ALPESH K. AJMERA HUF ,MUMBAI vs. INCOME TAX OFFICER WARD 18(1)(1), MUMBAI

Date of Hearing 10.12.2025 Date of Pronouncement 22.12.2025 ORDER Per: SHRI. SANDEEP GOSAIN, J.M.:

The present appeal has been filed by the assessee challenging the impugned order dt. 07.05.2025 passed by National Faceless Appeal Centre, Delhi (NFAC) / CIT(A).The assessee has raised the following grounds of appeal:

1.2 Without prejudice to the generality of the above, the appellate order so passed is bad, illegal and void as the same is utterly cryptic and perverse.

2. NATURAL JUSTICE 2.1 It is submitted that, in the facts and the circumstances of the case, and in law, the appellate order so framed be held as bad and illegal, as: (i) The same is framed in breach of the principles of natural justice; and (ii) The same is passed without application of mind to the facts and the submissions brought on record by the Appellant. 2.2 Without prejudice to the generality of the above ground, in the facts and the circumstances of the case, the Ld. CIT(A) erred in not granting proper, sufficient and adequate opportunity of being heard to the Appellant while framing the appellate order. 2.3 It is submitted that in the facts and the circumstances of the case, and in law, no such action was called for. WITHOUT FURTHER PREJUDICE TO THE ABOVE 3.1 The Ld. CIT (A) erred in confirming the addition made by the A.O. of Rs.51,02,720/- u/s. 68 of the Act, on account of alleged bogus / unexplained long term capital gain. 3.2 While doing so, the Ld. CIT (A) erred in: (i) Basing his action on wrong/ erroneous facts. (ii) Basing his action only on surmises, suspicion and conjecture; (iii) Taking into account irrelevant and extraneous considerations; and (iv) Ignoring relevant material and considerations as submitted by the Appellant. 3.3 It is submitted that in the facts and the circumstances of the case, and in law, no such addition was called for. 3.4 Without prejudice to the above, assuming but not admitting that some addition was called for, it is submitted that the computation of the addition made by the A.O. is arbitrary, excessive and not in accordance with the law.

WITHOUT FURTHER PREJUDICE TO THE ABOVE 4.1 The Ld. CIT (A) erred in confirming the addition made by the A.O. of Rs.1,02,054/- u/s. 69 of the Act, on account of alleged estimated unexplained expenses. 4.2 While doing so, the Ld. CIT (A) erred in: (i) Basing his action only on surmises, suspicion and conjecture; (ii) Taking into account irrelevant and extraneous considerations; and (iii) Ignoring relevant material and considerations as submitted by the Appellant. 4.3 It is submitted that in the facts and the circumstances of the case, and in law, no such addition was called for. 4.4 Without prejudice to the above, assuming but not admitting - that some addition was called for, it is submitted that the computation of the addition made by the A.O. is arbitrary, excessive and not in accordance with the law. LIBERTY 5. The Appellant craves leave to add, alter, delete or modify all or any the above ground at the time of hearing.

10. Reliance in this regard is also placed upon the decision, wherein under the identical circumstances involving the same scrip the matter was decided by the different Benches of the Tribunal in the following cases.

S.N. CITATION OBSERVATION [2024] 164 INCOME TAX : Where assessee, dealing in taxmann.com 86 shares, claimed a trading loss in scrip of (Ahmedabad - Trib.) certain company, since all transactions were IN THE ITAT conducted through registered stockbrokers AHMEDABAD BENCH and there was no complaint filed by any of 'D' party either to SEBI or stock exchange about Vicky Rajesh Jhaveri assessee or brokers that it was involved in v. manipulation of prices of shares, allegation of Deputy revenue that there was manipulations in scrip Commissioner of for providing accommodation entries could not Income-tax* be accepted for disallowing claim of assessee IT APPEAL NOS. 423 Section 69A of the Income-tax Act, 1961 - TO 428 (AHD.) OF Unexplained moneys - Assessment years 2023 2010-11 to 2012-13 - Unexplained moneys - [ASSESSMENT Assessee was dealing in share - He claimed YEARS 2010-11 TO trading loss in script of M/s ‘P’- Revenue 2012-13] alleged that assessee had carried out transactions in script of M/s ‘P’ in connivance with SCS - Basis for holding so was that it was discovered during search proceedings at premises of SCS that company namely M/s ‘P’ was engaged in providing accommodation entries through involvement of SCS - Accordingly, trading loss claimed by assessee was disallowed - It was noted that all transactions were carried out by assessee at stock exchange through involvement of registered/ stockbrokers and revenue had not established any link between SCS/ M/s ‘P’ viz a viz registered stockbrokers which was necessary for carrying out manipulation in script in dispute - Likewise, it was also noted that there was nothing on record suggesting that there was any enquiry conducted either by SEBI or stock exchange with respect to trading in script of M/s ‘P’ - Similarly, there was no complaint filed by any of party either to SEBI or stock exchange about assessee or brokers or M/s ‘P’ that it was involved in manipulation of prices of shares - Moreover, name of M/s ‘P’ did not appear in report of investigation wing - Whether just modus operandi, generalisation, preponderance of human probabilities could not be only basis for rejecting claim of assessee, unless specific evidence was brought on record to prove that assessee was involved in collusion with entry operator/ stockbrokers for such a scam - Held, yes - Whether in absence of any finding specifically against assessee in investigation wing report, assessee could not be held to be guilty or linked to wrong acts of persons investigated with respect to his trading loss claim - Held, yes [Paras 9.4, 9.5, 9.6, 9.7, 9.9 and 9.10] [In favour of assessee] IN THE INCOME TAX In this case, a trading loss of Rs. APPELLATE 42,14,344/- claimed by the assessee in the TRIBUNAL, ‘’D’’ scrip of M/s Prraneta Industries Ltd. was BENCH, AHMEDABAD disallowed by the AO on the basis of search Vicky Rajesh Jhaveri material found in the case of Shirish VS Chandrakant Shah (SCS), alleging that the The Deputy loss was bogus and part of an accommodation Commissioner of entry arrangement. The assessee submitted Income Tax, Central that all transactions were carried out through Circle-1(1), stock exchange, registered stockbrokers, Ahmedabad duly supported by contract notes, demat Assessment Year : statements and bank channels, and no 2010-11 to 2012-13 incriminating material or cash trail was found ITA No. : Nos.423 to during the survey at assessee’s premises. It 428/Ahd/2023 was also pointed out that no evidence was brought on record by the AO linking the assessee with SCS or the company, and no enquiry was made from SEBI, BSE/NSE, counterparties or brokers. The Tribunal noted that the assessee was engaged in regular share trading business with substantial turnover and had sufficient brought forward losses, and therefore there was no motive to create an artificial loss. It was further held that no nexus between the assessee and SCS or any operator was established, no complaint or investigation existed regarding manipulation in the scrip, and no independent evidence was produced to support the allegation of cash exchange or collusion. The ITAT held that mere modus operandi, generalisation and human probabilities could not be the basis for disallowance in absence of specific evidence. Relying on the judgment of Pr. CIT vs. Smt. Krishna Devi (Delhi High Court), the Tribunal held that suspicion cannot replace proof. Since all documents were on record, payments were through account payee cheques, trades were on stock exchange, shares were in demat, and no adverse material existed against the assessee, the disallowance was deleted and the trading loss was allowed. IN THE INCOME TAX In the case of Jasmin K. Ajmera & Ors vs. APPELLATE DCIT (Mumbai ITAT, order dated TRIBUNAL “A” 02.11.2021), the assessees had claimed BENCH, MUMBAI Long-Term Capital Gains from sale of Jasmin K. Ajmera shares of Prraneta Industries Ltd. (now VS DCIT-2(2) AND Aadhar Venture India Ltd.), which were OTHERS treated by the Assessing Officer as bogus transactions on the basis of alleged Shri Ashish K. accommodation entries of the Shirish C. Shah Ajmera group. The assessments were made for non- Minal M. Ajmera abated years, where the original Avani J. Ajmera assessments had attained finality and the Manish K. Ajmera time limit for issue of notice under section Jiten K. Ajmera 143(2) had expired before the date of search. (Legal Heir of Sh. The Tribunal recorded a finding that no Kishore H. Ajmera) incriminating material was found during International the course of search, and the seized Financial Services documents consisted only of regular books Ltd. such as ledger extracts, stock summaries and Essem Capital investment details, which were already Markets Ltd. disclosed and did not have any incriminating Ajmera Associates nature. The addition was made solely on the Ltd. basis of a statement recorded under 983/Mum/2020 section 132(4) without any corroborative 1140/Mum/2020 material, which was subsequently retracted 1113/Mum/2020 by way of a sworn affidavit. The Tribunal 539/Mum/2020 held that as per settled law, no addition can 985/Mum/2020 be made in an unabated assessment in 1142/Mum/2020 absence of incriminating material found 1108/Mum/2020 during search, relying upon binding decisions 1141/Mum/2020 in Continental Warehousing, Gurinder 4997/Mum/2018 Singh Bawa, Kabul Chawla and Harjeev AY 2011-12 Aggarwal, and also referring to CBDT Circulars dated 10.03.2003 and 18.12.2014, which discourage additions based only on statements. Accordingly, the ITAT concluded that the additions were unsustainable in law, as they were made only on the basis of suspicion and 3rd party search material, and therefore all additions were deleted and the appeals of the assessees were allowed. INCOME TAX FACTS APPELLATE TRIBUNAL ‘D’ BENCH In this consolidated group of appeals MUMBAI concerning the Ajmera family, the assessees Jiten K Ajmera were engaged in share trading and stock (Legal heir of Late broking, and had subscribed to shares of Shri Kishore H Prraneta Industries Ltd. (later Aadhar Ajmera) VS DCIT., Ventures) in August 2009 at Rs. 2.25 per Central Circle – 2(2) share through account payee cheques. These AND OTHERS shares were later sold on 15 occasions Reena A Ajmera between 16.08.2010 and 06.06.2011 Minal M Ajmera through the online BSE platform, supported Avani J Ajmera by contract notes, demat statements, STT Jiten K Ajmera and bank statements, and long-term Manish K Ajmera capital gains were offered as exempt u/s International 10(38). The Assessing Officer treated the Financial Services gains as bogus, relying on statements Ltd. recorded during search and alleged cash Ajmera ledger entries from the Shirish C. Shah Pharmasure Ltd. group, along with the fact that group Ashish K Ajmera companies of Shri Shirish C. Shah Alpesh K Ajmera purchased shares in the market. The AO Harsh J Ajmera added the capital gain as unexplained cash (Legal Heir of Late and also made a separate 5.25% commission Jasmin K Ajmera) addition. The assessees rebutted these findings, filed detailed retraction affidavits 626/Mum/2021 explaining that the statement was taken under 1111/Mum/2020 pressure and duress, emphasized that no 1112/Mum/2020 incriminating material was found during 1110/Mum/2020 search at their premises, and highlighted that 1143/Mum/2020 all transactions were through stock 986/Mum/2020 exchange with no evidence of cash 1109/Mum/2020 movement. The CIT(A) upheld the addition 1137/Mum/2020 based primarily on the statements and search 1135/Mum/2020 findings in the case of Shri Shirish C. Shah. 1144/Mum/2020 984/Mum/2020 HELD AY 2012-13 The Tribunal held that the facts, documents and evidences clearly established purchase and sale through the stock exchange, and that no incriminating material was found during the search in the Ajmera family cases. The retraction affidavits were filed immediately after the search, and the authorities had not disproved or addressed the contents of those affidavits. It was also noted that in earlier years, transactions in the same scrip were accepted as genuine, and no material or corroborative evidence was produced to show cash movement, nor was any adverse finding given by SEBI or BSE. The Tribunal observed that additions were made solely on statements and suspicion, without independent verification or evidence, and that mere reliance on human probabilities and third-party statements was insufficient to deny the claim. Accordingly, the additions made on account of long-term capital gain and commission were deleted, and the appeals of the assessees were allowed.

IN THE INCOME TAX In this case, the assessee had reported Long- APPELLATE Term Capital Gain of Rs. 94,49,384/- on TRIBUNAL “D” shares of Talent Infoway Ltd. and Short- BENCH, AHMEDABAD Term Capital Gain of Rs. 32,94,684/- on ACIT, Circle-7, shares of Prraneta Industries Ltd.. The Ahmedabad Assessing Officer treated the gain as bogus VS accommodation entries on the basis of Vineet enquiries from stock exchanges and Sureshchandra statements of Mukesh Choksi, alleging that Agarwal no trades were executed in the name of assessee, and therefore added the 1442/Ahd/2013 & CO amounts u/s 68. The assessee produced No. 209/Ahd/2013 complete supporting documents, including Assessment Year : purchase bills, contract notes, demat 2005-06 statements, bank statements, trade numbers, quantity, sale rates, and account payee cheques, and explained that the transactions were carried out through registered brokers Goldstar Finvest Pvt. Ltd., Mahasagar Securities Pvt. Ltd., Neptune Securities Pvt. Ltd., and Vimla Exim Pvt. Ltd.. It was also demonstrated that all shares were held in demat form, and BSE confirmed the transaction of 30,000 shares, while 20,000 shares were sold through Vimla Exim Pvt. Ltd., with invoices containing full trading particulars, but no enquiry was made from that broker. The CIT(A) held that no adverse material was found against the assessee, the purchase of shares had been accepted in earlier assessments, and off-market transactions are not illegal, relying on the judgment in Mukesh Moralia, which is confirmed by the Bombay High Court. The Tribunal observed that all documents were genuine, payments were through banking channels, and no link was established between the assessee and any alleged fraudulent activities. Therefore, the ITAT upheld the order of the CIT(A) and held that the capital gains cannot be treated as unexplained cash credit, and both LTCG and STCG were allowed. The Revenue’s appeal was dismissed. IN THE INCOME TAX FACTS APPELLATE TRIBUNAL, ‘’ B’’ The assessee, Pinac Stock Brokers Pvt. Ltd., BENCH, AHMEDABAD was engaged in the business of trading in Pinac Stock Brokers shares and during the year had sold shares of Pvt. Ltd. Akshar Entertainment Ltd. to four VS companies, including Prraneta Industries D.C.I.T., Central (Aadhar Venture), receiving a total Circle-1(1), consideration of Rs. 7.25 crores through Ahmedabad. banking channels. The Assessing Officer treated the receipts as unexplained cash 254/AHD/2020 credits u/s 68, stating that the purchasing Asstt. Year: 2011-12 companies were shell entities controlled by & 2012-13 Shirish C. Shah (SCS) and that the shares were transferred to square off alleged And accommodation entries. The assessee Lopa Saumil contended that the shares were purchased Bhavnagari in earlier years through banking channels, Vs duly recorded in the books, and that the D.C.I.T., Central receipts were only sale proceeds, not loans or Circle-1(1), capital infusion. No material was found to Ahmedabad. show any cash payment or consideration books, and requests for cross- 255/AHD/2020 examination of SCS were not granted. The Asstt. Year:2012-13 AO relied on a third-party excel sheet found in the search on SCS, but the assessee was not a party to those entries and there was no corroboration of cash movement.

HELD The Tribunal observed that no incriminating evidence was found to suggest that the assessee had received any cash in lieu of the cheques, and the purchases of shares were accepted by the Revenue in earlier years. The excel sheet relied upon was seized from a third party premises, and no link was established between those cash entries and the assessee. It was held that if the purchase of shares was accepted as genuine, the corresponding sale receipts cannot be treated as unexplained u/s 68, especially when consideration was received through banking channels. The Tribunal found that there was no benefit of unexplained income flowing to the assessee and noted that the funds, if any, were connected to the promoters of Akshar Entertainment Ltd., not the assessee. Accordingly, the addition under section 68 was deleted, holding that the assessee had discharged the onus, and the Revenue failed to bring any corroborative material. The Tribunal therefore allowed the appeal and directed deletion of the addition.

[2021] 126 Section 68 of the Income-tax Act, 1961 - Cash taxmann.com 225 credits - Assessment year 2008-09 - Whether (Chandigarh - Trib.) where all arguments alongwith various IN THE ITAT judicial pronouncement relied upon by both CHANDIGARH BENCH parties were duly considered before deleting 'A' addition under section 68 in hands of Deputy assessee by Tribunal, there existed no Commissioner of manifest error in order of Tribunal, Income-tax rectification application was to be rejected - v. Held, yes [Para 6.7 and 7.2] [In favour of Sanjay Singal assessee] A search and seizure operation was MISCELLANEOUS carried out by department at the business APPLN. NOS. 31 TO premises of the 'BPSL' Group alongwith 36 (CHD) OF 2020 residential premises of its directors and other IT APPEAL NOS. related entities. Wherein it was found that 706, 707, 709, 712, BPSL Group had been continuously involved in 713 AND 715 (CHD.) introduction of its unaccounted income in grab OF 2018 of LTCG, OT etc. The assessee one of director [ASSESSMENT of group company alongwith his wife YEARS 2008-09, surrendered certain sum as undisclosed 2010-11 AND 2012- income. The Assessing Officer accordingly 13] added said income under section 68 to income of the assessee. The Tribunal however deleted the addition in hands of the assessee on ground that no incriminating material was found during search against assessee. The revenue filed instant application claiming there was apparent mistakes in impugned order of ITAT. It was contended that submissions of the revenue with respect to the alleged non applicability of the case of Shri Brij Bhushan Singal and others to the facts of the present case were altogether omitted to be taken note of in the impugned order of the ITAT and no cognizance was taken by the ITAT on the live nexus between the incriminating material found during the search action at various places/premises. Held that all the submissions and the case laws relied by the Special Counsel for the revenue find place at page nos. 94 to 108 in paras 38 to 45 of the impugned order and after considering those submissions as well as case laws, the conclusion has been drawn by the ITAT. It appears that the Department wants to get the order passed by the Tribunal reviewed which is not permissible as the ITAT has no power to review its order and the right platform/forum for redressal of this grievance on any special question of law arising from the order of the ITAT would be the High Court under section 260A. In the present case the ITAT passed the order in consonance with judicial principle laid down by the Apex Court in the case of Asstt. Commissioner, Commercial Tax Department Works Compact & Leasing v. Shukla & Brothers [2010] 3 taxmann.com 622 and all the four preposition of judgment stands fulfilled in the impugned order of the ITAT dated 7-2-2020 in Sanjay Singhal v. Dy. CIT [IT Appeal No. 706/Chd/2018] for the assessment year 2008-09 viz; (i.) There is adequate clarity on thought. (ii.) Decision has been well reasoned. (iii.) The reason for decision have been well communicated. (iv.) The order is well reasoned. Since all the arguments alongwith the various judicial pronouncements relied upon by both the parties, were duly considered, there exists no manifest error in the decision of the ITAT. Therefore, no merit was found in this Misc. Application moved by the Department. [2024] 167 INCOME TAX : Where assessee earned taxmann.com 377 capital gain on sale of shares of two (Mumbai - Trib.) companies and Assessing Officer treated IN THE ITAT MUMBAI said transactions as bogus and added BENCH 'A' entire amount to assessee's income under Amrita Abhishek section 68, since assessee had carried out Doshi transactions through recognised stock v. exchange and she had discharged her Deputy onus by submitting documents before Commissioner of Assessing Officer and latter had not Income-tax * conducted independent investigation and IT APPEAL NO. 1353 fully relied on observations of (MUM.) OF 2024 investigating authority, impugned [ ASSESSMENT YEAR addition deserved to be quashed 2014-15 ] Section 68, read with section 45, of the Income-tax Act, 1961 - Cash credit (Share transaction) - Assessment year 2014-15 - Assessee earned long-term capital gain and short term capital gain on sale of shares of two companies - Assessing Officer treated both transactions as bogus and added entire amount to assessee's income under section 68 Whether since assessee had carried out transactions through recognized stock exchange and she had discharged her onus by submitting documents before Assessing Officer and latter had not conducted independent investigation and fully relied on observations of investigating authority, addition made to assessee's income deserved to be quashed - Held, yes [Paras 8 and 10] [In favour of assessee]

S. CITATION OBSERVATION N. 1. [2015] 54 Section 68 of the Income-tax Act, 1961 - Cash taxmann.com 108 credit (Share dealings) - Assessment years (Bombay) HIGH 2003-04 to 2006- 07 - Assesse declared capital COURT OF BOMBAY gain on sale of shares of two companies - Commissioner of Assessing Officer, observing that transaction Income-tax-13 v. was done through brokers at Calcutta and Shyam R. Pawar* performance of concerned companies was not DECEMBER 10, such as would justify increase in share prices, 2014 held said transaction as bogus and having been done to convert unaccounted money of assesse to accounted income and, therefore, made addition under section 68 - On appeal, Tribunal deleted addition observing that DMAT account and contract note showed credit/details of share transactions; and that revenue had stopped inquiry at particular point and did not carry forward it to discharge basic onus - Whether on facts, transactions in shares were rightly held to be genuine and addition made by Assessing Officer was rightly deleted - Held, yes [Para 7] [In favor of assesse] 2. [2014] 41 Section 10(38) of the Income-tax Act, 1961 - taxmann.com 118 Capital gains - Exemption of, on transfer of (Hyderabad - Trib.) securities [Genuineness of transactions] - IN THE ITAT Assessment year 2006- 07 - Assesse filed its HYDERABAD BENCH return declaring long term capital gains on 'A' Income-tax shares traded in Calcutta Stock Exchange - Officer, Ward 2, Since sale transactions took place through Nizamabad v. Smt. authorized stock exchange and securities Aarti Mittal* transaction tax was paid, assesse claimed NOVEMBER 6, 2013 entire sale proceeds arising out of transaction as long term capital gain exempt from tax under section 10(38) - Assessing Officer did not believe transactions in question as genuine and treated entire sale proceeds as 'Income from Other Sources' - Commissioner (Appeals) opined that in absence of any positive evidence, merely on basis of suspicion, transactions could not be held to be not genuine - Commissioner (Appeals) thus set aside addition made by Assessing Officer - It was noted that even though enquiry with Chennai Stock Exchange (CSE) revealed that no purchase had taken place through it, since transactions were in physical form and done through off market, question of same being routed through floor of a recognized stock exchange did not arise - It was also apparent that assesse having purchased shares in question, converted them in D-mat form and thereupon sale of those shares was carried out through CSE after paying Securities Transaction Tax - Whether on facts, transactions of purchase and sale of shares were to be regarded as genuine in nature and, therefore, assesses claim was rightly allowed - Held, yes [Para 23] [In favor of assesse] 3. [2017] 77 Section 10(38), read with section 147, of the taxmann.com 260 Income-tax Act, 1961 - Capital gains - Income (Ahmedabad - Trib.) arising from transfer of long-term securities IN THE ITAT (Bogus transactions) - Assessment year 2006- AHMEDABAD BENCH 07 - Assesse purchased 3000 shares of 'B' Pratik company 'T' through a stock broker - These Suryakant Shah v. shares were transferred to assesses demat Income-tax Officer, account - However, said stock broker Ward- 10 (3), submitted before authorities that he was Ahmedabad* providing accommodation entries for taking OCTOBER 21, 2016 profit or loss by showing purchase or sales of shares and securities commission from beneficiary parties and that assesse was one of beneficiary of such accommodation entries - Assessing authorities reopened assessment of assesse - Whether since shares of said company was listed in BSE/NSE and these were also transferred to demat account of assesse, assesses claim of exemptions of long- term capital gain on sale of shares could not be denied on basis of submission of said broker - Held, yes [Paras 17 and 18] [In favor of assesse] 4. ACIT vs. Vineet Bogus capital gains from penny stocks: The Sureshchandra fact that the Stock Exchanges disclaimed the Agarwal (ITAT transaction is irrelevant because purchase and Ahmedabad) of shares outside the floor of Stock 1442/Ahd/2013 & Exchange is not an unlawful activity. Off- CO No. market transactions are not illegal. It is 209/Ahd/2013 always possible for the parties to enter into Assessment Year : transactions even without the help of brokers. 2005-06 Therefore, it is not possible to hold that the transactions reported by the assesse were sham or bogus 5. Surya Prakash Bogus capital gains from penny stocks: Long- Toshniwal HUF vs. term capital gains claimed exempt u/s 10(38) ITO (ITAT Kolkata) cannot be treated as bogus unexplained income ITA if the paper work is in order. The fact that the No.1213/Kol/2016 Company whose shares were sold has violated Assessment Year SEBI norms and is not traceable does not mean :2005-06 that the assesse is at fault 6. CIT vs. Mukesh S. 10(38)/ 68: Long-term capital gains on sale Ratilal Marolia of "penny" stocks cannot be treated as bogus & (Bombay High unexplained cash credit if the documentation is Court) INCOME TAX in order & there is no allegation of APPEAL NO. 456 OF manipulation by SEBI or the BSE. Denial of 200 7 7th right of cross-examination is a fatal flaw which September 2011 renders the assessment order a nullity 7. Smt. Sunita Jain, The claim of the assesse cannot be denied on V/s. Income Tax the basis of presumption and surmises in Officer, Ward10 (3), respect of penny stock by disregarding the Ahmedabad ITA. direct evidences on record relating to the Nos: 501 & sale/purchase transactions in shares 502/AHD/2016 supported by broker’s contract notes, Assessment Year: confirmation of receipt of sale proceeds through 2008-09) regular banking channels and the demat account 8. ITO-24(3)(1) V/s M/s Where assesses broker share transaction was Arvind Kumar Jain bone fide in all respect, merely because share HUF was tainted violating SEBI regulations, 4862/MUM/2014 would not make assesses share transactions Assessment Year: bogus. 2005-06 9. Kamla Devi S. Bogus penny stocks capital gain: The s. 131 Doshi V/s. The statement implicating the assesse is not Income Tax Officer sufficient to draw an adverse inference against Ward 16(3)(1), I.T.A. the assesse when the documentary evidence in No.1957/Mum/2015 the form of contract notes, bank statements, Assessment Year: STT payments etc prove genuine purchase and 2006-07) sale of the penny stock. Failure to provide cross-examination is a fatal error 10. Shri Sunil Prakash S. 68 bogus gains from penny stocks: If the AO V/s. ACIT -15(2) relies upon the statement of a third party to I.T.A./6494/Mum/20 make the addition, he is duty bound to provide 14, Assessment a copy of the statement to the assesse and Year: 2005-06 afford the opportunity of cross-examination. Failure to do so vitiates the assessment proceedings. A transaction evidenced by payment/receipt of share transaction value through banking channels, transfer of shares in and from the Dmat account, etc cannot be treated as a bogus transaction so as to attract s. 68 11. Pramod Kumar S. 10(38) Bogus long-term gains from penny Lodha vs. ITO stocks: The transaction cannot be treated as (ITAT Jaipur) bogus until and unless a finding is given that the shares were acquired by the assesse from the person other than the broker claimed by the assesse. The enquiry conducted by the Investigation Indore is not a conclusive finding of fact in view of the fact that the shares were duly materialized & held in the d-mat account. Merely supplying of statement to the assesse at the fag end of the assessment proceedings is not sufficient to meet the requirement of giving an opportunity to cross examine. The AO cannot proceed on suspicion without any material evidence to controvert or disprove the evidence produced by the assesse 12. Navneet Agarwal Bogus Capital Gains From Penny Stocks: In vs. ITO (ITAT order to treat the capital gains from penny Kolkata) stocks as bogus, the Dept has to show that there is a scam and that the assesse is part of the scam. The chain of events and the live link of assesses action giving her involvement in the scam should be established. The Dept cannot rely on alleged modus operandi & human behavior and disregard the evidence produced by the assesse. All imp judgements referred 13. ACIT vs. Vineet Bogus capital gains from penny stocks: The Sureshchandra fact that the Stock Exchanges disclaimed the Agarwal (ITAT transaction is irrelevant because purchase and Ahmedabad) sale of shares outside the floor of Stock Exchange is not an unlawful activity. Off- market transactions are not illegal. It is always possible for the parties to enter into transactions even without the help of brokers. Therefore, it is not possible to hold that the transactions reported by the assesse were sham or bogus 14. Meenu Goel vs. ITO Bogus Capital gains from penny stocks: Capital gains from penny stocks cannot be (ITAT Delhi) assessed as unexplained cash credit u/s 68 if the assesse has produced documentary evidence to prove the source, identity and genuineness of the transaction and the AO has not found any fault with it. The fact that the investigation dept has alleged that there is a modus operandi of bogus LTCG scheme is not relevant if the same is not substantiated 15. Dipesh Vardhan S. 10(38)/68: Bogus Capital Gains from and others vs DCIT- Penny Stocks: The AO has not discharged Central Circle I.T.A. the onus of controverting the documentary No.7648, 7649, evidences furnished by the assessee and by 7650, 7651 and bringing on record any cogent material to 7662/Mum/2019 sustain the addition. The allegation of price rigging / manipulation has been levied without establishing the vital link between the assessee and other entities. The whole basis of making additions is third party statement and no opportunity of cross-examination has been provided to the assessee to confront the said party. As against this, the assessee's position that the transactions were genuine and duly supported by various documentary evidences, could not be disturbed by the revenue Para 6 of the order states as follows:- The perusal of record would reveal that the assessee purchased certain shares of an entity namely M/s STL as early as September, 2011. The shares were converted into demat form in assessee’s account during the month of March, 2012. The transactions took place through banking channels. The investments were duly reflected by the assessee in financial statements of respective years. The copies of financial statements of M/s STL for FYs 2009- 10 & 2010-11 which led to investment by the assessee in that entity was also furnished during the course of assessment proceedings. Subsequently, M/s STL got merged with another entity viz. M/s SAL(Sunrise Asian Ltd.) pursuant to scheme of amalgamation u/s 391 to 394 of The Companies Act, 1956. The Scheme was duly approved by Hon’ble Bombay High Court vide order dated 22/03/2013, a copy of which is on record. Consequently, the shares of M/s STL held by the assessee got swapped with the shares of M/s SAL and new shares were allotted to the assessee during June, 2013 pursuant to the approved scheme of amalgamation. M/s SAL is stated to be listed public company Group ‘A’ shares signifying high trades with high liquidity. The assessee has sold these shares through its stock broker namely M/s Unique Stockbro Private Limited in online platform of the recognised stock exchange during the month of March, 2014. The selling price was in the range of Rs.489/- to Rs.491/- per share. The transactions took place through online mechanism after complying with all the formalities and procedure including payment of STT. The delivery of the shares was through clearing mechanism of the stock exchange and sale consideration was received through banking channels. The transactions are duly evidenced by contract notes, demat statements, bank statements and other documentary evidences. The key person of assessee group, in his statement, maintained the position that trading transactions were genuine transactions carried out through stock exchange following all process and legal procedures. The assessee also filed trading volume data and price range of the scrip for a period of more than 2 years i.e. from Jan, 2013 to July, 2015. The shares reflected healthy trading volume and the price range reflected therein was in the range of Rs.360/- to Rs.600/- per share. The price range was stated to be in the same range for 15 months after the period of sale of shares by the assessee, which has not been disputed by the revenue. On the basis of all these facts, it could be gathered that the assessee had duly discharged the onus casted upon him to prove the genuineness of the stated transactions and the onus had shifted on revenue to rebut the same. Resultantly, the addition on account of alleged Long-Term Capital Gains as well as estimated commission against the same, stands deleted. The grounds of appeal

, to that extent, stand allowed.

16. The Commissioner Unexplained cash credit u/s. 68 - ITAT deleted of Income Tax-16. the addition - Held that:- The transaction of Vs. Mrs. Kesar A. purchase and sale of shares done by the Gada respondent – assessee was genuine. 2015 (1) TMI 1220 - Consequently, it was also held by both the BOMBAY HIGH Authorities that addition under Section 68 of COURT the Act was not called for. We find that the impugned order has been passed relying upon the decision of this Court in the case of “Mukesh R. Marolia” [2005 (12) TMI 457 - ITAT MUMBAI] and the findings are essentially findings of facts. Hence, no substantial question of law arises for our consideration. - Decided against revenue.

17. Ramprasad Agarwa Where assessee had produced relevant record l v. to show allotment of shares by company on ITO2(3)(2), Mumbai[ payment of consideration by cheque and 2018] 100 assessee dematerialized shares in D-mat taxmann.com 172 account and Assessing Officer had not brought (Mumbai - Trib.) any material on record to show that assessee had paid over and above purchase consideration, it could not be held that assessee had introduced his own unaccounted money by way of bogus long-term capital gain.

18. Shri Amar Nath Considering the material on record in the light Goenka Vs. The of above decisions it is clear that assessee ACIT, Circle-20(1), placed sufficient documentary evidences before New Delhi. A.O. to prove genuineness of the transaction. ITA.No.5882/Del./20 The assessee purchased shares through 18 banking channel and actually got the shares transferred in his name. Purchase was made through cheque which is supported by bank statement. The transactions of sale have been made through Demat account. The contract note along with other 36 ITA.No.5882, 5883, 6457 to 6459/Del./2018 Shri Amar Nath Goenka, Delhi & Oth 37 ITA.No.5882, 5883, 6457 to 6459/Del./2018 Shri Amar Nath Goenka, Delhi & Others. . in evidence against the assessee. I rely on the decision of Hon’ble Supreme Court in the case of Kishan Chand Chela Ram 125 ITR 713 (SC). The A.O. did not mention any fact as to how the claim of assessee was sham or bogus. The assessee thus, satisfied the conditions of Section 10(38) of the I.T. Act. The broker through whom transactions have been carried out have not denied the transaction conducted on behalf of the assessee. It, therefore, appears that the addition is merely made on presumption and assumptions of certain facts which are not part of the record. The issue is, therefore, covered in favour of the assessee by several Orders of the Tribunal including the case of Smt. Shikha Dhawan, Gurgaon vs. ITO, Ward-4(2), Gurgaon (supra). There is no other material available on record to rebut the claim of assessee of exemption claimed under section 10(38) of the I.T. Act. Keeping in view of the above discussion and material on record in the light of above decisions of the Tribunal and Hon’ble Delhi High Court, I set aside the Orders of the authorities below and delete the 38 ITA.No.5882, 5883, 6457 to 6459/Del./2018 Shri Amar Nath Goenka, Delhi & Others. . addition of Rs.14,61,585/-. The appeal of Assessee is accordingly allowed.

19. Mukta Gupta vs. The aforesaid direction of the JCIT to the ITO, Ward-1(4), Assessing Officer clearly clinches the issue in Ghaziabad.I.T.A. favour of the assessee in both the cases. Thus, No.2766/DEL/2018 the addition made by the Assessing Officer by disallowing the Long Term Capital Gain and treating as unexplained money is deleted.

20. AJAY GOEL vs.I.T.O, I find that the AO has completed the WARD 39(5)ITA No. assessment by relying on the Investigation 4481/DEL/2018 Report, but the copy of the Investigation Report was not provided to the assessee, despite request made by him in his letter dated 23.12.2016, which is against the law settled by the Hon’ble Supreme Court of India in the case Kishinchand Chellaram vs. CIT 125 ITR 713 at page no. 714; Hon’ble Delhi High Court decision in the case of CIT vs. Ashwani Gupta 322 ITR 396 and CIT vs. Pradeep Gupta 303 ITR 95 and CIT vs. Dharam Pal Prem Chand Ltd. 295 ITR 105.Keeping in view of the facts and circumstances of the present case and respectfully following the aforesaid precedents on identical facts and circumstances, the addition in dispute is deleted and the appeal of the assessee is allowed.

by the assessee is allowed.

28. Shashikant B. Both the parties before us agreed that the facts Mhatre v/s ITO, in in the case of Shri being ITA Shashikant B Mhatre (HUF) are identical to No.694/Mum/2018 that of Smt Geeta Khare supra except with order dated 29th variance in figures and name of the scrip that May, 2019 was dealt with. Both the parties before ITAT stated that identical reasoning was given by both the lower authorities for denying the claim of exemption u/s 10(38) of the Act to the assessee. The decision rendered in the case of Smt Geeta Khare would apply with & 694/Mum/2018 Smt. Geeta Khare & Shri Shashikant B. Mhatre equal force for this assessee also and accordingly, the ground raised by the assessee in is allowed.

29. Mrs. Pratibha S. The ITAT find that the issue for our Mhatre, Mumbai adjudication relates to the disallowance under ITAT C-Bench, section 68 of the Act on account of Mumbai- 11th June, unaccounted income. Exactly similar issue has 2021(ITA.No.695/Mu been decided by the Co-ordinate Bench of the m/2018) for Asst. Tribunal, Mumbai, in HUF of her husband's year 2014-15 case in Shashikant B. Mhatre v/s ITO, being order dated 29th May 2019, a copy of which is placed on record, wherein the Co-ordinate Bench of the Tribunal, on identical and on similar set of facts and circumstances, after considering the submissions of the parties has decided the issue in favour of the assessee and against the Mrs. Pratibha S. Mhatre Revenue. Respectfully following the above decision, we allow the appeal filed by the assessee.(In favour of the assessee.

Order pronounced in the open court on 22/12/2025.