NARENDRA SHANTILAL BAPNA,NAVI MUMBAI vs. INCOME TAX OFFICER, WD-28(2)(3), MUMBAI, MUMBAI

IN THE INCOME-TAX APPELLATE TRIBUNAL”B” BENCH,
MUMBAI
BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER
&
SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER
Narendra Shantilal Bapna
Flat No. A2501, Plot No. R3
B Emerald Bay, Sector 14,
Nerul, Navi Mumbai –
400 706, Maharashtra v/s.
बनाम
Income Tax Officer, Ward –
28(2)(3)
4th Floor, Tower No. 6, Vashi
Station Complex, Vashi, Navi
Mumbai– 400703, Maharashtra
स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: ACLPB8458J
Appellant/अपीलार्थी
..
Respondent/प्रतिवादी

Appellant by :
Shri Prakash Jhunjhunwala, AR
Respondent by :
Shri Leyaqat Ali Aafaqui, (Sr.DR)

Date of Hearing
30.09.2025
Date of Pronouncement
18.11.2025

आदेश / O R D E R

PER PRABHASH SHANKAR [A.M.] :-

The present appeal arising from the appellate order dated 09.06.2025 is preferred 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 the assessment order passed u/s. 143(3) r.w.s. 147 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 27.12.2017 for the Assessment Year [A.Y.] 2014-15. P a g e | 2
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Additional Grounds of appeal:
1. On facts and circumstances of the case and in law, Ld. CIT(A) erred in confirming the addition u/s 68 of Rs.2,33,24,050/- of entire sale consideration of STT paid listed shares of M/s Surabhi Chemicals & Investments Ltd on rejecting the appellant’s claim of Long term capital gain;
2. The Ld. CIT(A), before confirming the addition of sale consideration of shares of Rs.2,33,24,050/-, ought to have considered the understated vital facts, being; a) The correctness of the documentary evidences, being Contract-cum-bills, ledger account/confirmation of broker, D-mat statements, Bank statements,
Share certificates, Bhav copy, etc. are not disputed by Ld. AO and Ld.
CIT(A); b) The substantial increase in price of shares cannot be a sole reason to treat the bonafide transaction as non-genuine, since the appellant had sold the listed shares on floor of recognised Bombay stock exchange at prevailing market price; c) The period of holding of listed shares in appellant’s D-mat account exceeds 15
months and such shares had been sold on floor of BSE on which STT, Service
Tax, etc. had been paid; d) The appellant, in statement recorded on oath u/s 131, had confirmed the transactions along with supporting documents;

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Narendra Shantilal Bapna e) The SEBI had not framed any allegations and had not passed any contrary order against the appellant and stock broker; f) The appellant is not related to any directors/promoters and exit providers and the AO, inspite of appellant’s written request, had not provided the copies of contrary material/evidence and statements of 3rd persons for rebuttal and also did not allow an opportunity of cross examination; g) The genuineness of capital asset acquired in earlier year cannot be disputed in impugned year.

2,33,24,050/- by the assessee was disallowed and the entire amount received back as sales proceeds on sale of shares was added under section 68 of the act.
4. In the subsequent appeal, the ld.CIT(A) upheld the addition taking into account the facts narrated in the assessment order. He observed that the assessee was unable to file any satisfactory reply to justify the logic behind genuine purchase and sale of the above shares and failed to justify the genuineness of sudden increase and decrease of the prices of the shares . The AO had culled out proximate facts in each of the case , took into consideration the surrounding circumstances which came to light after the investigation, assessed the conduct of the assessee by recording statement issuing summon , took note of the proximity of the time between the buy and sale operations and also the sudden and steep rise of the price of the shares of the companies when the general market trend was admittedly recessive and thereafter arrived at a conclusion. He placed reliance on Principal Commissioner of Income-tax v.
Swati Bajaj [2022] 139 taxmann.com 352 (Calcutta) and upheld the addition.
5. Before us, the ld.DR has placed reliance on the orders of authorities below.
6. The ld.AR made a detailed oral and written submissions inter alia stating that in order to justify the genuineness of long term capital gain, the assessee filed documentary evidences such as Contract notes-cum-sale bills,

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Narendra Shantilal Bapna transactions confirmation of stock broker M/s L.F.C Securities Pvt. Ltd., bank statements, rate publication, Demat statements, Purchase bill, payment receipt, share certificate, Advertisement, Corporate announcements for bonus and stock-split, balance sheet of earlier years and other documents on record.
The assessee had made off-market purchase of 4,000 shares of SCIL from M/s
Sarvottam Advisory Services Pvt. Ltd. on 26/03/2012 at a purchase consideration of Rs.10,00,000/-, on making the payment through banking channel on 27/04/2012 and such shares were credited in Demat account on 05/07/2012. He received 36,000 bonus shares credited in his D-mat account on 23/08/2012 and such shares were sub-divided into 4,00,000 shares. The period of holding of shares by him, in his Demat account, exceeded 15-16
months. The acquisition of such shares was properly disclosed in balance sheet of the assessee of earlier years as ‘Investments’. The sale of shares were made on floor of Bombay Stock Exchange at prevailing market price through registered stock broker M/s L.F.C Securities Pvt. Ltd., on making the payment of Security Transaction tax, Service tax, etc. He delivered the shares through
Demat account on 24/10/2013 and 07/11/2013 and received the entire sale consideration through banking channel from 31/10/2013 to 21/11/2013
through online mechanism of stock Exchange. The CIN Master data and record of the Stock Exchange discloses the present status of such listed company as ‘Listed’ and ‘active’.

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Narendra Shantilal Bapna gains reported by the assessee is bogus in nature. We notice that the investigation report prepared by Investigation wing, Kolkata is a generalized report with regard to the modus operandi adopted in manipulation of prices of certain shares and generation of bogus capital gains. We notice that the AO has placed reliance on the said report without bringing any material on record to show that the transactions entered by the assessee were found to be a part of manipulated transactions, i.e., it was not proved that the assessee has carried out the transactions of purchase and sale of shares in connivance with the people who were involved in the alleged rigging of prices. The Ld A.R submitted that the SEBI, who is regulator of stock market operations, have conducted enquiries and the interim order passed by it suspending the trading in two of the companies mentioned above, has since been revoked. In any case, it is stated by Ld A.R that the transactions carried on by the assessee were not subjected to scrutiny by SEBI at all.
10. We notice from the statement recorded by the AO from the assessee u/s 131 of the Act that the assessee herein is a Chartered Accountant. In the statement, the assessee has specifically stated that he is a long term investor, meaning thereby, he would not be watching the share price movements on day to day basis. Hence, we are unable to understand as to how that AO could observe that the assessee herein was ignorant of stock market operations. We also notice that the assessee has (a) purchased these shares by paying consideration through banking channels
(b) dematerialized the shares and kept the same in the Demat account.
(c) sold the shares through stock exchange platform
(d) received the sale consideration through banking channels.
Further, the shares have entered and exited the demat account of the assessee. We notice that the AO himself has not found any defect/deficiencies in the evidences furnished by the assessee with regard to purchase and sale of 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. Suresh kumar 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

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Narendra Shantilal Bapna 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. Suresh kumar, 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 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 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 P a g e | 12
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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 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

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Narendra Shantilal Bapna 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 High Court in the case of PCIT vs. Ziauddin A Siddique (Income tax 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 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 P a g e | 14
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Narendra Shantilal Bapna 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 Exchage. 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
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.

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Assessing Officer is thus purely Rama Rajiv Jagdale., AY 2014-15 an assumption based on conjectures and surmises. In our thoughtful considerations to the facts and circumstances of the case, it is not in controversy that assessee has discharged her burden by submitting the relevant documents, details of which are already extracted above, forming part of the paper book.
7.1. For our observations and findings, we place reliance on the decision in the case of CIT vs. Jamnadevi Agrawal [2012] 20 taxmann.com 529 (Bom), wherein it was held that 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. We also draw our force from the decision of Hon'ble High Court of Delhi in the case of PCIT v. Krishna Devi [2021] 126 taxmann.com 80 (Del) wherein the Hon'ble Court noticed that the reasoning given by the Assessing Officer to disbelieve the capital gain declared by the assessee, viz. astronomical increase in the price of shares, weak fundamentals of the relevant companies are based on mere conjectures.
7.2. Reliance placed by the ld. Assessing Officer on the report of investigation wing without further corroboration based on cogent material does not justify the conclusion that the impugned transaction is bogus, sham and part of racket of accommodation entries. It does not prove that the assessee has carried out the impugned transactions of purchase and sale of shares in connivance with the people who were involved in the alleged rigging of share prices. In absence of any such material, enquiry and examination, the addition made pertaining to receipt of sale consideration of the impugned transaction cannot be sustained. In our considered view, ld. Assessing Officer has not established that the assessee was involved in price rigging.
8. We note that ld. Assessing Officer has observed about the so called purchasers of shares sold by the assessee who have not been identified even though notices were issued u/s.133(6) of the Act. In this context, it is worth noting that impugned share sale transactions undertaken by the assessee are on the online digital trading platform of stock exchange of BSE which is a regulated market under the aggies of a regulator viz. SEBI. There is nothing on record from the market regulator SEBI for the relevant period which establishes the 'tainted' status of the scrip involved in the present case, so as to hold the share sale transactions as bogus/accommodation entry as alleged by the ld. AO. It is also important to note that the operations and modus operandi of this regulated market does not in any way provide for any mechanism by which assessee can bring forth the identity of the buyers of his shares and their creditworthiness. Further, sale proceeds are received through the stock market process into the pre-identified bank account of the seller i.e., the assessee which cannot be tainted as 'unexplained or unaccounted or undisclosed' money for the addition made u/s. 68 by the ld. Assessing Officer.

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Narendra Shantilal Bapna prices. Suspicion by the ld. Assessing Officer on the purchase and sale of shares is baseless. We also note that ld. Assessing Officer did not allow the assessee to cross examination the parties whose statements were relied upon by him for drawing the adverse conclusion. Such an approach adopted by ld. Assessing Officer is not in compliance with the provisions of section 142(3) of the Act which is a statutory mandatory procedural requirement for making a valid assessment. We note that the required compliance with section 142(3) has not been met.
11. As already noted above, ld. Assessing Officer has referred to the theory of preponderance of probability which according to us is applied to weigh the evidence of either side and draw a conclusion in favour of a party which has more favourable factor in his side. The conclusions have to be drawn on the basis of certain admitted facts and materials and not on the basis of presumption of fact that might go against the assessee. Once nothing has been proved against the assessee with the aid of any direct material, nothing can be implicated against the assessee on the presumption or suspicion, howsoever, strong it might appear to be true.
12. For our observations and to arrive at the findings, we find force of binding nature from the decisions of Hon'ble High Court of Bombay being a juri ictional High
Court:
i) Pr. CIT v. Ziauddin A Siddique [Income-tax Appeal No. 2012 of 2017, dated 4-3-
2022] held as under:-
"1. The following question of law is proposed:
"Whether on the facts and in the circumstances of the case and in law, the Hon'ble
Tribunal was justified in deleting the addition of Rs. 1,03,33,925/- made by AO u/s 68 of the I.T. Act, 1961, ignoring the fact that the shares were bought/acquired from off market sources and thereafter the same was DMATed and registered in stock exchange and increase in share price of Ramkrishna Fincap Ltd. is not supported by the financials and, therefore, the amount of LTCG of Rs. 1,03,33,925/- claimed by the assessee is nothing but unaccounted income which was rightly added u/s 68 of the I.
T. Act, 1961?"
2. We have considered the impugned order with the assistance of the 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 the 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 also come to a finding that there is no allegation

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Narendra Shantilal Bapna against 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 judgment of the Apex Court in Principal
Commissioner of Income-tax (Central)-1 v. NRA Iron & Steel (P.) Ltd. 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.
6. The appeal is devoid of merits and it is dismissed with no order as to costs."
ii) PCIT vs. Indravadan Jain HUF [2023] 156 taxmann.com 605 (Bom) wherein it was held:
"Where shares were purchased by assessee on floor of stock exchange and not from broker, payment was made through banking channel, deliveries were taken in DMAT account where shares remained for more than one year, contract notes were issued and shares were also sold on stock exchange, there was no reason to add capital gains as unexplained cash credit under section 68"
iii) CIT vs. Shyam R. Pawar [2015] 54 taxmann.com 108 (Bom) wherein it was held:
"Where DMAT account and contract note showed details of share transaction, and Assessing Officer had not proved said transaction as bogus, capital gain earned on said transaction could not be treated as unaccounted income under section 68"
13. In the course of hearing before us, Ld. Sr. DR placed reliance on various judicial precedents including that of Hon'ble High Court of Calcutta in the case of Swati
Bajaj & others v. PCIT [2022] 446 ITR 56 (Cal) and also in the case of PCIT vs. Usha Devi Modi [2023] 151 taxmann.com 199 (Calcutta). Reliance was also placed on decision of Coordinate Bench of ITAT, Pune and Mumbai in the case of Abhishek Ashok Lohade vs. ITO in ITA No.816/Pun/2018, dated 22.11.2022, in Archana Rajendra Malu vs. ITO [2023] 155 taxmann.com 625 (Pune) and in the case of Sant Kumar Maliram Tola vs. ITO in ITA No.1092/Mum/2023, dated
19.02.2024. 13.1. However, we note that there are several decisions of Hon'ble Juri ictional High
Court as stated supra which are in favour of the assessee. Ld. Counsel had also placed

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Narendra Shantilal Bapna on record the decision of Coordinate Bench of ITAT, Mumbai in the case of Chirag
TejPrakash Dangi vs. ITO in ITA No.3256/Mum/2022, dated 20.02.2024
wherein the decision was held in favour of assessee in respect of long term capital gain earned by him on the same scrip, i.e.Surbhi Chemicals
& Investments Ltd. as in the present case for which the claim of exemption u/s.
10(38) was allowed. Accordingly, the same would prevail on the issue before this Tribunal in the present case. Further, decision of the Hon'ble Non-Juri ictional
High Court carries only a persuasive value. The law is very well settled by the Hon'ble
Corporation Ltd reported in 55 ELT 43 (1991) that the decision of Hon'ble
Juri ictional High Court would have higher precedence value on the Tribunal than the decision of Hon'ble Non-Juri ictional High Court. Hon'ble Supreme Court emphasised therein that the orders of Tribunal should be followed by the authorities falling within its juri iction so that judicial discipline would be maintained in order to give effect to orders of the higher appellate authorities. The Hon'ble Apex Court has observed that utmost regard must be had by the adjudicating authorities and the appellate authorities to the requirement of judicial discipline.
13.2. Respectfully following the same, we deem it fit and appropriate to follow the decisions of Hon'ble Juri ictional High Court of Bombay referred supra which carries force of binding nature, wherein the impugned issue is decided in favour of the assessee. Moreover, when there are conflicting decisions of various High Courts on the same issue, the Hon'ble Supreme Court in the case of Vegetable Products reported in 88 ITR 192 (SC) had held that construction that is favourable to the assessee should be adopted. Hence by following this principle, reliance placed by ld.
Sr. DR on the above referred decisions do not hold their fort. Further in the present case, we find that assessee has duly established the nature and source of credit representing sale proceeds of shares of Surbhi Chemicals & Investments Ltd.
14. Considering the totality of facts and circumstances of the case, factual matrix and submissions of parties narrated as well as Rama Rajiv Jagdale., AY 2014-15
discussion and observations made herein above, we uphold the finding arrived at by the ld. CIT(A) and accordingly delete the addition made u/s 68 towards proceeds of sale of listed shares of Surbhi Chemicals & Investments Ltd. which gave rise to Long
Term Capital Gain on the said sale, claimed exempt by the assessee u/s 10(38).
Accordingly, grounds taken by the Revenue in this respect are dismissed.
15. Addition made by the ld. Assessing Officer on estimate basis towards commission for arranging alleged artificial capital gains @ 3% amounting to Rs. 1,87,358/- is consequential to the addition made towards receipt of sale proceeds of alleged penny stock. Since we have deleted the said addition towards sale proceeds of alleged penny stock in terms of above stated observations and findings, this consequential addition

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Narendra Shantilal Bapna of commission has no foundation to stand. Accordingly, the same is deleted. Grounds taken by the Revenue in this respect are dismissed.
16. In the result, appeal of the Revenue is dismissed.”
8. We find that the ratio of decisions of hon’ble Bombay High Court
(supra) are squarely applicable to the facts of the case as well. The payments have been made through banking channels and even Security Transaction Tax has also been paid. There is no allegation against the assessee that it has participated in any price rigging in the market on the shares SCIL. Further, in the case of CIT vs. Jamnadevi Agarwal (supra), the Hon'ble Bombay
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Narendra Shantilal Bapna evidences furnished have been neither controverted by the AO during the assessment proceedings nor anything substantive brought on record to justify the addition made by him. At any stage of the present case, Revenue has not brought on record any material about participation of the assessee with any such dubious transactions relating to accommodation entry, price rigging or exit providers. To our mind, once the assessee has produced documentary evidence to establish the veracity of his claim, the burden would shift on the Revenue to establish its case. On the perusal of records, it is discernible that the AO had proceeded on the basis of analysis of the financials of the companies. According to him, sharp jump in the share prices of the aforesaid scrips is not justified. He has relied upon the search and survey operations conducted by the investigation wing of the Department at various locations in respect of alleged penny stocks which sets out the modus operandi adopted in the business of providing entries for bogus capital gains. The conclusion drawn by him of implicating the assessee is unsupported by any cogent material on record. The finding arrived at is thus purely an assumption based on conjectures and surmises. In our thoughtful considerations to the facts and circumstances of the case, it is not in controversy that assessee has discharged his burden by submitting the relevant documents. There is nothing adverse on record from the market regulator SEBI supporting the allegations of the AO
Also, the operations and modus operandi of this regulated market does not in P a g e | 24
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Narendra Shantilal Bapna any way provide for any mechanism by which assessee can bring forth the identity of the buyers of his shares and their creditworthiness. Further, sale proceeds are received through the stock market process into the pre-identified bank account of the seller i.e., the assessee which cannot be tainted as 'unexplained or unaccounted or undisclosed' money for the addition madeu/s.
68 of the Act.

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Narendra Shantilal Bapna piece of evidence and not on the basis of admission of certain individuals.
Apparently, the ld.CIT(A) in the appellate order has, in a preconceived manner 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 the grounds of appeal.

Place: म ुंबई/Mumbai
ददनाुंक /Date 18.11.2025
Lubhna Shaikh / Steno

आदेश की प्रयियलयि अग्रेयिि/Copy of the Order forwarded to :
1. अपीलार्थी / The Appellant
2. प्रत्यर्थी / The Respondent.
3. आयकर आयुक्त / CIT
4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai
5. गार्ड फाईल / Guard file.
सत्यावपि प्रवि ////
आदेशानुसार/ BY ORDER,

उि/सहायक िंजीकार (Dy./Asstt.