JIGNABEN PRASHANTBHAI PATEL,SATELLITE, AHMEDABAD V. PRINCIPAL COMMISSIONER OF INCOME TAX-3, AHMEDABAD, PRATYAKSHKAR BAWAN, AMBAWADI, AHMEDABAD

ITA 366/AHD/2024

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The case revolves around an appeal by Jignaben Prashantbhai Patel against the order of the Principal Commissioner of Income Tax-3, Ahmedabad, which set aside the original assessment order and directed a fresh assessment concerning the assessment year 2013-14. The original assessment accepted the assessee's return, including an exemption for long-term capital gains on shares of Parikh Herbals Ltd., which were later questioned by the Pr. CIT under section 263, citing underassessment of income. The Tribunal examined the documents and submissions presented during the reassessment proceedings and concluded that the Assessing Officer had adequately verified the transactions and allowed the exemption correctly. The Tribunal criticized the Pr. CIT's invocation of section 263 as a mere second opinion, which does not meet the criteria for revising an assessment order under the Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712798 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2013-2014
• Laws Referred To: The Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R. P. RASTOGI
• Assessee Lawyers: PARIN SHAH
• Keywords: Set aside; Accommodation entries; Revision of order; Bogus
• Section: 147; 144; 263; 68

Judgement Text

"THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before Dr. BRR Kumar, Vice President And Ms. Suchitra Kamble, Judicial Member Jignaben Prashantbhai Patel, 14 Upvan Twin Bunglows, Opp. Shyamal 3B, Satellite, Ahmedabad PAN: AIQPP3239G (Appellant) Vs The PCIT-3, Ahmedabad (Respondent) Assessee by: Shri Parin Shah, A.R. Revenue by: Shri R.P. Rastogi, CIT-D.R. Date of hearing : 08-07-2025 Date of pronouncement : 29-07-2025 आदेश/ORDER Per Suchitra Kamble, Judicial Member: This is an appeal filed against the order dated 14-02- 2024 passed by PCIT, Ahmedabad-3 for assessment year 2013-14. 2. The grounds of appeal are as under:- “1. On the facts & in the circumstances of the case it is most respectfully submitted that the Ld. Principal Commissioner of Income Tax- 3 has erred in Law and on Facts in holding that the order passed u/s 147 r.w.s 144 of The Income Tax Act, 1961 dated 28/09/2021 as erroneous and prejudicial to the interest of revenue and directing the Ld. Assessing Officer to make fresh assessment, by passing the Order U/s 263 of The Income Tax Act, 1961 dated 14/02/2024. 2. On the facts & in the circumstances of the case it is most respectfully submitted that the Ld. Principal Commissioner of Income Tax-3 has erred in Law and on Facts by holding that sales proceeds of stock namely Parikh ITA No. 366/Ahd/2024 Assessment Year 2013-14 Printed from counselvise.com I.T.A No. 366/Ahd/2024 Jignaben Prashantbhai Patel, A.Y. 2013-14 2 Herbals Limited is unexplained income u/s 68 or 69A r.w.s 115BBE of the I.T. Act. 3. Your appellant craves leave to add, to alter or to amend the grounds of appeal if occasion arises.” 3. The assessee filed return of income for assessment year 2013-14 on 21-11-2023 declaring total income of Rs.7,62,330/-. The case was selected for re-assessment and the Assessing Officer passed order u/s. 147 r.w.s. 144/144B of the Income Tax Ac, 1961 on 29-09-2021 by accepting return income of the assessee. The Pr. CIT found that the assessee has claimed exempt long term capital gain of Rs. 41,03,175/- u/s. 10(38) of the Act on sale of share of Parikh Herbal Ltd. It is found that Assessing Officer has not added bogus long term capital gain from penny stock name Parikh Herbals Ltd. which has resulted into under assessment of Rs. 41,06,175/- as per the observation made by the Pr. CIT. Therefore Pr. CIT issued notice dated 21- 11-2023 thereby invoking section 263 of the Income Tax Act. The assessee responded the same and after taking cognizance of the response of the assessee, the Pr. CIT set aside the assessment order u/s. 144 r.w.s 147 dated 29-09-2021 and directed the Assessing Officer to pass a fresh assessment order and treat entire sale proceeds from the said scrip as unexplained deposit/receipt and provision of section 115BBE should be applied. 4. Being aggrieved by the order u/s. 263 of the Act, the assessee filed appeal before us. 5. The ld. A.R. submitted that the assessee filed her original return of income on 28-06-2013 thereby declaring income at Rs. 7,62,330/-. The reopening u/s. 147 was for the very basis in Printed from counselvise.com I.T.A No. 366/Ahd/2024 Jignaben Prashantbhai Patel, A.Y. 2013-14 3 respect of the said scrip Parikh Herbals Ltd. and the persons who have admitted that they were engaged in providing accommodation entries to their clients. The ld. A.R. submitted that the assessee at the time of assessment proceedings vide submissions dated 18-09-2021 provided following documents:- (a) Copies of contract note in respect of sale of shares Parikh Herbals Ltd during assessment year 2013-14 showing the name of broker, pan of the broker, shares’ name, contract date from settlement no and date of issue of loss on the note. (b) Copy of shares ledger account from the books of the Religare Securities Ltd. i.e. the broker. (c) Copies of assessee’s bank statements wherein sales proceeds on sale of the said scrip namely Parikh Herbals Ltd. was received. Thus, the A.R. submitted that it is undisputed fact that the assessee had purchased and sold shares at recognized stock exchange and Security Transaction Tax (STT) was paid on purchase as well as on sale of the said scrip. Thus, the assessee proved the genuineness of the shares transaction in the said scrip and therefore claimed exemption for long term capital gain u/s. 10(38) of the Act. The ld. A.R. submitted that by invoking section 263 of the Act, the Pr. CIT has invoked the said section without looking into the merits of the assessee’s case wherein the assessee has proved the case before the Assessing Officer on the very same issue with all the documentary proofs. Thus, the Assessing Officer has taken a proper view and has allowed the long term capital gain u/s. 10(38) after verifying all the Printed from counselvise.com I.T.A No. 366/Ahd/2024 Jignaben Prashantbhai Patel, A.Y. 2013-14 4 documentary evidences. Thus, the ld. A.R. submitted that the Pr. CIT was not right in invoking section 263 of the Act. 6. The ld. D.R. submitted that the Pr. CIT has rightly invoked section 263 as the Assessing Officer failed to add tax on long term capital gain to penny stock named Parikh Herbals Ltd. and therefore it resulted into under assessment of Rs. 41,03,175/-. The ld. D.R. relied upon the order passed u/s. 263 of the Act. 7. We have heard both the parties and perused all the relevant material available on record. From the perusal of the reasons for reopening, it can be seen that the very basis for reopening was on the ground of the scrip Parikh Herbals Ltd.. In fact, the Assessing Officer has confronted the assessee during the re-assessment proceeding related to the said transaction and called upon the details of purchase as well as the sale of the said scrip. The assessee also responded the same vide submissions dated 16-09-2021 and submitted the details such as contract note in respect of purchase of shares, contract note in respect of sale of shares as well as the bank statements and the ledger account from the books of the broker through whom the assessee made these transactions. After perusing all these documents only the Assessing Officer has arrived at the conclusion that the assessee has rightly taken exemption u/s. 10(38) of the Act. The assessee has demonstrated before the Assessing Officer during the assessment proceedings about the genuineness, creditworthiness of the transactions which was questioned to the assessee during re-assessment proceedings. The invocation of section 263 cannot be applicable in the cases where the assessee has proved the claim of the assessee for exemption or deduction in respect of his income when Printed from counselvise.com I.T.A No. 366/Ahd/2024 Jignaben Prashantbhai Patel, A.Y. 2013-14 5 confronted by the Assessing Officer through various statutory notices as well as show cause notices. There is no lapse on the part of the Assessing Officer as well as on the part of the assessee in respect of granting the claim of exemption of the assessee or claiming the exemption u/s. 10(38) of the Act. The observation of the Pr. CIT while invoking section 263 is not justified when the Revenue through its Assessing Officer has properly verified and has taken into account all the evidences and has arrived at a proper conclusion as per Income Tax Statute. The Pr. CIT has not pointed out as to how the assessment order is erroneous and prejudicial to the interest of revenue. It is merely a second opinion which cannot be the criteria for invoking section. 263. Thus, invocation of section 263 of the Act by the Pr. CIT is not justified. 8. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 29-07-2025 Sd/- Sd/- (Dr. BRR Kumar) (Suchitra Kamble) Vice President Judicial Member Ahmedabad : Dated 29/07/2025 आदेश क\u0006 \u0007\bत ल प अ\u000fे षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील\u0012य अ\u0013धकरण, अहमदाबाद Printed from counselvise.com "