KISHOR SHANKAR BHOIR,MUMBAI vs. WARD 20 2 3, MUMBAI

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ITA 1321/MUM/2026Status: DisposedITAT Mumbai31 August 2026AY 2015-165 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision, finding that the assessee failed to demonstrate the company's intrinsic financial strength or rebut the findings regarding the scrip's abnormal behavior. The claim for exempt long-term capital gain was not accepted.

What were the facts?

The assessee claimed exempt Long-Term Capital Gain from the sale of equity shares. The Assessing Officer denied this exemption, considering the company a penny stock. The CIT(A) upheld this decision, citing investigations into the scrip's abnormal price movement and lack of financial fundamentals.

What were the issues?

Whether the Long-Term Capital Gain claimed by the assessee is genuine, considering the scrip's abnormal price movement and lack of financial fundamentals, and whether addition under Section 68 is justified.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “E” BENCH, MUMBAI

Before: SHRI SANDEEP GOSAIN, JM & SHRI BIJAYANANDA PRUSETH, AM

For Respondent: Smt. Sujatha Iyyanger, Sr. DR
Hearing: 31.08.2026

आयकरअपीलीयअिधकरण�ायपीठमुंबईम�। IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JM & SHRI BIJAYANANDA PRUSETH, AM I.T.A. No. 1321/Mum/2026 (Assessment Year: 2015-16) Kishor Shankar Bhoir Ward 20 (2)(3) 31 Khush Vihar CHSL, DR Piramal Chambers, Parel, Vs. Ambedkar Road, Dadar East, Mumbai-400012 Mumbai-400014 PAN: AACPB9453E Assessee- अपीलाथ� / Appellant Revenue-��थ�/ Respondent :

Assessee by : None Revenue by : Smt. Sujatha Iyyanger, Sr. DR : 24.08.2026 Date of Hearing : 31.08.2026 Date of Pronouncement

O R D E R PER SANDEEP GOSAIN, JM: This appeal has been filed by the assessee challenging the order under section 250 of the Income Tax Act, 1961 [in short, “the Act”] passed by Commissioner of Income Tax Appeals, National Faceless Appeal Centre (NFAC), Delhi [in short, “the Ld. CIT(A)”], dated 03.12.2025 for the Assessment Year (AY) 2015-16.

2.

None appeared on behalf of assessee in spite of repeated calls. From the details, we notice that summons/notice of the case were issued on the address supplied by the assessee himself in Form 36 through speed post and also through

ITA No. 1321/Mum/2026 Kishor Shankar Bhoir email but in spite of that none appeared on behalf of the assessee. Therefore while drawing inference under the General Clauses Act, we proceed the assessee ex parte.

3.

On the other hand, the Ld. DR present in the Court is ready with the argument; therefore, we have decided to proceed with the hearing by proceeding the assessee as ex parte.

4.

We have heard Ld. DR and perused the material placed on record and also the orders passed by the Revenue Authorities. From the records, it is noticed that the assessee has raised claim of exempt Long-Term Capital Gain arising from the sale of equity shares of Parag Shilpa Investments Ltd. However, the Assessing Officer found that the said company was a penny stock and consequently denied the exemption sought by the assessee on account of Long-Term Capital Gain.

5.

Aggrieved by the said order, although the assessee preferred appeal but the same was rejected by Ld. CIT(A) and operative portion of the Ld. CIT(A) is contained at page nos. 5 to 7: “Appellate Analysis and Adjudication The submissions made by the assessee have been considered in the light of the material available on record. While the documentary trail relating to merger-based allotment, dematerialisation, and sale through a recognised intermediary is noted, the larger context cannot be ignored. The scrip in question has been the subject of extensive investigation by specialised authorities, and the pattern of price movement, trading behaviour, and the absence of corresponding financial fundamentals were found, to be inconsistent with normalmarket behaviour. The assessee has not produced any independent evidence to demonstrate the intrinsic financial strength of the company or to rebut the wider findings recorded in relation to the scrip.

ITA No. 1321/Mum/2026 Kishor Shankar Bhoir The decisions relied upon by the assessee pertain to fact situations where the surrounding circumstances, factual matrices, and evidentiary patterns were materially different. On the other hand, judicial authorities including High Courts have consistently held that in cases involving abnormal price rise unsupported by fundamentals, the Assessing Officer is justified in drawing an adverse inference despite the existence of contract notes or dematerialised transactions. Documentary compliance alone does not preclude examination of the genuineness of the transaction when other surrounding indicators point toward accommodation-entry arrangements. In the present case, the chain of events, coupled with the findings emerging from investigation reports relating to the scrip and similar entities, does not satisfactorily establish that the long-term capital gain declared by the assessee represents a genuine and independent market-driven transaction. On a cumulative consideration of the material on record, the claim of exempt long-term capital gain cannot be accepted. The addition made under section 68, therefore, stands justified. E. FINAL DETERMINATION On a consideration of the assessment order, the submissions filed, the documentary material placed on record, and the Remand Report along with the assessee's reply, the long-term capital gain declared on the sale of shares of Parag Shilpa Investments Ltd has not been established as a genuine transaction. The evidentiary trail relied upon though placed on record does not satisfactorily rebut the wider findings concerning the scrip, the abnormal price movement, and the investigative material forming the basis of the assessment. The addition made under section 68 is therefore found to be in accordance with law and requires no interference. The grounds raised accordingly fail, and the appeal stands dismissed.” 6. After having considered the order of Ld. CIT(A) and also that of the Assessing Officer, we found that as per the documents available on record and the documentary trail relating to merger based allotment, dematerialization and sale through recognized intermediary was analyzed by the Ld. CIT(A) and also that the Assessing Officer and it was specifically noticed that the scrip in question has been the subject of extensive investigation by specialized authorities and the pattern of price movement, trading behavior and the absence of corresponding financial fundamentals were found which were inconsistent with normal market behavior. Therefore, while considering the entire facts and circumstances, more particularly, the fact that assessee has failed to demonstrate

ITA No. 1321/Mum/2026 Kishor Shankar Bhoir the intrinsic financial strength of the company and has not been able to rebut the findings recorded by the Assessing Officer, thus denied the claim raised by the assessee and consequently upheld the additions u/s 68 of the Income Tax Act, 1961.

7.

No new facts or circumstances have been put before us in order to controvert or rebut the lawful findings so recorded by the Ld. CIT(A). Therefore, we find no reasons to interfere into the findings so recorded by the Ld. CIT(A). Therefore, we dismiss the grounds raised by the assessee and consequently the appeal filed by the assessee also stands dismissed.

8.

In result, the appeal of assessee stands dismissed.

Order pronounced in the open court on 31-08-2026.

Sd/- Sd/- (BIJAYANANDA PRUSETH) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai, Dated : 31-08-2026. Ankit K., Sr. PS

ITA No. 1321/Mum/2026 Kishor Shankar Bhoir Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT

BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai

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