INCOME TAX OFFICER, MUMBAI vs. PELLUCID SECURITIES PRIVATE LIMITED, MUMBAI

Whether on the facts and in the circumstances of the case, the Ld. CIT(A) failed to appreciate that the addition made by the Assessing Officer was based on credible information and was justified considering the nature and extent of non- genuine purchases; hence, the full addition ought to have been upheld.

Facts of the case are that assessee is engaged in the business of investment in shares and mutual funds, trading in derivatives and loans and advances. Assessee earned income by way of dividend and capital gain on investments and interest during the year under consideration. It filed its original return on 27.09.2012, reporting a total loss at Rs.13,05,783/-. Subsequently, case of the assessee was taken up for reopening u/s.147 by issuing notice u/s.148 based on information received from the Investigation Wing, Mumbai that assessee is allegedly a beneficiary of bogus long-term capital gain by way of accommodation entry through transactions in the shares of Clarus Finance and Securities Ltd. (later, name changed to Scan Steels Ltd.) This share script is alleged as a penny stock based on the information received from the Investigation Wing, Mumbai.

1. Transaction of assessee in the said scrip, totalling to Rs. 1,29,000/- was flagged as part of the information for the purpose of reopening of the case of the assessee. Details of purchase/sale transaction undertaken by the assessee in respect of the said scrip is tabulated below:

04.2011

2. Ld. Assessing Officer called for details and explanations in respect of the long-term capital gain reported by the assessee at Rs. 1,13,163/- and claimed as exempt u/s.10(38). Assessee furnished its detailed submission by stating that it is regularly investing in shares, securities and mutual funds and deriving income by way of dividend and capital gain on its investment activities which is duly accounted for and reported in the return filed by the assessee. For this, assessee referred to the statement of holding as on 31.03.2010 to demonstrate its investment in various shares. The said detail is extracted below for ready reference:

3. Assessee submitted that it had purchased 3,000 equity shares of listed company known as Mittal Securities Ltd. on 11.03.2010 at the purchase rate of Rs.15.50/- per share on the online trading platform of Bombay Stock Exchange (BSE) through its broker. Purchase

4. Out of the 3,000 shares, assessee sold 2,000 shares in the assessment year 2011-12 and reported long term capital gain of Rs. 2,18,347/-, claiming it as exempt u/s.10(38). This assessment year 2011-12 was also taken up for reassessment u/s. 147 r.w.s. 143(3). In the said reassessment, long term capital gain on sale of 2,000 shares was accepted by the Revenue and exemption was allowed u/s.10(38). For the remaining 1,000 shares of the same script, these were sold in the year under consideration, i.e., on 01.04.2011 for which long term capital gain of Rs.1,13,163/- was reported in the return and claimed as exempt u/s.10(38).

5. In the course of assessment proceedings as well as before the ld. CIT(A), assessee furnished all the details relating to purchase and sale of the said script along with corroborative documentary evidences which included contract notes, bank statements and DMAT account statement. No doubts whatsoever were raised on the genuineness of these documentary evidences nor any discrepancy found from them. No further enquiries were conducted by the ld. Assessing Officer for verification of the documentary evidences to controvert the submissions of the assessee. Exhaustive documentary evidences placed by the assessee in the course of assessment proceedings as well as at the first appellate stage is tabulated below for ready reference: S. No.

6. Ld. Assessing Officer has heavily relied on the information of the Investigation Wing which indicated a large syndicate manipulating penny stocks to generate bogus long term capital gain. However, no independent enquiries were conducted by ld. Assessing Officer nor any cogent material placed on record to dislodge the claim of the assessee and disprove the documentary evidences furnished by the assessee. The most clinching fact placed on record and remains uncontroverted is that in the immediately preceding assessment year AY 2011-12, assessee has done identical transaction of sale of 2,000 shares out of the total purchase of 3,000 shares on which Revenue has accepted the claim of the assessee by giving exemption u/s.10(38) of the long term capital gain earned by the assessee.

7. Accordingly, in the given set of facts and circumstances which is duly supported by detailed documentary evidences placed on record which remains uncontroverted, more particularly when Revenue has already accepted part of the transaction in the immediately preceding

Ground No. 2 is consequential to the outcome of ground No. 1, since it relates to addition made u/s.69C on account of commission expense related to the alleged accommodation entry of share transaction undertaken by the assessee dealt in ground No.1. Since, addition contested vide ground no.1 is deleted, ground no.2 raised by the Revenue in respect of commission on the said transaction is rendered infructuous. Accordingly, ground no. 2 raised by the Revenue is dismissed.

In the result, appeal by the Revenue is dismissed. Order is pronounced in the open court on 30 September, 2025 (Amit Shukla) Accountant Member Dated: 30 September, 2025 MP, Sr.P.S. Copy to :