SANTOSH BHANSALI HUF,JAIPUR V. ITO, WARD 6(1), JAIPUR

ITA 716/JPR/2024

AI Insights

The case involves Santosh Bhansali HUF, who appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, which confirmed the initiation of proceedings under sections 147/148 of the Income Tax Act by the Assessing Officer (AO). The primary contention was the addition of Rs. 1,40,60,000 as income from undisclosed sources and Rs. 2,81,200 as commission paid, both of which the assessee argued were based on assumptions and conjectures. The Tribunal examined the facts, including the transactions involving shares of Lactose (India) Ltd., and found that the reopening of the assessment was not justified as it was based on incorrect assumptions and lacked substantive evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 23915 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR; LD
• Assessee Lawyers: SIDDHARTH RANKA
• Keywords: Reassessment proceedings; Capital Gains; Bogus
• Section: 147; 148; 142(1); 250; 68; 69C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH “A”, JAIPUR BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER ITA No. 716/JPR/2024 (A. Y. 2018-19) Santosh Bhansali HUF, D-79, Patrakar Colony, Tilak Marg, Shanti Path, Jaipur 302004 PAN No. AAOHS6943N ...... Appellant Vs. Income Tax Officer Ward 6(1), Jaipur …... Respondent Appellant by : Mr. Siddharth Ranka, Adv. Mr. Sanjay Godha, CA & Mr. Saurav Harsh, Adv., Ld. ARs Respondent by : Mr. Manoj Kumar, JCIT, Ld. DR Date of hearing : 06/02/2025 Date of pronouncement : 21/02/2025 O R D E R PER GAGAN GOYAL, A.M: This appeal by the assessee is directed against the order of NFAC, Delhi dated 30.03.2024 passed u/s. 250 of the Income Tax Act, 1961 (in short ‘the Act’).The assessee has raised the following grounds of appeal: - 2 1. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) grossly erred in confirming the initiation of proceedings u/s. 147/148 of the Act by the Ld. AO as valid which is bad in law. 2. That on the facts and in the circumstances of the case, the Ld. CIT(A) grossly erred in confirming the addition made by the ld. AO u/s. 68 r.w.s. 115BBE of the Act of Rs. 1,40,60,000/- being sale consideration of equity shares of Lactose (India) Ltd. as income from undisclosed sources which is purely based on assumption, presumption, conjectures and surmises. 3. That on the facts and in the circumstances of the case, the Ld. CIT(A) grossly erred in confirming the addition made by the Ld. AO u/s 69C r.w.s. 115BBE of the Act of Rs. 2,81,200/- on account of commission paid which is purely based on assumption, presumption, conjectures and surmises. 4 That the appellant craves leave to add, alter, amend or withdraw any of the grounds of appeal before or at the time of hearing.” 2. The brief facts of the case are that the assessee is a Hindu Undivided Family (HUF). During the year under consideration the assessee filed its return of income u/s. 139 of the Act declaring total income at Rs. 2,28,95,260/-, consisting of Rs. 1,87,43,686/- under the head short capital gains, Rs. 43,09,023/- under the head income from other sources and Rs. 8,70,03,314/- as long term capital gains (Not chargeable to tax u/s. 10(38) of the Act). Thereafter an information was received from DDIT (Inv.)-5(1), New Delhi that the assessee has availed bogus LTCG/STCL by sell/purchase of scrips of M/s. Lactose (India) Ltd. of Rs. 41,30,312/-. Proceedings u/s. 148 of the Act was initiated vide details as contained in the assessment order passed u/s. 147 r.w.s. 144B of the Act. In response to the notice issued u/s. 148 of the Act the assessee filed its return vide dated:16.01.2023 again declaring the original figure of income, i.e. 2,28,95,260/-. Ultimately, the case of the assessee was assessed at Rs. 3,72,36,460/- after adding the amount of Rs. 1,40,60,000/- being total consideration of 76,000 equity shares of M/s. Lactose 3 (India) Ltd. and 2,81,200/- being commission paid towards commission paid u/s. 69C of the Act. The assessee being aggrieved with the same preferred an appeal before the Ld. CIT(A), who in turn confirmed the order of the AO. The assessee being further aggrieved preferred the present appeal before us. 3. We have gone through the order of the AO, order of the Ld. CIT(A) and submissions of the assessee alongwith grounds taken before us. The issue involved has a very narrow compass, i.e. whether the assessee was involved in the transaction of availing any bogus LTCG/STCL or not, based on which the case was re-opened. It is observed that in this case the assessee purchased the shares of M/s. Lactose (India) Ltd. through its broker M/s. HEM Securities Ltd. between 12.07.2017 to 17.07.2017 amounting to Rs. 99,64,263/-(Total 76,000 shares) and sold the same also through M/s. HEM Securities Ltd. amounting to Rs. 1,40,11,030/- on 04.09.2017. Which resulted in a short term capital gain of Rs. 40,46,767/- and as observed (supra) the same has already been declared by the assessee in its return for taxation purposes and the same is not eligible to exemption u/s. 10(38) of the Act. 4. We have gone through the notice issued u/s. 148A(b) of the Act, vide page no. 51 of the paper book, wherein it was specifically enquired by the AO that the assessee was indulged in the fictitious LTCG/STCL through the scrip of M/s. Lactose (India) Ltd. amounting to Rs. 41,30,312/-, whereas the assessee actually earned income under the head short term capital gains. Thereafter vide page no. 58 of the paper book, the AO further asked through the notice issued u/s. 142(1) of the Act that the assessee was amongst the non-filer of return, which is 4 factually incorrect and demonstrates the non-application of mind by the AO and his casual approach in the whole matter. 5. Nevertheless, the above observation, the AO chosen to add the whole amount of sales consideration (Alongwith presumptive expenses u/s. 69C of the Act). Moreover, from where the figure of Rs. 41,30,312/- was picked by the AO, that is also beyond our understanding. In nutshell, the whole re-opening found to be on wrong appreciation of facts, non-application of mind and with a casual approach by both the lower authorities. It is also observed vide page no. 59-61 0f the paper book, the assessee requested for copies of information received from DDIT(Inv.), 5(1), Delhi, but the same were categorically denied to the assessee vide the AO’s letter vide page no. 62-63 of the paper book. We have considered the price movement in the shares of the company M/s. Lactose (India) Ltd. and from any angel it can’t be said to be a penny stock. 6. Notwithstanding the above, we have thoroughly examined the order of the AO and the Ld. CIT(A), but there is no whisper of any manipulation by the assessee found in terms of any illegitimate gain availed by the assessee or is a part of any larger conspiracy against the Revenue. Rather, the whole case is made out on sheer conjectures, surmises and guess work. On peruse the notice issued under section 148 and the reasons for reopening the assessment it becomes clear that the same are founded on non-existent transaction of LTCG/STCL. Inspite of the assessee elaborating in its reply as well as the objections that it had never entered into any such transaction the Assessing Officer made no efforts whatsoever to rectify the blatant blunder and instead he has tried to justify the fundamentally flawed reopening proceedings on entirely a new ground that the 5 assessee was in collusion with M/s. Mangal Savitri Bizcon Pvt. Ltd. to arrange STCL for M/s. Mangal Savitri Bizcon Pvt. Ltd. This observation of the Assessing Officer is also incorrect on the face of record because the total shares the assessee dealt with were 76,000, whereas the shares pertains to M/s. Mangal Savitri Bizcon Pvt. Ltd. were only 8,627. 7. Resultantly the very foundation of the impugned notice, the reasons to believe and the order turning down objections is non-existent. All the three proceedings are sheer conjectures and surmises. The Assessing Officer had no tangible evidence to initiate the reassessment proceedings against the assessee. We found that the notice issued, proceedings initiated and consequential order passed by the AO is without any authority of law, rather the same is found to be in violation of law and extra judicial measures were being adopted by the authorities below and same are not appreciable and sustainable at all. In the result notice issued u/s. 148 of the Act and consequential proceedings set-aside and grounds raised by the assessee are accepted. 8. In the result, the appeal of the Assessee is allowed. Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board. Sd/- Sd/- (SANDEEP GOSAIN) (GAGAN GOYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Jaipur, िदनांक/Dated: 21/02/2025 6 Copy of the Order forwarded to: 1. अपीलाथ\r/The Appellant , 2. \u000eितवादी/ The Respondent. 3. आयकर आयु\u0015 CIT 4. िवभागीय \u000eितिनिध, आय.अपी.अिध., Sr.DR., ITAT, 5. गाड\u001e फाइल/Guard file. BY ORDER, //True Copy// (Asstt.Registrar) ITAT, Jaipur Details Date Initials Designation 1 Draft dictated on PC on 21.02.2025 Sr.PS/PS 2 Draft Placed before author 21.02.2025 Sr.PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member JM/AM 5. Approved Draft comes to the Sr.PS/PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS/PS 7. File sent to the Bench Clerk Sr.PS/PS 8 Date on which the file goes to the Head clerk 9 Date of Dispatch of order "