RUCHI JAIN,DELHI vs. ITO WARD 54(1), DELHI

Per Renu Jauhri, Accountant Member:

This appeal by the Assessee is directed against the order dated 30.12.2025 of the National Faceless Appeal Centre (NFAC), Delhi, [hereinafter referred to as the ‘Ld. CIT(A)] arising out of the Assessment Order dated 28.12.2016 passed under section 143(2) of the Income Tax Act, 1961 (hereinafter referred to as the ‘the Act’)

ITA No.- 4345/Del/2026 Ruchi Jain by the Income Tax Officer, Ward 54(1), New Delhi, (hereinafter referred to as the ‘AO’) pertaining to Assessment Year (A.Y.) 2014-15. 2. Revised grounds of appeal filed by the Assessee are reproduced as under: “1. That the applicant craves leave to revise the ground no 2, 3, 5 and 6 of the grounds of appeal filed in the above captioned appeal 2 Ground No. 2: That, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in sustaining the addition of ₹27,83,695/- under Section 68 read with Section 115BBE of the Act on account of alleged unexplained money and the consequential addition of 55,674/- being alleged commission @2%, along with the addition on account of alleged unexplained expenditure, without any cogent evidence and without properly appreciating the material on record and the provisions of the Act 3. Ground no 3: That, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in sustaining the addition of 27,83,695/- made by the Ld. AO, along with the consequential addition of 55,674/- being alleged commission @2%,on account of alleged unexplained expenditure, without appreciating that the appellant's name did not appear in the alleged price-rigging activities and in the absence of any incriminating material linking the appellant with such transactions. 4. Ground no 5: That, on the facts and in the circumstances of the case and in law, the Ld. AO erred in making the addition of ₹27,83,695/- under Section 68 read with Section 115BBE of the Act, along with the consequential addition of 55,674/- being alleged commission @2%, on account of alleged unexplained expenditure, without properly considering the documentary evidence furnished by the appellant in support of the exemption claimed under Section 10(38) of the Act. 5. Ground no 6: That, on the facts and in the circumstances of the case and in law, the Ld. AO erred in making the addition of 27,83,695/- under Section 68 read with Section 115BBE of the Act, along with the consequential addition of 55,674/- being alleged commission @2% on account of alleged unexplained expenditure, without conducting any independent enquiry and merely relying upon the report of the Directorate of Investigation, Kolkata.”

ITA No.- 4345/Del/2026 Ruchi Jain Gains (LTCG) of Rs. 27,83,690/- on the sale of scrips of Kappac Pharma Ltd. The case was selected for scrutiny and assessment was completed at an income of Rs. 10,42,05,500/- by making various addition and disallowance.

3.1 Aggrieved, the assessee preferred an appeal before the CIT(A), who allowed part relief to the assessee. However, the addition on account of disallowance of claim of LTCG of Rs. 27,83,695/- made u/s 68 of the Act, was confirmed by the CIT(A) alongwith consequential addition of Rs. 5,56,741/-, on account of commission @ 2% alleged by paid by the assessee on impugned transaction.

Aggrieved by the order of Ld. CIT(A), the assessee has filed present appeal before the Tribunal.

He has pointed out that the husband of the assessee, Sh. Suresh Kumarn Jain had also purchased 6000 shares of M/s Kappac Pharma Ltd., at the same time and those were sold subsequently in A.Y. 2014-15. Under identical facts and circumstances the coordinate bench in his case (ITA No.-1337/Del/2025) had accepted the transaction as genuine and confirmed the decision of Ld. CIT(A), who had deleted the addition after examining the entire transaction of purchase and sale

ITA No.- 4345/Del/2026 Ruchi Jain of shares. He has, therefore, submitted that facts and circumstances being identical in this case, the LTCG should be treated as genuine and relief allowed to the assessee.

4.1 Ld. DR, on the other hand, has vehemently argued that M/s Kappac Pharma Ltd. had been found to be a penny stock company which was investigated by the SEBI and trading in itsshares was also suspended in 2015. Further, the report of investigation conducted by the Investigation Wing, Kolkata also established that the impugned transactions were bogus and hence the addition made by the AO and confirmed by Ld. CIT(A) deserves to be upheld.

“Observations concerning the Merit of Additional Evidences: (1) Additional Evidence w.r.t. to Addition of Rs. 27,83,695/- u/s 68 read with sec. 115BBE on account of bogus long term capital gain: I have gone through the above records and documents. Prima-facie the said records and documents appear to be genuine. However, it needs to be appreciated that in such cases of bogus claims of long term capital gains, "substance" must prevail over "form" and as such the above documents and records should not be considered to have any evidentiary value in the context of the said addition in respect of bogus claim of long term capital gain of the assessee.”

However, despite above comments of the AO, Ld. CIT(A) held that the purchase and sale of shares were arranged to generate bogus LTCG and confirmed the addition. 4

ITA No.- 4345/Del/2026 Ruchi Jain We note that neither the AO nor the CIT(A) has doubted the documentary evidences furnished by the assessee regarding purchase and sale the shares. Moveover, under identical facts and circumstances, the addition made in the case of Sh. Suresh Kumar Jain was deleted by the CIT(A) and the deletion was also upheld by the coordinate bench in department’s appeal with the following observations:

“4. Both sides heard, orders of the authorities below examined. A perusal of the assessment order shows that the AO based on the information received from Investigation Wing formed an opinion that the LTCG earned by the assessee on sale of shares of M/s. Kappac Pharma Ltd. is bogus as the shares of said company fall in the category of penny stock. The AO made addition of the entire LTCG claimed by the assessee on sale of shares of M/s. Kappac Pharma Ltd. I find that the AO in the assessment order has given a detailed finding explaining characteristics of a penny stock, role of share brokers, financial analyses of company, role of operator, role of promoter of penny stock companies in artificial rigging of penny stock shares prices and the manner in which penny stock is traded. The AO further explained as to how the penny stocks are used as artificial mode of reducing tax liability. However, in the entire assessment order, the AO has not established the nexus of assessee or the broker of the assessee in price rigging of the shares or the role of assessee or its broker in alleged penny stock scam resulting in artificial booking of bogus LTCG. The AO after having recorded the fact of assessee having sold shares of M/s. Kаррас Pharma Ltd. and having earned LTCG on sale of said shares referred to the investigation report from Investigation Wing, Kolkata explaining modus operandi of trading in penny stock and role of share brokers, etc. The AO in the penultimate paragraph of the order concludes that the amount realized from the sale of shares of M/s. Kappac Pharma Ltd. is unexplained money u/s.69A of the Act and made addition of the same. There is no whisper in the assessment order alleging the transaction of purchase and sale of shares of M/s. Kappac Pharma Ltd. by the assessee was in any manner fixed or premeditated. The assessee is order to discharge its onus in proving genuineness of transaction had furnished contract notes, demat statement and details of banking transactions. Hence, the AO has failed to establish that the transaction of sale of shares by the assessee is bogus. No controverting material is brought on record by the Revenue to dislodge findings of the First Appellate Authority. I find no infirmity in findings of the CIT(A) in deleting the addition.”

ITA No.- 4345/Del/2026 Ruchi Jain 5.2 In view of the facts noted hereinbefore and the decision of the coordinate bench in the identical set of facts, we hereby delete the addition made on account of LTCG of Rs. 27,83,695/-.

5.3 Further, since the addition u/s 68 in respect of LTCG of Rs. 27,83,695/- has been deleted, the consequential addition on account of alleged commission @ 2% amounting to Rs. 55,674/- is also deleted.

Order pronounced in the open court on 09.09.2026.

Sd/- Sd/- [ANUBHAV SHARMA] [RENU JAUHRI] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated- 09.09.2026. Pooja. Copy forwarded to: 1. Assessee 2. Respondent 3. CIT 4. CIT(A) 5. DR

Asst. Registrar, ITAT, New Delhi,

ITA No.- 4345/Del/2026 Ruchi Jain

Date of dictation of Tribunal order 2. Date on which typed draft order is placed before the dictating Member 3 Date on which typed draft order is placed before the other Member (in the case of DB) 4. Date on which the approved draft order comes to P.S/Sr.P.S 5. Date on which the fair Order is placed before the dictating Member for sign 6. Date on which the fair Order is placed before the other Member for sign ( in the case of DB) 7. Date on which the Order comes back to P.S./Sr.P.S for uploading on ITAT website Date of uploading, if not, reason for not 8. uploading 9. Date on which the file goes to the Bench Clerk 10. Date on which order goes for xerox 11. Date on which order goes for endorsement 12. Date on which the file goes to the Superintendent/O.S. for checking 13. Date on which the file goes to the Assistant Registrar for signature on the order 14. Date on which the file goes to dispatch section for dispatch the Tribunal Order 15. Date of dispatch of order Date on which file goes to Record Room after 16. dispatch the order