YASHWANT RAJ LALCHAND BAMBOLI,MUMBAI vs. INCOME TAX OFFICER, WD-27(3)(5), MUMBAI, MUMBAI

IN THE INCOME-TAX APPELLATE TRIBUNAL “G” BENCH,
MUMBAI
BEFORE SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER
&
SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER
Yashwant
Raj
Lalchand
Bamboli
7, Trimurti Building, 105-A,
N.G.
Acharaya
Marg,
Chembur, Mumbai - 400 071,
Maharashtra v/s.
बनाम
Income Tax Officer, Ward –
27(3)(5), 4th Floor, Tower
No.
6,
Vashi
Station
Complex, Mumbai –400703,
Maharashtra
स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AIJPB5149A
Appellant/अपीलार्थी
..
Respondent/प्रतिवादी

Appellant by :
Shri Prakash Jhunjhunwala,AR
Respondent by :
Shri Swapnil Choudhary, (Sr.DR)

Date of Hearing
07.10.2025
Date of Pronouncement
03.12.2025

आदेश / O R D E R

PER PRABHASH SHANKAR [A.M.] :-

The present appeal arising from the appellate order dated
10.06.2025 is filed by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless
Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s143(3) of the Income-tax Act, 1961
[hereinafter referred to as “Act”] dated 30.12.2016 for the Assessment
Year [A.Y.] 2014-15. P a g e | 2
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Yashwant Raj Lalchand Bamboli, Mumbai

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Yashwant Raj Lalchand Bamboli, Mumbai during the year. According to the assessment order, this gain was found suspicious and detailed investigation of this issue was undertaken.
Kolkata Investigation Directorate had undertaken investigation into 84
penny stocks (SCIL, being one of it) and had given detailed findings indicating bogus LTCG/STCL entries claimed by large number of beneficiaries. The modus operandi involving operators, intermediaries and the beneficiaries has been detailed in the investigation report prepared and disseminated by the Kolkata Directorate. Similar investigations were also conducted by the Directorate of Investigation at Mumbai and Ahmedabad. The basic aim of this dubious scheme was to route the unaccounted money of LTCG Beneficiaries into their account/books in the garb of Long Term Capital Gain. It was found that financials of SCIL were very poor during the period shares were allotted.
The business profile showed that the company was not engaged into any substantial activity. The business funds that were raised through preferential allotment had not been used for any expansion and have been further advanced as loans and investments. The whole process of preferential allotment was a prearranged and a managed process so as to allot preferential shares to beneficiaries of bogus LTCG which could later be sold by them for of shares. The shares were rigged on the Stock
Exchange through manipulation of the stock market. Suspension of the P a g e | 4
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Yashwant Raj Lalchand Bamboli, Mumbai scrip by the BSE with the directions of the SEBI also established that the shares of have been manipulated and rigged and thereafter the shares have been sold accommodation by the beneficiaries of bogus
LTCG/STCG on the stock exchange to avail entry of bogus LTCG/STCG.
The assessee failed to show of having any knowledge about the shares traded and having any knowledge about the fundamentals of the penny stock companies.
4. In the subsequent appeal, it was submitted that the transaction of purchase and sale ofshares of SCIL resulting in LTCG was a genuine transaction. The assessee had submitted all relevant documents pertaining to purchase and sale of the shares of SCIL. The AO did not carried out any independent enquiries or recorded the statement of the assessee u/s 131 of the Act. He has not brought anything on records to disprove the transaction. The AO has not doubted any of the documents/evidences submitted by him. The purchase and sale of shares had been done on the stock exchange at the prevailing market price. All transactions were through banking channel. All transactions were part of books of accounts. Further, merely because the assessee had earned substantial gains on sale of shares of SCIL, did not make the transaction an accommodation entry. The SEBI did not pass any adverse order in the case of the assessee. Also, AO’s allegation that he brought

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Yashwant Raj Lalchand Bamboli, Mumbai back its unaccounted money in the books by way of LTCG is without any basis and is figment of his imagination. Similar issue involving sale of shares of SCIL has been decided in favour of the assessee by various
ITATs including Hon’ble Juri ictional ITAT Mumbai. Also, Hon’ble juri ictional Bombay High Court has decided similar issue in favour of the assessee in the cases (a)ITO vs Jamnadevi Agarwal 328 ITR 656
(Bom) (b) CIT vs Shyam R. Pawar 229 Taxman256 (Bom).
4.1 The ld.CIT(A) however, upheld the action of the AO with the observations that on identical facts, Hon’ble High Court of Calcutta had decided the issue in favour of the Revenue in the case of PCIT Vs Swati
Bajaj (Calcutta High Court) Appeal Number: IA No. GA/2/2022, dated
14/06/2022.Hon’ble High Court has discussed in details this issue of earning long term capital gains (LTCG)/ Short Term Capital Loss
(STCL) on share transactions involving penny stocks. The Hon’ble Court had analysed and evaluated various aspects of the transactions in penny stocks and has, thereafter, concluded that such transactions are sham transactions incurred wholly for the purpose of availing accommodation entry either by way of LTCG/ STCL. He also upheld the estimated addition u/s 69C on estimated commission paid on these transactions.
5. Before us, the ld.DR has placed reliance on the orders of the authorities below. Per contra the ld.AR has reiterated the same

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Yashwant Raj Lalchand Bamboli, Mumbai contention as made before them. It is submitted that the assessee is engaged in investment in shares of long term basis. The appellant, in return of income, had disclosed the exempt long term capital gain of Rs.54,89,476/- on sale of STT paid listed shares of SCIL. In order to justify the genuineness of long term capital gain, the appellant filed the documentary evidences such as Contract notes-cum-sale bills, Global
Report, Confirmation of stock broker M/s Swastika Investmart Ltd, bank statements, rate publication, D-mat statement, Purchase bill, payment receipt, share certificate, Advertisement, Offer document,
Corporate announcements for bonus and stock-split and balance sheet of earlier years on assessment record.
5.1
The assessee had made off-market purchase of 1,000 shares of from M/s Sarvottam Advisory Services Pvt Ltd on 31/03/2012 at a purchase consideration of Rs.2,50,000/-, on making the payment through banking channel on 03/04/2012 and such shares were credited in Demat account on 03/08/2012. He received 9,000 bonus shares credited in D-mat account on 23/10/2012 and such shares were sub- divided into 1,00,000 shares. The period of holding of shares by him , in his Demat account, exceeded 14-15 months. The acquisition of shares were properly disclosed in balance sheet of the assessee of earlier years as ‘Investments’. The sale of shares were made on floor of Bombay Stock

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Yashwant Raj Lalchand Bamboli, Mumbai

Exchange at prevailing market price through registered stock broker
M/s Swastika Investmart Ltd., on making the payment of Security
Transaction tax, Service tax, etc. He delivered the shares through D-mat account on 15/10/2013 and 06/11/2013 and received the entire sale consideration through banking channel from 29/10/2013 to 11/11/2013
through online mechanism of Stock Exchange. The rate publications discloses the sale of shares made at prevailing market price in Bombay
Stock Exchange. The CIN Master data and record of Bombay Stock
Exchange discloses the present status of such listed company as ‘Listed’
and ‘active’. The SEBI had not issued any notice and had not passed any contrary order against the appellant and his registered stock broker.
5.2 It is further argued that the SEBI vide final order dated
30/09/2021 had conducted an investigation against the listed company
Surabhi Chemicals &Investments Ltd and other persons for the period from 01/08/2012 to 06/01/2015 and it is most vital to note that the SEBI had not passed any contrary orders against the appellant, listed company and stock broker M/s. Swastika Investmart Ltd and had imposed a meagre penalty of Rs.2,00,000/- on 2 unrelated persons. The SEBI’s order dated 30/09/2021 imposing the penalty of Rs.2,00,000/- on two unrelated persons would not disprove the appellant’s transaction on understated reasons:-

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Yashwant Raj Lalchand Bamboli, Mumbai a) The para-18.1 at page-13 to15 of SEBI order discloses that the alleged manipulation of price was made during the period from 27/11/2012 to 21/03/2013. However, the appellant had sold the shares of such listed company from 15/10/2013 to 05/11/2013 (subsequent to disputed period), thus the allegations framed on unknown and unrelated entities would not hold any adverse bearing on the appellant, b) The SEBI, in concluding para-32 at page-21, had not imposed any monetary fine/penalty on the listed company and stock broker, however had imposed the nominal penalty of Rs. 2,00,000/- each on 2 unknown persons. The SEBI order does not disclose any sort of appellant’s involvement in alleged manipulation of share price;
5.3 It is further stated that ITAT, Mumbai in similar cases of Seema Narendra Bapna (ITA No-1120/MUM/2024) and Smt. Bhavna
Lalit Jain (ITA No-1016/Mum/2024) had considered the SEBI orders and decided the issue in favour of the assessee. The facts of assessee’s case are identical to above stated cases, since involved same scrip and same assessment year (A.Y-2014-15).
5.4
It is further contended that the decision of Hon’ble High
Court of Calcutta in the case of Swati Bajaj (446 ITR 56) had been considered by Hon’ble High Court of Gujarat in the case of PCIT v.
Sanjay Kumar Damjibhai Gangani (178 taxmann.com 276) and Hon’ble
ITAT, Mumbai in the case of Yogesh Thakkar (ITA no.1605/Mum/2021) and held the long term capital gain as genuine.

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Yashwant Raj Lalchand Bamboli, Mumbai

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Yashwant Raj Lalchand Bamboli, Mumbai on 14.08.2012, the assessee was allotted 25,200 bonus shares, resulting in a total holding of 28,000 shares, which were later sub-divided into 2,80,000
shares.
24. These shares were held in the assessee's own demat account for a period of approximately 14 to 15 months before being sold on the floor of the Bombay
Stock Exchange Praveen Sitaram Agarwal through a SEBI-registered broker,
M/s. Shilpa Stock Broker Pvt. Ltd., for a total consideration of ₹1,63,34,228/-.
The delivery of shares was effected directly from the assessee's demat account, and the sale proceeds were received entirely through RTGS transfers under the recognised online clearing mechanism of the BSE. Importantly, neither the Assessing Officer nor the learned CIT(A) has brought on record any material to dispute the authenticity of these documents, nor has any contrary evidence been produced to demonstrate manipulation of share prices by the assessee.
The additions were made primarily on the basis of general observations contained in the Investigation Wing's report, without establishing any direct nexus between the assessee and the alleged operators or accommodation entry providers.
25. For the sake of clarity, the gist of the assessee's purchase and sale transactions, along with the supporting documents furnished, is summarised in the following tabular form:
1) Name of the share : M/s. Surabhi Chemicals & Investments Ltd
2) Purchase Cost 2,800 Shares purchased on 26/06/2012 at Rs.: 7,00,0007-
{@ Rs.250/-} 25,200 Bonus shares were issued on 14/08/2012 and thereafter, shares were splitted into 2,80,000 shares
3) Mode of payment : Purchase cost paid by A/c payee cheque on 26/06/2012
4) Sale Consideration : 2,80,000 shares sold on 10/10/2013 to 18/1 1/2013 at Rs.1,63,34,228/- {@ Rs.58/-} on floor of BSE
5) Average cost price : Rs,2.80 per share Praveen Sitaram Agarwal
6) Average sale price : Rs.58 per share
7) Mode of Receipt : Sale consideration received by RTGS through online mechanism of BSE from 17/10/2013 to 20/1 1/2013 from M/s Shilpa Stock
Broker Pvt Ltd.
8) Period of Holding : 14 to 15 months in D-mat Account

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Yashwant Raj Lalchand Bamboli, Mumbai

9) Mode of Delivery : Through D-mat account On Purchase - 02/08/2012
(Bonus -18/09/2012) On Sales- 09/10/2013 to 07/11/2013
10) Documents filed on sales : Contract note-cum-Sale bills, Confirmation of stock broker, Bank statement, D-mat statement, Rate publication of BSE.
11) Documents filed on : Purchase Bill, Money receipt, Bank statement, purchase Share Certificates, Letter of Allotment of bonus shares, D-mat statement and Balance sheet of earlier year
12) Assessee's statement u/s : Assessee's statement was recorded u/s 131 131 wherein the genuineness of transactions with documentary evidences is confirmed.
13) SEBI's Allegation : No allegation framed by the SEBI against the assessee
26. All the documents relating to the purchase and sale of shares have been placed before us in the paper book. Upon perusal of the broker's account, it is evident that the shares held by the assessee in the earlier years were sold during the relevant financial year at various dates and times on the Bombay
Stock Exchange. The details of the broker's statement reflecting these sales appear in the paper book at pages 18 to 29. The corresponding sale proceeds were duly credited to the assessee's bank account, which is also corroborated by the demat statements placed on record. Similarly, the purchases were executed entirely through recognised banking channels, supported by requisite documents such as purchase bills, bank statements, allotment letters, dematerialisation statements, and bonus allotment confirmations.
26.1. We further note that the Assessing Officer, instead of examining these documents or conducting any independent enquiry to verify the genuineness of the transactions, has merely relied upon the general findings recorded by the Investigation Wing. Notably, there is no material in the Investigation
Report linking the assessee by name, nor any reference to the stockbroker through whom these transactions were routed. The shares in question continued to remain listed on the Bombay Stock Exchange throughout the period under consideration, and there is no evidence on record of any ban, suspension, or adverse inference drawn by SEBI regarding this scrip.
26.2. During the course of hearing, we specifically called upon both the assessee and the Revenue to clarify whether any regulatory action had been initiated by SEBI in respect of alleged price rigging or manipulation of the shares of M/s. Surabhi Chemicals & Investments Ltd., either during the relevant period or thereafter. It has been fairly submitted by both sides that no P a g e | 12
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Yashwant Raj Lalchand Bamboli, Mumbai such adverse action has ever been taken by SEBI against the company or in relation to its listed scrip.
26.3. Furthermore, we observe that in the case of the assessee's brother, Shri
Manoj Kumar Agrawal, involving an identical set of facts, the very same scrip, and similar observations by the Assessing Officer, this Tribunal, in ITA No. 4456/Mum/2024 dated 03.12.2014, had deleted the additions made under sections 68 and 69C after detailed examination of the material on record and consideration of the Investigation Wing's report.
The relevant findings of the Tribunal in that case, which are squarely applicable to the present matter, read as under:
"8. We heard rival contentions and perused the record. We notice that the assessee, before the Ld.CIT(A), has submitted as under and furnished following documents to support the purchase and sale transactions of above said shares:-
In respect of sale transactions Sale bills-cum-Contract notes of stock broker : In this regard, the appellant is submitting that the order number, order time, trade number, trade time, Service Tax, stamp duty and STT paid are disclosed. The entire sale of shares had been made on floor of Bombay Stock Exchange (BSE) through SEBI registered stock broker M/s Shilpa Stock Brokers Pvt. Ltd., from 20/11/2013 to 06/12/2013 at Rs.2,33,81,175/-. The contents of contract notes match exactly with online data available in public platform of the Bombay
Stock Exchange (BSE);
1. Confirmation of account of SEBI registered stock broker M/s. Shilpa
Stock Broker Pvt. Ltd;
2. Appellant's bank statement disclosing the receipt of sale consideration by RTGS. The appellant had not withdrawn the cash against sale of shares;
3. D-mat statement disclosing the delivery of shares to Bombay Stock
Exchange (BSE) made from 06/11/2013 and 22/11/2013;
4. Bhav copy (rate publication) of Bombay Stock Exchange (BSE) evidencing the sale of shares made at prevailing market price;
5. CIN master data (ROC) disclosing the status of M/s Surabhi
Chemicals and Investments Ltd as "Active" and "Listed" and also disclosing the names, address of directors of such company.

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Yashwant Raj Lalchand Bamboli, Mumbai

In respect of Purchase transaction:-
(a) Purchase bill dated 26/06/2012 evidencing the purchase of shares;
(b) Appellant's bank statement disclosing the payment made for purchase of shares of Rs. 10,00,000/- through A/c payee cheque on 26/06/2012;
(c) Receipt issued by the seller, thereby confirming the sale of shares to the appellant;
(d) Share certificate endorsed in the name of appellant on 29/06/2012
of 4000 shares;
(e) Allotment of 36000 bonus shares on 14/08/2012 and thereafter stock splitted into 4,00,000 shares;
(f) D-mat statement converting the physical shares in electronic mode on 27/08/2012 and 19/10/2012;
(g) Balance sheet of appellant of earlier year ended 31/03/2013
wherein the purchase of shares are disclosed under "Investments".
9. We notice that the Ld.CIT(A) has deleted the addition with the following observations:-
"7.5 I have carefully gone through the above evidence as well as the information filed before me; which was also submitted before the assessing officer. From a careful consideration of the facts on record, I of the considered opinion that the assessing officer has not properly examined the above evidence submitted by the appellant at the assessment stage. Based on the facts of the case, I am convinced that the AO has simply relied on the information received from the Investigation Wing and has not done any further enquiry to confirm the information. Further, the appellate has sold the said shares on real time basis through a SEBI approved broker. The contract note cum bill issued by the broker is on record. The appellant does not have any dealings with Exit providers. The modus operandi mentioned by the AO at Para number 7 of his order is general in nature and doesn't bring out any specific conduct of the appellant which warrants addition in his case. In view of Praveen Sitaram Agarwal this, I am in agreement with the allegation of the appellant that the addition in question was made based on suspicion, assumptions and surmises.
7.6 As held by Hon’ble ITAT, Kolkata in the case of Shri Navneet
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Yashwant Raj Lalchand Bamboli, Mumbai

2281/KOL/ 2017 dated 27 2018, even if an alleged scam has taken place, it has to be established in each case by the party alleging so (Revenue in this case). It has to be established whether this assessee in question was part of this scam. The chain of events and the live link of the assessee's action giving his involvement in the scam should be established. No such attempt has been made by the AO in this case.
Hon'ble ITAT in the above case, further held that just the modus operandi, generalizations, preponderance of human probabilities cannot be the only basis for rejecting the claim of the assessee. Unless the specific evidence is brought on record to counteract the validity and correctness of the documentary evidences produced, the same cannot be rejected by the department. Hon'ble Supreme Court in the case of Omar Salav Mohammad Sait reported in (1959) 37 ITR. 151
(SC) held that no addition can be made on the basis of surmises, suspicion and conjunctures. The appellant has quoted several decisions in its favour to put forth the above proposition. 7.7 In addition, the following judgments advocate the above proposition, where exactly identical issue regarding allowability of long term capital gain on sale of shares of same listed company, M/s. Surabhi Chemicals
& investments Ltd. had been decided by the Hon’ble Tribunals in favour of the respective assessees :
(i) Chirag Tejprakash Dangi vs. ITO (ITA No. 3256/Mum/2022)
(ii) M/s. Anusmriti Sarkar vs. ITO (ITA No. 390/M/2020 dated 07-06-
2021)
(iii) Shri Udit Agarwal vs. DCIT (ITA NO. 1839/KOL/2017 dated 26-
12-2018)
(iv) Shashi Bala Bajaj vs. ITO (ITA No. 1457/KOL/2018 dated 16-11-
2018) The Hon‟ble Tribunals, in above four cases, had carefully analysed the facts of the case and judicial decisions of various Courts and Tribunals and held that the Long term Praveen Sitaram Agarwal capital gain earned on sale of M/s. Surabhi Chemicals & investments
Ltd. is genuine in nature.
7.8 Applying the proposition of law as laid down in the above mentioned judgements, to the facts of this case, I am of the considered opinion that the evidences produced by the appellant in support of its claim before the assessing officer outweigh the suspicion or preponderance of probabilities. No material has been brought on record by the assessing officer to counteract the evidence furnished by the appellant. Under these circumstances, I hold that the assessing

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Yashwant Raj Lalchand Bamboli, Mumbai officer is not justified in taxing the LTCG of Rs. 2,23,81,175 as „‟Unexplained cash credit" under section 68 of the Act. Based on the facts, circumstances and legal issues brought out in the foregoing paragraphs, I allow the claim that the income in question as a bona fide LTCG arising from the sale of M/s. Surabhi Chemicals &
investment Ltd. Accordingly, I delete the above addition of Rs.
2,23,81,175 made under section 68 of the Act. Therefore, Grounds No.
2 and 3 succeed."
10. In the case of Chirag Tejprakash Dangi (supra), the Tribunal has followed the decisions rendered by Hon‟ble High Court of Bombay in the following cases:- i) PCIT Vs. Indravadan Jain HUF (ITA No. 454 of 2018)(Bom) ii) PCIT Vs. Ziauddin A. Siddiquie (ITA No. 2012 of 2017) (Bom) iii) CIT Vs. Shyam R. Pawar (54 taxmann.com 108)(Bom) iv) CIT Vs. Smt. Jamnadevi Agrawal (20 taxmann.com 529 (Bom) In the above said cases, the Hon‟ble Bombay High Court has held that the AO is required to show that the assessee was part of the group, which were rigging the prices of shares or he should find deficiencies in the documents furnished by the assessee to prove the purchases and sale of shares, before assessing the capital gains. In the instant case, the AO has not done so and he simply placed reliance on the report given by the Investigation wing. Hence, his order cannot be sustained.
11. In view of the foregoing discussions, we confirm the order passed by the Ld.CIT(A) on this issue.
12. In the result, the appeal filed by the Revenue is dismissed.
27. Since a Coordinate Bench of this Tribunal, in the case of the assessee's brother involving the same scrip and an identical set of facts, has already adjudicated the matter, we find no reason to take a different view. Respectfully following the said judicial precedent and applying the same reasoning to the facts of the present case, we hold that the additions made by the learned
Assessing Officer under section 68 are unsustainable and are accordingly deleted. Consequently, as the addition on account of the alleged bogus long-term capital gains stands deleted, the consequential and purely notional addition made towards alleged commission expenses under section 69C also does not survive and is, therefore, deleted.”

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Yashwant Raj Lalchand Bamboli, Mumbai

Yashwant Raj Lalchand Bamboli, Mumbai shares. As noticed earlier, the AO has not brought on record any material to show that the assessee was part of the group which involved in the manipulation of prices of shares. Hence, there is no reason to suspect the purchase and sale of shares undertaken by the assessee.
11. We may now refer to certain decisions rendered by Hon'ble Bombay High
Court on identical issue. In the case of Shyam Pawar (supra), the Hon'ble
Bombay High Court has observed as under:-
"3. Mr. Sureshkumar seriously complained that such finding rendered concurrently should not have been interfered with by the Tribunal. In further Appeal, the Tribunal proceeded not by analyzing this material and concluding that findings of fact concurrently rendered by the Assessing Officer and the Commissioner are perverse. The Tribunal proceeded on the footing that onus was on the Department to nail the Assessee through a proper evidence and that there was some cash transaction through these suspected brokers, on whom there was an investigation conducted by the Department. Once the onus on the Department was discharged, according to Mr. Sureshkumr, by the Revenue-Department, then, such a finding by the Tribunal raises a substantial question of law. The Appeal, therefore, be admitted.
4. Mr. Gopal, learned Counsel appearing on behalf of the Assessee in each of these Appeals, invites our attention to the finding of the Tribunal. He submits that if this was nothing but an accommodation of A Y : 2014-15 Income Tax Officer Versus Seema Narendra
Bapna cash or conversion of unaccounted money into accounted one, then, the evidence should have been complete. Change of circumstances ought to have, after the result of the investigation, connected the Assessee in some way or either with these brokers and the persons floating the two companies. It is only, after the Assessee who is supposed to dealing in shares and producing all the details including the DMAT account, the Exchange at Calcutta confirming the transaction, that the Appeal of the Assessee has been rightly allowed.
The Tribunal has not merely interfered with the concurrent orders because another view was possible. It interfered because it was required to interfere with them as the Commissioner and the Assessing
Officer failed to note some relevant and germane material. In these circumstances, he submits that the Appeals do not raise any substantial question of law and deserve to be dismissed.
5. We have perused the concurrent findings and on which heavy reliance is placed by Mr. Sureshkumar. While it is true that the P a g e | 18
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Commissioner extensively referred to the correspondence and the contents of the report of the Investigation carried out in paras 20, 20.1,
20.2 and 21 of his order, what was important and vital for the purpose of the present case was whether the transactions in shares were genuine or sham and bogus. If the purchase and sale of shares are reflected in the Assessee's DMAT account, yet they are termed as arranged transactions and projected to be real, then, such conclusion which has been reached by the Commissioner and the Assessing
Officer required a deeper scrutiny. It was also revealed during the course of inquiry by the Assessing Officer that the Calcutta Stock
Exchange records showed that the shares were purchased for code numbers S003 and R121 of Sagar Trade Pvt Ltd. and Rockey
Marketing Pvt. Ltd. respectively. Out of these two, only Rockey
Marketing Pvt. Ltd. is listed in the appraisal report and it is stated to be involved in the modus-operandi. It is on this material that he holds that the transactions in sale and purchase of shares are doubtful and not genuine. In relation to Assessee's role in all this, all that the Commissioner observed is that the Assessee transacted through brokers at Calcutta, which itself raises doubt about the genuineness of the transactions and the financial result and performance of the Company was not such as would justify the increase in the share prices. Therefore, he reached the conclusion that certain operators and brokers devised the scheme to convert the unaccounted money of the Assessee to the accounted income and the present Assessee utilized the scheme.
6. It is in that regard that we find that Mr. Gopal's contentions are well founded. The Tribunal concluded that there was something more which was required, which would connect the present Assessee to the transactions and which are attributed to the Promoters/Directors of the two companies. The Tribunal referred to the entire material and found that the investigation stopped at a particular point and was not carried forward by the Revenue. There are 1,30,000 shares of Bolton
Properties Ltd. purchased by the Assessee during the month of January 2003 and he continued to hold them till 31 March 2003. The present case related to 20,000 shares of Mantra Online Ltd for the total consideration of Rs. 25,93,150/-. These shares were sold and how they were sold, on what dates and for what consideration and the sums received by cheques have been referred extensively by the Tribunal in para 10. A copy of the DMAT account, placed at pages 36 & 37 of the Appeal Paper Book before the Tribunal showed the credit of share transaction. The contract notes in Form-A with two brokers were available and which gave details of the transactions. The contract note

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Yashwant Raj Lalchand Bamboli, Mumbai is a system generated and prescribed by the Stock Exchange. From this material, in para 11 the Tribunal concluded that this was not mere accommodation of cash and enabling it to be converted into accounted or regular payment. The discrepancy pointed out by the Calcutta Stock
Exchange regarding client Code has been referred to. But the Tribunal concluded that itself, is not enough to prove that the transactions in the impugned shares were bogus/sham. The details received from Stock Exchange have been relied upon and for the purposes of faulting the Revenue in failing to discharge the basic onus. If the Tribunal proceeds on this line and concluded that inquiry was not carried forward and with a view to discharge the initial or basic onus, then such conclusion of the Tribunal cannot be termed as perverse. The conclusions as recorded in para 12 of the Tribunal's order are not vitiated by any error of law apparent on the face of the record either.
7. As a result of the above discussion, we do not find any substance in the contention of Mr. Suresh kumar that the Tribunal mi irected itself and in law. We hold that the Appeals do not raise any substantial question of law. They are accordingly dismissed. There would no order as to costs. 8. Even the additional question cannot be said to be substantial question of law, because it arises in the context of same transactions, dealings, same investigation and same charge or allegation of accommodation of unaccounted money being converted into accounted or regular as such. The relevant details pertaining to the shares were already on record. This question is also a fall out of the issue or question dealt with by the Tribunal and pertaining to the addition of Rs. 25,93,150/-. Barring the figure of loss that is stated to have been taken, no distinguishable feature can be or could be placed on record. For the same reasons, even this additional question cannot be termed as substantial question of law."
12. We may now refer to the decision rendered by Hon'ble Juri ictional
Appeal No. 2012 of 2017 dated 4th March, 2022) and relevant discussions made by Hon'ble Bombay High Court are extracted below:-
"2. We have considered the impugned order with the assistance of learned counsels and we have no reason to interfere. There is a finding of fact by the Tribunal that the transaction of purchase and sale of shares of the alleged penny stock of shares of Ramkrishna Fincap Ltd ("RFL") is done through stock exchange and through the registered Stock Brokers. The payments have been made through banking channels and even Security Transaction Tax
("STT") has also been paid. The Assessing Officer also has not criticized the documentation involving the sale and purchase of shares. The Tribunal has P a g e | 20
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Yashwant Raj Lalchand Bamboli, Mumbai also come to a finding that there is no allegation against the assessee that it has participated in any price rigging in the market on the shares of RFL.
3. Therefore we find nothing perverse in the order of the Tribunal.
4. Mr. Walve placed reliance on a judgement of the Apex Court in Principal
Commissioner of Income tax (Central)-1 vs. NRA Iron & Steel (P) Ltd
(2019)(103 taxmann.com 48)(SC) but that does not help the revenue in as much as the facts in that case were entirely different.
5. In our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law.
In the case of CIT vs. Jamnadevi Agarwal (supra), the Hon'ble Bombay
High Court held that the transactions of purchase and sale of shares cannot be considered to be bogus, when the documentary evidences furnished by the assessee establish genuineness of the claim. In the case of PCIT vs.
Indravadan Jain (HUF) (supra), the broker through whom, the assessee had carried out the transactions have been alleged to have been indulged in price manipulations and the SEBI had also passed an order regarding irregularities and synchronized trades carried out in the shares by the said broker. However, the evidences furnished by the assessee with regard to purchase and sale of shares were not doubted. Under these set of facts, the Hon'ble Bombay High Court held as under:-
"....The CIT(A) came to the conclusion that respondent bought 3000 shares of RFL, on the floor of Kolkata Stock Exchange through registered share broker.
In pursuance of purchase of shares the said broker had raised invoice and purchase price was paid by cheque and respondent's bank account has been debited. The shares were also transferred into respondent's Demat account where it remained for more than one year. After a period of one year the shares were sold by the said broker on various dates in the Kolkata Stock
Exchange. Pursuant to sale of shares the said broker had also issued contract notes cum bill for sale and these contract notes and bills were made available during the course of appellate proceedings. On the sale of shares respondent effected delivery of shares by way of Demat instruction slips and also received payment from Kolkata Stock Exchange. The cheque received was deposited in respondent's bank account. In view thereof, the CIT(A) found there was no reason to add the capital gains as unexplained cash credit under section 68 of the Act. The Tribunal while dismissing the appeals filed by the Revenue also observed on facts that these shares were purchased by respondent on the floor of Stock Exchange and not from the said broker, deliveries were taken, contract notes were issued and shares were also sold on the floor of Stock

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Exchange. The ITAT therefore, in our view, rightly concluded that there was no merit in the appeal."
In the instant case also, we noticed that the evidences furnished by the assessee to prove the purchase and sale of shares, payment made/received, entry/exit of shares in the demat account of the assessee etc., were not doubted with.
13. In the case of PCIT vs. Smt Krishna Devi (supra), the Hon'ble Delhi
High Court has noticed that the reasoning given by the AO to disbelieve the capital gains declared by the assessee, viz., astronomical increase in the price of shares, weak fundamentals of the relevant companies are based on mere conjectures. Accordingly, the Hon'ble Delhi High Court affirmed the decision rendered by ITAT in deleting the addition of capital gains.
14. Accordingly, in the facts and circumstances of the case, we are of the view that the decisions rendered by the juri ictional Hon'ble Bombay High Court in the cases cited above shall apply to the present case, since the AO has not established that the assessee was involved in price rigging and further the AO did not find fault with any of the documents furnished by the assessee.
15. We noticed earlier that the AO has assessed the Sale consideration of shares as unexplained cash credit u/s 68 of the Act. It is pertinent to note that the purchase of shares made in an earlier year has been accepted by the revenue. The sale of shares has taken place in the online platform of the Stock exchange and the sale consideration has been received through the stock broker in banking channels. Hence, in the facts of the case, the sale consideration cannot be considered to be unexplained cash credit in terms of sec. 68 of the Act.
16. Since we have held that the sale transactions of shares cannot be doubted with, the addition made by the AO with regard to estimated commission expenses is also liable to be deleted.
17. In view of the foregoing discussions, we hold that the sale consideration received on sale of shares cannot be assessed as unexplained cash credit u/s 68 of the Act and the long term capital gains declared by the assessee cannot be doubted with. Accordingly, we set aside the order passed by Ld CIT(A) and direct the AO to delete the impugned additions made by him."
20. The above decision has considered following judicial pronouncements :-

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Principal Commissioner of Income Tax (Central) - 1 Versus NRA Iron& Smt.
Karuna Garg, Smt. Karuna Garg, Bindu Garg, Krishna Devi, Hardev Sahai
Gupta (Garg) Versus Income Tax Officer Ward - 39 (4) , Ward - 38 (3) , New
Delhi - 2019 (8) TMI 450 - ITAT DELHICommissioner of Income-tax Versus.
Smt. Jamnadevi Agrawal - 2010 (9) TMI 81 - Bombay High Court
Commissioner of Income Tax-13 Versus Mr. Shyam R. Pawar - 2014 (12) TMI
977 - BOMBAY HIGH COURT Principal Commissioner of Income Tax -12
Versus Smt. Krishna Devi, Hardev Sahai Gupta (Garg) , Smt. Bindu Garg -
2021 (1) TMI 1008 - DELHI HIGH COURT Principal Commissioner of Income Tax - 3 Mumbai Versus Ziauddin A Siddique - 2022 (3) TMI 1437 -
BOMBAY HIGH COURT Principal Commissioner of Income Tax - 31,
Mumbai Versus Indravadan Jain, HUF - 2023 (7) TMI 1091 - BOMBAY HIGH
COURT PR. COMMISSIONER OF INCOME TAX-1 KANPUR Versus RENU
AGGARWAL - 2023 (7) TMI 288 - SC Order Steel Pvt. Ltd. - 2019 (3) TMI
323 - Supreme Court
21. Thus, respectfully following the above decisions which binds us judicially, we do not find any merits in the reason of the ld. AO as well as the ld. CIT (A) where the above addition is confirmed by them. Thus, orders of lower authorities are reversed. The ld. AO is directed to delete the addition u/s 68 of the act and allow assessee exemption u/s 10 (38) of the Act. Thus, ground no 2 & 3 of the appeals are allowed.”
6.3
Before parting, we may also refer to the order of hon’ble Calcutta High
Court in the case of Swati Bajaj(supra) in which similar claims have been upheld in favour of the revenue. However, as stated in the preceding para, there are several contrary decisions of the juri ictional High Court in favour of the assessee where the issues are same. We have already relied on the said ratio laid down by the Hon'ble Bombay High Court which has binding effect.
7. Considering the above discussion, the facts on record and the legal position emerging out of catena of decisions of the juri ictional High Court and direct decisions rendered by the co- ordinate benches of Mumbai, ITAT(supra),and respectfully following them, we hold that the addition made by the AO u/s 68 of the Act in the year under consideration is not justified and devoid of any merit. The P a g e | 23
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Yashwant Raj Lalchand Bamboli, Mumbai claim of the assessee u/s 10(38) of the Act has been based on facts which could not be rebutted by the AO. The documentary evidences could not be rejected without bringing on record any substantial piece of evidence and not on the basis of admission of certain individuals. Apparently, the ld.CIT(A) in the appellate order has dittoed the assessment order rather than adjudicating by way of independent application of mind on his part. We have no hesitation in deleting the addition. The AO is therefore, directed to delete the impugned addition made thus, allowing all the grounds of appeal.
8. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 03/12/2025. SANDEEP SINGH KARHAIL
PRABHASH SHANKAR
(न्याययक सदस्य /JUDICIAL MEMBER)
(लेखाकार सदस्य/ACCOUNTANT MEMBER)

Place: म ुंबई/Mumbai
ददनाुंक /Date 03.12.2025
Lubhna Shaikh / Steno

आदेश की प्रयियलयि अग्रेयिि/Copy of the Order forwarded to :

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Yashwant Raj Lalchand Bamboli, Mumbai

Mumbai
5. गार्ड फाईल / Guard file.

सत्यावपि प्रवि ////
आदेशानुसार/ BY ORDER,

उि/सहायक िंजीकार (Dy./Asstt.