SH.SUNIL BHALA,NEW DELHI V. PCIT(CENTRAL)-3, DELHI

ITA 2483/DEL/2025

AI Insights

The case revolves around the appeal by Sh. Sunil Bhala against the revisionary order passed by the Principal Commissioner of Income Tax (PCIT) under section 263 of the Income Tax Act, 1961. The revision pertained to the issue of LTCG of Rs. 29,08,873 claimed by the assessee on the sale of shares of M/s Alankit Ltd. The PCIT contended that the AO did not adequately inquire into this issue during the assessment under section 153C, despite specific information being available. The Tribunal, however, found that the AO had indeed examined the issue thoroughly, as evidenced by the detailed inquiries and the substantial evidence provided by the assessee. Consequently, the Tribunal quashed the revisionary order, stating that the AO's assessment did not require interference.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 840052 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Appeal Filed On: 17-04-2025
• Other Referred Cases: ITO vs. Vikram Sujitkumar Bhatia, DCIT vs. UK Paints (Overseas) Ltd., PCIT vs. Abhisar Buildwell P. Ltd., CIT vs. Kabul Chawla, Pr. CIT vs. Meeta Gutgutia Prop. Ferns 'N' Petals & Ors, Malabar Industrial Co. Ltd. vs. CIT, CIT vs. Max India
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Assessee Lawyers: RAKESH GUPTA
• Keywords: Set aside; Retraction; Accommodation entries; Assessment record; Revision of order; Bogus
• Section: 147; 148; 143(3); 142(1); 263; 153A

Judgement Text

"P a g e | 1 ITA No.2483/Del/2025 Sh. Sunil Bhala (AY: 2017-18) IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER & SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.2483/Del/2025 (Assessment Year:2017-18) Sh. Sunil Bhala CGY-041, DLF Capital Green, 15 Shivaji Marg, Karmapura, New Delhi – 110015 Vs. PCIT (Central)-3 Delhi - 110001 \u0001थायीलेखासं./जीआइआरसं./PAN/GIR No: AAHPB3627R Appellant .. Respondent Appellant by : Sh. Rakesh Gupta, Adv. Sh. Somil Aggarwal, Adv. Respondent by : Ms.Pooja Swaroop, CIT, DR Date of Hearing 06.01.2026 Date of Pronouncement 26.02.2026 O R D E R PER ANUBHAV SHARMA, JM: This appeal is preferred by the assessee against the order dated 26.03.2025 of the Ld. PCIT(Central)-3, Delhi (hereinafter referred as Ld. Revisionary Authority) in DIN & Order No : ITBA/REV/F/REV5/2024- Printed from counselvise.com P a g e | 2 ITA No.2483/Del/2025 Sh. Sunil Bhala (AY: 2017-18) 25/1075081480(1)arising out of the order u/s 153C of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by the DCIT, Central Circle-28, Delhi for AY: 2017-18. 2. Heard and perused the records. Brief facts of the case are that initially the impugned case was re-opened u/s 147 vide notice u/s 148 dated 31.03.2021 on the issue of LTCG u/s 10(38) of Rs. 29,08,873- claimed by assessee on sale of shares of M/s Alankit Ltd. Subsequently, on the basis of the search conducted in the case of Alankit Group, a satisfaction note u/s 153C of the Act, copy of which is at 19-43 & 44-65 of PB was recorded in the case of the assessee inter-alia for the year under consideration and notice u/s 153C dated 28.12.2021 was accordingly issued for the year under consideration.Consequently, the pending re-assessment proceedings as on 28.12.2021 (i.e., the re-assessment proceedings initiated vide notice u/s 148 dated 31.03.2021) were abated as per the provision of section 153C r.w.s 153A. Thereafter, the assessment was concluded vide assessment order passed u/s 153C dated 31.03.2023 wherein certain additions were made by Ld. AO.However, subsequently, Ld. PCIT assumed jurisdiction u/s 263 vide notice dated 12.03.2025 and passed the impugned revisionary order u/s 263 Printed from counselvise.com P a g e | 3 ITA No.2483/Del/2025 Sh. Sunil Bhala (AY: 2017-18) alleging that the issue of LTCG u/s 10(38) of Rs. 29,08,873/- claimed by assessee on sale of shares of M/s Alankit Ltd. have not been enquired into by Ld. AO while framing the assessment u/s 153C and that too when specific information was available with Ld. AO for this issue on the basis of case was earlier re-opened u/s 147.Therefore, order u/s 153C dated 31.03.2023 is erroneous and prejudicial to the interest of the revenue. The assesse has challenged the same with following grounds; 3. The contention of ld. Counsel is that the assumption of jurisdiction u/s 263 of the Act by Ld. PCIT is bad-in-law for the reasons that satisfaction notes recorded u/s 153C does not mention about the alleged bogus LTCG u/s 10(38) of Rs. 29,08,873/- claimed by assessee on sale of shares of M/s Alankit Ltd. Therefore, no addition could have been made by Ld. AO qua this issue in the impugned assessment framed u/s 153C and since, no addition could have been made, the said order cannot be said to be erroneousand prejudicial to the interest of revenue. 3.1 Ld. Counsel submitted that at PB 7-18 is the copy of notice u/s 148 along with reason recorded showing that the case of was reopened for the issue of LTCG u/s 10(38) of Rs. 29,08,873/-claimed by assessee on sale of Printed from counselvise.com P a g e | 4 ITA No.2483/Del/2025 Sh. Sunil Bhala (AY: 2017-18) shares of M/s Alankit Ltd. and at PB 19-43 and 44-65 are the copies of satisfaction notes recorded u/s 153C by theAO of the searched person and by the Ld. AO of the assessee which would show that the said issued the issue of LTCG u/s 10(38) of Rs. 29,08,873/- claimed by assessee on sale of shares of M/s Alankit Ltd does not form part of the said satisfaction notes.This fact has duly been acknowledged by Ld. PCIT at page 34 of his order.In this regard, reliance is placed on the following judicial decisions wherein it has been held that as held Ld. AO cannot travel beyond the satisfaction note while framing the assessment u/s 153C: • ITO vs. Vikram Sujitkumar Bhatia., (2023) 453 ITR 0417 (SC). • DCIT vs. UK Paints (Overseas Ltd., Civil Appeal No. 6634 of 2021 dated 25.04.2023, (SC). • PCIT vs. Abhisar Buildwell P. Ltd., CA No. 6580/2021 dated 24.04.2023 (SC). • CIT vs. Kabul Chawla, 380 ITR 573, High Court of Delhi. • Pr. CIT vs. MeetaGutgutia Prop. Ferns 'N' Petals &Ors, 395 ITR 526, High Court of Delhi Printed from counselvise.com P a g e | 5 ITA No.2483/Del/2025 Sh. Sunil Bhala (AY: 2017-18) 4. The with regard to the allegation of lack of proper enquiry vis-a-vis assessment under s. 153A of the Act, ld Counsel submitted that since the assessment for the relevant assessment year has not abated and the issues which have been set aside by the Principal CIT for fresh adjudication are not connected with any incriminating material found during the course of search, the said issues are beyond the scope of the assessment made under s. 153A r/w.s. 143(3) and, therefore, the exercise of jurisdiction under s. 263 was not sustainable. 5. Then, on without prejudice basis it is also submitted that the said issue of LTCG u/s 10(38) of Rs. 29,08,873/- claimed by assessee on sale of shares of M/s Alankit Ltd. has been duly enquired into by Ld. AO and after due verification, the claim of the assessee was accepted by the Ld. AO. These facts are evident from the following: 1. PB 1-6 is the copy of computation of income of the assessee for the year under consideration wherein assessee has duly declared the exempt LTCG u/s 10(38) amounting to Rs. 29,08,873 on the sale of shares of M/s Alankit Lta. Printed from counselvise.com P a g e | 6 ITA No.2483/Del/2025 Sh. Sunil Bhala (AY: 2017-18) 2. PB 90-99 is the copy of notice u/s 142(1) dated 24.11.2022 issued by Ld. AO during the course of assessment proceedings wherein Ld. AO has duly required assessee vide question 15 and 16 (PB 95) to furnish complete details along with evidences of shares sold by the assessee during the year under consideration. 3. PB 100-169 (131 & 164-165) is the copy of show cause notice dated 18.02.2023 issue by Ld. AO during the course of assessment proceedings wherein assesseewas required to show cause as to why the exempt LTCG of Rs. 29,08,873/-claimed by the assessee should not be added to his total income. 4. PB 170-207 is the copy of assessee's reply dated 28.02.2023 filed before Ld. AO during the course of assessment proceeding submitting substantial evidences in support of exempt LTCG of Rs. 29,08,873/- claimed by the assessee on sale of shares of M/s Alankit Ltd. (earlier known as Euro Finmart Ltd.) which are as under: • PB 184 is a copy of a chart showing the that assessee has sold 24,500 shares of M/s Alankit Ltd. (earlier known as Euro Finmart Ltd.) for a Printed from counselvise.com P a g e | 7 ITA No.2483/Del/2025 Sh. Sunil Bhala (AY: 2017-18) total consideration of Rs. 33,56,293/- and purchase price of the said shares were Rs. 4,51,241/- • PB 185 is the copy of transaction ledger of the assessee in the books of the broker, namely, Rajgul Securities Pvt. Ltd., which would show that assessee has sold 24,500 shares of M/s Alankit Ltd., during the year under consideration for an aggregate amount of Rs. 33,56,293 in 2 tranches i.e., 5000 shares for a consideration of Rs. 6,38,773/- and 19,500 shares for a consideration of Rs. 27,17,520/- • PB 192-195 & 196-197 & 207 is the copy of contract notes issued by the broker namely, Rajgul Securities Ltd., for sale of shares of M/s Alankit Ltd., on the recognized stock exchange. • PB 189 is the copy of DMAT account of the assessee for the year under consideration which would show that assessee had opening balance of 24500shares of M/s Alankit Ltd and these shares were sold during the year under consideration and the same were duly debited from the assessee's DMAT account. • PB 198-201 & 206 is the copy of contract note for purchase of shares of M/s Alankit Ltd in FY 2012-13. Printed from counselvise.com P a g e | 8 ITA No.2483/Del/2025 Sh. Sunil Bhala (AY: 2017-18) 5. In view of the above, it was submitted that the impugned assessment order has been passed by the Ld. AO after making due enquires and necessary verification and after applying his mind a view has been taken by the Ld. AO assessment. Thus, the order passed u/s 263 is without any basis, material or evidences and deserves to be quashed and in this regard, reliance is placed on the following judicial decisions: • Malabar Industrial Co. Ltd. vs. CIT, (2000) 243 ITR 83(SC) • CIT vs. Max India, 295 ITR 282 (SC) 6. Lastly it was contended that after passing of the impugned assessment order u/s 153C dated 31.03.2023, a notice u/s 148A(b) was issued by Id. AO dated 31.03.2024 (PB 223-235) requiring assessee to show cause as to why the impugned case should not be re-opened u/s 148 on issue of LTCG u/s 10(38) of Rs. 29,08,873/- claimed by assessee on sale of shares of M/s Alankit Ltd. In response to which, detailed reply was filed by the assessee (PB 236-243) and thereafter, no further action was taken by Ld. AO which duly establishes that Ld. AO once again has accepted the claim of the assessee and this issue has been enquired in detailed once again.Accordingly, the subsequent assumption of jurisdiction u/s 263 on the very same issue Printed from counselvise.com P a g e | 9 ITA No.2483/Del/2025 Sh. Sunil Bhala (AY: 2017-18) again is unjust and bad-in-law and thus, such revisionary order u/s 263 so passed may please be quashed. 7. Ld. Counsel also submitted that the impugned assessment order passed u/s 153C has been passed with prior approval of Addl. CIT u/s 153D (PB 17- 18) and it has been held in the following judicial decisions that order passed after prior approval u/s 153D cannot be revised u/s 263: • PCIT vs. Prakhar Developers (P.) Ltd., (2024) 339 CTR 370 (MP) • Devender Kumar Gupta vs. PCIT, (2024) 166 taxmann.com 95, (Del.Trib.) • RamamoorthyVasudevan vs. PCIT, ITA No. 967 & 968/ Pun/2016, (Pune Tribunal) 8. Ld. DR has however relied the impugned orders. 9. It comes up that that ld. PCIT has primarily held that Ld. AO during the course of impugned assessment proceedings has not examined the said issue in question but the aforesaid submission of ld. Counsel sufficiently establish that issue has been duly examined and there was due indulgence. Ld. AO vide show cause notice dated 18.02.2023 (PB 131, 165) required assessee to Printed from counselvise.com P a g e | 10 ITA No.2483/Del/2025 Sh. Sunil Bhala (AY: 2017-18) show cause as to why the exempt LTCG of Rs. 29,08,873/- claimed by the assessee should not be added tohis total income and in response to the said notice detailed reply dated 28.02.2023 was filed by assessee along with substantial evidences in support of its claim of exempt LTCG. 10. Then Ld. PCIT has heavily relied upon the statement of one Sh. Sunil Kumar Gupta, recorded during the search on Alankit Group to show that assessee was involved with Alankit Group in providing accommodation entries for commission. Further, it is also mentioned by Ld. PCIT that the contention of the assessee that Sh. Sunil Kumar Gupta has retracted his statement is also not acceptable as no such retraction as furnished by the assessee. But what we find is that assessee has categorically denied any kind of association with Sh. Sunil Kumar Gupta or with said Alankit group during the course of assessment proceedings vide letter dated 25.03.2023 (PB 208- 222) and also before Ld. PCIT vide letter dated 17.03.2025 (PB 75-82) and no contrary evidence excepted the retracted statement of Sh. Sunil Kuamr Gupta has been brought on recorded either by Ld. AO or Ld. PCIT. There is substance in the contention of ld. Counsel that retraction filed by Sh. Sunil Kumar Gupta is part of department's record and could have been obtained by Printed from counselvise.com P a g e | 11 ITA No.2483/Del/2025 Sh. Sunil Bhala (AY: 2017-18) the Ld. PCIT from the concerned departmental authority, which has not been done and therefore, blame for inaction on the part of Ld. PCIT cannot be fastened toward the assessee. In any case, the said retraction letter dated 02.11.2019 filed by Sh. Sunil Kumar Gupta for retracting his statements recorded on 18.10.2019 and 19.10.2019 is enclosed at PB 244-247 and therefore, the said observation of Ld. PCIT do not hold goodanymore. Accordingly, the statement of Sh. Sunil Kumar Gupta cannot be relied upon and in absence of such statement there is nothing on record to even remotely suggest that the exempt LTCG u/s 10(38) claimed by the assessee is bogus in nature. 11. Ld. PCIT has alleged that there has been drastic increase in the share price in December 2013, February 2015, January 2018 of M/s Alankit Ltd. which has no correlation with the said company's business performances etc. However, that continues to be a suspicion alone and just another opinion of a superior tax authority. That is not good reason to invoke provisions of section 263 of the Act. 12. Consequent to aforesaid discussion we find that ld. Revisionary authority has fallen in error to ignore the material from assessment record Printed from counselvise.com P a g e | 12 ITA No.2483/Del/2025 Sh. Sunil Bhala (AY: 2017-18) which showed that the issue was duly examined and ld. AO’s conclusion needed no interference. Grounds deserve to be sustained. Accordingly appeal is allowed and impugned order is quashed. Order pronounced in the open court on 26.02.2026 Sd/- (Manish Agarwal) Sd/- (Anubhav Sharma) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 26.02.2026 Rohit, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Printed from counselvise.com "