NAYNA MUKESH SHAH ,MUMBAI V. DCIT, CIRCLE 41(2)(1), MUMBAI

ITA 1861/MUM/2025

AI Insights

Ms. Nayna Mukesh Shah appealed against the order of the Learned Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre, which had upheld the additions made by the Assessing Officer during reassessment proceedings for the Assessment Year 2011-12. The reassessment was triggered by information from the Investigation wing suggesting that the assessee had engaged in transactions involving a penny stock, M/s. Arya Global (Kuvam International Ltd.), which were suspected to be non-genuine and aimed at availing bogus long-term capital gains. The Tribunal noted that the assessee failed to substantiate the genuineness of the transactions or provide necessary documentary evidence, leading to the dismissal of her appeal.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 841746 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2026
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 20-03-2025
• Other Referred Cases: Sanjay Bimalchand Jain vs. Pr. CIT, Nagpur, PCIT vs. Swati Bajaj
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SWAPNIL CHOUDHARI
• Keywords: Reassessment proceedings; Unexplained cash credit; Unexplained investment; Cost of acquisition; Reopening of assessment; Principle of natural justice; Accommodation entries; Borrowed satisfaction; Bogus
• Section: 147; 148; 143(3); 69C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI OM PRAKASH KANT, AM AND MS. KAVITHA RAJAGOPAL, JM ITA No.1861/Mum/2025 (Assessment Year: 2011-12) Ms. Nayna Mukesh Shah, 14E, Konark Darshan, Jain Mandir Road, Sarvodaya Nagar, Mulund (W), Mumbai-400080 Vs. DCIT, Circle 41(2)(1), Kautilya Bhavan, G Block BKC, Bandra Kurla Complex, Bandra (East), Mumbai – 400051. PAN: AOQPS4652E (Appellant) : (Respondent) Assessee by : None Respondent by : Shri Swapnil Choudhari, Sr. AR Date of Hearing : 11.02.2026 Date of Pronouncement : 27.02.2026 O R D E R Per Kavitha Rajagopal, JM: This appeal has been filed by the assessee, challenging the order of the Learned Commissioner of Income Tax [‘Ld. CIT(A)’ for short], National Faceless Appeal Centre (‘NFAC’ for short) passed u/s. 250 of the Income Tax Act, 1961 (‘the Act') pertaining to the Assessment Year (‘A.Y.’ for short) 2011-12. 2. As there was no representation on behalf of the assessee inspite of several opportunities given, notably the Bench had also on the earlier occasion directed the assessee to appear inspite of giving a last opportunity, none appeared before us on behalf of the assessee. We, therefore, proceed to decide this appeal by hearing the Learned Departmental Representative (‘Ld. DR’ for short) and on perusal of the materials available on record. Printed from counselvise.com ITA No.1861/Mum/2025 Ms. Nayna Mukesh Shah 2 3. The assessee has raised the following grounds of appeal: “1. The Learned CIT(A) passed appeal order Ignoring the principal of natural justice. In fact, the appellant had asked for the adjournment of hearing in response of first hearing notice. The learned CIT(A) had passed the order without giving an opportunity of hearing. 2. The Learned CIT(A) had conveniently ignored the grounds of appeal of the appellant. One of ground raised by the appellant that appellant had not been provided cross examination of third party and also certified copy of statement recorded of the third party on the basis of which reassessment proceedings initiated and assessment order was passed. 3. The Learned CIT(A) passed the non-speaking order and further also passed the order without application of mind. 4. The Ld. CIT(A) erred in Law as well as of facts by not considering the appellant plea that the re-opening of assessment u/s 147 of Income Tax Act, 1961 had been done without application of mind and solely on the basis of borrowed satisfaction on the basis of the information received from the Investigation wing. Hence, the process of re-opening of the assessment itself is void ab intio, illegal and hence, assessment order is liable for quash. 5. The Ld. CIT(A) erred of law as well as of fact in confirming re-assessment proceedings by ignoring the fact as well as law that the re-assessment proceedings lacks proper sanction from the appropriate authority. Hence, the process of re-opening of the assessment itself is void ab intio, illegal and hence, assessment order is liable for quash. 6. The Ld. CIT(A) erred of law as well as of fact by not considering the request of the appellant for keeping the appeal proceedings in abeyance as the appellant was exploring the provisions of Vivaad Se Vishwaas, 2024 and whether to go for Settlement of Disputes or not. The Ld. CIT(A) without considering the request of the appellant passed an appeal order. Hence, the appellant had been denied of reasonable opportunity of hearing and violation of principle of natural justice. 7. The Learned CIT(A) had erred of fact as well as of Law by sustaining the addition made by the Ld. AO u/s 68 of Rs 1,03,15,740/- by treating entire sales considered received by the appellant as an unexplained credit without considering the explanations and documents submitted by the appellant during the course of assessment proceedings. 8. The Ld. CIT(A) erred of fact as well as of law by confirming the addition made u/s 69C of Rs 3,09,472/- being 3% of Sales Value of Rs 1,03,15,740/- on account of presumption without any justification. 9. The Ld. CIT(A) erred of fact as well as of law by not allowing the cost of acquisition of Rs 4,14,500/- being the amount paid towards the cost for the purchase of shares. 10. The Ld. CIT(A) erred of fact as well as of law by not allowing the deduction of Rs 1,15,000/- claimed under Chapter VI-A of Income Tax Act, 1961. Printed from counselvise.com ITA No.1861/Mum/2025 Ms. Nayna Mukesh Shah 3 11. The Ld. CIT(A) erred of fact as well as of law by not appreciating that the assessment order has been passed without considering the submissions, explanations made by the appellant during the course of assessment proceedings. 12. The order appealed against is bad in Law and against the principles of natural justices and tax jurisprudence. 13. The order appealed against is based on surmises and conjectures. 14. The appellant craves leave to add, amend, alter and vary any of the grounds of appeal either before or at the time of hearing of the appeal. 15. Each ground of appeal is distinct and separate.” 4. Brief facts of the case are that the assessee is an individual and had filed her return of income dated 23.07.2011 declaring total income at Rs.28,31,970/- and the same was processed u/s 143(1) of the Act. The assessee’s case was reopened u/s 147 vide notice u/s 148 of the Act dated 30.03.2018 for the reason that the assessee has purchased 50,000 shares of M/s. Arya Global (Kuvam International Ltd.) for a consideration of Rs.4,14,500/- @Rs.8.29 per share and subsequent to this, splitting of shares into 5,00,000 shares, the assessee sold the same for consideration of Rs.1,03,15,740/- thereby claiming a Long Term Capital Gain (‘LTCG’ for short) amounting to Rs.98,48,770/- during the year under consideration. The Learned Assessing Officer (‘AO’ for short) sought for details pertaining to the said transaction alleged to be a penny scrip for the purpose of availing bogus LTCG u/s 10(38) of the Act as exempt in the hands of the assessee. The Ld. AO made an addition of Rs.1,03,15,740/- u/s 68 of the Act as unexplained investment and Rs.3,09,472/- as unexplained cash expenditure u/s 69C of the Act thereby determining the total income at Rs.1,34,39,129/- vide assessment order dated 27.12.2018 passed u/s 143(3) r.w.s. 147 of the Act on the ground that the assessee has failed to substantiate the genuineness of the transaction. Printed from counselvise.com ITA No.1861/Mum/2025 Ms. Nayna Mukesh Shah 4 5. Aggrieved, the assessee was in appeal before the first appellate authority who vide order dated 31.01.2025 upheld the addition made by the Ld. AO. 6. The assessee is in appeal before us, challenging the order of the Ld. CIT(A) on the above mentioned grounds. 7. We have heard the Ld. DR and perused the materials available on record. It is observed that the assessee has transacted in shares of M/s. Arya Global (Kuvam International Ltd.) alleged to be a penny stock listed on BSE scrip code (531731), basis which the Ld. AO reopened the assessee’s case pursuant to the information received from ADIT (Inv.), Unit-8(2), Mumbai that the assessee was one of the beneficiaries of availing bogus LTCG by transacting in the said penny scrip. It is further observed that the assessee had purchased 50,000 shares of the scrip for a meagre consideration of Rs.4,14,500/- on 24.06.2009 and 25.06.2009 and had sold the same for a consideration of Rs.1,03,15,740/- claiming LTCG of Rs.98,48,770/- as exempt u/s 10(38) of the Act during the year under consideration within a short span of time. The contention of the Revenue was that the price of the shares of the penny scrip was artificially rigged and controlled by the operators, the exit providers and brokers for providing accommodation entries. The Ld. AO held the transaction to be a non-genuine after considering the circumstantial evidences where the price of the alleged penny scrip was rigged for the purpose of bogus transactions, which the beneficiaries would take advantage of the exorbitant increase in the price of the share without any justifiable cause or reason. The Ld. AO had relied on the decision of the Hon’ble Jurisdictional Bombay High Court in the case of Sanjay Bimalchand Jain vs. Pr. CIT, Nagpur and others in ITA No.18/2017 where on identical facts it was held that the Printed from counselvise.com ITA No.1861/Mum/2025 Ms. Nayna Mukesh Shah 5 assessee had indulged in dubious transaction for accounting the undisclosed income in the guise of LTCG. The first appellate authority though had passed a cryptic order, upheld the addition made by the Ld. AO. Before us, neither the assessee nor her representative had substantiated that the impugned transaction was genuine in nature and had also failed to furnish supporting documentary evidences to controvert the Revenue’s finding that the transaction in the alleged penny scrip of M/s. Arya Global Shares and Securities Ltd. was a sham transaction. By considering the proposition laid down by the Hon’ble Jurisdictional Bombay High Court in the case of Sanjay Bimalchand Jain (supra), also the Hon’ble Kolkata High Court in the case of PCIT vs. Swati Bajaj ITA No.6 of 2022 (2022) 139 taxmann.com 352 (Kolkata), we deem it fit to hold that the assessee has failed to establish as to the huge increase in the share price resulting in unrealistic LTCG, which a regular scrip pertaining to a functional company would yield. On the basis of the circumstantial evidences and also in the absence of any rebuttal by the assessee inspite of several opportunities, we deem it fit to hold that there is no infirmity in the order of Ld. CIT(A). Hence, the grounds raised by the assessee are hereby dismissed. 8. In the result, the appeal filed by the assessee is dismissed. Order pronounced in the open court on 27.02.2026 Sd/- Sd/- (OM PRAKASH KANT) (KAVITHA RAJAGOPAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated: 27.02.2026 * Kishore, Sr. P.S. Printed from counselvise.com ITA No.1861/Mum/2025 Ms. Nayna Mukesh Shah 6 Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai Printed from counselvise.com "