SUSHEEL KUMAR GOVINDRAM SARAFF,MUMBAI V. ITO, INTERNATIONAL TAXATION WARD-4(2)(1), MUMBAI

MA 191/MUM/2025

AI Insights

The case involves Susheel Kumar Govindram Saraff, who filed a return of income declaring a total income of Rs.3,42,67,505 for the assessment year 2017-18. The return was initially processed under section 143(1) of the Income Tax Act. However, following information from the Investigation Wing regarding unusual trading activities in Kushal Ltd. scrip, a notice under section 148 was issued, leading to a reassessment. The assessee contested the reassessment, which was upheld by the CIT(A). The Tribunal, upon reviewing the case, found that the reasons for reopening the assessment were incorrect as they mischaracterized the nature of the gains reported by the assessee. The Tribunal's decision to quash the reassessment was based on the factual inaccuracy of the recorded reasons for reopening the case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 787716 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 18-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2017-2018
• Appeal Filed On: 22-07-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KRISHNA KUMAR
• Assessee Lawyers: RUTUJA PAWAR SNEHA MORE
• Keywords: Capital Gains; Penny stocks; Bogus
• Section: 147; 148

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI BEFORE SMT. BEENA PILLAI (JUDICIAL MEMBER) AND SMT. RENU JAUHRI ACCOUNTANT MEMBER) MA No.191/Mum/2025 (Arising out of ITA 631/Mum/2023) Assessment Year: 2017-18 Susheel Kumar Govindram Saraff, 1349, 62, Saichol Mansion Tower B, Banglumpoolang Klongsan 22F, Charoennakorn Road, Bangkok, Thailand PAN:AAJPS1334A Vs. Income Tax Officer, Int. Tax Officer-Ward 4(2)(1), Mumbai 1708, 17th Floor, Air India Building, Nariman Point, Mumbai-400021 (Appellant) (Respondent) Appellant by Ms. Rutuja Pawar/Ms. Sneha More Respondent by Shri Krishna Kumar, SR. D.R. Date of Hearing 22.08.2025 Date of Pronouncement 18.11.2025 ORDER Per: Smt. Beena Pillai, J.M.: The Present Miscellaneous Application is filed by the assessee arising out of order passed by this Tribunal in above referred appeals vide order dated 28/02/2025: Brief facts of the case are as under : Printed from counselvise.com 2 MA no.191/Mum/2025; A.Y. 2017-18 Susheel Kumar Govindram Saraff 2. The assessee e-filed its return of income during the year under consideration on 27.02.2018 declaring total income of Rs.3,42,67,505/. The same was processed u/s.143(1) of the Act. Subsequently, the Ld.AO received certain information from the Investigation Wing. As per the investigation report of the DGIT(Inv.), Ahmedabad unit, price of Kushal scrip was rigged at unusual high price without supportive financials and fundamental of the company. It was informed that the assessee received LTCG of Rs.1,17.29.585/- while trading in Kushal Ltd script on various dates during F.Y 2016-17, however it was not offered to tax in the return of income. Accordingly, notice u/s. 148 of the Act was issued on 31.03.2021 and subsequently the Ld. CIT(A) also dismissed the appeal of the assessee. 3. It is submitted that this Tribunal decided the appeal by considering the arguments of the Ld.AR on Additional Ground No.2. It is submitted that the issue raised in Additional Ground No.1 was not decided though the Ld.AR had raised his arguments, she submitted that non adjudication of Additional Ground No.1 is a mistake apparent on record. The Ld.AR thus submitted that Addl. Ground No.1 may also be adjudicated. The Ld.DR did not object to the same. 3.1 Considering the submissions of both sides we hereby adjudicate Addl. Ground no.1 as under. Following paras shall be read in continuation to para 7.3 of the order dated 28/02/2025 in following manner. 8. The Ld.AR submitted that, the reasons recorded were incorrect as it was mentioned that the assessee had generated bogus long-term capital gain through trading in penny stocks. However, the assessee Printed from counselvise.com 3 MA no.191/Mum/2025; A.Y. 2017-18 Susheel Kumar Govindram Saraff had in fact shown short-term capital gain from the transaction of shares of M/s. Kushal Ltd. and short-term capital gains from these which were duly reflected in the original return of income. 8.1 Ld. DR, on the other hand, relied on the order of Ld. AO. We have heard the rival submissions and perused the material available on record. 9. It is seen that while recording the reasons for reopening, Ld. AO has categorically mentioned that the assessee had received bogus long- term capital gain of Rs. 1,17,29,585/- while trading in M/s. Kushal Ltd. scrip during FY 2016-17. However, the reasons recorded were factually incorrect as the assessee in fact earned short-term capital gain from the transactions in shares of M/s. Kushal Ltd. which was also duly disclosed in his original return of income. 9.1 In view of the above facts, we hold that the reasons recorded for reopening of the assessment u/s 148 were incorrect, and accordingly, the assessment order u/s 147 r.w.s. 144C(13) is hereby quashed. 9.2 As we have quashed the assessment order, the issue raised by the assessee on merits of the addition becomes academic at this stage.” 4. Para 8 of the order dated 28/02/2025 stands deleted. In the result miscellaneous petition filed by the assessee stands allowed. Order pronounced in the open court on 18/11/2025 Sd/- Sd/- (RENU JAUHRI) (BEENA PILLAI) Accountant Member Judicial Member Mumbai: Dated: 18/11/2025 Poonam Mirashi, Stenographer Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy Printed from counselvise.com 4 MA no.191/Mum/2025; A.Y. 2017-18 Susheel Kumar Govindram Saraff By order (Asstt. Registrar) ITAT, Mumbai Printed from counselvise.com "