Krishna Devi vs ACIT, Central Circle-29

PER ANUBHAV SHARMA, JM:

These appeals preferred by the assessee against the orders of the Ld. Commissioner of Income-tax (Appeals)-30 (hereinafter referred to as the First Appellate Authority or ‘the ld. FAA’ for short) in appeals filed before him against the order of the ld. Assessing Officer (hereinafter referred to as the Ld. AO, for short) passed u/s 147/143(3) and 271AAC(1) of the Income-tax Act, 1961 (hereafter referred to as ‘the Act’). Further details of the orders of the lower authorities are as under:

On hearing both sides we find that as per the assessing officer information was received in the case of Smt. Krishna Devi. It was observed that the assessee Smt. Krishna Devi to be the beneficiary of accommodation entries of bogus LTCG from sale of shares of M/s Eicher Motors Ltd. As per details available on record. It is known that a search and seizure action was carried out in the case of Tradenext Securities Limited (Erstwhile Lifeline Securities Limited and Karnam Securities Pvt. Ltd. holding company of M/s Lifeline Securities Ltd.) along with one beneficiary of Long Term Capital Gain (LTCG) exempt u/s 10(38). Kundu Grup of Rohtak on 25.02.2021. During the course of search operation it is found that a broker M/s Lifeline Securities Limited was arranging the back dated forged transfer entry of shares to the Dmat Account of the beneficiary through preparing manipulated bogus contract note in their names. It is pertinent to mention here that on that manipulated date the purchase did neither been made by neither the beneficiary nor the broker through any listed stock exchange.

Therefore, income to the extent of Rs.40,77,313/- for F.Y. 2017-18 (AY: 2018-19) had escaped assessment owning to failure on part of the assessee to disclose fully and truly all material facts necessary for its assessment within the meaning of section 147 of the Income-tax 1961. Notice u/s 148A(b) of the Act having DIN ITBA/AST/F/148A/(SCN)2021-22/1041370556(1) dated 23.03.2022 was issued to the assessee by the jurisdictional Assessing Officer i.e. ITO, Ward 49(1), Delhi. In response to this notice the assessee vide her submission dated 23.03.2022 had furnished the copy of Acknowledgment of ITR filed for the relevant period along with copy of computation of income Kotak Mahindra Bank pass book, his Demat Account and contract Notes/Statement of Account with M/s Karnam Securities Pvt. ltd. But the assessee remained fail to bring anything on record which might have been sufficient to discharge her onus that the transaction of sale of shares of M/s Eicher Motor Ltd. was genuine.

The assessing officer was not satisfied and he had made addition which have been sustained by the Ld. CIT(A) for which assessee is in appeal and at the time of arguments on behalf of assessee arguments were primarily addressed on ground No. 1 by which assessee has alleged that reassessment proceedings were initiated without any inquiry and on the basis of borrowed satisfaction and factually incorrect information. Ld. DR had defended the same by relying the impugned orders and submitted that during the assessment proceedings assessee had mentioned about some discrepancies in the notice and for that reason afresh show cause notice was issued to the assessee as mentioned in para 10 of the assessment order and the same had all the relevant information and facts.

We find from the material before us that at page No. 11 to 15 of the paper book assessee has provided copy of notice under clause (b) of Section 148A of the Act and the same mentions that assessing officer had relied information allegedly retrieve after search and seizure operation in Tradenext Securities Limited and Kundu Group of Rohtak the same mentions in para 8 that as per the information Krishna Devi (the assessee) sold shares of M/s Karnam Securities Pvt. Ltd. at total consideration of Rs.40,77,313/- and the description of the same in terms of quantity of shares purchase with relevant dates is mentioned. In para 9 assessing officer specifically mentions that on the basis of followed contract note with Karnam Securities Ltd. this transaction was found to be leading to escapement of income. It was specifically mentioned that no scrutiny assessment u/s 143(3) has taken place in the case of assessee for the relevant year. Then at page 16-23 copy of order under clause (d) of Section 148A of the Act has been provided wherein reference to similar search has been made but allegation is that the assessee and his family members have taken long term capital gain through investments in shares of Indusind Bank. At the same time, there is also allegation that assessee had sold shares of M/s Karnam Securities Pvt. Ltd. We find that assessee dealt with any of these scrips and had reported long term capital gain in regard to shares of M/s Eicher Motors Ltd. We find that this mistake has come into the knowledge of assessing officer during the assessment proceedings and therefore, a show cause notice dated 24.03.2023 copy of which is available at page No. 33 of the paper book has been provided in which the facts were corrected and the assessee was confronted to the transactions of selling shares of M/s Eicher Motors Ltd. was confronted and it was mentioned that in fact, transaction was conducted through M/s Karnam Securities Pvt. Ltd. Thus, there is no doubt left with at the time of assumption of jurisdiction the assessing officer while issuing the notice u/s 148A(b) on 23.03.2022 of issuance of notice u/s 148A(d) along with Section 148 on 31.03.2022 do not at all applied its mind to the information about transaction as actually entered into by the assessee and for that reason had to issue a fresh show cause notice during the assessment proceedings and that to our mind rectify mistake of assumption of jurisdiction on the basis of blindly following information of investigation wing. Howsoever, serious may be the allegation against the assessee but when the question is about assumption of jurisdiction on incorrect facts which only establish non application of mind for assumption of jurisdiction then such assessment order cannot be sustained. We thus, sustain ground No. 1 in appeal 6768/Del/2025 the impugned assessment order is quashed. Consequently penalty levied u/s 271AAC(1) also deserves to be deleted.

The appeal ITA No. 6769/Del/25 is also allowed and the impugned penalty is quashed.