DINESH SHERSINGH AGARWAL,GHATKOPER WEST vs. DCIT CIRCLE 8(2)(1), MUMBAI, MUMBAI

The registry informed that the appeal was filed with a delay for 109 days. The assessee submitted a condonation petition along with notarized affidavit sworn by the assessee himself, dated 17.01.2026. The Ld. DR had not made any strong objection against the submission of the Ld. AR. We find that there is a sufficient cause for delay in filing the appeal before the bench. Accordingly, the appeal for 109 days is duly condoned and appeal is taken for adjudication.

The brief facts of the case are that the assessee filed the return by declaring total income of Rs. 1,06,91,260/- The return was selected under CASS. During the assessment proceeding, the Ld. AO found that the assessee had claimed exemption under section 10(38) of the Act related to Long Term Capital Gain (LTCG) amount to Rs. 1,84,87,853/-. It is further considered that the said transaction is a sham transaction and assessee is the beneficiary of the bogus LTCG. Consequently, the commission was calculated at the rate of 3% on LTCG for providing the bogus capital gain. The commission was determined amount to Rs. 5,54,635/- & added back under section 69C of the Act. So, the total amount comes to Rs. 1,90,42,488/- which was confimed inassessment proceeding. The aggrieved assessee filed an appeal before the Ld. CITA. The Ld. CITA passed the order ex-parte without considering the submission of the assessee. Being aggrieved, assessee filed an appeal before us.

The Ld. AR argued and filed a paper book comprising pages 1 to 39, which has been placed on record. The Ld. AR contended that the assessee had made the transaction related to the share Kailash Auto Finance Limited and earned the LTCG amount to Rs. 1,84,87,853/-. During the appellate proceedings, the assessee had submitted the purchase bill, demand statement, bank statement, contract notes, and copy of the SEBI orders dated 21.09.2017 in support of evidencing the said transaction was genuine transaction. Without considering the same, the Ld.CIT(A) rejected the appeal of the assessee. The Ld. AR prayed to restore the appeal to the file of Ld.CIT(A).

The Ld. DR argued and stands in favor of the orders of the revenue authorities. The Ld. DR contended that the assessee had claimed the income under section 10(38), which is a bogus transaction. The assessee is a beneficiary of LTCG and the said scrip was duly treated by the revenue authorities as a sham transaction. The Ld. DR has duly prayed for sustaining the addition.

We heard the rival submissions and considered the documents available on the record. The assessee filed the return by declaring total income amount to Rs. 1,06,91,260/-. The scrutiny assessment was initiated in impugned assessment year. The Ld. AO found that the assessee had claimed exemption under section 10(38) related to LTCG amount to Rs. 1,84,87,853/-. The Ld. AO treated the entire transaction as a sham transaction and rejected the exemption u/s. 10(38) of the Act and the alleged amount was added back with the total income of the assessee. Consequently, the Ld. AO determined the commission for availing the bogus transactions amount to Rs. 5,54,635/- which was also added back u/s. 69C of the Act. The assessee filed the appeal before the Ld. CIT(A) and submitted all the relevant documents in support of his claim. The evidences are supported by the purchase bill, contract note, broker’s confirmation, bank statement and demat account which are also submitted before the bench at APB pages 1 to 16. But without considering the following documents, the Ld. CIT(A) rejected the appeal of the assessee. So, there is a gross violation of natural justice. In our considered view, we find that the reasonable opportunity from the assessee for submission of the evidence is duly denied. In the interest of substantial justice, and having regard to the principle of natural justice, we are of the considered view that the assessee deserves one more effective opportunity to substantiate its claim before the first appellate authority. Accordingly, we set aside the impugned order of the Ld. CIT(A) and restored the matter to his file for de novo adjudication in accordance with law, after affording the assessee a reasonable and effective opportunity of being heard, and after considering all evidences and submissions that may be placed on record. The assessee shall extend full cooperation and shall not seek unnecessary adjournments. We clarify that we have not expressed any opinion on the merits of the additions, and all issues are left open for fresh adjudication by the Ld. CIT(A). Accordingly, the appeal is allowed for statistical purposes. 7. In the result, the appeal of the assessee bearing ITA No.402/Mum/2026 is allowed for statistical purposes. Order pronounced in the open court on 18th day of August 2026.