SUNNY VIJAY LAKHANI,MUMBAI vs. ACIT, 28(3), MUMBAI

Per Bench: These three appeals by the Assessee are directed against three separate orders dated 24th March, 2023; 13th September, 2023 and 23rd January, 2024, passed by the Ld. Commissioner of Income-tax(Appeals)-National Faceless Appeal Centre [(in short Ld.CIT (A)] for AY 2014-15, 2015-16 and 2016-17 respectively.

for AY 2014-15 and 2015-16
de addition of sale proceeds of ugs & Pharma Ltd. as unexplai of Section 68 of the Income-ta
Act). In AY 2016-17, the AO con of shares Toyam Industries Lim ction Company Ltd. as unexplai tion 68 of the Act. As an issues- ls are identical, therefore, sam and disposed off by way of th the sake of convenience.
e take the appeal for AY 201
reed that the decision on the g
4-15 may be applied mutatis m aised in the said assessment ord or AY 2014-15 are reproduced a BECAUSE, the CIT(A) has erred in law irming the order of the AO in treati gain of Rs.61,49,000/-from sale of lis feline Drugs and Pharma Ltd. as unex
/s 68 of the Act.
ITA Nos. 6947, 6948 &
6950/MUM/2024
2
Sunny Vijay Lakhani
6, the Assessing f shares of M/s.
ined cash credit ax Act, 1961 (in nsidered the sale mited/Ojas Asset ined cash credit in-dispute in all me were heard his consolidated
4-15. Both the grounds decided mutandis on the der.
as under:
w and on facts ing long term sted shares of xplained cash

BECAUSE, the CIT(A) has given a go b inching evidence in support of the ed by the Appellant thereby dischargi
BECAUSE, the CIT(A) and the AO e any material/evidence to dislodge nuineness of documentary evidences essee in support of his claim and has e upon some untested and uncorrobor ation wing where the Appellant is not BECAUSE, the CIT(A) failed to conside ble Delhi ITAT in the case Shri Anoop
186 DTR (Del) (Trib) 57 squarely app case wherein the Court has held tha feline Drugs and Pharma Ltd. goes to paper company nor a shell company.
BECAUSE, the CIT(A) and AO both ha and in fact by failing to provide ents relied upon by the department an ortunity to cross-examine the indiv ents have been used as the basis fo even on specific request.
BECAUSE, the CIT(A) has erred in law rming the addition of commission @7
33,370/-unexplained cash credit u/s on assumption and presumption wit
ITA Nos. 6947, 6948 &
6950/MUM/2024
3
Sunny Vijay Lakhani y to the direct e transaction ng its onus.
has failed to or controvert produced by rather placed rated report of t even named.
er the decision
Jain v. ACIT plicable in the at financials of o show that it ave erred both copies of the nd by denying iduals whose r the addition w and on facts
7% amounting
68 of the Act thout bringing on recor said exp
5. At the outs our attenti delay of 39
that the de on the par appellate assessee’s aware of th penalty no otherwise lapse is an 5.1
The writte accrued to prejudice w condoned, appeal me defeated on 5.2
We have co affidavits, view, the e rd any document that the Appellant penditure.
set, the learned Counsel for the ion to the application seeking c
92 days in filing the appeal. It elay occurred solely due to an in rt of the accountant, who faile order dated 30.09.2023 de registered e-mail ID. The as he order only upon receipt of otice. It was emphasized that th been diligent in all tax procee isolated, bona fide error.
en submissions highlight that o the assessee as a result of th will be caused to the Departmen and (iii) substantial issues erit adjudication on merits rat n a technical lapse.
onsidered the rival submissions and perused the material on explanation furnished constitute
ITA Nos. 6947, 6948 &
6950/MUM/2024
4
Sunny Vijay Lakhani had incurred e assessee drew condonation of a t was submitted nadvertent lapse ed to notice the elivered to the ssessee became the subsequent he assessee has edings, and this t (i) no benefit he delay, (ii) no nt if the delay is arising in the ther than being s, examined the record. In our es a “sufficient cause” wit
Act, as ex
Collector, L
471 (SC), w liberal app justice is a v. M. Krish length of d satisfactory
5.3
Applying t neither de genuine in and no pr
Revenue.
explanation
5.4
Accordingly condoned, merits.
6. Briefly stat in the bus partner in return of i thin the meaning of section 5 o xpounded by the Hon’ble Sup
Land Acquisition v. Mst. Katiji wherein it was held that courts proach in condoning delays wh at stake. The Supreme Court in N hnamurthy (1998) 7 SCC 123 fu delay is immaterial so long as th y and the conduct bona fide.
these principles, we find tha liberate nor motivated, but at nadvertent error. No mala fide c ejudice is shown to have been In the interest of substanti n merits acceptance.
y, the delay of 392 days in filin
, and the appeal is admitted for ted, the assessee is an individu siness of building and constru the firm M/s S Buildtech. H income on 30.09.2014, declar
ITA Nos. 6947, 6948 &
6950/MUM/2024
5
Sunny Vijay Lakhani of the Limitation preme Court in (1987) 167 ITR should adopt a here substantial
N. Balakrishnan urther held that he explanation is at the delay is ttributable to a can be imputed, n caused to the ial justice, the ng the appeal is adjudication on ual engaged uction as a He filed his ring a total income of for scrutin
Act were d assessmen that the a M/s Lifelin through an broker, Sa company is in the ratio on 01.10. 50,000 sh sold during the remai following ye
6.1
The Assess of the sha
January 2
surged to the Assess wholly di performanc highlighted

Rs. 28,90,820/-. The return w ny, and statutory notices issued duly served and complied with.
nt proceedings, the Assessing O assessee had purchased 1,000
ne Drugs and Pharma Ltd. on 1
n offline transaction from a Ko ikat Tradelink Pvt. Ltd. Subseq ssued 4,000 bonus shares on 0
o of 1:2, and the shares underw
2013, resulting in the assess hares. Out of these, 35,000 s g the year relevant to A.Y. 201
ning 15,000 shares were s ear.
sing Officer observed that the m ares fluctuated between ₹0.80–
2011 to January 2013, but su
₹176.90 in February 2014. A sing Officer, such an exponenti isproportionate to the finan ce of the company. The A d that, despite the shares being
ITA Nos. 6947, 6948 &
6950/MUM/2024
6
Sunny Vijay Lakhani was selected d under the During the Officer noted
0 shares of 17.09.2011
lkata-based quently, the 06.08.2012
went a split see holding shares were 4–15, while old in the market price
–₹0.85 from ubsequently
According to ial rise was ncials and AO further g listed, the assessee c concerns a The assess admitted t and sale question. N
133(6) of t
Officer also Investigatio
(13.03.201
(01.05.201
accommod capital g companies
Ltd. The As cause notic and sale o collusive m submission passed an term capit bogus. On the appeal chose to purchase them offli about the genuineness of the t see’s statement was recorded, o having little knowledge of th of shares, including the tran
Notices issued to the brokers un the Act remained unserved. The o relied upon statements recor on Wing—inter alia of Shri An 5) and Shri
Devesh
5)—who were found to be or ation entries in the guise of gains through various pen
, including M/s Lifeline Drugs a ssessing Officer further noted, in ce, that the pattern of matchin orders demonstrated a pre-arr mechanism. After considering the ns, the AO rejected the expla order on 29.12.2016, treatin tal gain claimed under section further appeal the Ld. CIT (A of the assessee observing as un
ITA Nos. 6947, 6948 &
6950/MUM/2024
7
Sunny Vijay Lakhani ine, raising transaction.
wherein he he purchase nsaction in nder section e Assessing rded by the nuj Agrawal
Upadhyay rchestrating f long-term nny stock and Pharma n the show- ng purchase ranged and e assessee’s anation and ng the long- n 10(38) as A) dismissed nder:

“5.1. I submiss addition termcap sold 15
Pharma
Thelearn were bo that the is artific
AO is Investig sold by submiss contenti contenti increase investig wherein the pric compan
5.2
Th pronoun
1969 of Ltd (wi
Civil A 08.02.1

have gone through the Assessmen sions of the appellant. The learned n of Rs.38,41,300/- by reversing ex pital gain u/s 10(38) of 1.T. Act. The a 5000 shares named asM/s Life l a Ltd the same were found to be ned AO contented that the underline ogus and without anysubstance and ere is sudden surge in the volume tra cially rigged for these shares. The a based on Investigation carried ou gation Directorate on 84 penny stocks.
y appellant falls under such investig sions the appellant had claime ions are genuine. However, it failed ions raised by learned AO i.e, reaso e in trade volumes, unusual rise in pri ation wing, justification againstor n artificial methods are adopted for ces, inadequate financial health o ny.
he reliance is placed on follow ncement The Hon'ble Apex Court in Ci f 2011 in the case of SEBI Vs. Rakh ith Civil Appeal No.3174-3177 o
AppealNo.3180 of 2011) vide its 8 observed as follows:
ITA Nos. 6947, 6948 &
6950/MUM/2024
8
Sunny Vijay Lakhani nt Order and d AO carried xempted long appellant had line Drugs &
penny stock.
ed companies d he observed aded andprice action learned t by Kolkata
These shares gation. In the ed that the d to refutethe on for sudden ice, findings of rder of SEBI manipulating of underlined wing judicial ivil Appeal No.
hi Traders (P) of 2011 and order dated

"co and of s wil thr
Suc me and Boa ma and of t
5.3 In v the add upheld.”
7. Before us, attention t the detaile contract n statements examined contended basis of th
SEBI v. Ra synchroniz onsidering the reversal transaction, q d timeand sale, parties being persiste such hugetransaction with huge price ll be too naive to holdthat the tran rough screen based trading andhence ch conclusion would be overlook eeting of minds involving synchroniz d sellorder and not negotiated deal ard's
Circular.
Theimpugned tran anipulative/ deceptive device tocreate d/as profit. Such synchronized trad transparent norms of trading insecurit view of the above I am of the consider dition carried out bylearned AO is c
”
the learned Counsel for the o Ground Nos. 2, 4 and 5 and ed documentary evidence furn otes, broker’s notes, demat st s and other supporting materi nor discussed by the learned that the learned CIT(A) proceed he judgment of the Hon’ble Su akhi Trading Pvt. Ltd.(supra), wh zed derivative trades and has n
ITA Nos. 6947, 6948 &
6950/MUM/2024
9
Sunny Vijay Lakhani quantum price ent in number e variations, it nsactions are e anonymous.
king theprior zation of buy ls as per the nsaction are e desired loss ing isviolative ties……..
rate view that correct and is assessee drew submitted that nished, such as atements, bank ial, was neither d CIT(A). It was ded solely on the upreme Court in hich pertains to no factual nexus with the a to the lear vitiated fo disregard o precedents
7.1
The learn supported submitted
8. We have g submission reading of does not d the assess evidence fu learned CIT upon the without ap synchroniz factually di
8.1
Section 25
first appe determinat ssessee’s equity share transact rned Counsel, the impugned ap or being unreasoned, non-sp of the material on record as wel s cited.
ned Departmental Representa the orders of the authorit that the appellate order deserve given our thoughtful considerat ns and perused the impugned the order of the learned CIT(A deal with the specific submissio see, nor does it analyse th urnished in support of the clai
T(A) has rested his conclusion decision in Rakhi Trading P ppreciating that the said judgm zed trades in the derivatives istinguishable from the issue be 50(6) of the Income-tax Act ma ellate authority shall state t tion, the decision thereon, and ITA Nos. 6947, 6948 &
6950/MUM/2024
10
Sunny Vijay Lakhani tions. According ppellate order is eaking and in ll as the judicial ative, however, ties below and es to be upheld.
tion to the rival order. A careful
A) reveals that it ons advanced by he documentary im. Instead, the almost entirely
Pvt. Ltd.(supra), ment relates to market and is efore us.
andates that the the points for the reasons for such decis procedural to ensure decision-m address th is legally
Hon’ble Su
8.2
In the pres not meet t
The absenc with the c clear viola render the 8.3
In the tota proper to CIT(A) and adjudicatio

(i) consid authorities sion. This statutory requiremen l formality but an essential facet transparency, fairness and ac making. A non-speaking order w e assessee’s contentions, eviden unsustainable, as held cons upreme Court and various High C sent case, the order of the lear the mandatory requirements of ce of reasoned findings and the core submissions of the assess ation of the principles of natu order infirm.
ality of the circumstances, we d set aside the impugned order d restore the matter to his on. The learned CIT(A) shall:
er all submissions, evidenc s relied upon by both parties;
ITA Nos. 6947, 6948 &
6950/MUM/2024
11
Sunny Vijay Lakhani nt is not a mere t of adjudication ccountability in which does not nces or case-law istently by the Courts.
ned CIT(A) does f section 250(6).
e failure to deal see constitute a ural justice and deem it just and r of the learned file for fresh ces and legal

(ii) afford heard to t and (iii) pass a with Sectio
9. The facts a 2016-17 a involved in grounds fo in line with 10. In the resu allowed for Order pron (RAJ KUMA
JUDICIA

Mumbai;
Dated: 05/12/2025

Tarun, Sr. P.S..

Copy of the Order fo
1. The Appellant
2. The Respondent.
3. CIT adequate and effective oppor he assessee as well as the As reasoned, speaking order strict on 250(6) and the principles of n and legal issues involved in A.Y are substantially identical, save n A.Y. 2016-17 is different. A r these years are disposed of mu h our directions for A.Y. 2014-15
ult all the three appeals of th r statistical purposes.
nounced in the open Court on d/-
AR CHAUHAN)
(OM PRA
AL MEMBER
ACCOUNT orwarded to :

.
ITA Nos. 6947, 6948 &
6950/MUM/2024
12
Sunny Vijay Lakhani tunity of being ssessing Officer; tly in conformity natural justice.
Ys. 2015-16 and e that the scrip
Accordingly, the utatis mutandis
5. he assessee are n 05/12/2025. AKASH KANT)
TANT MEMBER

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bai

BY O

(Assistan

ITAT
ITA Nos. 6947, 6948 &
6950/MUM/2024
13
Sunny Vijay Lakhani
ORDER, nt