SAYATIBEN BHANWARLAL SANGHVI,MANAK HOUSE, CP TANK ROAD, MUMBAI vs. WARD 19(3)(2), MUMBAI, PIRAMAL CHAMBER, LAL BAUG, PAREL, MUMBAI

The controversy involved in the present case pertains to the addition of Rs. 77,47,600/-, representing the entire sale consideration, by

Brief facts relevant for adjudication of the instant appeal are that the Assessee was/is a regular investor in shares and, during the period from 03.03.2011 to 15.03.2011, purchased 60,000 shares of Shreenath Commercial and Finance Company Ltd. for a consideration of Rs.13,52,850/- @ Rs. 22.55 per share. Subsequently, the said company issued bonus shares in the ratio of 1:1 on 17.03.2021, resulting in the Assessee holding 1,20,000 shares. Thereafter, during the period from 31.08.2012 to 24.12.2012, the Assessee sold the impugned shares through the online platform of BSE for a total consideration of Rs. 77,47,600/-. Further, it is a fact that the transactions were carried out through banking channels and were subjected to STT.

It is an undisputed fact that, before the authorities below, the Assessee furnished, inter alia, the following documents:

We further observe that the Co-ordinate Bench of the Tribunal in the case of Usha Hitesh Sanghvi vs. ITO,ITA No. 6172/Mum/2024 also dealt with the same scrip andultimately deleted the addition, after considering the identical facts, material and allegations and by relying on various judicial precedents, including the judgment in CIT-13 vs. Shyam R. Pawar,ITA Nos. 1568 to 1571 of 2012, decided on 10.12.2014, wherein the Hon’ble Bombay High Court upheld the Tribunal’s deletion of the addition made u/s. 68 of the Act by observing that where the purchase and sale of shares were reflected in the Assessee’s Demat account and supported by contract notes generated in the prescribed form of the Stock Exchange, then merely referring to an investigation report, abnormal rise in share prices, transactions through particular brokers or discrepancy in client code, was not sufficient to hold the transactions as bogus.

Similarly, the Co-ordinate Bench in Vinod Hirachand Sanghvi vs. ACIT, {ITA No. 4340/Mum/2023decided ondated 27.05.2025}, while dealing with the same scrip and similar allegations, ultimately deleted the identical addition.

The Hon’ble Jurisdictional High Court in the case of PCIT-31 vs. Indravadan Jain, HUF, {ITA No. 454 of 2018 decided on 12.07.2023}, affirmed the deletion of the addition u/s. 68 of the Act, where the Assessee held the shares for than a yearand purchase and sale of shares were effected on the floor of the Stock Exchange, supported by contract notes and Demat records, the purchase consideration was paid through banking channels and the sale consideration was also received through banking channels, and no material was brought on record to establish the Assessee’s involvement in the alleged price manipulation.

In the present case also, the Assessee held the shares for more than 1 and ½ year and the documentary evidence furnished by the Assessee qua purchase, holding and sale of the shares has not been disproved by

Thus, considering the peculiar facts and circumstances of the case and the judicial precedents referred to above, we are of the considered view that the addition of Rs. 77,47,600/-, representing the entire sale consideration by denying the claim of long-term capital gain of Rs. 65,41,902/- exempt u/s. 10(38) of the Act, and the consequential addition of Rs. 1,54,952/- u/s. 69C of the Act towards alleged commission expenditure, as made by the AO and affirmed by the Ld. Commissioner, are unsustainable. Thus, the same are, accordingly, deleted.

In the result, the Assessee’s appeal is allowed.