Khushboo Anand Bhayani Vs ITO (Gujarat High Court)
Gujarat High Court heard the petition filed by Khushboo Anand Bhayani challenging the reassessment notice issued under Section 148 of the Income Tax Act, 1961. The petitioner, who earned income from trading in shares, commodities, and derivatives, had declared a profit of ₹59,19,328 from Futures & Options (F&O) transactions in her profit and loss account. However, the Income Tax Department reopened her assessment for the year 2015-16, citing discrepancies between her declared income and trading volumes recorded in the Insight Portal. The petitioner contested the reassessment, arguing that the reopening was based on vague reasons and lacked independent application of mind.
The department justified the reopening based on information received from “Project Falcon,” which flagged coordinated and premeditated trading in illiquid stock options. According to the Assessing Officer (AO), the petitioner had participated in non-genuine transactions and failed to fully disclose material facts. However, the High Court found that the reopening was mechanical and based solely on third-party information without an independent inquiry into the petitioner’s specific transactions. The court noted that the petitioner had already declared her F&O profits in her tax filings, and the AO failed to demonstrate any tangible evidence of income escaping assessment.
