BHARAT BALVANTRAI GORADIA,MUMBAI vs. INCOME TAX OFFICER, MUMBAI

PER OM PRAKASH KANT, AM

This appeal by the Assessee is directed against order dated 20.01.2026, passed by the learned Addl. / Joint Commissioner of Income-tax (Appeals)-Thiruvanantpuram (in short, “the learned CIT(A)”), in faceless manner for Assessment Year (in short, “A.Y.”) 2011-12, raising following grounds:

ITA 3771/MUM/2026, 2 Bharat Balvantrai Goradia

“l. Reopening of Assessment l. Reopening of Assessment 1) The learned ITO erred in reopening the assessment u/s. 1) The learned ITO erred in reopening the assessment u/s. 147 and issuing notice 47 and issuing notice u/s. 148 of the Income Tax Act, 1961. ncome Tax Act, 1961. 2) The learned ITO erred in reopening assessment merely based on information erred in reopening assessment merely based on information erred in reopening assessment merely based on information received from DCIT without forming independent belief with regard to escapement received from DCIT without forming independent belief with regard to escapement received from DCIT without forming independent belief with regard to escapement of income. 3) The Learned CIT(A) 3) The Learned CIT(A) erred in confirming the disallowance of Short Term Capital erred in confirming the disallowance of Short Term Capital Loss amounting to Rs.1 ounting to Rs.16,60,821/- on sale of shares of Comfort sale of shares of Comfort Intech Ltd., treating the same as bogus, without bringing any cogent evidence on record to treating the same as bogus, without bringing any cogent evidence on record to treating the same as bogus, without bringing any cogent evidence on record to establish that the transactions were non establish that the transactions were non-genuine. 2. Disallowance of Short term capital loss 2. Disallowance of Short term capital loss 1) The Learned CIT(A) erred in upholding the addition solely on the basis of 1) The Learned CIT(A) erred in upholding the addition solely on the basis of 1) The Learned CIT(A) erred in upholding the addition solely on the basis of suspicion, suspicion, suspicion, conjectures, conjectures, conjectures, and and and general general general allegations allegations allegations regarding regarding regarding penny penny penny stock stock stock transactions without establishing any direct nexus between the appellant and transactions without establishing any direct nexus between transactions without establishing any direct nexus between any alleged accommodation entry provider any alleged accommodation entry provider. 2) The Learned CIT(A) failed to appreciate that the appellant had duly discharged 2) The Learned CIT(A) failed to appreciate that the appellant had duly discharged 2) The Learned CIT(A) failed to appreciate that the appellant had duly discharged the onus by furnishing complete documentary evidence including contract notes, the onus by furnishing complete documentary evidence including contract notes, the onus by furnishing complete documentary evidence including contract notes, bank statements, and demat stateme bank statements, and demat statements evidencing genuine purchase and sale nts evidencing genuine purchase and sale of shares. 3) The Learned CIT(A) erred in holding that the appellant failed to establish 3) The Learned CIT(A) erred in holding that the appellant failed to establish 3) The Learned CIT(A) erred in holding that the appellant failed to establish genuineness of transactions, ignoring the fact that all transactions were carried genuineness of transactions, ignoring the fact that all transactions were carried genuineness of transactions, ignoring the fact that all transactions were carried out through recognized stock exchange and t out through recognized stock exchange and through banking channels hrough banking channels. 4) The Learned CIT(A) erred in relying on third 4) The Learned CIT(A) erred in relying on third-party information and investigation party information and investigation reports without providing the appellant an opportunity to cross-examine the reports without providing the appellant an opportunity to cross reports without providing the appellant an opportunity to cross persons whose statements were relied upon, thereby violating the principles of persons whose statements were relied upon, thereby violating the princ persons whose statements were relied upon, thereby violating the princ natural justice. 5) The Learned CIT(A) failed to appreciate that no material evidence was brought 5) The Learned CIT(A) failed to appreciate that no material evidence was brought 5) The Learned CIT(A) failed to appreciate that no material evidence was brought on record to demonstrate that the appellant had received any accommodation on record to demonstrate that the appellant had received any accommodation on record to demonstrate that the appellant had received any accommodation entry or that the transactions were sham or fictitious entry or that the transactions were sham or fictitious. 6) The Learned CIT(A) erred in sustaining the addition without establishing that IT(A) erred in sustaining the addition without establishing that IT(A) erred in sustaining the addition without establishing that the appellant had introduced any unaccounted income in the guise of Short Term the appellant had introduced any unaccounted income in the guise of Short Term the appellant had introduced any unaccounted income in the guise of Short Term Capital Loss. The Appellant craves, leave to add to, amend, alter or withdraw any of the above The Appellant craves, leave to add to, amend, alter or withdraw any of the above The Appellant craves, leave to add to, amend, alter or withdraw any of the above grounds of appeal before or at the time of hearing of the appeal, if necessary. appeal before or at the time of hearing of the appeal, if necessary.” appeal before or at the time of hearing of the appeal, if necessary.

ITA 3771/MUM/2026, 3 Bharat Balvantrai Goradia

2.1 The information so received further stated that the assessee The information so received further stated that the assessee The information so received further stated that the assessee was one of the beneficiaries who had undertaken purchase and sale eficiaries who had undertaken purchase and sale eficiaries who had undertaken purchase and sale transactions in shares of M/s Comfort Intech Ltd. and, on the basis transactions in shares of M/s Comfort Intech Ltd. and, on the basis transactions in shares of M/s Comfort Intech Ltd. and, on the basis of the average sale price, average purchase price and number of of the average sale price, average purchase price and number of of the average sale price, average purchase price and number of shares sold during Financial Year 2010 shares sold during Financial Year 2010-11, had allegedly incurred a 11, had allegedly incurred a bogus loss of Rs.19,67,655/ ss of Rs.19,67,655/-. Pursuant thereto, the Assessing . Pursuant thereto, the Assessing Officer completed the reassessment under section 143(3) read with Officer completed the reassessment under section 143(3) read with Officer completed the reassessment under section 143(3) read with section 147 of the Act vide order dated 14.12.2018, wherein the section 147 of the Act vide order dated 14.12.2018, wherein the section 147 of the Act vide order dated 14.12.2018, wherein the short-term capital loss claimed by the assessee was disallowed. term capital loss claimed by the assessee was disallowed. term capital loss claimed by the assessee was disallowed.

The assessee carried the matter in appeal before the learned 2.2 The assessee carried the matter in appeal before the learned The assessee carried the matter in appeal before the learned CIT(A). The learned CIT(A) upheld the reopening as well as the CIT(A). The learned CIT(A) upheld the reopening as well as the CIT(A). The learned CIT(A) upheld the reopening as well as the disallowance. With regard to reopening, the learned CIT(A) observed disallowance. With regard to reopening, the learned CIT(A) observed disallowance. With regard to reopening, the learned CIT(A) observed that the Assessing Officer had recorded reasons on the basis of that the Assessing Officer had recorded reasons on the basis of that the Assessing Officer had recorded reasons on the basis of

ITA 3771/MUM/2026, 4 Bharat Balvantrai Goradia

information received from the DCIT, Central Circle-3(4), Mumbai, information received from the DCIT, Central Circle information received from the DCIT, Central Circle according to which M/s Comfort Intech Ltd. was a penny-stock according to which M/s Comfort Intech Ltd. was a penny according to which M/s Comfort Intech Ltd. was a penny company allegedly used for providing accommodation entries and company allegedly used for providing accommodation entries and company allegedly used for providing accommodation entries and that the assessee was one of the beneficiaries. The learned CIT(A), that the assessee was one of the beneficiaries. The learned CIT(A), that the assessee was one of the beneficiaries. The learned CIT(A), therefore, held that the Assessing Officer had material before him therefore, held that the Assessing Officer had material before him therefore, held that the Assessing Officer had material before him for reopening the assessment. for reopening the assessment.

2.3 On the merits, the learned CIT(A) recorded that, according to On the merits, the learned CIT(A) recorded that, according to On the merits, the learned CIT(A) recorded that, according to the Assessing Officer, the assessee had purchased 2,65,500 shares the Assessing Officer, the assessee had purchased 2,65,500 shares the Assessing Officer, the assessee had purchased 2,65,500 shares of M/s Comfort Intech Ltd. of M/s Comfort Intech Ltd. for Rs.31,21,383/- and sold the same and sold the same for Rs.15,65,065/-. The learned CIT(A) observed that the purchase . The learned CIT(A) observed that the purchase . The learned CIT(A) observed that the purchase of shares at a high price was made when the company had no of shares at a high price was made when the company had no of shares at a high price was made when the company had no proven financial results and that the transactions were not proven financial results and that the transactions were not proven financial results and that the transactions were not supported by the market factors p supported by the market factors prevailing at the relevant time. He revailing at the relevant time. He accordingly held that the assessee had failed to establish the accordingly held that the assessee had failed to establish the accordingly held that the assessee had failed to establish the genuineness of the transaction and sustained the disallowance of genuineness of the transaction and sustained the disallowance of genuineness of the transaction and sustained the disallowance of the short-term capital loss. term capital loss.

ITA 3771/MUM/2026, 5 Bharat Balvantrai Goradia

3.1 The learned counsel submitted that the controversy relates to The learned counsel submitted that the controversy relates to The learned counsel submitted that the controversy relates to the disallowance of short the disallowance of short-term capital loss of Rs.16,60,821/ term capital loss of Rs.16,60,821/- arising from the sale of shares of M/s Comfort Intech Ltd. He submitted from the sale of shares of M/s Comfort Intech Ltd. He submitted from the sale of shares of M/s Comfort Intech Ltd. He submitted that the additional evidence sought to be placed on record is that the additional evidence sought to be placed on record i that the additional evidence sought to be placed on record i directly relevant to the issue and goes to the root of the matter. It directly relevant to the issue and goes to the root of the matter. It directly relevant to the issue and goes to the root of the matter. It was contended that the documents could not be produced before was contended that the documents could not be produced before was contended that the documents could not be produced before the lower authorities due to lack of proper guidance and that their the lower authorities due to lack of proper guidance and that their the lower authorities due to lack of proper guidance and that their admission would facilitate proper adjudication of the dispute admission would facilitate proper adjudication of the admission would facilitate proper adjudication of the without causing prejudice to the Revenue. without causing prejudice to the Revenue.

In support of the application, the learned counsel relied upon the In support of the application, the learned counsel relied upon the In support of the application, the learned counsel relied upon the decisions of the Hon'ble Bombay High Court in Smt. Prabhavati S. Smt. Prabhavati S. decisions of the Hon'ble Bombay High Court in Shah v. CIT, 231 ITR 1 (Bom.) 231 ITR 1 (Bom.), the Hon'ble Madras High Court in , the Hon'ble Madras High Court in R.S.S. Shanmugam Pillai & Sons v. CIT anmugam Pillai & Sons v. CIT, 95 ITR 109 (Mad.) 95 ITR 109 (Mad.), the Tribunal decision in Abhay Kumar Shroff v. ITO Abhay Kumar Shroff v. ITO, 63 ITD 144 Tribunal decision in (Patna)(TM), and the judgment of the Hon'ble Supreme Court in , and the judgment of the Hon'ble Supreme Court in , and the judgment of the Hon'ble Supreme Court in Tek Ram (Dead) through LRs v. CIT Tek Ram (Dead) through LRs v. CIT, 357 ITR 133 (SC) 357 ITR 133 (SC), in support of the proposition support of the proposition that additional evidence may be admitted that additional evidence may be admitted where it is relevant and necessary for proper adjudication of the where it is relevant and necessary for proper adjudication of the where it is relevant and necessary for proper adjudication of the appeal.

We have heard the rival submissions and perused the material 4. We have heard the rival submissions and perused the material We have heard the rival submissions and perused the material available on record. The first question requiring our consideration is available on record. The first question requiring our consideration is available on record. The first question requiring our consideration is whether the additional evidence sought to be produced by the whether the additional evidence sought to be produced by the whether the additional evidence sought to be produced by the

ITA 3771/MUM/2026, 6 Bharat Balvantrai Goradia

assessee under Rule 29 of the Income assessee under Rule 29 of the Income-tax (Appellate Tribunal) tax (Appellate Tribunal) Rules, 1963, deserves to be admitted. ules, 1963, deserves to be admitted.

4.1 The dispute on merits concerns the genuineness of the The dispute on merits concerns the genuineness of the The dispute on merits concerns the genuineness of the purchase and sale of shares of M/s Comfort Intech Ltd. The learned purchase and sale of shares of M/s Comfort Intech Ltd. The learned purchase and sale of shares of M/s Comfort Intech Ltd. The learned CIT(A) has sustained the disallowance essentially on the premise CIT(A) has sustained the disallowance essentially on the premise CIT(A) has sustained the disallowance essentially on the premise that the assessee failed to e that the assessee failed to establish the genuineness of the stablish the genuineness of the transactions and the economic basis of the substantial movement transactions and the economic basis of the substantial movement transactions and the economic basis of the substantial movement in the price of the shares. The assessee, on the other hand, seeks to in the price of the shares. The assessee, on the other hand, seeks to in the price of the shares. The assessee, on the other hand, seeks to place before us bank statements and CDSL transaction statements, place before us bank statements and CDSL transaction statements, place before us bank statements and CDSL transaction statements, besides other documents f besides other documents forming part of the paper book, in support orming part of the paper book, in support of the actual purchase and sale transactions. of the actual purchase and sale transactions.

We are of the view that the documents sought to be admitted are We are of the view that the documents sought to be admitted are We are of the view that the documents sought to be admitted are not peripheral or collateral to the controversy. They bear directly not peripheral or collateral to the controversy. They bear directly not peripheral or collateral to the controversy. They bear directly upon the factual question which lies upon the factual question which lies at the heart of the dispute, at the heart of the dispute, namely, whether the transactions of purchase and sale of shares namely, whether the transactions of purchase and sale of shares namely, whether the transactions of purchase and sale of shares were actually undertaken by the assessee in the manner claimed by were actually undertaken by the assessee in the manner claimed by were actually undertaken by the assessee in the manner claimed by it. The documents, therefore, have a material bearing upon the it. The documents, therefore, have a material bearing upon the it. The documents, therefore, have a material bearing upon the adjudication of the appeal. adjudication of the appeal.

4.2 Rule 29 of the Income ule 29 of the Income-tax (Appellate Tribunal) Rules, 1963 tax (Appellate Tribunal) Rules, 1963 empowers the Tribunal, for reasons to be recorded, to permit empowers the Tribunal, for reasons to be recorded, to permit empowers the Tribunal, for reasons to be recorded, to permit production of additional evidence where such evidence is required production of additional evidence where such evidence is required production of additional evidence where such evidence is required to enable it to pass orders or for any other substantial cause. The to enable it to pass orders or for any other substantial cause. The to enable it to pass orders or for any other substantial cause. The power is discretionary, but is required to be exercised judicially with er is discretionary, but is required to be exercised judicially with er is discretionary, but is required to be exercised judicially with

ITA 3771/MUM/2026, 7 Bharat Balvantrai Goradia

the object of enabling the Tribunal to arrive at a proper and effective the object of enabling the Tribunal to arrive at a proper and effective the object of enabling the Tribunal to arrive at a proper and effective adjudication of the dispute. The authorities relied upon by the adjudication of the dispute. The authorities relied upon by the adjudication of the dispute. The authorities relied upon by the learned counsel, including learned counsel, including Smt. Prabhavati S. Shah Smt. Prabhavati S. Shah v. CIT, (supra) recognise the Tribunal's power in an appropriate case where the recognise the Tribunal's power in an appropriate case where the recognise the Tribunal's power in an appropriate case where the additional evidence has a material bearing on the issue in dispute. additional evidence has a material bearing on the issue in dispute. additional evidence has a material bearing on the issue in dispute.

4.3 In the present case, the additional documents sought to be In the present case, the additional documents sought to be In the present case, the additional documents sought to be placed on record are directly relevant to the placed on record are directly relevant to the genuineness of the genuineness of the transactions under consideration. Their admission, therefore, would transactions under consideration. Their admission, therefore, would transactions under consideration. Their admission, therefore, would assist in determining the controversy on its merits. We accordingly assist in determining the controversy on its merits. We accordingly assist in determining the controversy on its merits. We accordingly admit the additional evidence under Rule 29 of the Income-tax admit the additional evidence under Rule 29 of the Income admit the additional evidence under Rule 29 of the Income (Appellate Tribunal) Rules, 1963. (Appellate Tribunal) Rules, 1963.

4.4 Having admitted the additional evidence, the question that Having admitted the additional evidence, the question that Having admitted the additional evidence, the question that follows is whether the matter should be adjudicated by us on the follows is whether the matter should be adjudicated by us on the follows is whether the matter should be adjudicated by us on the basis of the material presently available or restored to the file of the basis of the material presently available or restored to the file of the basis of the material presently available or restored to the file of the learned CIT(A) for appropriate examination. We find that the learned CIT(A) for appropriate examination. We find that th learned CIT(A) for appropriate examination. We find that th documents now produced before us were admittedly not available documents now produced before us were admittedly not available documents now produced before us were admittedly not available before the lower authorities. Further, the question whether these before the lower authorities. Further, the question whether these before the lower authorities. Further, the question whether these documents satisfactorily establish the purchase, payment, holding documents satisfactorily establish the purchase, payment, holding documents satisfactorily establish the purchase, payment, holding and sale of the shares, and whether they have any bearing upon the and sale of the shares, and whether they have any bearing u and sale of the shares, and whether they have any bearing u conclusions drawn by the Assessing Officer and sustained by the conclusions drawn by the Assessing Officer and sustained by the conclusions drawn by the Assessing Officer and sustained by the learned CIT(A), involves factual examination. The Tribunal is learned CIT(A), involves factual examination. The Tribunal is learned CIT(A), involves factual examination. The Tribunal is undoubtedly the final fact undoubtedly the final fact-finding authority; however, where finding authority; however, where material evidence relevant to the determination of the factual material evidence relevant to the determination of the factua material evidence relevant to the determination of the factua

ITA 3771/MUM/2026, 8 Bharat Balvantrai Goradia

controversy is produced for the first time at the appellate stage, it controversy is produced for the first time at the appellate stage, it controversy is produced for the first time at the appellate stage, it would be appropriate that the lower appellate authority is afforded would be appropriate that the lower appellate authority is afforded would be appropriate that the lower appellate authority is afforded an opportunity to examine the same and record its findings after an opportunity to examine the same and record its findings after an opportunity to examine the same and record its findings after granting due opportunity to the Assessing Officer, wherever granting due opportunity to the Assessing Officer, granting due opportunity to the Assessing Officer, required.

4.5 We, therefore, consider it just and proper to set aside the We, therefore, consider it just and proper to set aside the We, therefore, consider it just and proper to set aside the impugned order of the learned CIT(A), impugned order of the learned CIT(A), insofar as the issue relating insofar as the issue relating to the disallowance of short to the disallowance of short-term capital loss is concerned term capital loss is concerned, and restore the matter to his file for fresh restore the matter to his file for fresh adjudication. The learned adjudication. The learned CIT(A) shall examine the additional evidence admitted by us, afford CIT(A) shall examine the additional evidence admitted by us, afford CIT(A) shall examine the additional evidence admitted by us, afford reasonable opportunity of being heard to both sides, and thereafter reasonable opportunity of being heard to both sides, and thereafter reasonable opportunity of being heard to both sides, and thereafter decide the issue afresh in accordance with law. Needless to say, the decide the issue afresh in accordance with law. Needless to say, the decide the issue afresh in accordance with law. Needless to say, the learned CIT(A) shall con learned CIT(A) shall consider the entire material available on record sider the entire material available on record and shall record a reasoned finding on the genuineness and and shall record a reasoned finding on the genuineness and and shall record a reasoned finding on the genuineness and allowability of the short allowability of the short-term capital loss claimed by the assessee. term capital loss claimed by the assessee. In view of the restoration of the matter on the merits, we refrain In view of the restoration of the matter on the merits, we refrain In view of the restoration of the matter on the merits, we refrain from expressing any opinion on the merits of the rival contentions g any opinion on the merits of the rival contentions g any opinion on the merits of the rival contentions concerning the genuineness of the share transactions. Our concerning the genuineness of the share transactions. Our concerning the genuineness of the share transactions. Our observations herein are confined to the question of admission of observations herein are confined to the question of admission of observations herein are confined to the question of admission of additional evidence and the consequential requirement of factual additional evidence and the consequential requirement of factual additional evidence and the consequential requirement of factual examination. The grounds raised on merit are allowed for statistical e grounds raised on merit are allowed for statistical e grounds raised on merit are allowed for statistical purposes.

ITA 3771/MUM/2026, 9 Bharat Balvantrai Goradia

4.6 As regards the grounds challenging the validity of reopening of As regards the grounds challenging the validity of reopening of As regards the grounds challenging the validity of reopening of the assessment under sections 147/148 of the Act, the same raise a the assessment under sections 147/148 of the Act, the same raise a the assessment under sections 147/148 of the Act, the same raise a separate legal issue. Since the matter relating to the substantive separate legal issue. Since the matter relating to the su separate legal issue. Since the matter relating to the su addition is being restored to the file of the learned CIT(A) for fresh addition is being restored to the file of the learned CIT(A) for fresh addition is being restored to the file of the learned CIT(A) for fresh adjudication after consideration of the additional evidence, we adjudication after consideration of the additional evidence, we adjudication after consideration of the additional evidence, we consider it appropriate, in the facts and circumstances of the consider it appropriate, in the facts and circumstances of the consider it appropriate, in the facts and circumstances of the present case, to leave the said grounds open leave the said grounds open for consideration, if consideration, if necessary, at the appropriate stage. Accordingly, the grounds necessary, at the appropriate stage. Accordingly, the grounds necessary, at the appropriate stage. Accordingly, the grounds relating to the validity of reopening are not adjudicated upon at this relating to the validity of reopening are not adjudicated upon at this relating to the validity of reopening are not adjudicated upon at this stage and are kept open. stage and are kept open.

In the result, the appeal of the assessee is allowed for 5. In the result, the appeal of the assessee is In the result, the appeal of the assessee is statistical purposes. .

Order pronounced in the open Court Order pronounced in the open Court on 17/ /08/2026.

Sd/- Sd/- (ANIKESH BANERJEE ANIKESH BANERJEE) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER

Mumbai; Dated: 17/08/2026 Kunal Kumar, P.S.

ITA 3771/MUM/2026, 10 Bharat Balvantrai Goradia

Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file.

BY ORDER, BY ORDER,

//True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai