SHRI JAYANT BHOGILAL SHAH,MUMBAI vs. THE ACIT CIRCLE 2(1)(1), MUMBAI

This appeal by the assessee is directed against the order dated 29.08.2025 passed by the learned Additional/Joint Commissioner of Income-tax (Appeals), Agra, arising from the assessment order dated 24.12.2019 passed under section 143(3) read with section 147 of the Income-tax Act, 1961 (“the Act”) for the assessment year 2012-13.

The assessee has raised grounds challenging the validity of the reassessment as well as the addition of Rs.12,82,863 made under section

Briefly stated, the assessee purchased 23,800 shares of VMS Industries Ltd. on 16.08.2011 for a consideration of Rs.2,57,876 and sold the same on 12.03.2012 for Rs.15,40,739. The purchase and sale were effected on the recognised stock exchange through a registered broker and the payments were made through banking channels. The resultant short-term capital gain of Rs.12,82,863 was disclosed in the return of income and offered to tax. The Assessing Officer, relying upon the investigation relating to the scrip of VMS Industries Ltd., treated the gain as bogus and made an addition under section 68. The learned CIT(A) upheld the addition.

The learned Authorised Representative submitted that the transactions were fully supported by contract notes, demat statement and bank records. It was further submitted that the assessee had neither claimed any exempt long-term capital gain nor any short-term capital loss and that the short-term capital gain had already been offered to tax. The learned Departmental Representative relied upon the orders of the lower authorities.

We have considered the rival submissions and perused the material on record. The purchase and sale of 23,800 shares were carried out on the recognised stock exchange through a registered broker, the shares were held in the demat account and the consideration moved through banking channels. The Revenue has not brought on record any material showing that the assessee was connected with the alleged operators, that any cash was paid by the assessee in lieu of the sale proceeds, or that the documents produced by the assessee were false. The addition rests only on the general investigation concerning the scrip and the 2

We further find that this is not a case where the assessee claimed an exempt long-term capital gain from a penny stock. The assessee earned a short-term capital gain and offered the same to tax. Merely because the shares were of VMS Industries Ltd., the genuine, exchange- traded transactions cannot be rejected in the absence of any cogent material against the assessee. We, therefore, direct the Assessing Officer to delete the addition of Rs.12,82,863 and accept the short-term capital gain as returned by the assessee. The grounds on merits are allowed.

Since the appeal has been allowed on merits, the remaining grounds challenging the validity of the reassessment and other procedural issues are rendered academic and are left open.

In the result, the appeal filed by the assessee is allowed.