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IN THE HIGH COURT OF DELHI AT NEW DELHI

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ITA 232/2022 & CM APPL. 32874/2022

PRINCIPAL COMMISSIONER OF INCOME TAX, DELHI-20

..... Appellant

Through:

Ms. Vibhooti Malhotra, Sr. Standing

Counsel for Revenue.

versus

MS. KAVITA AGARWAL

..... Respondent

Through:

None.

%

Date of Decision: 28^thJuly, 2022

CORAM:

HON'BLE MR. JUSTICE MANMOHAN

HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA

J U D G M E N T

MANMEET PRITAM SINGH ARORA, J (ORAL):

CM APPL. 32874/2022

Exemption allowed, subject to all just exceptions.

Accordingly, this application is disposed of.

ITA 232/2022

1.

The present Income Tax Appeal arises out of the impugned order

dated 30^thJune, 2021 passed by the Income Tax Appellate Tribunal

(hereinafter referred to as ‘ITAT’), Delhi in ITA 5858/Del/2018. The facts,

in brief are that the Investigation Wing of the Income Tax Department

conducted a search & seizure and survey operations under Section 132/133A

This is a digitally signed Judgement.

NEUTRAL CITATION NO: 2022/DHC/002947

of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’) on 8^th

July, 2015 against M/s K.R. Pulp & Papers Ltd. and its group at various

residential and business premises. During post-search investigations, Sh.

Madho Gopal Agarwal, Managing Director of M/s K.R. Pulp & Papers Ltd.

made a statement. It is the case of the Revenue that Sh. Madho Gopal

Agarwal, Managing Director of M/s K.R. Pulp & Papers Ltd. admitted that

undisclosed income has been routed in the books through bogus entries of

Long Term Capital Gains (LTCG) by way of sale of shares. It is also the

case of the Revenue that during the course of the search operations and post-

search investigation, various incriminating documents were found and

seized which disclosed that income from sale of shares of penny stock

companies was disclosed as LTCG by its beneficiaries, and the LTCG

earned by the promoters and family members has been used for personal

use.

2.

In this regard reliance has been placed on the statement of Sh. Madho

Gopal Agarwal recorded on oath under Section 132(4) of the Act on 3^rd

August, 2015 and letter dated 31^stJuly, 2015 issued by Sh. Madho Gopal

Agarwal. The case was centralised as per the orders passed under Section

127 of the Act and a notice under Section 153A of the Act was issued on

26^thSeptember, 2016, which was duly served. Upon receipt of notice the

assessee filed her return for the relevant assessment year 2011-12 declaring

an income of Rs. 5,53,080/- on 2^ndMarch, 2017. During the year under

consideration, the assessee declared income under the head ‘income from

sources’. With respect to the income from capital gains, the assessee

submitted in her reply to state that she had purchased 1,600 shares of one

This is a digitally signed Judgement.

NEUTRAL CITATION NO: 2022/DHC/002947

M/s KGN Industries Ltd. for a total consideration of Rs. 16,000/- at Rs.10/-

per share, subsequently dematerialised the shares and sold the shares on 20^th

October, 2010 i.e., in Financial Year (FY) 2010-11 for a sum of Rs.

37,95,231/-. It is submitted that the assessee had earned capital gain of Rs.

37,79,449/- on the sale of the said shares. However, LTCG of Rs.

37,79,449/- was claimed by the assessee as an exempt income under Section

10(38) of the Act. The Assessing Officer (AO) relying upon the letter dated

31^stJuly, 2015 and statement by Sh. Madho Gopal Agarwal dated 3^rd

August, 2015 held that the amount of gain of Rs. 37,79,449/- is an

accommodation entry, therefore, rejected the return filed by the assessee and

treated the amount of Rs. 37,79,449/- as an unexplained credit received by

the assessee under Section 68 of the Act and added the same to the total

income of the assessee.

3.

The assessee filed an appeal against the aforesaid order of the AO

dated 17^thJuly, 2018 before CIT(A). The assessee raised a specific ground

that the assessment with respect to the AY 2011-12 stood completed as on

the date when notice under Section 153A of the Act was issued to the

assessee. Th