Processing return of income under section 143(1) does not prevent reassessment. Additions under section 68 for alleged bogus long-term capital gains require specific evidence linking the assessee to price manipulation; suspicion or generalized investigation reports are insufficient to discharge the Revenue's burden against documented transactions.

आदेश / O R D E R

PER BENCH :-

The above captioned appeals have been preferred by the Revenue against the orders of even date passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to the assessment orders passed u/s. 143(3) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for the Assessment Years [A.Y.] 2011-12, 2014-15 and 2015-16. The appeals which were heard together are being taken up together for adjudication vide this composite order for the sake of brevity.

ITA 3199/MUM/2025 (A.Y. 2011-12)

The grounds of appeal are as under:-

1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in not upholding the reopening of assessment proceedings u/s 148 of the Income Tax act, 1961 (the Act), holding that re-open proceedings are not found to be correct, without considering Explanation 2 to section 147 & provisions of section 149(1)(b)of the Act?

2. Whether on the facts and circumstances of the case & in law, the Ld. C1T(A) is justified in quashing the proceedings u/s 147 of the Act without considering the fact that the reopening is based on proper recording of reasons?

3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in quashing the reopening of Assessment u/s 147 of the Income Tax Act, 1961, without considering the fact that merely showing the facts in return of income is not enough to get rid of the obligation on assessee to make full and true disclosure?

4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in quashing the proceedings u/s 147 of the Act thereby deleting the addition made by the Assessing Office being bogus LTCG which could not be proved to be genuine by the assessee?

5. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in quashing the proceedings u/s 147 of the Act thereby deleting the addition u/s 68 made by the Assessing Officer, without appreciating the fact involved in this case that M/s Gemstone Investment Ltd. (GIL), is a penny stock company and the sale of shares of the penny stock company was pre-arranged method of assessee?

6. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made u/s. 68 of the Income Tax Act, 1961 proceeds on sale of the Scrip on which LTCG was claimed by the assessee, without appreciating the overwhelming evidence such as purchases shown to have been made off market, statement of various relevant persons admitting that these companies were indulged in giving accommodation entries, abnormal rise in prices over short period, cash trails in the accounts of entry operators etc.?

7. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) ignored the ratio laid down by the Hon'ble Calcutta High Court in the case of PCIT Vs Swati Bajaj reported [2022] 139 taxmann.com 352 (Calcutta) and the decision of Hon'ble Delhi High Court in Suman Poddar Vs ITO , whereby the entire modus operandi adopted by the assessee has been clearly illustrated and there is no reason to hold a contrary view and that the principles of natural justice do not require formal cross examination, since it has direct relevance to the assessee's case?

8. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition, granting relief without considering the Principals laid down in the decisions of Hon'ble Supreme Court in the cases of Durga Prasad More vs. CIT (1971) 82