ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1(1)(1), MEERUT, MEERUT vs. ITI GUPTA, MEERUT

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘E’ NEW DELHI BEFORE SH. MAHAVIR SINGH, VICE PRESIDENT AND SH. KRINWANT SAHAY, ACCOUNTANT MEMBER I.T A. No.5820/Del/2026 (A.Y 2018-19) ACIT ITI Gupta 214A, Ganj Vs. Bazar, Merrut Cantt. Circle – 1 (1) (1) H.O. Meerut -250001 Meerut PAN No.AGMPA8157C

Cross Objection No.311/Del/2026 ( In I.T A. No.5820/Del/2026) (A.Y 2018-19) ITI Gupta 214A, Ganj Bazar, ACIT Merrut Cantt. H.O. Meerut - Vs. Circle – 1 (1) (1) 250001 Meerut PAN No.AGMPA8157C

Appellant by: Sh. Tarun Sharda , Sr. DR Respondent by : Sh. Piyush Agarwal, CA

Date of Hearing 12.08.2026 Date of Pronouncement 12.08.2026

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ORDER PER KRINWANT SAHAY AM

Appeal in this case has been filed by the Revenue against the order dated 06.03.2026 passed by the CIT(A)/NFAC, Delhi for the A.Y. 2018-19. Grounds of appeal are as under :-

“1. On facts and circumstances of the case and in law, Ld. CIT(A) has erred in deleting the addition of Rs. 8,44,817/- claimed as exempt u/s 10(38) of the Income- tax Act, 1961. 2. On facts and circumstances of the case and in law, Ld. CIT(A) has erred in holding that nature and source of transaction was explained despite the facts that the same could not be verified from M/s Karnam Securities Pvt Ltd. 3. On facts and circumstances of the case and in law, Ld. CIT(A) has erred in holding that the A.O has primarily relied on the Investigation Report and not made any independent enquiry or investigation and the assesse has discharged her initial burden cast upon him. 4. On facts and circumstances of the case and in law, the CIT(A) has erred in not considering the fact that purchase of said shares of M/s Eicher Motors in 2009 from M/s Karnam Securities Pvt Ltd has not been substantiated as no bank statement was furnished at any point of time to prove payment of purchase consideration.

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“5.1 Ground Nos. 8 and 11 Through these grounds, the appellant has challenged the action of the Assessing Officer in denying the exemption under Section 10(38) in respect of Long Term Capital Gain amounting to Rs.8,44,817/- arising from the sale of shares held for a period exceeding twelve months and sold through a recognized stock exchange after payment of Securities Transaction Tax (STT). Further The appellant has also contested the addition of Rs.8,44,817/- made under Sections 69/69A, submitting that the same is unjustified and contrary to the provisions of law. The appellant has further contended that once the purchase of shares has been accepted by the Assessing Officer, the sale of such shares cannot be treated as non-genuine. It is argued that the addition has been made merely on the basis of speculation, generalized statements, theoretical assumptions and allegations

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without any supporting evidence and therefore the same is illegal, unjustified and liable to be deleted. 5.1.1 During the appellate proceedings, the appellant furnished the following documentary evidences: (i) Documents relating to purchase of shares a. Purchase bill evidencing the purchase of shares by the appellant. b. Share transfer form evidencing transfer of 30 shares of M/s. Eicher Motors Ltd. in the name of the appellant on 03.08.2009. (ii) Documents relating to sale of shares c. Contract note issued by the registered broker for sale of the shares showing payment of Securities Transaction Tax (STT). d. Bank statement evidencing receipt of sale consideration through banking channels. order, it is observed 5.1.2 From the assessment order, it is observed that the Assessing Officer has accepted the purchase of shares, however, the benefit of sale transactions has been denied. It is further observed that the Assessing Officer has not disputed the following facts: The shares were held by the assessee for a p r a period exceeding one year. The shares were sold through a recognized stock exchange. Securities Transaction Tax (STT) was duly paid on the transaction. СОМЕ ТАХ ДЕРАRTM All the transactions are supported by supported by documentary evidences and the AO has not pointed out any specific discrepancy or defect in the documents furnished by the appellant. The addition has been made merely on the assumption that the transactions are sham in nature. However, no material evidence has been brought on record to substantiate such allegation.

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5.1.3 The sale of shares was carried out through a recognized stock exchange and STT was paid on the said transaction. Accordingly, in terms of Section 10(38) of the Act, the resultant Long Term Capital Gain was eligible for exemption. Reliance is also placed on the decision of the Hon'ble ITAT Mumbai in the case of Farzad Sheriar Jehani vs. Income Tax Officer [2024] 159 taxmann.com 9 wherein the Tribunal held that although certain characteristics of penny stock transactions may exist, in the absence of any material linking the assessee with an. price rigging, accommodation entry, or exit provider, the claim of exemption unde section 10(38) cannot be denied when the assessee has produced all the supporting documentary evidences and no discrepancy has been found therein. 5.1.4 In the present case also, the appellant has furnished all relevant documentary evidences in support of the transaction. The Assessing Officer has relied primarily upon the investigation wing report and has not brought any material on record to establish the involvement of the appellant in any alleged accommodation entry or price manipulation. Further, no defects have been pointed out in the documents submitted by the appellant. It is also evident that: The sale of shares took place through a recognized stock exchange. STT was duly paid on the transaction. The purchase of shares has been accepted by the Assessing Officer, The sale proceeds were received through banking channels. 5.1.5 Thus, the appellant has satisfactorily explained the nature and source of the transaction with supporting documentary evidences and has discharged the onus cast upon him. Accordingly, the addition of Rs.8,44,817/- made by the Assessing Officer is deleted, and Ground Nos. 8 and 11 are allowed.”

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Cross Objection No. 311/Del/2026 for the A.Y. 2018-19

“1. That the appeal filed by the Department is not maintainable because the tax effect in this case is below the monetary limit fixed by the CBDT for filing appeals before the Hon'ble ITAT. Therefore, the Department appeal is not maintainable and deserves to be dismissed.

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u/s 10(38) is justified as the shares were held for a period exceeding 12 months and sold through banking channels on a recognized stock exchange after payment of STT.. Once the purchase of shares has been accepted as genuine, the subsequent sale thereof cannot be rejected, Therefore, the order of the Ld. CIT(A) deserves to be upheld. 7. That the Ld. CIT(A) erred in not considering the fact that the Ld. AO has reopened the assessment proceedings on wrong facts and figures. The reopening is further vitiated as it is founded upon borrowed satisfaction without any independent application of mind by the Ld. AO. Also, the approval if given has been in mechanical manner. So, the notice of reopening cannot be held to be sustainable in law and the order passed is void-ab- initio, illegal, unjustifiable, bad in law and liable to be quashed. 8. That each ground of appeal is without prejudice to each other. That the tax levied, interest charged and the penalty imposed is excessive at any rate. That the appellant craved the right to add, amend and alter any or all of the grounds of appeal herein and to submit such statements, documents and papers as may be considered necessary either at or before the appeal hearing.”

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Order pronounced in the open Court on 12.08.2026.

Sd/- Sd/- SD (MAHAVIR SINGH) (KRINWANT SAHAY) VICE PRESIDENT ACCOUNTANT MEMBER Dated : 21/08/2026 *Neha Sr. PS* Copy forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT (Appeals) 5. DR: ITAT

ASSISTANT REGISTRAR ITAT NEW DELHI

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