INTERGRATOR CONSULTANTS PRIVATE LIMITED ,DELHI vs. DCIT, CENTRAL CIRCLE - 1(4), MUMBAI, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL
“C” BENCH MUMBAI

BEFORE HON’BLE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER&
SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER
Integrator Consultants Pvt
Ltd.,
551,
Abhinav
Apartment,
Vasundhara Enclave, East
Delhi, Delhi – 110096

Vs.
DCIT, CC – 1(4)
902,
9th
Floor,
Pratishtha Bhavan, Old
CGO Annexe, MK Road,
Mumbai – 400020. PAN/GIR No. AAAC10517P
(Applicant)
(Respondent)

Assessee by Shri Ravi Gantra
Revenue by Shri Virabhdra Mahajan, Sr. DR

Date of Hearing
24.09.2025
Date of Pronouncement
25.11.2025

आदेश / ORDER

PER SANDEEP GOSAIN, JM:

The present appeal has been filed by the assessee challenging the impugned order dt. 06.03.2025 passed under section 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre (NFAC) / CIT(A) for the assessment year 2015-16.The assessee has raised the following grounds of appeal:
1. On the facts and in the circumstances of the appellant's case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in not quashing the assessment order passed u/s 143(3)

2
Integrator Consultants Pvt Ltd., Mumbai.

r.w.s. 147 of the Income Tax Act, 1961 [hereinafter referred to as 'the Act'] despite the fact that re-opening was illegal, bad-in- law or otherwise void for want of juri iction.

said judgement of the was rendered under the Securities
Exchange Board of India Act, 1992 and not under Income Tax
Act, 1961. 5. On the facts and in the circumstances of the appellant's case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in upholding the disallowance of set off of loss of Rs
47,68,944/- made by the Assessing Officer disregarding the relevant supporting documents in the form of demat statement, ledger, financial statements and bank statement furnished by the appellant during the course of assessment proceedings, thereby discharging the onus cast on the appellant.

amount of alleging the loss incurred, treating the transaction as a bogus accommodation entry.
9. On the facts and in the circumstances of the appellant's case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in upholding the disallowance of set off of loss of Rs
47,68,944/- and addition of commission of Rs 95,379/- made by the Assessing Officer in absence of any incriminating material / evidence against the appellant company solely on the guesswork of prior meeting of minds, suspicion, assumption, presumption, surmises and conjectures.

assessee was one of the beneficiaries indulged in the above- mentioned activity and generating bogus losses.Therefore the case of the assessee company was reopened u/s 147 of the Act. It was also noticed by the AO that from the data available on record, the assessee has purchased and sold stock options on BSE resulting in loss of Rs 47,68,944/- for AY 2015-16. 3. Thus while relying upon the interim order dated 20.08.2015 of SEBI, decision of Hon’ble Supreme Court in Rakhi Trading Private
Limited delivered on 08.02.2018 in CA No 1969 of 2011 and third party statement of one Shri Arun Shah, director of share broking firm M/s Aryav Securities P Limited. It was concluded that the assessee had befitted from engaging in reversal trades in illiquid stock options on BSE resulting in non- genuine loss amounting to Rs 1,93,37,131/- and has incurred cash expenses amounting to Rs
3,86,743/- towards commission for the year under consideration.
4. The order of assessment was challenged by the assessee, however the Ld.CIT(A) dismissed the same. Against this order of dismissal, the assessee has preferred the present appeal before us on the grounds mentioned herein above.
5. All the grounds raised by the assessee are interrelated and interconnected and relates to challenging the order of CIT(A) in upholding the order of AO on various grounds as mentioned in the grounds of appeal, therefore we have decided to adjudicate these grounds through the present consolidated order.
6. Ld. AR appearing on behalf of the assessee reiterated the same arguments as were raised by him before the revenue authorities and also submitted that the identical issue had already been decided by the Coordinate
Bench of ITAT in ITA
No.

6
Integrator Consultants Pvt Ltd., Mumbai.

1179/Mum/2025 in the case of Laurels Properties Pvt Ltd.Vs.
DCIT. It was also submitted that the reopening and consequently the order of the assessment was illegal, bad in law and without juri iction. It was submitted that the reopening was entirely based on borrowed satisfaction and without application of mind or independent enquiries on the part of the AO. It was further argued that the assessment was re-opened merely on the basis of information received from Investigation Wing and SEBI
Interim Order, which was under a different law with a different purpose and which was subsequently set aside and no independent enquiry was made by the AO before the re-opening of assessment proceedings to translate the information into a 'reason to believe' or even before passing the assessment order.
Apart from the above, it was also argued Ld. CIT(A) erred in upholding the disallowance of set off of loss of Rs 47,68,944/- made by the AO in the assessment order, incurred on account of trading in stock options by treating the same as bogus even though the sale / purchase was made in the normal course of business through online transactions on recognized stock exchange in the prescribed and legal manner as a bonafide trader without any acquaintance with counter parties to the transaction and thus Ld. CIT(A) while ignoring the decision of the Coordinate Bench of the ITAT in the case of the Assistant
Commissioner of Income Tax [2020] 120 taxmann.com 422
(Delhi - Trib.) and even the reliance on the decision of Hon'ble
Apex Court in the case of Rakhi Trading P Limited was misplaced and irrelevant as the said judgement was rendered under the Securities Exchange Board of India Act, 1992 and not under Income Tax Act, 1961. It was also submitted that 7
Integrator Consultants Pvt Ltd., Mumbai.

Ld. CIT(A) erred in upholding the disallowance of set off of loss of Rs 47,68,944/- made by the AO by relying on the statement of Shri Arun Shah, Director of M/s Aryav Securities Private
Limited (the alleged accommodation entry provider) even though he had not stated anything incriminating as regards the transactions by the assessee. It was submitted that the disallowance of set off of loss of Rs 47,68,944/- made by the AO was without providing copy of statement of Shri Arun Shah relied upon by him and without providing an opportunity to cross-examine Arun Shah despite repeated requests, which is against the principles of natural justice. It was argued the addition of Rs 95,379/- made by the AO on account of alleged ad-hoc commission on the amount of alleging the loss incurred, treating the transaction as a bogus accommodation entry was wrong.
7. On the other hand Ld.DR relied upon the orders passed by the revenue authorities.
8. We have heard the counsels for both the parties, perused the material placed on record, judgments cited before us and also the orders passed by the revenue authorities. From the records we noticed that the case of the assessee was reopened on the ground that assessee was one of the beneficiary who indulged in generating bogus losses on the equity options segment on the Bombay Stock
Exchange (BSE) reversal trades. It was also held by the revenue that from the data available on record, the assessee had purchased and sold stock option on BSE resulting into loss of Rs. 47,68,944/- for the year under consideration.

8
Integrator Consultants Pvt Ltd., Mumbai.

9
Integrator Consultants Pvt Ltd., Mumbai.

10
Integrator Consultants Pvt Ltd., Mumbai.

“14.3 The A.O. however relied upon ad-interim order of the SEBI dated 20/22-8-2015 in which it was found prima facie that profit making entities were deliberately making repeated losses through their reversal trading in stock option which do not make economic sense and facilitating their counter parties, thus, contravening the provisions of SEBI Act and restrain such entities from buying or selling or dealing in the Securities Markets and their objections were called for. The A.O. further referred to the Order of the SEBI dated 22-8-2016 in which SEBI released the confirmatory order and interim order was diluted with permission to the assessee and others for dealing in the scrips. It was further directed in the said order that these directions shall continue to be in force till further directions. These facts clearly show that the ad- interim order of the SEBI was passed without hearing the objections of the assessee and when objections of the assessee were considered, the interim order was diluted by giving permission to the assessee to deal in the transactions. Ultimately, both the orders of the SEBI relied upon by the A.O. have been vacated by the SEBI vide order dated 5-4 2018. Thus, there were no material available with the authorities below so as to conclude that assessee has entered into any dubious or 11
Integrator Consultants Pvt Ltd., Mumbai.

other transactions deliberately to show business loss. In such circumstances, it was imperative on the part of the authorities below to examine the issue on merit and to decide whether assessee has suffered genuine business losses out of the transactions/trades in question.
However, the authorities below did not examine the issue on merits and merely relying upon the ad-interim order concluded the issue against the assessee. It is also clear from these facts that the ad-interim order which was passed exparte - Whether would disclose any binding precedent or ratio which may be binding on the Income-tax
Department?". In our humble view, it would not be binding precedent. It may create some suspicion or doubt. It is well settled Law that "suspicion howsoever strong may be but it cannot take place of legal proof." The Ld. D.R.
submitted that if the test of human probability is applied to the facts and circumstances of the case, it would prove that assessee has not suffered genuine business loss.
However, such a principle is to be applied to weigh the evidences of either side and draw a conclusion in favour of the party which has more favourable factors in his side.
Further in the present case the findings of the A.O./Ld.
CIT(A) are merely based upon the findings given by the SEBI in ad-interim order and subsequent order which have been vacated subsequently by the SEBI. Even such orders cannot be relied upon at this stage as there were nothing against the assessee so as to conclude that assessee has not suffered genuine business loss because the SEBI itself have mentioned in its Orders that the issue will require detailed verification from the Income-tax Department. The issue before the SEBI Authorities were in fact violation of SEBI provisions and Rules and they have not adjudicated upon if there were any violation of the Income-tax provisions which they also were not competent to deal with it. Therefore, reliance placed by the A.O. of such Orders which are ultimately vacated was totally misplaced and cannot be read against the assessee.

12
Integrator Consultants Pvt Ltd., Mumbai.

"20. The question whether there was fictitious transactions creating illegal synchronization has to be gathered from the facts and circumstances and intention of the parties. Acting in concert is something about which it is difficult to obtain direct evidence.
Proof of manipulation might depend upon inferences drawn from factual details. Such inferences could be gathered from pattern of trading data and the nature of the transactions etc."

"45. No grounds have been raised in the show cause notice alleging that the impugned fictitious transactions have been entered into with a view to avoid payment of tax and was an act of tax planning. Adjudicating officer also has not gone into this aspect. Hence, I am not inclined to go into this aspect, whether the impugned transactions were intended to reduce the brunt of taxation and an act of tax planning. The correctness of findings of SAT in the case of Viram Investment (P.) Ltd. is left open."

13
Integrator Consultants Pvt Ltd., Mumbai.

provisions of SEBI Act. The above facts clearly show that the ad- interim order of the SEBI was passed without hearing the objections of the assessee. Even there were no material available with the authorities below so as to conclude that assessee has entered into any dubious or other transactions deliberately to show business loss. In such circumstances, it was imperative on the part of the authorities below to examine the issue on merit and to decide whether assessee has suffered genuine business losses out of the transactions/trades in question. However, the authorities below did not examine the issue on merits and merely relied upon the ad- interim order and concluded the issue against the assessee.
It is well settled Law that "suspicion howsoever strong may be but it cannot take place of legal proof." The Ld. D.R.
submitted that if the test of human probability is applied to the facts and circumstances of the case, it would prove that assessee has not suffered genuine business loss. However, such a principle is to be applied to weigh the evidences of either side and draw a conclusion in favour of the party which has more favourable factors in his side. In the present case the findings of the A.O./Ld. CIT(A) are merely based upon the findings given by the SEBI in ad-interim order and what happened finally has not been mentioned anywhere throughout the assessment order. Even such order cannot be relied upon at this stage as there were nothing against the assessee so as to conclude that assessee has not suffered genuine business loss.
As it was further Income-tax department to carryout detailed verifications, thus it is clear from the records that the issue before the SEBI Authorities were in fact violation of SEBI provisions and Rules and they have not adjudicated upon if there were any violation of the Income-tax provisions which they also were not competent to deal with it. Therefore, reliance placed by the A.O. of 15
Integrator Consultants Pvt Ltd., Mumbai.

such Orders totally misplaced and cannot be read against the assessee.
Although Ld. D.R. also relied upon the Judgment of the Hon'ble Supreme Court in the case of Rakhi Trading (P.) Ltd.,
(supra), However in this case the issue was against the Traders and Brokers for violation of Regulation of SEBI Act and relating to synchronized trading in which the penalty was imposed under section 15HA of the SEBI Act against the respondent company which was set aside by the Securities Appellate Tribunal ("SAT") and SEBI has preferred an appeal before the Hon'ble Supreme
Court. It is a concurrent Judgment of the Hon'ble Judges of the Hon'ble Supreme Court dated 8-2-2018. The appeal against the Traders were allowed and Orders of the SAT are set aside and the Order of the SEBI was restored. However, the appeals filed against the Brokers were dismissed. In para 20 of the subsequent concurrent order, the Hon'ble Supreme Court held as under:

"20. The question whether there was fictitious transactions creating illegal synchronization has to be gathered from the facts and circumstances and intention of the parties. Acting in concert is something about which it is difficult to obtain direct evidence.
Proof of manipulation might depend upon inferences drawn from factual details. Such inferences could be gathered from pattern of trading data and the nature of the transactions etc."

In para 45 the Hon'ble Supreme Court further held as under:
"45. No grounds have been raised in the show cause notice alleging that the impugned fictitious transactions

16
Integrator Consultants Pvt Ltd., Mumbai.

have been entered into with a view to avoid payment of tax and was an act of tax planning. Adjudicating officer also has not gone into this aspect. Hence, I am not inclined to go into this aspect, whether the impugned transactions were intended to reduce the brunt of taxation and an act of tax planning. The correctness of findings of SAT in the case of Viram Investment (P.) Ltd. is left open."

The issue in appeal regarding violation of provisions of SEBI Rule was decided based on the facts and circumstances available on record and intention of the parties and ultimately the issue with regard to avoidance of payment of tax and act of tax planning was not adjudicated because the Adjudicating
Officer has not gone into this aspect. However, in the present case, the A.O./Ld. CIT(A) have not gone into the facts and material evidence on record and merely referring to the interim order of the SEBI have decided the issue against the assessee.
Since in the case of Rakhi Trading (P.) Ltd., (supra), the issue under Income-tax Act was also not adjudicated upon, therefore, in our humble opinion the decision in the case of Rakhi Trading (P.) Ltd., (supra), would not support the case of Revenue.
Therefore considering the totality of the facts and circumstances of the case in the light of material/evidences available on record and in the absence of any investigation carried-out by the authorities below, we are of the view that assessee has been able to establish that assessee company has suffered genuine business loss, therefore, authorities below should not have disallowed the same against the assessee. In 17
Integrator Consultants Pvt Ltd., Mumbai.

view of the above findings, we set aside the Orders of the authorities below and delete the entire addition.
16. As far as the admissibility of the third-party statement of Shri
Arun Shah as relied upon by the AO is concern in this regard we noticed that assessee has taken specific stand to the effect that the assessee company is not connected to Shri Arun Shah nor has it entered into any transactions with M/s Aryav Securities P Limited, the AO has not provided the copy of statement of Shri Arun Shah, the assessee has not been provided with the opportunity to cross examine Arun Shah, even the has not mentioned about what has been stated by Shri Arun Shah in his statement, which can have repercussions on the assessee. Moreover, the statement of third party without providing the relevant documents, copy of statements and opportunity for cross examination, cannot be relied upon by the AO.
17. From the records, we noticed that these aspects have also been not examined Ld. CIT(A).
18. We also noticed that the AO has provided a tabulated analysis of the alleged impugned trades done by the assessee, wherein, the AO has alleged that Rector Investment Private Limited is the counter party in these trades. In this regard Ld. AR outrightly submitted that throughout during the assessment proceedings, the AO has nowhere mentioned about the alleged counter party, i.e.,
Rector Investment P Limited, whereas, the assessee only came to know the name of the Rector Investment P Limited only in the order of assessment passed by the AO. Even from the records we noticed that throughout the AO could not prove as to how the said Rector
Investment Pvt Ltd is related to the assessee. Now before us the revenue has failed to indicate or prove, as to who is the 18
Integrator Consultants Pvt Ltd., Mumbai.

intermediately between the assessee and the alleged counter party to help facilitate the alleged reversal trading.
19. After evaluating the records, the we found that no notice u/s 133(6) of the Act was ever issued to Rector Investment P Limited nor any investigation with regard to the alleged reversal trading as regards the involvement of assessee company in such trading has been carried out. Even no statement of Rector Investment P Limited was recorded with regard to the alleged reversal trading and the assessee’s involvement in such trading. As per Ld.AR no information report or copy of analysis was provided by the AO to the assessee, which proves that Rector Investment P Limited is a counter party. Therefore, throughout the proceedings the AO could not prove as to how the assessee company purchased and sold the alleged stock options to Rector Investment P Limited by misusing or bypassing the online platform, which acted as a curtain.
20. After having gone through the orders passed by the revenue authorities, we find that all the above aspects were ignored by Ld.
CIT(A) as well during the appellate proceedings. In this regard, we noticed that it is a well settled fact of law that in order to prove that assessee had acquired some unaccounted cash in lieu of said loss, then the AO should have documented the requisite cash trail as conclusive or even a prima-facie evidence. However, in the entire assessment order the AO had not brought anything on record to prove that the assessee had been a party to any unaccounted cash transaction. Thus in our view the addition of Rs 95, 379/- is solely based on conjectures, surmises, suspicion and unconfronted third party statement and is therefore liable to be deleted. In this regard we placed reliance upon the following judicial precedents

19
Integrator Consultants Pvt Ltd., Mumbai.

i.
Decision of Hon’ble Delhi High Court in the case of Sabh
Infrastructure
Limited v.
ACIT reported in 99
taxmann.com 409 (Delhi), the facts of the case are that where during assessment proceedings, assessee had disclosed all relevant information regarding companies from which it had received share application money and Assessing Officer had not doubted such transaction, mere statement of an entry operator that companies in question were 'paper companies', by itself was insufficient to reopen assessment, unless
Assessing
Officer had further information that those companies were non-existent after making further inquiries into matter.

ii.
Decision of Hon’ble Juri ictional Bombay High Court in the case ofRita Rajkumar Singh Vs. Assistant Commissioner of Income Tax., the facts of the case are thatwhere assessment was sought to be reopened in case of assessee on ground that assessee had done transactions in shares of 'F', which was a penny stock company traded in Bombay
Stock Exchange, however, there was no allegation at all in reasons recorded for reopening that assessee was mastermind or actively involved in rigging of share price of 'F' in stock market and assessee having admitted that it had traded in 'F' and even provided documents thereto during assessment, there being no failure to truly and fully disclose material facts, reopening of assessment after four years was not justified.

iii.
Decision of Hon’ble High Court of Gujarat in the case of Nila
Pvt Ltd in ITA No. 1179/Mum/2025, the identical issue had already been decided in favoure of the assesse.
22
Therefore, keeping in view the entire facts and circumstances of the present case and also relying upon the decision of Coordinate
Bench of ITAT in the case of Laurels Properties Pvt Ltd in ITA No.
1179/Mum/2025, the identical issue had already been decided in favoure of the assesse. Thus, we are also of the view that the additions of Rs 47,68,944/-made on account of disallowance of set off of loss and addition of Rs 95,379/- made u/s 69C of the Act are not in accordance with the provisions of law, thus the same are directed to be deleted. Consequently, the grounds raised by the assessee are allowed.
23
In the result, the appeal filed by the assessee stands allowed.

Order pronounced in the open court on 25.11.2025 (GIRISH AGRAWAL) (SANDEEP GOSAIN)
ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai, Dated 25/11/2025

KRK, Sr. PS

21
Integrator Consultants Pvt Ltd., Mumbai.

आदेश की ितिलिप अेिषत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. थ / The Respondent.
3. संबंिधत आयकर आयु / The CIT(A)
4. आयकर आयु(अपील) / Concerned CIT
5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण,मुबई/ DR, ITAT, Mumbai
6. गाड फाईल / Guard file.

आदेशानुसार/BY ORDER,
सािपत ित ////