shall be submitted later on. Q. 20. Please furnish the copies of Broker Notes in respect of Purchase and Sale of these Shares and also give the Demat A/c. No. into which these shares were held. Ans:- I will submit the copies of Broker Notes and details of Demat Accounts later on. Q. 21. On verification of the Balance Sheets of Ashish O Mantri it is seen that Long Term Capital Gains on Sale of Share is credited to Capital Account, the Details are as under: Α.Υ. 2011-12 LTCG of Rs.1,44,35,357/- Α.Υ. 2012-13 LTCG of Rs.93,82,427/- Please give the details of Capital Gains Earned by him i.e. Name of Asset, Date of Purchase, Cost of Purchase, Date of Sale of Asset, Amount of Sale and copies of Relevant Pass Books. Please also furnish the copies of Broker Notes in respect of Purchase and Sale of these Shares and also give the Demat A/c. No. into which these shares were held. Ans. These Capital gains include various types of Shares and I shall furnish all the details of purchase and Sale of Shares and that of Demat Account and Broker Notes of these transactions Later on.” 13 ITA Nos.140 to 143 & 145 to 148/PUN/2024 15. He submitted that the assessee in response to the notice u/s 153A of the Act filed his return of income on 28.02.2014 declaring total income of Rs.15,08,324/- which is the original returned income. 16. Referring to pages 24 and 25 of the paper book, he drew the attention of the Bench to the reply given by the assessee to the specific queries raised by the Assessing Officer during 153A proceedings on 26.02.2016 which read as under: “Date 26.02.2014 From M.S.Bhakkad Chartered Accountants, Jalna To The Assistant Commissioner of Income Tax, Central Circle 1 Aurangabad Subject: Ashish O. Mantri (PAN AAXPM9270F) AY 2011-2012 Sir, During the course of hearing on earlier occasion, you were pleased to ask us to fie following details. We submit the following explanation and details for your kind consideration. 1. We enclose herewith confirmation of parties for the year under assessment. 2. We enclose herewith ledger account of agriculture income for your record and perusal. 3. The details of capital gain on sale of plots is already filed along with computation of income for the year under assessment in our earlier submission. We enclose herewith Purchase and sale deeds of the said plots sold for your record and perusal. 4. We enclose herewith copy of Financial Statements of SV Electricals along with movement of Share Prices for your record and perusal. We had already submitted all the contract notes of sale of SV Electrical Shares in our earlier submission. 14 ITA Nos.140 to 143 & 145 to 148/PUN/2024 5….. 6….. 7. We enclose herewith detail ledger account of Share Charges for the year under assessment. The share expenses of Rs.161706/- includes delay payment charges charged by broker of Rs.112311/- Please accept the above submission and oblige. Thanking you, Yours faithfully, Sd/- CA. M.S. Bhakkad” 17. He submitted that after considering the reply of the assessee the Assessing Officer completed the assessment u/s 143(3) r.w.s. 153A of the Act on 22.03.2016 determining the total income of the assessee at Rs.16,79,230/-. Under these circumstances, the question which arises is as to whether the Assessing Officer can reopen the assessment on the basis of the report of the Investigating Wing without independent application of mind and on the basis of the same material which was already available on record and duly considered by the Assessing Officer u/s 143(3) r.w.s. 153A proceedings the reopening notice issued beyond a period of 4 years. 18. Referring to the decision of the Hon’ble Bombay High Court in the case of South Yarra Holdings vs. ITO (2019) 263 Taxman 594 (Bom), he submitted that where after expiry of four years from end of relevant year, Assessing Officer initiated reassessment proceedings on basis of information received from 15 ITA Nos.140 to 143 & 145 to 148/PUN/2024 Investigation wing that 'N' Ltd. was a penny stock listed in BSE which used to facilitate introduction of unaccounted income of members in form of share capital and, assessee was one of those beneficiaries, in view of fact that there was no company by name of 'N' Ltd. which was in existence at relevant time period, impugned reassessment proceedings deserved to be quashed. 19. Referring to the decision of the Hon’ble Delhi High Court in the case of PCIT vs. Smt. Krishna Devi (2021) 431 ITR 361 (Del), he submitted that the Hon’ble High Court in the said decision has held that where assessee claimed exemption under section 10(38) on account of LTCG arose on sale of shares of a company, since there was no dispute that these shares were purchased by assessee online, payments were made through banking channel and shares were dematerialized and, further, sales were routed from demat account and, sale consideration was received through banking channels, impugned addition made by Assessing Officer under section 68 treating such LTCG as bogus was unjustified. 20. Referring to the decision of the Hon’ble Bombay High Court in the case of Chanchal Bhagwatilal Gokhru vs. Union of India (2023) 454 ITR 451 (Bom), he submitted that the Hon’ble High Court in the said decision has held that where addition based on penny stock transaction had already been considered while making scrutiny assessment under section 143(3), notice for reopening under 16 ITA Nos.140 to 143 & 145 to 148/PUN/2024 section 148 for same transaction could not be issued as there was no fresh tangible material. 21. Referring to the decision of the Hon’ble Allahabad High Court in the case of PCIT vs. Smt. Renu Agarwal (2023) 153 taxmann.com 578 (Allahabad), he submitted that the Hon’ble High Court in the said decision has held that where AO disallowed exemption claimed by assessee under section 10(38) and made additions, alleging involvement in penny stock which were being misused for providing bogus accommodation of LTCG, however, there was lack of adverse comments from stock exchange and officials of company involved in these transactions and no material relating to assessee was found in investigation wing report, additions made by AO had rightly been deleted. 22. He submitted that when the Revenue has challenged the above decision, the Hon’ble Supreme Court dismissed the SLP filed by the Revenue as reported in (2023) 456 ITR 249 (SC). 23. Referring to the decision of the Hon’ble Orissa High Court in the case of PCIT vs. Kuntala Mohapatra (2024) 466 ITR 47 (Orissa), he submitted that the Hon’ble High Court in the said decision has held that where shares were purchased via Account Payee Cheques, held in a Demat Account for over 12 months, and 17 ITA Nos.140 to 143 & 145 to 148/PUN/2024 sold through a recognized stock exchange after payment of security transaction tax, assessee was eligible to claim. 24. He submitted that when the Revenue challenged the above decision, the Hon’ble Supreme Court dismissed the SLP filed by the Revenue as reported in (2024) 466 ITR 50 (SC). 25. Referring to the decision of the Hon’ble Supreme Court in the case of CIT vs. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC), he submitted that the Hon’ble Supreme Court in the said decision has held that after 01.04.1989, the Assessing Officer has power to reopen the assessment, provided there is 'tangible material' to come to conclusion that there is escapement of income from assessment; reasons must have a live link with formation of belief. 26. He also relied on the decision of the Hon’ble Supreme Court in the case of Calcutta Discount Co. Ltd. vs. ITO (1961) 41 ITR 191 (SC) and various other decisions as per the case law compilation. 27. He submitted that the Ld. CIT(A) while quashing re-assessment proceedings has held that there was confusion in name of the alleged penny stock company while recording the reasons. While supporting the order of Ld. CIT(A) the Ld. 18 ITA Nos.140 to 143 & 145 to 148/PUN/2024 Counsel for the assessee drew the attention of the Bench to the following written submissions: “3. Submissions a) Name confusion: Vide Para 5.3, learned CIT(A) has observed discrepancy in name of the alleged penny stock company. As per details on record, the company, of which, shares were transacted by assessee was having name as M/s S V Electricals Limited. Kindly note the relevant dates matrix summarized in the above Events Chart (first 4-5 entries therein). Now, as per facts revealing from Events Chart, Assessee has acquired shares of M/s S V Electricals Limited in Dec 2009 and sold the same in January 2011. Thus, assessee was not holding any shares of the said M/s SV Electricals Limited after January 2011. Now, the name of the said company was changed on 14/3/2012. Thereafter, an internal report appears to have been made by Mumbai office of I-T (INV). From perusal of Para-2 of the \"reasons\", it appears to have been stated that, assessee has sold shares of M/s Nivyah Infrastructure & Telecom Private Limited for amount of Rs.1,60,30,716. Nowhere, in the \"reasons\", name of M/s SV Electricals Limited is stated. As such, the actual transaction of exempt LTCG declared by the Appellant was glossed over while recording \"reasons\" by the learned AO. Thus, there was no any independent application of mind of learned AO, while recording of the \"reasons\". Learned CIT(A) has followed decision of Honorable Bombay High Court in case of South Yaara Holdings vs. ITO - 104 Taxmann.com 216 at Para 5.3, wherein, identical facts existed and wherein, Honorable Bombay high Court has observed that \"reasons\" were recorded without due application of mind. b) Amount difference: From perusal of 2nd para on page-1 and last para on Page-2 of the \"reasons\" reveal an alleged LTCG amount of Rs.1,60,30,716 which has escaped assessment. As against, the 2nd last para of the 1st page of the two pages \"reasons\" of reassessment, relates to the exempt LTCG of Rs.1,44,35,387 declared by the Assessee. Now, the difference of the two amounts i.e. Rs.1,60,30,716 and Rs.1,44,35,387 is the cost of acquisition of Rs.25 lacs of the 2,50,000 shares of M/s S V Electricals Limited. The \"reasons\" keep on repeating the amount of Rs.1,60,30,716 as alleged escaped income. It appears, the learned AO, while recording of \"reasons\" was alleging that, the LTCG of M/s Nivyah Infrastructure & Telecom Services Limited was a totally different LTCG as against the LTCG of M/s S V Electricals Limited. In reality, it was only a case of change of name. Even this amount difference reveals lack of application of mind of learned AO. 19 ITA Nos.140 to 143 & 145 to 148/PUN/2024 c) Detailed enquiry during search & 153A assessment: Assessee has filed details of the search proceedings which took place in case of the Mantri Group on 2/5/2013. During the search proceedings, statement of Mr. Atul Mantri was recorded a copy of which is placed in Paper-Book at Page-9 onwards. Vide Question Nos.19 to 21, details of exempt LTCG were enquired by the search party in detail. These details were as follows – (i) Details of bank pass-books showing purchase & sale (ii) Details of broker notes (iii) Details of DEMAT account (iv) Quantification of exempt LTCG (v) Reflection in Balance-sheet Further, vide submissions during search based assessment proceedings, following further details were provided - (vi) Fluctuation in share price of M/s SV Electricals Ltd (vii) audited Balance-sheets of M/s SV Electricals Limited A copy of the said submission is placed on record at Page-24 onwards. From perusal of Point No.4, it appears, all aspects involved in scrutiny of any exempt LTCG were duly provided. Thereafter, learned AO, in the search based assessment has accepted the exempt LTCG. Now, vide \"reasons\" recorded in March 2018, the very same LTCG was proposed to be taxed. This is a clear reapplication of mind, and the same is contrary to the settled principles arising from landmark decision in case of CIT V. Kelvinator of India Ltd - 320 ITR 561 (SC). A copy of the said decision was submitted during the course of hearing. Learned CIT(A), at Para 5.4 of his appellate order has referred to a decision of Honorable Bombay High Court in case of Chanchal Bhagwatilal Gokhru v. UoI - 152 taxmann.com 214, wherein, identical facts were present. It was held therein that, reapplication of mind is not permitted in a reassessment u/s 147. d) Absence of any new 'tangible material’ revealing from \"reasons\": Perusal of the \"reasons\" for reassessment reveals that, the very same data of price fluctuation of M/s Nivyah Infrastructure & Telecom Services Ltd along with the audited accounts, etc. was relied upon for recording \"reasons\" of reassessment. Now, the very same data was already existing on files of the learned AO in the search based assessment, which was duly mind applied. In other words, there was absence of any fresh tangible material for the presently considered \"reasons\" of reassessment. Hence, the \"reasons\" of reassessment are incorrectly recorded. 20 ITA Nos.140 to 143 & 145 to 148/PUN/2024 e) Statements of three brokers: During the course of 147 proceedings, learned AO has extended copies of the statements of three brokers, named as follows- (i) Mr. Navneetkumar Singhania of Kolkata (ii) Mr. Beni Prasad Lahoti of Kolkata (iii) Mr. Shiv Sundar Banka of Kolkata Copies of these statements are submitted at Page-64 onwards in Paper- Book. Perusal of these statements reveal that, nowhere, assessee has been named by these three brokers as any beneficiary of the alleged bogus LTCG. Yet, the I-T department has relied upon these statements for taxing the exempt LTCG as bogus LTCG. Assessee has even requested for CROSS examination of the three brokers, which could not be extended by I-T department. It transpires, reliance of the statements of the three brokers for making additions on account of alleged bogus LTCG was inchoate/premature and as such, incorrect. f) Reliance on decision of Honorable Supreme Court in case of PCIT v. Renu Agarwal - 153 taxmann.com 579: Copy of the said decision is placed at Page-172 of the Paper-book. Perusal of the apex court decision, along with Honorable Allahabad High Court decision (and along with related decision in case of PCIT v Krishna Devi- 126 taxmann.com 80-Delhi) reveals that, taxation of LTCG on test of human probability (based on price fluctuation despite low assets base etc.) is a good reason to suspect, but not a sufficient reason to believe escapement of income. It transpires that, unless some tangible material in the form of brokers statements (alleging assessee for accommodation entries), or some evidence showing unaccounted money of assessee, etc. is found, suspicion based assessments are incorrect. Assessee relies on these evolved principles of adjudication of exempt LTCG. g) Taxing of alleged unaccounted income: Finally, assessee submits that, in his case, search based assessment has already been concluded in year 2016 owing to a search in May 2013. Despite, the learned AO has recorded \"reasons” for taxing alleged unaccounted income on mere suspicions. Now, a search-based assessment stands at an elevated position as regards taxation of unaccounted income, when pitted against any 147 assessment, and that too, on mere suspicions. It appears, learned AO's action of recording \"reasons\" of reassessment were totally incorrect. 21 ITA Nos.140 to 143 & 145 to 148/PUN/2024 4. Prayer Assessee submits that appeals preferred by I-T department are incorrect and as such deserve to be dismissed.” 28. He accordingly submitted that the order of the Ld. CIT(A) being in accordance with law should be upheld and the grounds raised by the Revenue be dismissed. 29. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the original assessment in the instant case for the assessment year 2011-12 was completed u/s 143(3) r.w.s. 153A of the Act on 22.03.2016 determining the total income of the assessee at Rs.16,79,230/- as against the returned income of Rs.15,08,324/-. The Assessing Officer in the said order has allowed the claim of long term capital gain of Rs.1,44,35,387/- claimed as exempt u/s 10(38) of the Act after considering the reply of the assessee to the specific queries put by him. We find on the basis of information obtained from the Investigation wing that the assessee has sold his investments in penny stock company NITSL, reopened the assessment after recording the reasons. The reasons recorded for reopening of the assessment read as under: 22 ITA Nos.140 to 143 & 145 to 148/PUN/2024 OFFICE OF THE ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, AAYAKAR BHAVAN, NEAR HOLY CROSS ENGLISH SCHOOL, CANTONMENT, AURANGABAD (Ph. 0240-2373001) No.ABD/ACIT/CC-1/147-Reasons/2018-19/63 Date: 10.05.2018 To Ashish Omprakash Mantri, Abhay Oil Industries, New Mandha Jalna 431 203 Email:[e-mail] Mo. No. 9422219414 Ph. No.248 2230539 Sir, Sub: Reasons for proceedings u/s 147 of the Income-tax Act, 1961-reg Ref: Your request letter dated 21.04.2016 received in this office on 23.04.2018 Please refer to the above mentioned subject and reference. As per your request, the reasons recorded for initiating proceedings u/s 147 in your case for AY 2011-12 is as under: \"The assessee is an individual having income from salary, house property, business and profession and other sources. A search action u/s 132 was conducted in the card of the assessee on 02.05.2013 and accordingly a notice u/s 153A was issued to the assessee in response to which the assessee filed his return of income on 28.02.2014 declaring total income of Rs.15,00,324/-. Thereafter, assessment under section u/s 143(3) r.w.s 153A wat completed on 22.03.2016 assessing total income at Rs.16,79,227/-. The office has received information from the office of the DDIT (Inv), Unit 8(3), Mumbai on 23.03.2018. As per the information received, the assessee has sold his investment in penny stock of M/s Nivyah Infrastructure & Telecom Services Ltd amounting to Rs.1,60,30,716.35/- during the AY under consideration. Further, it is stated that the company M/s Nivyah Infrastructure & Telecom Services Ltd. is a penny stock company and has facilitated various beneficiaries to claim LTCG exempt from tax under section 10(38) of the Act. The assessee is one of the beneficiaries of this penny stock company listed on BSE Script Code 517534. Also, it is stated that this company has been used to facilitate introduction of unaccounted income of members or beneficiaries in the farm of exempt capital gain or short Term Capital Loss in their books of accounts. The assessee Shri Ashish Omprakash Mantri is one such beneficiary and the amount involved in his case is Rs.1,60,30,716.35/-. 23 ITA Nos.140 to 143 & 145 to 148/PUN/2024 As per information received, the share price of /s. Nivya Infrastructure & Telecom Services Ltd rose from Rs.39/- on 21/07/2009 to Rs.2,050/-on 05/01/2011 and dipped to Rs.47.20 on 10.07.2012. However, financials of the company for the relevant period do not show any substantial change so as to support such a huge share price movement. The company does not have business to justify the sharp rise in market prices of the shares. The sharp rise in the market price of this entity is not supported by financial fundaments of the company. Both purchase and sale of share are concentrated within few persons / entities. The exit providers do not have credit worthiness. They are either non-filers or have filed nominal return of income and have not paid tax. On verification of the records of the assessee available with this office, it is noticed that the assessee has claimed exemption u/s 10(38) of Rs.1,44,35,387/-. However, no details regarding this LTCG has been mentioned such as the name of the company of which the stocks have been traded, purchase cost of shares and sale consideration etc. As the information received has established that the assessee has entered into transaction of purchase and sale of stock of M/s Nivya Infrastructure & Telecom Services Ltd which is a penny stock company, the case of the assessee needs to be assessed afresh so as to unearth the mechanism of converting unaccounted money into accounted for via investment in penny stock company. On in depth verification, it is clear that the assessee has employed the services of penny stock company i.e. M/s Nivya Infrastructure & Telecom Services Ltd. to convert his own unaccounted money into accounted one, in the form of exempt LTCG in lieu of commission with a view to evade paying taxes thereon. As discussed above, the assessee Shri Ashish Omprakash Mantri las derived income from LTCG purchase and sale of penny stuck of M/s Nivya Infrastructure & Telecom Services Ltd which is as penny stock company and exemption an LTCG has been claimed u/s 10(38) of the Act thereby doing away with the requirement of paying taxes on this Income. This LTCG is not real and the whole mechanism of earning exempt LTCG has been created with a view to convert his own unaccounted money into accounted income. Hence, I have reasons to believe that the LTCG earned via this mechanism to the extent of Rs.1,60,30,716.35/- has escaped assessment due to failure on the part of the assessse to truly and fully disclose the material facts necessary for his assessment. As per information received in this office the assessee has earned LTCG via penny stock and has claimed exemption u/s 10(38) of the Act. This being the mechanism of converting unaccounted money into accounted, or needs to be examined thoroughly as the said money was the unaccounted money of the assessee himself and the same was not disclosed by the assessee neither in his ITR nor during the course of assessment proceedings u/s 143(3) r.w.s 153A. Hence, the assesses hos failed to disclose truly and fully all material facts necessary for his attessment for AY 2011-12. Hence, the present case is covered by proviso to section 147. Also, even if the books of accounts were produced during the assessment proceedings the information related to the issue under consideration 24 ITA Nos.140 to 143 & 145 to 148/PUN/2024 was embedded in such a manner that the some could not have been discovered except with a diligence. Hence, explanation 1 to section 147 is also applicable to this case. In this case the return of income was filed for the year under consideration and assessment u/s 143(3) r.w.s 153A of the Art was made on 22.03.2016. Since 04 years from the end of the AY has expired in this case, the requirement to initiate proceedings u/s 147 of the Act are reason to believe that the income for the year consideration has escaped assessment because of failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for the AY under consideration. It is pertinent to mention here that the reasons to believe that income has escaped assessment for the AY under consideration have been recorded above. I have carefully considered the assessment records containing the submissions made by the assesse in response to various notices issued during the assessment proceedings and have noted that the assessee has not fully and truly disclosed the following material facts necessary for his assessment for the year under consideration. 1. The assessee has received an amount of Rs.1,60,30,716.35/- as LTCG via purchase and sale of stock of M/s Nivya Infrastructure & Telecom Services Ltd which is a penny stock company. However, the same has not been offered for taxation this LTCG is not real. It is evident from the above facts that the assessee had not fully and truly disclosed material facts necessary for his assessment for the year under consideration thereby necessitating re-opening u/s 147 of the Act. It is true that the assesses has filed a copy of annual report and audited profit and balance sheet along with return of income where various information/material were disclosed. However, the requisite full and true disclosure of all material facts necessary for assessment has not been made as noted above. It is pertinent to mention here that even though the assessee has produced book of accounts, annual report, audited profit and loss account and balance sheet or other evidence at mentioned above, the requisite material Facts of the case, in brief, are that the assessee as noted above in the reasons for reopening were embedded in such a manner that material evidence could not be disclosed by the AO and could have been discovered with due diligence accordingly attracting provisions of explanation 1 of section 147 of the Act. For aforestated reasons, it is not a case of change of opinion by the AO. In this case more than four years have lapsed from the end of the assessment year under consideration. Hence, necessary sanction / approval to issue notice u/s 148 has been obtained from the Pr. Commissioner of Income-tax (Central), Nagpur as per the provisions of section 151 of the Act\". Yours faithfully, Sd/- (Dr. Shushan Patil) Asstt. Commissioner of Income tax, Central Circle-1, Aurangabad” 25 ITA Nos.140 to 143 & 145 to 148/PUN/2024 30. We find when the assessee objected to the reasons recorded by the Assessing Officer for reopening of the assessment, the Assessing Officer in a speaking order rejected the objections raised by the assessee and completed the assessment u/s 143(3) / 147 wherein he disallowed the claim of long term capital gain of Rs.1,44,35,387/- claimed as exempt u/s 10(38) of the Act and also made the addition of Rs.3,20,614/- as unexplained expenditure u/s 69C of the Act being the commission paid for earning such bogus long term capital gain. We find when the assessee challenged the action of the Assessing Officer, the Ld. CIT(A) quashed the re-assessment proceedings, the reasons of which have already been reproduced in the preceding paragraphs. 31. We do not find any infirmity in the order of the Ld. CIT(A) on this issue. Admittedly the original assessment was completed u/s 143(3) r.w.s. 153A of the Act. It is also an admitted fact that during the course of assessment proceedings the Assessing Officer has raised specific queries on the issue of long term capital gain from sale of shares of NITSL and the assessee had replied to the same, the details of which are already reproduced in the preceding paragraphs. We find the Assessing Officer, after considering the various submissions filed by the assessee from time to time, has completed the assessment. 32. We find an identical issue had come up before the Hon’ble Bombay High Court in the case of South Yarra Holdings vs. ITO (supra). In that case also the 26 ITA Nos.140 to 143 & 145 to 148/PUN/2024 assessee had sold the shares of M/s. S V Electrical Limited which has subsequently been changed to NITSL and the order was passed u/s 143(3) of the Act on 01.11.2013. The Assessing Officer received information from the DDIT (Inv) Wing on 23.03.2018 which is the same date in case of the assessee also. The reasons were recorded in March, 2018 and the notice was issued to that assessee on 29.03.2018. (In the case of the assessee the date of notice is 28.03.2018). There also the Assessing Officer rejected the objections made by the Assessing Officer and the additions were made for alleged penny stock. When the assessee challenged the validity of re-assessment proceedings, the Hon’ble High Court quashed the re-assessment proceedings by observing as under: “3. For the Assessment Year 2011-12 the petitioner filed its return of income on 29.9.2012 declaring an income of Rs.12.52 lacs (rounded off). The return was taken up for scrutiny assessment by the Assessing Officer. On 1.11.2013 the Assessing Officer passed an order under section 143 (3) of the Act enhancing the petitioner's income to Rs.20.14 lacs. 4. Thereafter on 29.3.2018, the Assessing Officer issued the impugned notice seeking to re-open assessment for A.Y.2011-12. The reasons in support of the impugned notice as communicated to the petitioner reads thus:- \"Reasons for reopening u/s 148 for A.Y.2011-12 is provided as under : 1. The information has been received from DDIT (Inv) Unit 8 (3) Scindia House, Mumbai-38 vide their letter dated 23-3-2018 which is received in this office on 28-03-2018. 2) The DDIT (Inv) Mumbai has received information that M/s Nivyah Infrastructure & Telecom Services Ltd is a penny stock listed do in BSE with scrip code (517634) and this company has been used to facilitate introduction of unaccounted income of members of beneficiaries in the form of exempt capital gain or short term capital loss in their books of accounts. It was noticed that share price of M/s Nivyah Infrastructure & Telecom Services Ltd rose from Rs.39 in 21st July 2009 to Rs.2050 on January 2011 and dipped to Rs.47.20 on 18th July 2012. However, the financials of the company for the relevant period do not show any substantial change so as to support such huge share price movement. The company does not have 27 ITA Nos.140 to 143 & 145 to 148/PUN/2024 business worthwhile to justify the sharp rise in market price of shares. The sharp rise in market price of this entity is not supported by the fundamentals of the company. Both purchase and sale of the shares are concentrated within few person/entities. 2.2. The DDIT (Inv) has traded in the above script namely M/s Nivyah Infrastructure & Telecom Services Ltd during the F.Y. 2010-11 to the tune of Rs.35040000000000000000. 2.3. The DDIT (Inv) Unit - 8 (3) Mumbai has given a finding that enquiries have been conducted in the penny scrip namely M/s Nivyah Infrastructure & Telecom Services Ltd vis-a-vis facilitating introduction of unaccounted income of members of beneficiaries in the form of exempt Capital gain or Short term Capital Loss in their books of account. These transactions are mostly in view of cash of equal amount and commission is charged over and above at certain fixed percentage for providing such accommodation entry. These accommodation entries were taken from various beneficiaries for introducing their unaccounted cash into their books of accounts without paying the due taxes. 2.4 The detailed investigation report containing the modus operandi of tax evasion through penny stock and discussion in entry operators from brokers and scripts has been provided along with the letter of DDIT (Inv) Mumbai. 2.5. Our assessee is one of the beneficiary who have availed accommodation entries by way of traded in shares to the tune of Rs.3504000,000000000005 in M/s Nivyah Infrastructure & Telecom Services Ltd with a view to ultimately reduce tax liability and or to bring capital in the form of equity or debt or tax exempt income or a combination of the above transaction, therefore, it is necessary to verify the actual amount of bogus LTCG analyzing the D-mat statement and bank account statement. 3. In this case return of income as fixed for the year under consideration and regular assessment u/s 143 (3) was made on 27.11.2013. Since 4 years from the end of the relevant year has expired in this case the requirements to initiate proceedings u/s 147 of the IT Act are reasons to believe that income for the year under consideration has escaped assessment because of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the year under consideration. It is pertinent to mention here that reasons to believe that income has escaped assessment for the year under consideration have been recorded in paragraph 2 above. 4. In this case more than four years have lapsed from the end of assessment year under consideration. Hence, necessary sanction to issue the notice u/s 28 ITA Nos.140 to 143 & 145 to 148/PUN/2024 148 has been obtained separately from the Pr.Commissioner of Income Tax as per the provisions of section 151 of the Act. 5. Notice u/s 148 was issued with prior approval of Pr.Commissioner of Income Tax-6 Mumbai.\" 5. On receipt of above reasons on 9.8.2018, the petitioner filed its objections to the reasons in support of the impugned notice and in particular pointed out that the assessee had dealt with a company called \"S.V.Electricals Ltd\" and not with M/s Nivyah Infrastructure & Telecom Services Ltd. The name of company \"S.V.Electricals Ltd\" had subsequently changed on 14.2.2012 to M/s Nivyah Infrastructure and Telecom Ltd. It had also pointed out in its objection that during the regular assessment proceedings, details of the petitioner's dealing in scrip namely \"S.V.Electricals Ltd\" had been submitted during the regular assessment proceedings. The objections primarily proceeds on the basis, that the reasons as recorded, display total non-application of mind while forming reason to believe, this as during the relevant time, there was no company by the name \"M/s Nivyah Infrastructure and Telecom Services Ltd\" in which the petitioner could have dealt. The petitioner's objections were rejected by the Assessing Officer by passing an order on 28.9.2018. The order on objections, does not deal with the petitioner's primary contentions that the petitioner had not dealt with any company by name \"M/s Nivyah Infrastructure and Telecom Services Ltd\" during the period relevant to the subject assessment. This order dated 28.9.2018 disposing of the objections is completely silent on the above objections while rejecting the petitioner's objections. 6. The respondent's Assessing Officer has filed an affidavit-in reply dated 5.2.2019 of the Assessing Officer. However, the reply does not deal with this objection taken in the petition. Nevertheless, Mr.Suresh Kumar the learned counsel for the revenue submits that all these issues will be subject of consideration during the re- assessment proceedings. Thus, this Court should not interfere at this stage. 7. It is a settled position in law that re-opening of an assessment has to be done by an Assessing Officer on his own satisfaction. It is not open to an Assessing Officer to issue a reopening notice at the dictate and/or satisfaction of some other authority. Therefore, on receipt of any information which suggests escapement of income, the Assessing Officer must examine the information in the context of the facts of the case and only on satisfaction leading to a reasonable belief that income chargeable to tax has escaped assessment, that re-opening notice is to be issued. 8. From the reasons, it is evident that the impugned notice has been issued on the basis of information received from the Deputy Collector, Income Tax (Investigation) alleging that M/s Nivyah Infrastructure & Telecom Services Ltd is a penny stock listed on the Bombay Stock Exchange and that the petitioner had dealt with the same leading to escapement of income. On receipt of information, the least that is expected of the Assessing Officer is to examine the same in the context of the facts of this case and satisfy himself whether the information 29 ITA Nos.140 to 143 & 145 to 148/PUN/2024 received does prima facie lead to a reasonable belief that income chargeable to tax has escaped assessment. In this case, the reasons indicate that the Assessing Officer has not carried out such exercise and accepted the report of the Deputy Collector of Income Tax (Investigation) Mumbai to conclude that the petitioner had dealt with Nivyah Infrastructure and Telecom Services Ltd during the previous year relevant to the assessment year 2011-12. Admittedly, there was no company by name \"M/s Nivyah Infrastructure & Telecom Services Ltd\" in existence during that year for consideration. This clearly shows that the Assessing Officer acted on the satisfaction of the Deputy Collector of Income Tax (Investigation) that income chargeable to tax has escaped assessment. It must also be borne in mind that the impugned notice is issued beyond the period of four years from the end of the relevant assessment year in a case, where the assessment was completed under section 143 (3) of the Act. Therefore, the Assessing Officer would have to examine the information received in the context of the facts on record. If such an exercise were to be done, it is likely that the Assessing Officer would have come to the conclusion that there was no failure to disclose truly and fully all material facts necessary for assessment. Thus, hit by the proviso to section 147 of the Act. However, the Assessing Officer has not applied his mind to the information received in the context of the facts on record. The impugned notice is bad-in-law, as it has not been issued by the Assessing Officer on his satisfaction that there is reason to believe, that income chargeable to tax has escaped assessment. 9. In the above circumstances, the impugned notice is un- sustainable in law and therefore, is quashed and set aside. 10. Accordingly, Petition allowed.” 33. We find the Hon’ble Bombay High Court in the case of Chanchal Bhagwatilal Gokhru vs. Union of India (supra) has held that where addition based on penny stock transaction had already been considered while making scrutiny assessment under section 143(3), notice for reopening under section 148 for same transaction could not be issued as there was no fresh tangible material. The relevant observations of the Hon’ble High Court read as under: “3. The Petitioner had filed her return of income for AY 2014-15 on 28th July 2014. The Assessing Officer (\"AO\") had passed an order u/s 143 (3) of the Act on 18th November 2016, whereby he added Rs.1,07,18,922 to the total income on account of withdrawal of exemption claimed by the Petitioner u/s 10(38) of the Act and the Petitioner paid tax on the same. Thereafter, the Petitioner was also 30 ITA Nos.140 to 143 & 145 to 148/PUN/2024 granted waiver of penalty for the AY 2014-15 on 31st January 2018 on application u/s 273A of the Act by the PCIT-18, Mumbai. 4. Evidently a notice u/s 148 of the Act dated 26th March 2021 is issued after a period of four years following which a return of income was filed by the Petitioner on 14th April 2021. This was followed by Notice u/s 143(2) dated 10th November 2021 and notice u/s 142(1) dated 15th November 2021 seeking details to which the Petitioner filed a response dated 24th November 2021 and objected to the re- assessment by communication dated 28th January 2022. The objections were disposed of on 11th February 2022. Another notice was issued on 25th February 2022 which led to filing of this Petition. 5. Since the impugned notice u/s 148 of the Act has been issued after the expiry of four years from the end of the relevant AY, Respondents have to show that the jurisdictional requirement is satisfied that there was failure to truly and fully disclose material facts as decided by this Court in Ananta Landmark (P.) Ltd. v. Dy. CIT (2021) 131 taxmanın.com 52/283 Taxman 462/439 ITR 168. 6. We have examined the reasons recorded annexed to the Petition that are evidently premised on 'seen from the assessment records’. The Assessing Officer (AO) records that the assessee claimed to have purchased shares of the penny stock scrips for a total of Rs.33,09,976 and sold for a consideration of Rs.1,15.90,280/-. Therefore he held that the long term capital gain would be unexplained investment/income from other sources and not a capital gain as claimed by the assessee on the premise that entire transaction of purchase and sale of shares were a part of accommodation entry and represents unexplained investment made by assessee in cash to obtain an equivalent amount of bogus profit on sale of shares. 7. We find nothing to indicate failure to disclose any material fact. Upon examining the order u/s 143(3) we find that the AO has considered these very transactions and added Rs.1,07,18,922 to the total income on which the Petitioner has already paid the tax. We find no substance in the AO's reason to believe that income chargeable to tax has escaped assessment in as much as there is no mention of any tangible material that led to his conclusion. The entire process is triggered on a change of opinion as to the calculation of tax payable by the assessee. As stated hereinabove, it is evident that bald assertions of the transaction being \"an accommodation entry made in collusion & connivance with the entry provider\" are used to re-open the assessment. It is well settled judicial principal that, the true test of income chargeable to tax escaping assessment is whether there exists fresh \"tangible material\" on the basis of which appropriate conclusion is reached. In the absence of such material the reassessment proceedings would be invalid. This principle has been upheld by the Apex Court as well as the jurisdictional High Courts in various rulings. Furthermore, this Court has held that reconsideration of the material available at the time of original assessment proceedings tantamount to change of opinion and therefore invalid. 31 ITA Nos.140 to 143 & 145 to 148/PUN/2024 8. In view of the settled legal position and considering the facts of the present case, we pass the following order- i. The impugned notice dated 26th March 2021 issued by Respondent No.2 for AY 2014 15 are quashed and set aside and all action in furtherance thereto is prohibited: ii. Rule made absolute in above terms. No costs.” 34. We find the Hon’ble Allahabad High Court in the case of PCIT vs. Smt. Renu Agarwal (supra) has held that where AO disallowed exemption claimed by assessee under section 10(38) and made additions, alleging involvement in penny stock which were being misused for providing bogus accommodation of LTCG, however, there was lack of adverse comments from stock exchange and officials of company involved in these transactions and no material relating to assessee was found in investigation wing report, additions made by AO had rightly been deleted. The relevant observations of the Hon’ble High Court read as under: “3. The basic question involved in the present appeal is with regard to deletion of some amount which was added by the Assessing Officer on the allegation of penny stock. 4. The appeal of the respondent - assessee was allowed against the assessment order. The appeal filed by the assessee was allowed by the CIT (Appeal). Against the appellate order the Revenue had filed the aforesaid Income Tax Appeal which has been dismissed by the ITAT. 5. After detailed discussion, the ITAT has recorded the following findings of fact : \"The above findings recorded by ld. CIT(A) are quite exhaustive whereby he has discussed the basis on which the Assessing Officer had made the additions. While allowing relief to the assessee, the ld. CIT(A) has specifically held that there is no adverse comment in the form of general and specific statement by the Pr. Officer of stock exchange or by the company whose shares were involved in these transactions and he held that Assessing Officer only quoted facts pertaining to various completely unrelated persons whose statement were recorded and on the basis of unfounded presumptions. He further held that the name of the appellants 32 ITA Nos.140 to 143 & 145 to 148/PUN/2024 were neither quoted by any of such persons nor any material relating to the assessee was found at any place where investigation was done by the investigation Wing. The ld. CIT(A) relying on various orders of Lucknow Benches and other Benches has allowed relief to the assessee by placing reliance on the evidences filed by the assessee before Assessing Officer. I do not find any adversity in the order of ld. CIT(A) specifically keeping in view the fact that Lucknow Benches in a number of cases after relying on the judgment of Hon'ble Delhi High Court in the case of Krishna Devi and others had allowed relief to various assessees.\" 6. The concurrent findings of fact has been recorded by the first appellate authority and the ITAT. Thus, no substantial question of law is involved in the present appeal. The matter is concluded by findings of fact. 7. For the reasons aforestated, we do not find any good reason to entertain this appeal. Consequently, it is dismissed.” 35. We find when the Revenue challenged the order of the Hon’ble High Court, the Hon’ble Supreme Court dismissed the SLP filed by the Revenue as reported in (2023) 456 ITR 249 (SC). 36. The various other decisions relied on by the Ld. Counsel for the assessee also support his case to the proposition that where addition based on penny stock transaction had already been considered while making scrutiny assessment under section 143(3), notice for reopening under section 148 for same transaction could not be issued in absence of any fresh tangible material. 37. Since in the instant case, the Assessing Officer in the order passed u/s 143(3)/153A has allowed the claim of expenditure u/s 10(38) on account of profit from sale of shares of the alleged penny stock company, after considering the reply in response to the queries raised him, therefore, in absence of any fresh tangible 33 ITA Nos.140 to 143 & 145 to 148/PUN/2024 material, we hold that the re-assessment proceedings initiated for the same transaction are not in accordance with law. 38. In this view of the matter and in view of the detailed reasoning given by the Ld. CIT(A) and in the light of the various decisions cited (supra), we do not find any infirmity in the order of the Ld. CIT(A). Accordingly, we uphold the same and the grounds raised by the Revenue are dismissed. 39. We find the grounds raised by the Revenue in the other appeals are identical to the grounds raised by the Revenue in ITA No.147/PUN/2024. We have already adjudicated the issue and dismissed the appeal filed by the Revenue. Following similar reasonings, we dismiss all the other appeals filed by the Revenue in case of other assessees. 40. In the result, all the appeals filed by the Revenue are dismissed. Order pronounced in the open Court on 17th July, 2025. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 17th July, 2025 GCVSR 34 ITA Nos.140 to 143 & 145 to 148/PUN/2024 आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, ‘A’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune S.No. Details Date Initials Designation 1 Draft dictated on 03.07.2025 Sr. PS/PS 2 Draft placed before author 14.07.2025 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order "