INCOME TAX OFFICER, MUMBAI vs. KRUPALI AKASH SHAH, MUMBAI

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ITA 4609/MUM/2025Status: DisposedITAT Mumbai26 November 2025Bench: SHRI SANDEEP GOSAIN, JUDICIAL MEMBER\nITA No. 4609/Mum/2025\n(Assessment Year: 2012)\nIncome Tax Officer\nVs.\nKrupali Akash Shah\nRoom No. 735, 7th Floor,\nB-204, Uday Giri\nKautilya Bhavan, C-41 to C-\nCo.Op. Hsg. Soc Ltd.,\n43, G Block, Bandra Kurla\nAshok Nagar, Cross\nComplex, Bandra (East),\nRoad, Kandivali (East),\nMumbai- 400050\nMumbai- 400101\nPAN/GIR No. CFPPS7219D\n(Applicant)\n(Respondent)\nAssessee by\nShri. Nitesh Shah\nRevenue by\nShri. Nagnath Pasale, SR. DR.\nDate of Heari4 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the order passed by the learned CIT(A) was well-reasoned. The Tribunal noted that the CIT(A) had correctly observed that the AO made the addition of Rs. 8,76,443/- without considering the purchase cost of Rs. 7,92,384/- against the sale valuation. The CIT(A) had also noted that the assessee had offered the short-term capital gain of Rs. 81,476/- to tax and had not claimed any long-term capital gain. The Tribunal found that no new facts or circumstances were placed on record by the revenue to controvert the findings of the CIT(A). Therefore, the Tribunal found no reason to interfere with the CIT(A)'s order and dismissed the grounds raised by the revenue. The addition of Rs. 8,76,443/- was deleted as it was made by adding only the sales receipt without considering the purchases. The appeal filed by the revenue was dismissed.

What were the facts?

The Revenue has filed an appeal challenging the order dated 06.05.2025 passed by the National Faceless Appeal Centre (NFAC), Delhi, under Section 250 of the Income Tax Act, 1961, for the assessment year 2012-13. The appeal concerns the deletion of an addition of Rs. 8,76,443/- made by the Assessing Officer (AO) under Section 68 of the Act on account of an alleged unexplained cash credit, arising from the sale of shares of M/s. V.M.S. Industries Limited, which the AO deemed non-genuine. The CIT(A) deleted this addition, finding that the AO had failed to consider the purchase cost of Rs. 7,92,384/- against the sale consideration of Rs. 8,76,443/-.

What were the issues?

1. Whether the addition of Rs. 8,76,443/- made by the Assessing Officer under Section 68 of the Income Tax Act, 1961, on account of unexplained cash credit from the sale of shares of M/s. V.M.S. Industries Limited, was justified, considering the assessee's contention that the purchase cost was not reduced. Assessee's Contention: The assessee argued that the AO erred in making an addition of Rs. 8,76,443/- without considering the purchase cost of Rs. 7,94,967/-. The assessee stated that the short-term capital gain (STCG) of Rs. 81,476/- (sale consideration Rs. 8,76,443/- minus purchase cost Rs. 7,94,967/-) was offered to tax, and that the transactions were carried out on a recognized stock exchange. The assessee also contended that no long-term capital gain (LTCG) was claimed, and the AO's assessment was based on a flawed understanding of the facts. The assessee relied on the principle that a transaction must be considered as a whole, including purchases and sales. Revenue's Contention: The revenue's appeal challenges the deletion of the addition made by the AO. The specific arguments of the revenue are not explicitly detailed in the judgment, other than the general challenge to the CIT(A)'s order.

Which sections of the Income-tax Act were involved?

Section 68,Section 250,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SMC BENCH MUMBAI

Before: HONBLE SHRI SANDEEP GOSAIN

For Appellant: Shri. Nitesh Shah
For Respondent: Shri. Nagnath Pasale, SR. DR
Hearing: 04.09.2025Pronounced: 17.11.2025

Income Tax Officer Vs. Krupali Akash Shah Room No. 735, 7th Floor, B-204, Uday Giri Kautilya Bhavan, C-41 to C- Co.Op. Hsg. Soc Ltd., 43, G Block, Bandra Kurla Ashok Nagar, Cross Complex, Bandra (East)., Road,Kandivali (East), Mumbai- 400050 Mumbai- 400101 PAN/GIR No. CFPPS7219D (Applicant) (Respondent) Assessee by Shri. Nitesh Shah Revenue by Shri. Nagnath Pasale, SR. DR. Date of Hearing 04.09.2025 Date of Pronouncement 17.11.2025 आदेश / ORDER

PER SANDEEP GOSAIN, JM:

1.

The present appeal has been filed by the revenue challenging the impugned order 06.05.2025 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre, Delhi (NFAC) for the assessment year 2012-13.

2.

At the outset I notice that the only effective ground raised by the revenue relates to challenging the order of Ld. CIT(A) in deleting the addition made u/s 68 of the Income Tax Act.

3.

In this regard, I have heard the counsels for both the parties, perused the material placed on record, judgments cited before me and also the orders passed by the revenue authorities.

4.

As per the facts of the present case, Addition of sum of Rs. 8,76,443/- was made by AO u/s 68 of the Act on account of unexplained cash credit, thereby holding that the capital gains on the sale of shares of M/s. V.M.S. Industries Limited was non-genuine.

5.

On appeal Ld. CIT(A) thoroughly examining the facts of the case and noticed that while making of addition, the sale proceeds of the shares u/s 68 of the Act of Rs. 8,76,443/- was made by Ld.AO, without considering and reducing the purchase cost of Rs. 7,92,384/- against the said sale valuation of Rs. 8,76,443/- and consequently deleted the same.

6.

The operative portion of Ld. CIT(A) is reproduced herein below: “4. Consideration of issues under appeal and reasons for decision:- 4.1. The main contention of the assessee is as follows: 3. The learned Assessing officer erred in law and on facts in making unconceivable addition of Rs. 8,76,443/- being sale of penny Stock. He failed to appreciate that Assessee has no role to play in same, all these type of transaction are carried from recognize stock exchange. The Investment in VMS Industries was done on the floor of the exchange, both purchase and sale. Details of the same were also submitted. The gain of Rs. 81.476 was included in short term capital gain and offered to Tax 4.2. From the computation of STCG it can be seen that the profit from sales of the impugned stock has been offered to tax. It can be seen that the assessee's claim of AO not considering the purchases is found factually correct. The main contention of the AO throughout the order is that claim of bogus LTCG through manipulation of publicly traded stocks. In this case it can be seen that assessee has not claimed any LTCG in the ITR. The relevant part of the Impugned order adding the sale receipts is reproduced below.

4.3 A transaction has to be considered as a whole le, purchases has to be considered along with the sales. Hence the addition made by the AO adding only the sale proceeds and not considering the purchases is bad in law and assessee's grounds are allowed. Addition made of Rs, 8,76,443/- is deleted as it has been made by adding only the sales receipt without considering the purchases.

5. In view of the above, the appeal is allowed.” 7. After having heard counsels at length and perusal of the record, I find that Ld. CIT(A) had passed well reasoned order and on the contrary no new facts or circumstances have been placed on record by the appellate to controvert or rebut the lawful findings so recorded by Ld. CIT(A). Therefore I find no reasons to interference into or to deviated from the said findings. Hence, grounds raised by the revenue stands dismissed.

8.

Consequently, the appeal filed by the revenue stands dismissed.

Order pronounced in the open court on 17.11.2025

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