IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “B” BENCH: HYDERABAD BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MANJUNATHA G, ACCOUNTANT MEMBER Assessment Year 2012-2013 Mahesh Reddy Althuri, L/H of Late The ACIT, Audinarayana Reddy vs.

Central Circle-2(1), Althuri, Hyderabad.

Hyderabad.

PIN – 500 033 PAN ABQPA4251N (Appellant) (Respondent)

CA D K Chhablani For Assessee :

[Through Hybrid Mode For Revenue : Dr. Sachin Kumar, Sr. AR Date of Hearing : 09.04.2025 Date of Pronouncement : 17.04.2025 ORDER PER MANJUNATHA G. :

This appeal has been filed by the Assessee against the order dated 20.12.2022 of the learned CIT(A)-12, Hyderabad, relating to the assessment year 2012-2013.

2. Brief facts of the case are that the assessee is an individual, derived income from long term capital gains, income from other sources and agricultural income. The assessee has not filed return of income for the assessment year 2012-2013 on or before the “due date” provided under section 139 of the Income Tax Act, 1961 [in short “the Act”]. A search and seizure operation under section 132 of the Act was conducted in the case of M/s. AMR India Limited and others on 02.05.2018. As part of the search operations, case of the assessee was also covered under section 132 of the Act. A notice under section 153A of the Act was issued to the assessee on 25.06.2019. In response to the said notice, the assessee filed his return of income on 24.07.2019 admitting total income of Rs.41,810/-; agricultural income of Rs.14,05,376/- after claiming exemption under section 10(38) of the Act to the tune of Rs.5,96,11,906/- towards long term capital gains on sale of shares.

2.1. The case was selected for scrutiny and during the course of assessment proceeding, the Assessing Officer noticed that search operations and survey action was conducted by the Directorate of Investigation, Kolkata on various share brokers revealed the modus operandi of the brokers for providing accommodation entry of bogus long term capital gains and short term capital gains to various beneficiaries. Further, during the course of investigation, it was noticed that, they have facilitated various entities to trade in shares of M/s. Twenty First Century India Limited and other penny scrips for providing accommodation entry of bogus long term/short term capital gains. Further, information received from the Directorate of Investigation, Kolkata shows that the Directors and other family members of AMR India Limited have used penny stock to route their undisclosed income by booking long term capital gains through a company M/s. Twenty First Century India Limited managed by Shri Anil Kumar Khemkha. Subsequently, a search and seizure operation under section 132 of the Act was also conducted in the business premises of AMR India Limited and during the search operation, a statement was recorded from A. Mahesh Reddy wherein he had admitted to have received accommodation entry of bogus long term capital gains in the name of his family members and also voluntarily come forward to withdraw exemption claimed under section 10(38) of the Act. The Assessing Officer after considering the relevant information received from the Directorate of Investigation, Kolkata coupled with the statement recorded from various individuals and also the statement recorded from A.Mahesh Reddy, Managing Director of the AMR India Limited observed that, the assessee is a beneficiary of bogus long term capital gains entry provided by the entry operators which is evident from the statement recorded from various persons coupled with other information found during the course of search in the case of entry providers situated at Kolkata. The Assessing Officer had also discussed the issue at length in light of report of Directorate of Investigation, Kolkata and also the shares of companies, of which, the assessee has derived long term capital gains and came to the conclusion that, the long term capital gains derived by the assessee from sale of shares