Income Tax Appellate Tribunal - Kolkata
Ekta Tantia,Purulia vs Ito, Ward - 3(4), Asansol on 24 April, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL, "SMC" BENCH, KOLKATA
SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER
ITA No. 2675/KOL/2024
Assessment Year : 2012-2013
Ekta Tantia, Vs. ITO, Ward - 3(4),
Sadar Para, Purulia H.O, Asansol,
Purulia-I, Purulia, 723101, Sahana Apartment,
West Bengal Lower Chlidhanga G T
[PAN: ABYPT0974D] Road (West), Asansol,
West Bengal - 713304
APPELLANT RESPONDENT
Assessee by : Sh. Siddharth Agarwal, AR
Revenue by : Sh. Manas Mondal, Sr. DR
Date of hearing : 11.03.2026
Date of Pronouncement : 24.04.2026
ORDER
This is an appeal filed by the assessee against the orders passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as "the Act") by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as "the Ld. CIT(A)], dated 08.07.2022, DIN & order No. ITBA/NFAC/S/250/2022- 23/1043776574(1) on the following grounds of appeal: 2 ITA No. 2675/KOL/2024
Ekta Tantia "1. That in the facts and circumstances of the case, the order of the Learned Assessing Officer is arbitrary, excessive, perverse and bad in law. The Ld. CIT (A) has erred in confirming the action of A.O.
2. That in the facts and circumstances of the case, the notice u's 148 of the Income Tax Act does not satisfy the statutory requirements for issue of such notice and as such all the proceedings under section 143(3)/147 of the Act is void ab initio and is liable to be quashed. The Ld. CIT (A) has erred in confirming the action of A.O.
3. That in the facts and circumstances of the case, the Learned Assessing Officer erred in treating Long Term Capital Gain of Rs. 23,99,809/- as unexplained cash credit under section 68 of the Act, without properly appreciating the facts of the case. The additions has been made purely on surmises, conjectures and hence not sustainable in the eye of law. The Ld. CIT (A) has erred in confirming the action of A.O.
4. That in the facts and circumstances of the case, the Learned Assessing Officer erred in making additions of Rs. 1,44,991/- under section 69A of the Act. The Ld. CIT (A) has erred in confirming the action of A.O.
5. That in the facts and circumstances of the case, the Learned Assessing Officer has erred in levying interest under section 234A and 234B of the Act and/or the calculation of tax and interest thereon is incorrect.
6. That the appellant humbly craves leave to add, alter, withdraw grounds of appeal at the time of hearing."
2. At the outset of hearing, it was noticed that the appeal filed by the assessee or delay in this regard, the assessee has filed an affidavit dated 13.12.2024 which is as under:
"I Ekta Tantia, daughter of Late. Shyam Sunder Bhotika of Sadar Para, Purulia H.O, Purulia -723101, West Bengal, India (hereinafter referred to as 'the appellant') do hereby affirm as follows:-
1. That an assessment order under section 143(3) r.w.s 147 of the Act was passed on 27.12.2019 wherein the Ld. Assessing Officer has inter-alia made additions of Rs. 25,44,800/- under section 68 of the Act.
2. That subsequently, the appellant has filed appeal before CIT(A) on against the aforesaid order dated 27.12.2019.
3. That the instant year is the first and the only year wherein the appellant had filed appeal and since the appellant was not aware about the procedural part of filing appeal, the appellant had approached her regular tax consultant namely Choubey and Associates to file appeal.3 ITA No. 2675/KOL/2024
Ekta Tantia
4. That the said firm had given contact details of its partner or associated personnel while filing Income Tax return of various years and Form 35 of the instant year. The email address of the said firm was mentioned in all return and form ([email protected]&[email protected]) and the appellant acted in good faith, was under the bonafide belief that the legal professional is looking after the appeal matters and keep her informed about the status of the appellate proceedings. However, the legal professionals failed to monitor their email accounts and did not notify the appellant regarding passing of appellate order under section 250 of the Act.
5. That it was only when the appellant was contemplating to file application under Vivad Se Vishwas Scheme 2024, she came to know on 24.12.2024 that appellate order for the instant year was already passed on 08-07- 2022.
6. That for the purpose of filing appeal, date of receipt of appellate order is mentioned as 24.12.2024.
7. That, the appellant now intends to file appeal before the Hon'ble ITAT against the order passed by the Ld. Commissioner of Income Tax (Appeals), NFAC dated 08-07-2022
8. That the sole reason for non-filing of the aforesaid appeal within statutory time limit was due to non-receipt of CIT(A) order passed."
VERIFICATION
1. Ekta Tantia, the above named deponent, do hereby verify on oath that the contents of the affidavit above are true to the best of my knowledge and belief and nothing material has been concealed or falsely stated."
3. On going through the above reasons/explanations, I noted that the assessee had reasonable cause for not filing the appeal within the specified time. Therefore, relying on the judgment of Collector, Land Acquisition vs Mst. Katiji, (1987) 167 ITR 171 (SC), I condone the delay and the appeal is taking for adjudication.
4. Briefly stated the facts of the case are that the assessee e-filed return of income on 27.03.2013 declaring total income of Rs. 3,06,135/- and notice u/s 148 of the Act was issued on 28.03.2019 and in response to such notice, the assessee filed return of income on 04.05.2019 4 ITA No. 2675/KOL/2024 Ekta Tantia showing total income of Rs. 3,09,407/-. Accordingly, notice u/s 143(2) of the Act dated 25.09.2019 was issued to the assessee. Subsequently, other statutory notices were issued to the assessee, dated 14.11.2019, DIN & Order No. ITBA/COM/F/17/2019-20/1020406935(1). Copy of reasons recorded were provided to the assessee, the reasons recorded for reopening are as under:
5ITA No. 2675/KOL/2024
Ekta Tantia 6 ITA No. 2675/KOL/2024 Ekta Tantia 7 ITA No. 2675/KOL/2024 Ekta Tantia 8 ITA No. 2675/KOL/2024 Ekta Tantia
5. Later on, the assessee filed objections on 27.11.2019 which was duly disposed of the AO vide order dated 23.12.2019 which is as under: 9 ITA No. 2675/KOL/2024
Ekta Tantia 10 ITA No. 2675/KOL/2024 Ekta Tantia 11 ITA No. 2675/KOL/2024 Ekta Tantia
6. As per the information received from DIT, Kolkata that the assessee got benefit on sale of shares at high value of Multiplus Resources Ltd amounting to Rs. 25,44,800/- before 02.01.2013 and declared income of Rs. 23,99,809/- and claimed exempt income u/s 10(38) of the Act. The AO found that there is live link between the claim of exempted income 12 ITA No. 2675/KOL/2024 Ekta Tantia on account LTCG by the assessee of the manipulation of the price of shares of Multiplus Resources Ltd. The AO has duly disposed the objection filed by the assessee with speaking order which is noted (supra).
7. It was noted that in this scam, the shares of the penny stock companies are acquired by the beneficiaries of LTCG at very low prices generally through the route of preferential allotment (Private placement) or off market transaction. These shares are locked for a period of one year as per Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009. Another route to acquire the shares is through amalgamation or merger. In this route, the penny stock of LTCG are allotted shares of a private limited companies which is subsequently, amalgamated with a listed penny stock and the beneficiaries received shares of the listed penny stock in exchange of the shares of private limited company. Thereafter, the price of the shares of the penny stock companies are rigged and are raised through circular trading. This is managed by the "operator" of the script, an operator is a person who is managing the overall affairs of the scheme and he is the one who contacts the entities who wish to take entry of bogus LTCG/STCL in their books and arranges the same through the script of penny stock companies. The Operator manages many paper/bogus 13 ITA No. 2675/KOL/2024 Ekta Tantia companies and uses them to do circular transaction to rig the price of shares.
8. The modus operandi adopted by the brokers for earning bogus long term capital gain was observed by the income tax department by the beneficiary are as under:
"[II] The Modus Operandi to generate bogus LTCG There is a person "B" (Beneficiary) who is in possession of unaccounted money and who wants to bring this unaccounted money into his books and at the same time this person also desires to avoid paying any tax whatsoever when this money is brought into the books. [In this case the assessee who was allotted shares on preferential placement basis as discussed above is the beneficiary] Now this person "B" approaches the Entry operators "O". Operator is a person who manages the overall scheme of the scam. An operator maintains a complex nexus of various paper/bogus entities and is also in control of some penny stock companies whose shares are listed on one or the other Stock Exchanges. Multiplus Resources Limited is the penny stock company in the instant case.] When approached by "B", operator proposes the scheme to the beneficiary. The beneficiary is required to purchase the shares of penny stock companies. This arrangement is made by the operator by arranging for the issue of these shares to the beneficiary through preferential allotment i.e. through private placement (this is an off-market transaction). These shares are allotted to the beneficiaries at face price even though the market price may be very low. Thereafter, the Operator rigs the price of the shares through circular trading and increases the price of the shares. The prices are rigged to an optimum amount over a period of one year from the date of issue of shares to the beneficiaries. [As done in this case] Once a period of 12 months [for claim of exemption on LTCG u/s 10 (38)] is over, the operator asks the beneficiary to deliver the unaccounted cash. Once the unaccounted cash has been delivered by the beneficiary, the same is then routed by the operator to the books of various Paper/Bogus Companies/Persons ("Exit Providers") which ultimately buy the shares belonging to the beneficiary at high prices. The cash is routed to the books of bogus companies through a maze of various other paper companies so as to avoid the direct cash trail.
Once the cash has been routed to the books of paper/bogus companies, the operator instructs the Beneficiary to place a sell option, for the shares belonging to the beneficiary, in a particular lot size on a particular date and time.14 ITA No. 2675/KOL/2024
Ekta Tantia At the same time the operator instructs the paper/bogus companies/persons maintained by him to buy the shares of the beneficiary on the exchange at the predetermined particular date and time. In this way the shares of the beneficiaries are bought by the paper/bogus companies/persons and the unaccounted money of the beneficiary is routed to the books of the beneficiary as a entry of LTCG. [As evident from the tax exempt capital gain introduced by the assessee as capital during the year.] The modus operandi mentioned above is based on facts and has been deduced by various investigation wings of the income tax department, SEBI and other government agencies.
[9] The common finding of SEBI in Penny Stock cases:-
[I] "It can reasonably be inferred that the preferential allottees acting in concert with XYZ group have misused the stock exchange system to generate fictitious LTCG so as to convert their unaccounted income into accounted one with no payment of taxes as LTCG is tax exempt. I prima facie find that the above modus operandi helped the concerned entities to avoid payment of taxes and to show the source of this income to be from legitimate source, i.e. investment in stock market.
I am of the view that the preferential allotment was used as a tool for implementation of the dubious plan, device and artifice of XYZ group and allottees. One could argue that in the order to make LTCG, the preferential allottees in question could have bought in secondary market and waited for a year before selling the shares. In the instant case, probably the preferential allotment route was preferred over secondary market route because the share capital of XYZ company prior to preferential allotment was very small ie. n equity shares (face value) to accommodate the required fictitious LTCG of m crore approximately. As such the capital expansion through preferential allotment provided much bigger source to the persons involved in terms of volume and price manipulation to facilitate the whole operation. Since prior to the trading in its scrip during the Examination Period, XYZ company did not have any business or financial standing in the securities market, in my view, the only way it could have increased its share value is by way of market manipulation."
(II) The Chief General Manager, Integrated Surveillance Department, Security and Exchange Board of India (SEBI) has informed BSE, NSE of India Ltd and Metropolitan Stock Exchange of India Ltd. vide its letter No. SEBI/HO/ISD/ISD/OW/P/2017/18183 dated 08/07/2017 that SEBI is in receipt of a letter no F.NO.08/73/2017-CL-11 dated June 09, 2017 from the Ministry of Corporate Affairs (MCA) on the subject "Database of listed shell companies" in which MCA has identified a list of 331 companies as suspected shell companies for initiating necessary action as per SEBI laws/regulation. The exchanges are advised to identity the listed companies out of the list of 331, companies on their exchange and take following measures:
a) Trading in all such listed securities shall be placed in stage VI of the Graded Surveillance Measure (GSM) with immediate effect. If any listed company out of the said list is already identified under any stage of GSM, it shall also be moved to GSM stage VI directly.15 ITA No. 2675/KOL/2024
Ekta Tantia Under the stage VI of GSM, trading in these identified securities shall be permitted to trade once in a month under trade to trade category. Further, any upward price movement in these securities shall not be permitted beyond the last traded price and Additional Surveillance Deposit of 200% of trade value shall be collected from the Buyer which shall be retained with Exchanges for a period of five months.
b) The shares held by the promoters and directors in such listed companies shall be allowed to be transferred by the depositories only upon verification by concerned exchanges and they shall not be allowed to transact in the security except to buy securities in the said listed company until verification of credential/fundamental by Exchange is completed.
c) Exchanges shall initiate a process of verifying the credentials/fundamentals of such companies. Exchanges shall appoint an independent auditor to conduct audit of such listed companies and if necessary, even conduct forensic audit of such companies to verify its credentials/fundamentals
d) On verification, if Exchanges do not find appropriate credentials/fundamentals about existence of the company, Exchanges shall initiate the proceedings for compulsory delisting against the company, and the said company shall not be permitted to deal in any security on exchange platform and its holding in any depository account shall be frozen till such delisting process is completed."
The name of Multiplus Resources Limited has been included in the list of shell company at serial number 92, the Multiplus Resources Ltd. is CSE listed company. The following unlisted companies were amalgamated with Multiplus Resources Limited:
1. Tista Vincom Pvt. Ltd. 1:20
2. Heritage Vintrade Ltd. 1:2
9. Under the scheme of amalgamation, there is a swap ration, meaning hereby that the number of shares of the transferee company increases without increase in the value of shares.
10. Shri Sunil Kumar Kayen is an individual broker who runs a proprietorship concern in the name of M/s Sunil Kumar Kayan and Co. 16 ITA No. 2675/KOL/2024
Ekta Tantia He has traded in the script of Multiplus Resources Limited. Analysis of both purchase side and sale side of his trading in presented in the following table:
Name of the scrip Trade volume-purchase Trade volume-sale side (in crores Rs.) side (in crore Rs.) Multiplus Resources 99.46 93.47 Limited
11. The assessee has sold share of Multiplus Resources Ltd. to Rs. 25,44,800/- during the period 09.02.2012 to 05.03.2012 through broker Sunil Kumar Kayen & Co. and claimed long term capital gain of Rs. 23,99,809/-. The AO noted that it cannot be case of intelligent investment or simple and straight case of tax planning to gain benefit of long term capital gains earning @ 1655% , traded the shares of RS. 10/- each at the rate of RS. 181 to 182/- per share over period of 12 months is beyond the human probability and defies business logic of any business enterprise dealing with transaction. On analysis of the financial statement of Multiplus Resources Limited, it was observed that there is no fixed assets and financial strengthen of the company are very poor. The CSE site (www.cse.india.com) was visited for obtaining details of Multiplus Resources Ltd. from CSE company data based. It is noticed that the company has been suspended "furthermore" last traded price of companies over listed was searched and it was found that Rs. 198.90 and on 02/01/2013 are the last trade rate and trade date for the Multiplus Resources Ltd. (scrip code 10023483).
17ITA No. 2675/KOL/2024
Ekta Tantia On perusal of the income tax return filed by the assessee the assessee has claimed long term capital gain of Rs. 23,99,809/- paid STT it was also noticed that the assessee has maintained books of accounts as per the provision of section 44AA of the Act and credited Rs. 23,99,809/- in her books of accounts on account of long term capital gain that after discussed the issue on details the long term capital gain credited by the assessee was not found satisfactory and observed that assessee has undisclosed and unaccounted money credited in the books of the assessee by using colourable device of long term capital gain. Therefore, the LTCG claimed by the assessee were treated at deemed income u/s 68 of the Act and further a difference of Rs. 1,44,991/- (Rs. 25,44,800/- (-) Rs. 23,99,809/-) was treated as deemed income us 69A of the Act and there was assessed income of Rs. 2,85,270/- and completed assessment u/s 143 r.w.s. 147 of the Act on 27.12.2019.
12. Aggrieved from the above order, the assessee filed appeal before the Ld.CIT(A) with a delay which was condoned by the Ld.CIT(A). The Ld.CIT(A) issued various notices to justify the claim of the assessee as per the grounds of appeal taken. In this regard, the assessee filed detailed written submission to justify the grounds of appeal which is incorporated by the Ld.CIT(A) in his order. The Ld. CIT(A) dealt the entire grounds of the assessee and relying on judgments of Hon'ble High Court and Supreme Court. He also relied on the judgment of Hon'ble 18 ITA No. 2675/KOL/2024 Ekta Tantia jurisdictional High Court in the case of PCIT-5, Kolkata Vs. Swati Bajaj and Others group case in ITA No. GA/2/2022 in ITAT/6/2022 dated 14.06.2022, dismissed the appeal of the assessee. He further observed that the assessee never asked for cross examination during the assessment proceedings. Therefore, the judgment of Hon'ble Apex Court in the case of Andman Timbers Industries Ltd. Vs. CIT, Kolkata-7 (2016) 15 SCC 78 will not support to the case of the assessee.
13. Feeling aggrieved from the above order of the Ld.CIT(A), the assessee is in appeal before the ITAT.
14. The Ld. Counsel reiterated the submissions made before the lower authorities and further submitted that the cross examination was not provided to the assessee and he also stated that the reopening of the case of the assessee is wrong and does not specify the statutory requirement for issuing of notice u/s 148 of the Act and the proceedings made u/s 143(3)/147 of the Act is void ab initio. He further submitted that the AO has reopened the case only on the basis of information received from the DIT (inv.), Kolkata and he has not applied his mind independently. The assessee has sold the shares through recognized stock exchange as per the norms of the stock exchange and payments have been received through banking channel. There is no malafide intention of the assessee to get undue benefits u/s 10(38) of the Act. She has done transactions 19 ITA No. 2675/KOL/2024 Ekta Tantia as per Stock Exchange Rules and Regulations. She does not have direct connection through the stock exchange for carrying out transaction. The entire transaction have been carried out with the help of share brokers. The AO has wrongly treated the transaction with respect to dealing in shares of Multiplus Resources Limited as non genuine and bogus and made the addition u/s 68 and 69 of the Act. The assessee filed return of income for the assessment year under consideration on 27.03.2013 declaring total income of Rs. 3,09,470/- and after the notice u/s 148 of the Act issued to the assessee. In compliance, the assessee filed return of income on 04.05.2019, section 147 of the Act. The AO to assess of the assessee's income chargeable to tax if he had reason to believe that income for the assessment year has escaped assessment. It is also well settled that reason to believe that section 147 are stronger than merits which specified the believe entertain by the AO for the purpose of initiating proceeding u/s 147 of the Act must not be arbitrary or irrational it must be reasonable. It is further submitted that there must be direct nexus to live link between the material coming to the notice of the AO and the information of the believe that there has been escapement of income of the assessee. From the assessment in the particular year the assessee strongly objected for the issue of notice u/s 148 of the Act. It is submitted that there should be link between the reasons and the evidence/material available with the AO. Hence, the reasons to believe 20 ITA No. 2675/KOL/2024 Ekta Tantia as per the notice u/s 148 of the Act is not in accordance with the facts and circumstances of the case and as such consequent order u/s 143(3)/147 of the Act is void ab initio. He also relied on the judgment of the Hon'ble Apex Court in the case of ITO Vs. Lakhmani Mewal Das reported in 103 ITR 437 (SC) and he also relied on the various judgments which is as under:
"Two conditions have to be satisfied before an ITO acquires jurisdiction to issue notice under section 148 in respect of an assessment beyond the period of four years but within a period of eight years from the end of the relevant year, viz., (1) the ITO must have reason to believe that income chargeable to tax has escaped assessment, and (2) he must have reason to believe that such income has escaped assessment by reason of the omission or failure on the part of the assessee (a) to make a return under section 139 for the assessment year to the ITO, or (b) to disclose fully and truly material facts necessary for his assessment for that year. Both these conditions must co-exist in order to confer jurisdiction on the ITO. It is also imperative for the ITO to record his reasons before initiating proceedings as required by section 148(2). Another requirement is that before notice is issued after the expiry of four years from the end of the relevant assessment years, the Commissioner should be satisfied on the reasons recorded by the ITO that it is a fit case for the issue of such notice.
The expression "reason to believe" does not mean a purely subjective satisfaction on the part of the ITO. The reason must be held in good faith It cannot be merely a pretence. It is open to the Court to examine whether the reasons for the formation of the belief have a rational connection with or a relevant bearing on the formation of the belief and are not extraneous or irrelevant for the purpose of the section. To this limited extent, the action of the ITO in starting proceedings in respect of income escaping assessment is open to challenge m a Court of law"
The Hon'ble Delhi High Court in the case of Signature Hotels Pvt Ltd v.Income Tax officer [2012] 20 tuxmann.com 797 has held that "Section 147 is wide enough but it is not plenary. One has to consider and examine the crucial expression 'reason to believe' used in the said section. The Assessing Officer must have 'reason to believe that an income chargeable to tax has escaped assessment. This is mandatory and the 'reasons to believe' are required to be recorded in writing by the Assessing Officer. Sufficiency of reasons is not a matter, which is to be decided by the writ Court, but existence of belief is the subject-matter of the scrutiny. A notice under section 148 can be quashed if the 'belief is not bona fide, or one based on vague, irrelevant and non-specific information. The basis of the belief should be discernible from the 21 ITA No. 2675/KOL/2024 Ekta Tantia material on record, which in the instant case was available with the Assessing Officer, when he recorded the reason. There should be a link between the reasons and the evidence/material available with the Assessing Officer. The Assessing Officer reopened assessment of the assessee on the basis of information received from the DIT (Investigation) that amount received by the assessee from company 'S' was nothing but accommodation entry and the assessee was the beneficiary.
Held that the reason given did not satisfy the requirements of section 147. The reasons and the information referred to were extremely scanty and vague. There was no reference to document or statement except an annexure. The annexure could not be regarded as a material or evidence that prima facie showed or established nexus or link which disclosed escapement of income. The annexure was not a pointer and did not indicate escapement of income. Further, it was apparent that the Assessing Officer did not apply his own mind to the information and examine the basis and material of the information. The Assessing Officer accepted the plea on the basis of vague information in a mechanical manner. The Commissioner also acted on the same basis by mechanically giving his approval Therefore, the proceedings under section 148 were to be quashed"
The Hon'ble ITAT, Bench New Delhi in the case of Raj Hans Towers Pvt Ltd v. ITO, Ward 15(2), New Delhi ITA No. 1570/Del2013 has hell that "a) There is no tangible material, which come to the possession of the AO to lead to the conclusion that there was an escapement of income from assessment. There is no reference to any statement or bank account or any other material other than a main report of the investigation wing.
b) The reasons recorded are not after independent verification and application of mind by the AO and it is merely based on a report of the investigation wing.
This is clear from the conclusions in the assessment order that the figure of Rs. 20 lakhs is not correct
c) The reasons are vague and unsubstantiated and are not corroborated at the time of assessment or by any other evidence, such as statement, bank account copy etc.
d) When share capital is contributed by the directors, to believe that the money in question belonged to the assessee company and that this money was routed through the director of the assessee company, based on the report of the investigation wing is insubstantiated and not corroborated by any material"
The Hon'ble Delhi High Court in the case of Principal Commissioner of Income- tax-4 Vs. G & G Pharma India Ltd. [2017] 81 taxmann.com 109 (Delhi) has held that where Assessing Officer did not form a prima facie opinion on information given to him by Directorate of Investigation regarding introduction of assessee's own unaccounted money in bank account by way of accommodation entries before issuing notice under section 148 to assessee, reassessment proceedings were not sustainable.22 ITA No. 2675/KOL/2024
Ekta Tantia It was also held in the case of Principal Commissioner of Income-tax-6 Vs. Meenakshi Overseas (P) Ltd [2017] 82 taxmann.com 300 (Delhi) that where reassessment was resorted to on basis of information from DDIT (Investigation) that assessee had received accommodation entry but and there was no independent application of mind by Assessing Officer to tangible material and reasons failed to demonstrate link between tangible material and formation of reason to believe that income had escaped assessment, reassessment was not justified.
As such, basis of the Ld. Assessing officer on arriving at a conclusion that company didn't have physical existence cannot be treated as 'reasons to believe', which is the basic ingredient for issue of notice u/s 148 of Income Tax Act, 1961.
It is further submitted that proceedings under section 148/147 of the Act are liable to be quashed in absence of reason to believe that income has escaped assessment even in case where the assessment has been completed earlier by intimation u/s 143(1) of the Act.
In this connection, we would like to rely on the following pronouncements:-
The Hon'ble High Court, Delhi in the case of Commissioner of Income Tax-V v. Orient Craft Lid [2013] 354 ITR 536 (Del) has held that the assessee contention that even an assessment made under section 143(1) of the Act can be reopened under section 147 if the Assessing Officer has 'reason to believe that income chargeable to tax has escaped assessment, is sound. It is true that no assessment order is passed when the return is merely processed under section 143(1) and an intimation to that effect is sent to the assessee. However, it has been recognized by the Supreme Court itself in Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P) Ltd. [2007] 291 ITR 500/161 Taxman 316(SC) that even where proceedings under section 147 are sought to be taken with reference to an intimation framed earlier under section 143(1), the ingredients of section 147 have to be fulfilled, the ingredient is that there should exist reason to believe that income chargeable to tax has escaped assessment. This judgment, does not give a carte blanche to the Assessing Officer to disturb the finality of the intimation under section 143(1) at his whims and caprice; he must have reason to believe within the meaning of the section. [Para 8] In Cit Vs. Kelvinator of India Ltd. [2010] 187 Taxman 312/320 ITR 56) (SC) it was observed that after 1-4-1989 the Assessing Officer has power to reopen provided there is "tangible material to come to the conclusion that there is escapement of income. The judgment has laid emphasis on two more aspects: that there can be no review of an assessment in the guise of reopening and that a bare review without any tangible material would amount to abuse of the power, [Para 12] The assumption of the Revenue that somehow the words 'reason to believe' have to be understood in a liberal manner where the finality of an intimation under section 143(1) is sought to be disturbed is erroneous and misconceived.
There is no warrant for such an assumption because of the language employed in section 147; it makes no distinction between an order passed under section 143(3) and the intimation issued under section 143(1). Therefore, it is not 23 ITA No. 2675/KOL/2024 Ekta Tantia permissible to adopt different standards while interpreting the words 'reason to believe' vis-à-vis section 143(1) and section 143(3). [Par 13]"
The Hon'ble High Court, Delhi in the case of Pr. Commissioner of Income Tax v. Tupperware India (P) Ltd [2016] 236 Taxman 494 has held that The Court examined the meaning given to the words reasons to believe, and held that the assumption of the revenue that somehow the word reason to believe have to be understood in a liberal manner where the finality of an intimation under section 143(1) is sought to be disturbed, is erroneous and misconceived It was held that there is no warrant for such an assumption because of the language employed in section 147: it makes no distinction between an order passed under section 143(3) and the intimation issued under section 143(1). Therefore, it is not permissible to adopt different standards while interpreting the words 'reason to believe' vis-a-vis section 143(1) and section 143(3). The Court further comprehensively rejected the argument of the revenue, which it seeks to urge in the present case as well, that on 'intimation under section 143(1) cannot be equated to an assessment. The Court held that 'if an intimation' is not an 'assessment then it can never be subjected to section 147 proceedings, for that section covers only an 'assessment. The Court held that the expression 'reason to believe' cannot have two different standards or sets of meaning, one applicable where the assessment was earlier made under section 143(3) and another applicable where an intimation was earlier issued under section 143(1) [Para 17]"
The Hon'ble High Court, Delhi in the case of Sabharwal Properties Industries Pvt Lad v. Income Tax Officers [2016] 382 ITR 547 has held that "Even otherwise even the above reasons given subsequently do not satisfy the jurisdictional requirements of Section 147 (1) of the Act inasmuch as they do not indicate that there was a failure by the Assessee to disclose fully and truly all the material facts necessary for the assessment. The reasons also do not provide a live link to the formation of the belief that income had escaped assessment."
15. He also relying on the judgment of coordinate Bench of the Kolkata Tribunal in in the case of Anju Daruka Vs. ITO, ITA No. 2143/Kol/2024, order dated 01.04.2025 and stated that the judgment is squarely applicable in the case of the assessee. He strongly submitted that during the entire process of the assessment the assessee was not provided cross examination in spite of multiple requests made by the assessee. He further relied on the judgment of ITAT, Kolkata Bench in ITA No. 2143/KOL/2024 in the case of Anju Daruk vs ITO, Ward-3(1) Asansol 24 ITA No. 2675/KOL/2024 Ekta Tantia dated 01.04.2025.and supported at para No.13 and further submitted that the case of the assessee is squarely covered by this judgment.
16. On the other hand, the Ld. DR relied on the order of lower authorities and submitted that both the authorities below have properly delt the entire objections raised before the AO as well as the grounds of appeal taken before the Ld.CIT(A) and he further submitted that the assessee sold shares of Multiple Resources Limited which is very high rate which is penny stock company and the Multiple Resources Limited is included in the list of penny stock company identified by the SEBI at serial number 2 and he also submitted that during the assessment proceedings the assessee did not make any request to AO for cross examination even before the Ld.CIT(A) which is clear from the order of the Ld. CIT(A) at para No. 6.2.1. The Ld. CIT(A) also relied on the judgment of Hon'ble Jurisdictional High Court of Kolkata in the case of PCIT Vs. Swati Bajaj and others (noted supra) and various other High Courts/Supreme Court, the judgment relied by the Ld.CIT(A) are squarely applicable in the present facts of the case as the modus operandi adopted by the assessee to gain exempt long term capital gain on the sale of share of Rs. 10/- at a price of Rs. 181/- to 182/- during the period 09.02.2012 to 05.03.2012 and the price of the script was artificially raised by circular trading before 02.01.2013 for the purpose of bogus Long Term Capital Gain. Therefore, the reason for this 25 ITA No. 2675/KOL/2024 Ekta Tantia astronomical price rise is price manipulation of the shares by Sunil Kumar Kayan as a share broker, the legal issue raised by the assessee are not sustainable because the Assessing Officer before issue of notice has analysed the information received from DIT (Inv.), Kolkata, therefore, Assessing Officer has rightly applied his amount before reopening of the case, he was not totally dependent upon only information received from DIT, Kolkata. Before issuing notice the AO has examined the information and thereafter he obtained approval to reopen the case under Section 151 of the Act from the competent authority. Therefore, the entire legal issue raised by the assessee are not sustainable. The transactions of Multiplus Resources Limited was stopped by the SEBI when it was identified a penny stock trading transaction.
17. The Ld. DR also relied on the judgment of coordinate Bench of the ITAT, Ahmedabad in the case of Krutik Ashokkumar Parikh-HUF Vs. ITO HUF, Vs. ITO in ITA No. 1078/Ahd/2025 dated 13.08.2025 in which it has been held as under:
"Penny stock gain lacks "commercial credibility" & "human probability cites transaction as sham for tax evasion Ahmedabad ITAT upholds the addition made under Section 68 towards sale of penny stock holding the transaction to be a sham and non-genuine, ITAT opines, "It is beyond reasonable doubt that the transaction, though apparently structured as a genuine share trade on paper, does not meet the test of commercial credibility and human probability", ITAT observes that the particular scrip, in which the Assessee made the investment, has been highlighted in multiple investigations by the Revenue department and investigation wing as a well known penny stock used for tax evasion by routing unaccounted cash through circuitous means to generate fictitious long-term capital gains, ITAT notes that the 26 ITA No. 2675/KOL/2024 Ekta Tantia impugned investment was a one time, isolated transaction with no pattern of further purchase of this share and Assessee's extraordinary gain of over 1100% in a span of approximately 15-16 months in a single scrips without any business activity in shares before or after cannot be regarded as a normal or routine Investment, ITAT finds that the company in question had no apparent business operations or financial fundamentals that could justify such in exponential increase in market value and there was no intrinsic value or economic basis to support the Increase in share price within such a short time frame, ITAT emphasises that the conduct of the Assessee and the nature of the transaction must be tested on the yardstick of human probabilities and commercial prudence, by relying on Supreme Court judgment in Sumati Dayal v. CIT (1995) 90 Taxman 89 (SC) and CIT Durga Prasad More (1973) 82 (TR 540 (90) the Apex court held that apparent facts must yield to real substance, especially when, the reality does not accord with human probabilities. The Court held that the apparent must be shown to be real by testing it against the backdrop of human conduct and surrounding circumstances, ITAT refers to the principle of "preponderance of probabilities" (as laid down by Lord Denning in Miller v. Minister of Pensions), which requires that a fact is proved if it is more likely than not The same standard has been adopted in Indian tax jurisprudence, including by the Allahabad High Court in CIT v Swarup Cold Storage & General Mills (1982) 10 Taxman 215 (All)) and in Rishi Kesh Singh State TAIR 1970 A 611 ITAT underscores that long gap between purchase and payment, absence of supporting commercial rationale, the astronomical and unjustified rise in price of a non-performing company and the assessee's lack of further er prior involvement in share trading with respect to this stock, all point toward a pre-conceived and colourable transaction aimed at tax avoidance: Tribunal, thus upholds the CITIA) and assessment order by observing, CIT(A) nightly upheld the Assessing Officer's conclusion that the present transaction was a sham transaction aimed at tax avoidance, considered view, the addition of Rs. 21,72,300/-made by the Assessing Officer under section 68 of the Actis looking into the assessee's set of facts and therefore does not warrant any Interference. The assessee has failed to discharge the burden of proof resting upon him to substantiate the genuineness of the transaction wither by way of credible evidence or by satisfying the standard of preponderance of probabilities, is the result, the appeal filed by the assessee is dismissed.
18. He further submitted that the case law relied by the Ld. Counsel are not applicable since most of the judgment relied by the Ld. Counsel or prior to the judgment by the Hon'ble jurisdictional High Court in the case Swati Bajaj (noted supra). He further submitted the issue relied by the Ld. Counsel in case of ITAT Kolkata, ITA No. 2143/Kol/2024, dated 01.04.2025 is also does not support to the case of the assessee since in this case, the case has been decided only on the basis of legal issue but 27 ITA No. 2675/KOL/2024 Ekta Tantia not on the case of the merits and further submitted that once the jurisdictional High Court has decided the issue then the decision of the Hon'ble High Court is binding upon all Courts and Hon'ble Tribunals.. Therefore, the above case law does not support to the case of the assessee and requested that the order of the lower authorities should be upheld.
19. Considering the rival submissions and perusing the entire materials available on record and the orders of authorities below. I noted that the case of the assessee has been reopened after obtaining information from the DIT (Inv.), Kolkata and analysing the information and recorded the reasons thereafter taking approval from the competent authority, the notice has been issued u/s 148 of the Act on 28.03.2019 and copy of reasons were duly provided the assessee. In response to notice u/s 148 of the Act the assessee filed return of income on 04.05.2019 declaring income of Rs. 3,09,470/-. The 30 days time was granted to the assessee to file return of income u/s 148 of the Act. Further, the assessee filed return of income after the due date. I noted from the above copy of reasons recorded, the AO has duly applied his mind after received CD from the DIT (Investigation), Kolkata vide F.No. D-9/2015-26/3343 dated 24.11.2015 along with a CD. The contents of the CD are as follows:
(1) A folder named "report" containing 28 ITA No. 2675/KOL/2024 Ekta Tantia
a) "database of entry operators and brokers"
b) Investigation report in respect of bogus LTCG" (in pdf)
c) "Circular of amalgamation" (in pdf)
d) "DI's note" (in PDF)
2. Beneficiaries of Kolkata" in xlsx
3. Kolkata beneficiary data" in xlsx
4. Kolkata Jurisdiction data" in xlsx
5. Forwarding letter of Pr. DIT(Inv.), Kolkata in pdf
20. The AO before the issue of notice has analysed the information in the CD and he found in the information as detailed in the second paragraph , prima facie conclude that share of Multiplus Resources Limited has been utilised by Shri Sunil Kumar Kayan share broker (CSE Member Code D074) through his proprietorship concern under the name and style as M/s Sunil Kumar Kayan & Co. has provided bogus long term capital gain to the assessee, Smt. Ekta Tantia (PAN ABYPT0974D) during the period 09.02.2012 to
05.03.2012. The assessee has sold shares of Multiplus Resources Limited amounting to Rs. 25,44,800/- and the financial strengthen of the Multiplus Resources Limited are very poor. I also observed from the copy of reasons recorded that the financial statement from the March 2009 to March 2013 (noted supra), the financial strengthen of the Company are very poor. There is no fixed assets and EPS is very 29 ITA No. 2675/KOL/2024 Ekta Tantia low. The shares of Rs. 10 were traded @ of Rs. 181/- to 182/- of the Multiplus Resources Ltd. is very high.-. Considering the entire legal issue raised by the assessee and case law relied by the Ld. Counsel rightly distinguished by the ld. DR those case law are not applicable in the present facts of the case. I also noted that the CSE has stopped trading of C star. (the fully computerized online trading system) since 2013, yet trading in all the penny stocks prior to that period have yielded huge long term capital gain to the beneficiaries who have taken it as exempted u/s 10(38) of the Act. The AO also visited the CSE sight www.cse.india.com for obtaining details of Multiplus Resources Limited from CSE Company data base and it was noticed that the company has been suspended. Furthermore, last traded price of companies ever listed is searched and is found that Rs. 198.90 on 02.01.2013 are the last trade rate and trade date for the share of Multiplus Resources Limited (Scrip Code 10023483) the price of the script was artificially raised by circular trading before 02.01.2013 for the purpose of bogus LTCG, therefore, the reason for this astronomical price rise is 'price manipulation' of these shares by Sunil Kumar Kayan of Multiplus Resources Ltd. amounting to Rs. 25,44,800/- before 02.01.2013 and declared Rs. 23,99,809/- as exempt income on account of long-term capital gain from transaction on which STT was paid is bogus capital gain . The arguments of the 30 ITA No. 2675/KOL/2024 Ekta Tantia Ld. Counsel will not support the case. The STT was paid since the payment of STT applicable all over India if the share trading is done through not stock exchange so it is mandatory requirement, therefore, it cannot be said that the transaction is genuine merely STT was paid. The price has been manipulated by the stock broker to pass benefit to the beneficiaries who had purchased the share at lower rate. The arguments taken by the Ld. Counsel that the cross examination was not provided to the assessee during the course of assessment proceedings in this regard, I also asked to the Ld. Counsel many times regarding the proof of asking for cross examination before the AO but the assessee counsel was unable to show any proof for asking cross examination and the Ld. CIT(A) has also observed that the assessee has never asked for cross examination during the course of assessment proceedings which is clear from the findings of para number 5.2.1 of the Ld. CIT(A) order. Therefore, the judgment relied by the Ld. Counsel in case of Andaman Timbers (noted supra) will not support the case of the assessee. I also noted that on the similar circumstances and set of facts, the Hon'ble Jurisdictional High Court of Kolkata in the case of PCIT Vs. Swati Bajaj (noted supra) in which has held as under:
"......Thus, the orders of the tribunal are not only perfunctory but perverse as well. The exercise that was required to be done by the tribunal is to consider the totality of the circumstances because the transactions are shown to be very complex, the meeting of minds of the "players" can never 31 ITA No. 2675/KOL/2024 Ekta Tantia be established by direct evidence and therefore the surrounding circumstances was required to be taken note of by the tribunal which exercise has not been done. We have considered as to whether in such an event, should the matter be remanded to the tribunal for fresh consideration. We have held that there is no such requirement and that is the Court is empowered to examine the findings recorded by the assessing officer, or the CIT (A) to aive at a conclusion. The assessees have been harping upon the opinion rendered by the financial experts, professionals in the said field the information which were available in the media etc. All these opinions are at best suggestions to an investor. The assessees cannot state that merely because an expert had issued a buy call or there was news in the media that a particular shares shows an upwards trend and it is good time for buying those shares. They jumped into the fray the assessees are to be reminded of the doctrine of "caveat emptor The assessees cannot take shelter under the opinion given by the experts as it is not the expert who has indulged in the transaction but it is the assessee, therefore by following such experts advice if the assessee gets into an "web"
it is for him to extricate himself from the tangle and he cannot reach out to the expert to bail him out. The assessees cannot be heard to say that they had blindly followed advice of a third party and made the investment. Selection of shares to be purchased is a very complex issue, it requires personal knowledge and expertise as the investment is not in a mutual fund. None of the assessees before us have shown to have to made any risk analysis before making their investment in a "penny stock". If according to them they have blindly taken a decision to invest in insignificant companies they having done so at their own peril have to face the consequences. Thus, the conduct of the assessees before us probabilities the stand taken by the revenue, rightly the mind of the assessee as an investor was taken note to deny the claim for exemption. It is in this background that the human probabilities would assume significance. As observed earlier the doctrine of preponderance of probabilities could very well be applied in cases like the present one. We say human probabilities to be the relevant factor as on account of the fact that the assessees are of Individuals or Hindu Undivided Families and the trading has been done in the name of the individual assessee or by the Karta of the HUF None of the assessee before us have been shown to big time investor. This is evident from the income details of the assessee which has been culled out by the respective assessing officers. Assuming that the assessee is a regular Investor as was submitted to us by the leamed advocates for the assesses that in any manner cannot improve the situation as the claim for LTCG has been only restricted to the shares which were purchased and sold by the assessees in penny stocks companies. Therefore merely because the assessee had invested in other blue chip companies had earned profit or incurred loss cannot validate the tainted transactions. It has been established by the department that the rise of the prices of the shares was artificially done by the adopting manipulative practices. Consequently whatever resultant benefits which accrue from out of such manipulative practices are also to be treated... concerned and action has been initiated against more than thirty share broking entities and more than twenty entry operators working in Kolkata The report states that almost everyone has accepted its activity, participation in providing accommodation entry of LTCG The investigation has also indicated as to how the scheme of merger is being misused. 32 ITA No. 2675/KOL/2024
Ekta Tantia Though the scheme of merger is approved by the Company Court, in the event it is found that such merger was done obtained by playing fraud, the Company Court is empowered to revoke the order and & appears that the Income Tax Department has not taken any steps in this regant to approach the Company Court or the Tribunal with such a prayer Thus, we have no hesitation to hold that the orders passed by the CIT(A) affirming the orders passed by the Assessing Officers as well as the orders passed by CIT under Section 283 of the Act were proper and legal and the Tribunal committed a serious error in reversing such decisions 102. In the result, these appeals are allowed and the substantial questions of law framed suggested are answered in favour of the revenue and against the assessee restoring the orders passed by the respective Assessing Orders as affirmed by the CIT(A) as well as the orders passed by the CIT under Section 263 of the Act. No costs...."
21. Respectfully following the above judgment of the Hon'ble High Court of Calcutta, I dismiss the appeal of the assessee. I do not find any infirmity in the order of the Ld. CIT(A) and the decisions relied by the Ld.CIT(A) are very much applicable to the present facts of the case.
22. In the result, appeal of the assessee is dismissed. Order pronounced on 24.04.2026.
Sd/-
(Laxmi Prasad Sahu)
Accountant Member
Dated: 24.04.2026
AK, Sr. P.S.
33
ITA No. 2675/KOL/2024
Ekta Tantia
Copy of the order forwarded to:
1. Appellant
2. Respondent
3. Pr. CIT
4. CIT(A)
5. CIT(DR)
//True copy//
By order
Assistant Registrar, Kolkata Benches