Income Tax Appellate Tribunal - Mumbai
Acit Cc 7-4 Mumbai, Mumbai vs Gayatri Devi Jain, Delhi on 26 March, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "G", MUMBAI
BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND
SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER
ITA No.6717/Mum/2025 (Assessment year: 2014-15)
ITA No.6729/Mum/2025 (Assessment year: 2015-16)
ITA No.6730/Mum/2025 (Assessment year: 2016-17)
ACIT CC-7(4), Mumbai vs Gayatri Devi Jain
Room No.655, Aayakar Apt. No.33 & 34, 33 South Bldg. Dr.
Bhavan. M. K. Road Mumbai- Gopalrao Deshmukh Marg, (Pedder
400020 Road), Opp. Sterling Apartment,
Cumballa Hill, Mumbai-400026
PAN: AAGPJ2753H
APPELLANT RESPONDENT
CO No.50/Mum/2026 (Assessment year: 2014-15)
CO No.51/Mum/2026 (Assessment year: 2015-16)
CO No.52/Mum/2026 (Assessment year: 2016-17)
Gayatri Devi Jain vs ACIT CC-7(4), Mumbai
Apt. No.33 & 34, 33 South Room No.655, Aayakar Bhavan. M.
Bldg. Dr. Gopalrao Deshmukh K. Road Mumbai- 400020
Marg, (Pedder Road), Opp.
Sterling Apartment, Cumballa
Hill, Mumbai-400026
PAN: AAGPJ2753H
CROSS OBJECTOR RESPONDENT
Assessee by : Shri Ajay R Singh/ Shri Akshay Pawar
Respondent by : Smt. Priyanka Mashilkar (Sr.AR)
2
ITA No.6717,6729 & 6730/Mum/2025
CO No. 50 to 52/Mum/2026
Gayatri Devi Jain
Date of hearing : 23/03/2026
Date of pronouncement : 26/03/2026
ORDER
Per Bench:
A bunch of appeals of the revenue and the cross objection of the assessee filed against the separate orders of the Ld. Commissioner of Income Tax (Appeals)-49, Mumbai [for brevity the "Ld. CIT(A)"], orders passed under section 250 of the Income Tax Act 1961 (for brevity 'the Act') for assessment year 2014- 15 to 2016-17, date of orders 07.08.2025. The impugned orders emanated from the separate order of the Ld. Assistant Commissioner of Income Tax Central Circle-7(4), Mumbai (for brevity the 'Ld. AO') orders passed under section 147 of the Act, date of orders 23.03.2022.
2. All the appeals have same nature of fact and since all the appeals pertains to same assessee involving similar issue arising out of similar factual matrix, these appeals were heard together as a matter of convenience and are being decided by way of this consolidated order. With the consent of both the parties ITA No. 6717/Mum/2025 and CO No. 50/Mum/2026 are taken as lead case and the decision rendered therein shall apply mutatis mutandis to other appeals before us.
3. The brief facts of the case have been set out by the Ld. AR in the written submissions. For the sake of completeness and clarity, the relevant portion of the submissions made by the Ld. AR is reproduced hereunder:
3ITA No.6717,6729 & 6730/Mum/2025 CO No. 50 to 52/Mum/2026 Gayatri Devi Jain "Facts:
1. The Assessee is individual driving income from salary, Commission from LIC, Capital Gains and Interest Income. He is a regular investor in the security market.
2. During the year under consideration the Assessee has filed her ROI on 19/07/2014 by declaring total income ofRs. 10,11,724/- (Pg. No. 1-19)
3. The assessee had earned Long Term Capital Gain and Short-Term Capital Gains on sale of shares of PMC Fincorp Ltd of Rs. 41,00,829/-and Rs. 24, 364/- respectively during AY 2014-2015.
(Pg. No. 35)
4. The assessee had purchased and sold shares of PMC Fincorp Ltd as per chart enclosed.5. The assessee had purchased 10,000 shares off market transaction and balance shares through recognized Stock broker namely Almondz Global Securities Ltd. and made on a recognized stock exchange namely Bombay Stock Exchange.
6. The Assessee had genuinely made the purchased and sale of the shares of PMC Fincorp Ltd which are duly reflected in the Demat Statement of maintained by NSDL (National Securities Depositories Ltd). Sale of shares was on stock exchange and all payments received in bank account.
7. Pursuant to search action in group concerns on 1/2/2018, the Assessee was served with the notice dated 19/2/2019 u/s 153A, in response to the said notice the Assessee filed return of income on 06.03.2019. (Pg. No. 20)
8. Notice u/s 142(1) issued on 19/09/2019 (Pg. No. 21-26) (query raised on capital gains on sale of shares Pg. 23)
9. -Assessee letters dated 21/11/2019 annexing details of shares transaction (Pg. No. 27-35).
10. Assessment order u/s 143(3) r.w.s 153A of the Act dated 16/12/2019 for A.Y. 2016-17. (Pg. No. 36-39)
11. An notice u/s 148 of the Act dt 31/03/2021 was issued by AO. (Page no. 40) in response to that assessee his filed his ROI acknowledgement pursuant to notice. (Page no. 41)
12. The Assessing Officer issued notice u/s 143(2) of the Act dated along with reasons for reopening. (Page no. 42-46). As per reasons informationreceived in the office about script PMC Fincorp Ltd price being rigged and managed to provide accommodation entry.
4ITA No.6717,6729 & 6730/Mum/2025 CO No. 50 to 52/Mum/2026 Gayatri Devi Jain
13. The assessee filed his letter dated 09/09/2021 by raising objection to reasons for reopening. (Page no. 47-57) Wherein he asked for material evidence relied by the AO. Secondly assessee informed that in original assessment the issue was already look into. And that as per reasons recorded the information was already on record of the AO while completing the assessment. Reliance on third party general statement reopening is not justified.
14. The AO passed disposing the objections dated 14/12/2021 was passed by the AO by disposing the objections raised by the assessee. (Page no. 58 -65)
15. The notice u/s 142(1) of the Act dated 14/02/2022. (Page no. 66-70)
16. In response to that the assessee filed his letter dated 21/03/2022 along with following documents:-(Page no. 71-82)
a) History of Priti Mercantile Company Limited Shares. (Page no. 83)
b) Copy of Purchase Bill along with payment details. (Page no. 84-86)
c) Contract Notes showing purchase & Sales. (Page no. 87-98)
d) Demat Statement of the Assessee. (Page no. 99-126) (113)
e) Bank Statement of Corporation Bank of the Assessee. (Pg no.127-129)
f) Bank Statement of ICICI Bank of the Assessee. (Pg no. 130-136)
17. The Copy of Retraction Statement filed by Mr. Raj Kumar Modi. D 7/10/2018 (Page no. 137-
139)18. The assessee submitted his written submission before CIT(A) dated 11/12/2024. (Page no. 140-171) Brief Proposition:
1. The case was reopened on the basis of a search action conducted in M/s PMC Fincorp group dated 11/10/2018, the assessee name was found to be one of the beneficiaries.
2. The dept had information about the scripts prior to above search action as revealed from reasons recorded. Pg 42
3. Merely declaring a particular share a penny stock does not changes the nature of transaction entered by the assessee, however the same is claimed as exempt treating as long term capital gains which is duly recorded in the books of account and disclosed in its return of Income.5
ITA No.6717,6729 & 6730/Mum/2025 CO No. 50 to 52/Mum/2026 Gayatri Devi Jain
4. The assessee is not a trader. Appellant is a regular investor and aims to earn the capital appreciations in long run from capital markets. Further during the year under consideration, the assessee has dealt in many scripts including Mutual funds and has earned Long Term Capital Gains and Short-Term Capital Gains. It is submitted that the transaction made relating to purchase and sale of PMC Fincorp Script the said transaction is done in normal course of the earning capital appreciation from Capital market.
5. It is submitted that merely a script has been declared as penny does not make the whole transaction as non-genuine.
6. Further, the assessee had sold this script after holding it for a period ranging from 2 months to 14 months which shows that assessee's intention of earning capital appreciation.
7. The assesseedoes not have any contacts with the any person / employee or of the directors of PMC Fin Corp Ltd also there is no evidence on record to prove that assessee had any such contact with the said company.
8. Further, the fact that the sale had taken place on the recognized stock exchange where the transactions are executed under system driven mechanism proves that the assessee does not know who had bought the shares sold by him.
9. Therefore, the Long Term and Short-Term capital gains earned by the assessee on the said script are genuine.
10. The Ld. AO in the assessment order had relied upon the statement of the director of M/s PMC Fincorp Ltd of Shri. Raj Kumar Modi who was the director and alleged operator of PMC Fincorp.
11. It is pertinent to mentioned that the Ld. AO did not provide any opportunity to cross examine Mr. Raj Kumar Modi, whose statement was relied by the L.d. AO for the purpose making addition. Also, the entire statement of Mr. Raj Kumar Modi, neither he has referred any of the names of the persons or companies or any concerns which are related to the assessee nor the AO has proved any link which could establish that appellant is alleged beneficiary of wrongful/ illegal activities of Mr. Raj Kumar Modi.
12. The AO treated the shares as penny script merely relying on order dated 26.02.2021 passed by the SEBI against some entities which were allegedly involved in manipulating the share prices of PMC Fincrop Ltd. The said SEBI order dated 26.02.2021 against some entities which were allegedly involved in manipulating the share prices of PMC Fincrop Ltd, is set- a-side vide SAT order dated 12/9/2023 and 28/8/2023. [Copies enclosed] 6 ITA No.6717,6729 & 6730/Mum/2025 CO No. 50 to 52/Mum/2026 Gayatri Devi Jain
13. The "PMC Fincorp Ltd" is listed on BSE stock exchange having ISIN Code: INE793G01027 and online transactions through stock exchanges are still taking place. On MCA site the company is shown as active.
14. The shares were reflected in demate account All the transaction was available with the Assessee like purchase advice, demat account, Bank statement, contract notes etc. and same were submitted before AO & CIT(A).
15. The Assessing Officer has not produced any material or record to controvert the evidence produce by the assessee.
16. If general report from Investigation wing does not specifically mention name of Assessee as person involved in activity of price rigging or artificial transaction, the addition cannot be made by Assessing Officer merely on the basis of such general report.
17. Further Gain is of 7 - 8 times can't be called astronomical & highly unusual in period of 12 to 14 months.
18. Case laws citied by dept. are not applicable as in those case in short period of 1 to 2 years the script have provided return of 500 times even more. Whereas in facts of present case it is merely 7-8 times.
19. Findings in Asst. order are not pertaining to the assessee or his broker. Therefore addition may be deleted."
4. Ld. AO confirmed the additions amount to Rs.44,55,660/- u/sec. 68 of the Act and the commission calculated on the LTCG amount to Rs.1,33,670/- u/sec. 69C of the Act. The assessee challenged both the legal grounds on merit before the Ld. CIT(A). But the Ld. CIT(A) allowed the appeal of the assessee considering the merit of the case. Being aggrieved the revenue challenged the merit of the case and the assessee challenged the legal grounds by filing cross objection before us.
7ITA No.6717,6729 & 6730/Mum/2025 CO No. 50 to 52/Mum/2026 Gayatri Devi Jain CO No.50/Mum/2026, AY 2014-15
5. The Ld. AR argued and filed a paper book comprising page 1 to 171 which has been placed on record. The Ld. AR challenged the validity of reassessment order dated 23/03/2022. The assessee's case was framed u/sec. 143(3)/153A order dated 16/12/2019, annexed in APB pages 37 to 39, related to the search proceeding on dated 01/02/2018. During the assessment proceeding the Ld. AO issued the notice u/sec. 142(1) of the Act dated 19.09.2019 and asked the details of capital gain/loss/profit on sale of shares/mutual funds and the format was duly provided to the assessee. Accordingly, the assessee complied the said notice by a letter dated 21.11.2019. The relevant details were filed by the assessee which is annexed in APB pages 34 & 35. The relevant statement annexed in APB page 35 is reproduced as below:
6. The Ld. AR contended that during the course of assessment proceedings, the assessee had furnished complete details of capital gains arising from the sale of shares of Preeti Mercantile Company (PMC). The Ld. AR further submitted that 8 ITA No.6717,6729 & 6730/Mum/2025 CO No. 50 to 52/Mum/2026 Gayatri Devi Jain the Ld. AO had not brought on record any fresh or independent material, except relying upon information received from the Investigation Wing. It was pointed out that such information was already available and had been duly considered during the original assessment proceedings under section 143(3)/153A of the Act. The Ld. AR further submitted that, pursuant to the issuance of notice under section 148 of the Act, the assessee duly filed its return of income in compliance with the said notice and also raised objections against the reasons recorded by the Ld. AO for reopening the assessment. The Ld. AR invited our attention to the relevant portion of the reasons recorded by the Ld. AO on 29.06.2021, as placed at pages 42 to 44 of the APB. The relevant extract from paragraph 4 of the recorded reasons is reproduced here in below:
"4. Further, the CBDT also forwarded a list of 52 suspicious bogus scrips that have facilitated bogus LTCG for converting black money into white vide letter F. No. 289/47/2017- IT(Inv-II) CBDT, dated 18th May 2017 & through mail received in this office on 22.07.2017. M/s PMC Fincorp Limited (formerly known as Priti Mercantile Company Limited) was one of those suspicious bogus scrips. The company was registered at B-10, VIP Colony Civil Lines Rampur UP 244901."
7. The Ld. AR further contended that, while disposing of the objections raised by the assessee regarding the legal validity of the notice issued under section 148 of the Act, the Ld. AO himself acknowledged that the information pertaining to the sale of shares of the alleged scrip was already available with the Department. The Ld. AR invited our attention to the order dated 14.12.2021 passed by the Ld. AO, placed at pages 58 to 65 of the APB, wherein the relevant extract from paragraph 3.1 is reproduced hereunder:
"3.1. The undersigned after receipt of Investigation Wing Report had duly applied the independent mind over it and after due satisfactions about the law & the facts stated therein, 9 ITA No.6717,6729 & 6730/Mum/2025 CO No. 50 to 52/Mum/2026 Gayatri Devi Jain recorded the reasons to believe that indeed the income has escaped assessment in case of assessee, and after obtaining approval from the Competent Authority, sent the notice u/s 148 of the IT. Act. The report of the Investigation Wing is Confidential and is for Departmental use only. Moreover, you have already been provided the reasons recorded for the re-opening which includes the findings of the Investigation Wing. Further, the AO is not required to make a foolproof case for reopening of the assessment. Once, there are prima-facie reasons to believe that the income has escaped assessment, it is sufficient to invoke the provisions for reopening the assessment. In your case, all these criteria have been fulfilled."
8. The Ld. AR invited our attention in impugned reassessment order where the Ld. AO has considered that the said information related to the transaction of share was also available with the Ld. AO during the time of assessment u/sec. 143(3)/153A the Act. The relevant paragraph nos. 5.7 and 5.7.1 of the impugned reassessment order is reproduced as below:
"A. Findings of Investigation Wing:
5.7. A search u/s 132(1) of Income Tax Act, 1961 was conducted on 11.10.2018 at various office and residential premises of Sh. Raj Kumar Modi director cum operator of PMC Fincorp Ltd who has been in the business of providing accommodation entries of all kind including accommodation entry of bogus LTCG. During the search proceedings Shri Raj Kumar Modi admitted his role in the whole scheme of providing accommodation entry of bogus LTCG and also explained the entire modus operandi in detail. Further, statement on oath of Sh. Raj Kumar Modi was recorded u/s 131(1A) of Income Tax Act, 1961 during the post search investigation on 16.10.2018 and he duly confirmed all the confessions made by him in the statement given by him during the course of search conducted on 11.10.2018. He is found to have provided Bogus LTCG of hundreds of Crores.
5.7.1. A comprehensive list was forwarded by the Director of Income-tax (Inv), Kolkata to the different DGSIT (Inv.) including the Hon'ble Director General of Income-tax (Inv.), Lucknow vide F.No.75A/2015-16/257-273 dated 27.04.2015 under the project named "entry of bogus LTCG"
which has identified 84 BSE listed scrips which have been manipulated to provide accommodation entry of Long Term Capital Gain of nearly Rs. 38,000 Crore. A database of bogus/paper/shell companies had been prepared and disseminated. While going through the 10 ITA No.6717,6729 & 6730/Mum/2025 CO No. 50 to 52/Mum/2026 Gayatri Devi Jain database of shell companies, it was found that there were some other scrips as well, in which such bogus entities have facilitated bogus transaction for converting black money into white."
9. The Ld. AR submitted that no fresh tangible material has been brought on record by the Ld. AO to justify the reopening of the assessment. It was contended that the impugned transaction had already been examined by the Ld. AO during the original assessment proceedings under section 143(3)/153A of the Act, and therefore, any attempt to revisit the same issue would amount to a mere review, which is not permissible under the provisions of the Act. In support of this contention, the Ld. AR placed reliance on the decision of the Hon'ble Bombay High Court in the case of Gaurang Manhar Gandhi vs. ACIT reported in (2024) 160 taxmann.com 647 (Bom.), and invited our attention to paragraphs 14 and 15 thereof, which are reproduced hereunder:
"14. We are also satisfied that there has been no failure on the part of Petitioner to disclose any material fact. We say this because in the computation of income filed by Petitioner, (a) Petitioner has disclosed long term capital gain on sale of shares of Rs. 6,44,61,214.58, (b) purchase of 1,33,439 equity shares of SAL on 16th September, 2011 for a total consideration of Rs. 26,68,780/-, (c) the sale of those shares between 30th July, 2013 upto 23rd October, 2014 for a total consideration of Rs. 6,71,29,994.58 and (d) the gain of Rs. 6,44,61,214.58.
By notice dated 18th February, 2016 under section 142(1) of the Act, Petitioner was called upon to give details of long term capital gain on sale of shares and short term capital gain of office premises and in response, vide letter dated 10th March, 2016, Petitioner gave the entire details relating to the transactions in shares of SAL and even in the assessment order, long term capital loss, short term capital loss, etc. are discussed. It is also recorded in the assessment order dated 26th April, 2016 that capital gain was nil.
15. In the circumstances, the subject matter of capital gains in the shares of SAL was certainly a subject matter of consideration of the AO during the original assessment proceedings. As held by this Court in Aroni Commercials Ltd. v. Dy. CIT[2014] 44 taxmann.com 304/224 Taxman 13 11 ITA No.6717,6729 & 6730/Mum/2025 CO No. 50 to 52/Mum/2026 Gayatri Devi Jain (Mag.)/362 ITR 403 (Bombay) once a query is raised during the assessment proceedings and Assessee has replied to it, it follows that the query raised was a subject of consideration of the AO while completing the assessment. It is also not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. Therefore, the reopening of the assessment, in our view, is merely on the basis of change of opinion of the AO from that held earlier during the course of assessment proceedings and this change of opinion does not constitute justification and/or reason to believe that income chargeable to tax has escaped assessment."
10. The Ld. AR further respectfully relied on the order of Hon'ble Bombay High Court in the case of Vibrant Securities vs ITO reported in (2023) 150 taxmann.com 56 (Bom.). The relevant para no.15 is reproduced as below:
"15. Apart from above, it is clear that the material which was referred to in the reasons recorded in the shape of transactions, securities, etc. do not reflect that the said material was not available with the Assessing Officer during the scrutiny assessment proceedings. The Assessing Officer appears to have relied solely upon the said information obtained from the Investigation Wing of the department without, in the least, verifying as to whether the said issue had been gone into or disclosed by the assessee during the scrutiny assessment proceedings. The petitioner, on the other hand, has placed on record details of notices and the replies submitted thereto, as referred to in the preceding paragraphs which would show that the information with regard to all transactions had been sought for and supplied by the petitioner."
11. The Ld. DR argued that the assessee's case had already been reassessed pursuant to search proceedings, and the assessment was completed under sections 153A r.w.s. 143(3) of the Act on issues distinct from those involved in the present reopening. It was contended that there is no nexus between the material found during the search proceedings and the reasons recorded for reopening under section 148 of the Act. Accordingly, the Ld. DR submitted that the assessment framed under section 153A cannot preclude or override the action 12 ITA No.6717,6729 & 6730/Mum/2025 CO No. 50 to 52/Mum/2026 Gayatri Devi Jain taken by the Ld. AO under section 148 of the Act on a separate issue. The Ld. DR, therefore, supported the orders of the revenue authorities.
12. We have heard the rival submissions and perused the material available on record. It is an undisputed position that the assessee had originally filed the return of income under section 139(1) of the Act and, pursuant to search proceedings, the assessment was completed under section 143(3)/153A of the Act. During such assessment proceedings, the Ld. AO had specifically examined the issue of capital gains arising from the sale of shares, for which detailed information was called for under section 142(1) and duly furnished by the assessee. From the record, it is evident that all material facts relating to the impugned transactions were fully and truly disclosed by the assessee during the original assessment proceedings. The Ld. AO had applied his mind to these transactions while framing the assessment under section 143(3)/153A of the Act. The subsequent reopening under section 148 is based solely on information received from the Investigation Wing, which, as admitted, was already available on record at the time of original assessment. We find that no fresh tangible material has been brought on record by the Ld. AO to justify the reopening of the assessment. The reopening is, therefore, merely based on a change of opinion, which is impermissible under the settled principles of law. In this regard, we respectfully rely on the judgments of the Hon'ble Bombay High Court in the cases of Gaurang Manhar Gandhi (supra) and Vibrant Securities Pvt. Ltd. (supra), wherein it has been held that reassessment on the basis of material already examined during original assessment amounts to a mere review and is not sustainable in law. In view of the above facts and the binding judicial precedents, 13 ITA No.6717,6729 & 6730/Mum/2025 CO No. 50 to 52/Mum/2026 Gayatri Devi Jain we hold that the notice issued under section 148 of the Act and the consequent reassessment proceedings are bad in law and liable to be quashed. Accordingly, the reassessment order passed by the Ld. AO is hereby quashed.
13. Since we have quashed the reassessment proceedings on legal grounds, the issues raised by the revenue on merits become academic and do not require adjudication. In the result, the cross-objection filed by the assessee is allowed, and the appeal of the revenue stands dismissed as infructuous.
14. In the result, the appeal of the revenue bearing ITA No.6717,6729 and 6730/Mum/2025 are dismissed and assessee's CO No. 50 to 52/Mum/2026 are allowed.
Order pronounced in the open court on 26th day of March 2026.
Sd/- Sd/-
(PRABHASH SHANKAR) (ANIKESH BANERJEE)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai,िदनां क/Dated: 26/03/2026
SAUMYASr.PS
Copy of the Order forwarded to:
1. अपीलाथ /The Appellant ,
2. ितवादी/ The Respondent.
3. आयकरआयु CIT
4. िवभागीय ितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT,
Mumbai
5. गाडफाइल/Guard file.
BY ORDER,
//True Copy// (Asstt. Registrar), ITAT, MUMBAI