IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “D”, MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI RAJ KUMAR CHAUHAN, JUDICIAL MEMBER ITA NO. 1955/MUM/2022 : A.Y : 2013-14 Mukesh M. Trivedi Vs. Dy. Commissioner of Income B-205, Meri Gold Ram Mandir Tax, Central Circle – 2, Road, Vazira Naka, Borivali (W), Thane. (Respondent)

Mumbai 400 092.

PAN : AACPT0784C (Appellant)

ITA NO. 2141/MUM/2022 : A.Y : 2013-14 Rajesh M. Trivedi Vs. Dy. Commissioner of Income B-205, Meri Gold Ram Mandir Tax, Central Circle – 2, Road, Vazira Naka, Borivali (W), Thane. (Respondent)

Mumbai 400 092.

PAN : ABXPT5347F (Appellant)

Assessee by : Ms. Ridhisha Jain Revenue by : Shri R.R. Makwana Date of Hearing : 07/03/2025 Date of Pronouncement : 18/03/2025

O R D E R

Per Bench:-

The assessees herein have filed these appeals challenging the orders passed by the learned CIT(A), Pune-11 in their respective hands and both the appeals relate to A.Y. 2013-14. Both the assessees are aggrieved by the decision of the learned CIT(A) in confirming the assessment of long term capital gains declared by them on sale of shares as unexplained income under section 68 of the I.T. Act.

2. The appeal of Shri Rajesh M Trivedi was earlier disposed of by the co- ordinate bench by an ex-parte order dated 31-01-2023. Similarly, the appeal of Shri Mukesh M Trivedi was also disposed of by the co-ordinate bench earlier by an ex-parte order dated 07-02-2023. Subsequently, both the assessees filed miscellaneous applications seeking recall of the order passed in their appeals ex-parte. The miscellaneous application filed by Shri Rajesh M Trivedi was numbered as M A No.413/Mum/2023 and the earlier order was recalled in the order dated 30-08-2023 passed against the above said miscellaneous application. The miscellaneous application filed by Shri Mukesh M Trivedi was numbered as M A No.412/Mum/2023 and the earlier order was recalled in the order dated 27-10-2023 passed against the above said miscellaneous application. Accordingly, both these appeals came to be placed before this bench again for hearing afresh.

3. The facts relating to the issues contested by both the assessees are identical in nature. They are stated in brief. Both the assessees are sons of Shri Manuprasad Trivedi, who is a civil contractor undertaking sub-contract works from SMC Group. A search action was undertaken in the hands of SMC group on 23-05-2012. Consequent thereto, the assessment of the year under consideration was completed in the hands of both the assessees herein u/s 143(3) r.w.s 153A of the Act. Both the assessees had claimed exemption of long term capital gains declared by them on sale of shares of M/s NCL Research and Services Ltd and M/s Tuni Textile Mills Ltd. It was accepted by the AO in the above said assessment proceedings.

3.1 Subsequently, the AO received information that the long term capital gains on sale of shares of above said two companies, viz., M/s NCL Research and Services Ltd and M/s Tuni Textiles Mills Ltd declared by the assessees are bogus in nature, since both the above said companies have been identified as penny stock companies by the investigation wing of Income tax department. We notice that Shri Mukesh M Trivedi had claimed exemption of long term capital gains of Rs.83,31,639/- and Shri Rajesh M Trivedi had claimed exemption of long term capital gains of Rs.90,01,964/-. Based on the information given by the investigation wing, the AO entertained the reason to believe that there was escapement of income in the hands of both the assessees herein in the form of wrongly allowing exemption to the bogus long term capital gains. Accordingly, he reopened the assessment of the year under consideration in the hands of both the assessees herein by issuing notice under section 148 of the Act.

4. In the reopened assessment, the Assessing Officer referred extensively to the report given by the investigation wing with regard to the modus operandi followed by the operators to generate bogus