ITAT Delhi Quashes Reassessment Over Alleged Stock Option Manipulation

The “A” Bench of the Income Tax Appellate Tribunal, Delhi, delivered its order on 25 February 2026 in the case of Ashiana Manufacturing India Ltd for Assessment Year 2014–15. The appeal challenged reassessment proceedings and an addition of ₹93.63 lakh under Section 69A of the Income-tax Act.

Reopening Based on Irrelevant Allegations

The Assessing Officer reopened the assessment alleging that the assessee had engaged in coordinated reversal trades in stock options on the Bombay Stock Exchange, resulting in non-genuine gains of ₹93.63 lakh. The allegation was based on general observations regarding manipulation in illiquid options contracts investigated by SEBI. The Tribunal noted that the assessee had actually declared the said ₹93.63 lakh as business income in its return and had merely set it off against brought-forward losses of Assessment Year 2012–13, which were never disputed. The ITAT held that the allegations regarding loss-making entities were irrelevant to the assessee’s case, as the assessee had earned profits, not losses. It further observed complete non-application of mind and mechanical approval under Section 151, as there was no escapement of income when the amount was already offered to tax. Even if treated under Section 68, the law as applicable during the relevant year permitted set-off of losses against such income.

Reassessment Declared Void Ab Initio

The Tribunal concluded that the very foundation of the “reason to believe” was flawed. Since there was no escapement of income and the reopening was based on irrelevant material, the assumption of jurisdiction under Section 147 was invalid. Accordingly, the entire reassessment proceedings were quashed as void ab initio. The addition of ₹93.63 lakh was set aside and the assessee’s appeal was allowed.