ITO-10(1)(1), MUMBAI, MUMBAI vs. AMISHA BINAL KORADIA, MUMBAI

The Assessee filed her return of income declaring a total income of Rs. 4,17,580/-. Subsequently, the assessment was reopened under section 147 of the Act and completed under sections 143(3) read with section 147 of the Act. During the assessment proceedings, the Assessing Officer [“AO”] observed that the Assessee had purchased and sold 1,000 shares of M/s. VAS Infrastructure Ltd. and declared short-term capital gain of Rs. 8,544/-.

Relying upon information received from the Investigation Wing regarding alleged manipulation in the scrip of M/s. VAS Infrastructure Ltd., the AO treated the entire sale consideration of Rs. 1,18,805/- as unexplained cash credit u/s 68 of the Act and also made an addition of Rs. 2736/- u/s 69C of the Act, towards alleged commission expenditure.

On appeal, the Assessee submitted that the transactions were carried out through the recognised stock exchange, duly reflected in her DEMAT account and supported by contract notes and other documents. The resultant short-term capital gain was also offered to tax.

The Ld. Commissioner, finding no direct or corroborative evidence connecting the Assessee with any alleged manipulation or accommodation-entry provider, considering the relevant documents filed by the Assessee, deleted the additions.

Thus, the Revenue being aggrieved is in appeal before us.

We have heard the parties, perused the material available on record and given thoughtful consideration to the rival claims of the parties. We observe that it is an undisputed position that the Assessee purchased and sold 1,000 shares of M/s. VAS Infrastructure Ltd. through the recognised stock exchange and the transactions were reflected in her DEMAT account. The transactions were also supported by the contract notes, portfolio statements and other documentary evidence. Further, the Assessee did not claim any exemption under section 10(38) of the Act but offered the resulting short-term capital gain of Rs. 8,544/- to tax.

The AO has primarily relied upon the general investigation carried out in respect of penny-stock companies, the increase in the share price and the alleged involvement of certain brokers, promoters and entry providers. However, no specific or corroborative material has been brought on record to establish that the Assessee was connected with the alleged manipulation or had paid any unaccounted money for obtaining an accommodation entry.

We further observe that the Co-ordinate Benches in ITO vs. Kamalesh Mohandas Lakhwani, ITA No. 253/Mum/2023, order dated 07.08.2023; Komal Kumarpal Shah vs. ITO, ITA No. 2856/Mum/2023, order dated 22.08.2024; and ITO vs. Kumarpal Mahendrakumar Shah, ITA No. 5030/Mum/2024, order dated 31.01.2025, while dealing with the identical scrip, held that in the absence of corroborative evidence, such addition could not be sustained. Similar view was taken by the Hon'ble Gujarat High Court in Principal Commissioner of Income-tax vs. Genuine Finance Pvt. Ltd., [2023] 152 taxmann.com 330 (Guj.).

Thus, considering the peculiar facts and circumstances of the case and respectfully following the aforesaid decisions, we are of the considered view that the addition of Rs. 1,18,805/- u/s 68 of the Act, based merely upon the general Investigation Wing report without any specific and corroborative material against the Assessee, cannot be sustained.

Consequently, we find no perversity, impropriety or illegality in the conclusion drawn by the Ld. Commissioner, in deleting the addition u/s 68 of the Act. The consequential addition of Rs. 2736/- u/s 69C of the Act, was also unsustainable and thus, has rightly been deleted by the Ld. Commissioner.

In the result, the Revenue's appeal is dismissed.