MR. LALIT KUMAR ROSHANLAL BOHARA,MUMBAI vs. ITO WARD -28(2)(1), MUMBAI

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ITA 8690/MUM/2025Status: DisposedITAT Mumbai03 August 2026AY 2014-1510 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had provided sufficient documentary evidence to support the purchase and sale of shares, and the Revenue failed to provide any material to controvert these documents or establish the assessee's involvement in any dubious transaction. Therefore, the addition made by the Assessing Officer was not sustained.

What were the facts?

The assessee disclosed sale proceeds of Rs. 70,40,700/- from shares of Nyssa Corporation Ltd., claiming long-term capital gain. The Assessing Officer treated this as unexplained money under Section 69A, alleging it was an accommodation entry due to an unusual price rise and information from an investigation wing.

What were the issues?

Whether the sale proceeds of shares were unexplained money or genuine capital gains, and whether the assessment proceedings were validly initiated.

Which sections of the Income-tax Act were involved?

Section 69A,Section 147,Section 144B,Section 148,Section 153C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: HON’BLE SHRI PAWAN SINGH & HON’BLE SHRI GIRISH AGRAWAL

For Respondent: Shri Surendra Mohan, Sr. DR
Pronounced: 03.08.2026

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: A BEFORE HON’BLE SHRI PAWAN SINGH, JUDICIAL MEMBER AND HON’BLE SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA 8690/MUM/2025 िनधा�रण वष�/Assmt. Year: 2014-15 Lalit Kumar Roshanlal Bohara Income Tax Officer Ward B-1001, Govind Complex M.G Complex, 28(2)(1), Vs. Sector-12, Vashi, Navi Mumbai Navi Mumbai- 400705 (अपीलाथ� Appellant) (��थ� Respondent) Permanent Account Number of AAHPB7371C Assessee: िनधा�रती �ारा/Assessee represented by: Shri V. D. Parmar, CA राज� व �ारा/Revenue represented by: Shri Surendra Mohan, Sr. DR

सुनवाई की तारीख / Date of conclusion of hearing: 05.05.2026 घोषणा की तारीख / Date of pronouncement: 03.08.2026 आदेश / ORDER PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of ld. CIT(A)/National Faceless Appeal Centre vide DIN: ITBA/NFAC/S/250/2025-26/1082645316(1), dated 14.11.2025 passed against the assessment order by the National Faceless Assessment Centre Delhi, u/s 147 r.w.s. 144B of the Income-tax Act (hereinafter referred to as the “Act”), dated 18.05.2023 for the Assessment Year 2014-15.

2.

Assessee has raised the following grounds of appeal: 1. On facts and circumstances of the case and in law Ld. CIT(A) erred in confirming notice us 148 issued by JAO as validly issued without appreciating the fact that it is issued in non-faceless manner and ignoring the jurisdictional High Court decision in case of Hexaware Technologies Pvt Ltd vs ACIT [2024] 162 taxmann.com 225 (Bom). 2. On facts and circumstances of the case and in law Ld. CIT(A) erred in confirming the issue of notice us 148 without appreciating the fact that reopening is based on seized material found in premises of 3rd party, so AO should have invoked the provisions of sec 153C of the IT Act 1961 and not of section148 of the IT Act 1961.

3.

On facts and circumstances of the case and in law Ld. CIT(A) erred in confirming addition of Rs 70,40,700/- us 69A representing sale proceeds of shares of Nyassa Corporation.

3.

Brief facts of the case are that during the year under consideration, assessee had disclosed sale proceeds of Rs.70,40,700/- arising from sale of shares of Nyssa Corporation Ltd. Assessee had claimed the corresponding long-term capital gain as genuine. Ld. Assessing Officer, however, treated the aforesaid sale consideration as unexplained money u/s 69A, alleging that the transaction represented accommodation entry in the guise of long-term capital gain. In the course of assessment proceedings, assessee furnished relevant documentary evidences in support of purchase and sale of the aforesaid shares. Assessee had purchased 5,200 shares of Nyssa Corporation Ltd. (formerly known as Ravinay Trading Company Ltd.) on 30.07.2012 through SEBI registered broker, IIFL Securities (India Infoline Ltd.), on BSE platform for a consideration of Rs.9,88,985/- paid through account payee cheque. The purchase transaction was supported by contract-cum-purchase bill issued by the broker and ledger account of the broker. The shares so purchased were duly credited in the DMAT account of the assessee. Subsequently, aforesaid shares were split in the ratio of 10:1 on 18.09.2013 and accordingly, assessee held 52,000 shares of Nyssa Corporation Ltd. The said shares were thereafter sold by the assessee through the same SEBI registered broker on a recognized stock exchange for a consideration of Rs.70,40,700/-. The sale transactions were supported by contract notes-cum-sale bills issued by the broker. The sale consideration was received through account payee cheques and duly reflected in the bank statement and ledger account of the broker. The corresponding delivery of shares was made through the DMAT account of the assessee. The transactions were subjected to STT and other applicable statutory charges.

4.

Ld. Assessing Officer, however, arrived at an adverse conclusion primarily on the basis that there was an unusual rise in the price of the shares which was not supported by the fundamentals of the company. He also relied upon the information gathered by the Investigation Wing and the statement of Shri Naresh Jain, who was stated to have admitted that the scrip of Nyssa Corporation Ltd. was being used for providing bogus long-term capital gain entries. Ld. Assessing Officer further relied upon the doctrine of preponderance of human probabilities and treated the impugned transaction as an accommodation entry. Aggrieved, assessee went in appeal before the ld. CIT(A), who confirmed the addition made by the ld. Assessing Officer by observing, inter alia, that the rise in the price of the scrip was unusual and lacked fundamental basis, that the statement of Shri Naresh Jain implicated the scrip in providing bogus LTCG, and that assessee had not initially furnished certain documents relating to the purchase transaction. Ld. CIT(A) relied upon the decision of Hon'ble High Court of Calcutta in the case of PCIT vs. Swati Bajaj [2022] 446 ITR 56 (Cal).

5.

Before us, ld. Counsel for the assessee reiterated the submissions made before the lower authorities and placed reliance on the documentary evidences furnished in the Paper Book. It was submitted that the entire flow of transaction, right from purchase of shares, payment of purchase consideration through banking channel, credit of shares in the DMAT account, subsequent split of shares, sale through registered broker on recognized stock exchange, delivery through DMAT account and receipt of sale consideration through banking channel, is duly corroborated by contemporaneous documentary evidences. It was further submitted that ld. Assessing Officer has neither pointed out any discrepancy in these documents nor brought any material on record to controvert the same.

5.1. Assessee is a regular investor, for which details of his investment in shares of other listed companies as on 31.03.2013 and as on 31.03.2014 are placed in the Paper book at page 67 and 73. The same are extracted as under:

6.

We have heard the rival submissions and perused the material available on record. We note that assessee had furnished documentary evidences in support of the purchase and sale of shares of Nyssa Corporation Ltd., details of which is already taken note of in the above paragraphs and not repeated for the same of brevity. We find that the entire flow of these transactions is corroborated by relevant documentary evidences placed on record. While making the addition, no specific discrepancy has been pointed out by ld. Assessing Officer in the documents and details furnished by the assessee. The evidences furnished by the assessee have neither been controverted by ld. Assessing Officer nor has any substantive material been brought on record to justify the addition made by him.

6.1. At any stage of the proceedings, Revenue has not brought on record any material to establish participation of the assessee in any dubious transaction relating to accommodation entry, price rigging or 5 manipulation of the scrip. There is no material on record to establish that the assessee had entered into any arrangement with any alleged accommodation entry provider or had paid any unaccounted cash against the sale proceeds received through banking channels.

6.2. To our mind, ld. Assessing Officer could have taken an adverse view only if he could point out discrepancies or insufficiency in the evidence and details furnished by the assessee. Once the assessee has produced documentary evidence to establish the veracity of his claim, the burden would shift on the Revenue to establish its case. In the present case, Revenue has failed to discharge the burden so shifted upon it.

6.3. On perusal of records, it is discernible that the ld. Assessing Officer has proceeded substantially on the basis of the sharp rise in the share price of the aforesaid scrip and the alleged weak fundamentals of the company. Ld. Assessing Officer has also relied upon the information gathered by the Investigation Wing relating to alleged penny stock transactions.

6.4. In our considered view, however, the conclusion drawn by ld. Assessing Officer of implicating the assessee in an alleged accommodation entry transaction is unsupported by any cogent material on record. The mere fact that there has been an unusual rise in the price of a particular scrip, or that the financial fundamentals of the company do not justify such rise, cannot by itself establish that the assessee's transaction was bogus. The conclusion of ld. Assessing Officer, in the absence of any further corroborative material connecting the assessee with the alleged price rigging or accommodation entry operators, is based on assumptions and conjectures. We also note that reliance placed by the ld. Assessing Officer on the Investigation Wing report and the statement of a third party has not been supported by any independent material establishing that the assessee was a beneficiary of any alleged accommodation entry. A general investigation into the affairs of a scrip or the modus operandi adopted by certain operators cannot, by itself, establish that every transaction undertaken in that scrip by every investor is necessarily bogus.

7.

We find force from the decisions of the Hon'ble jurisdictional High Court of Bombay. In the case of Pr. CIT vs. Ziauddin A. Siddique, in ITA No.2012 of 2017, dated 04.03.2022, Hon'ble Bombay High Court, while considering a case involving alleged penny stock, observed that where the transaction of purchase and sale of shares was undertaken through stock exchange and registered stock brokers, payments were made through banking channels, STT was paid and the Assessing Officer had not criticized the documentation involving the sale and purchase of shares, and there was no allegation that the assessee had participated in price rigging, there was no perversity in the order of the Tribunal deleting the addition.

7.1. Similarly, in the case of CIT vs. Shyam R. Pawar [2015] 54 taxmann.com 108 (Bom), Hon'ble jurisdictional High Court held that where the DMAT account and contract notes showed details of share transactions and the Assessing Officer had not proved the said transaction to be bogus, the capital gain earned on such transaction could not be treated as unaccounted income.

7.2. Further, in the case of PCIT vs. Indravadan Jain HUF [2023] 156 taxmann.com 605 (Bom), Hon'ble jurisdictional High Court has also considered a case where shares were purchased, payment was made through banking channel, deliveries were taken in the DMAT account, contract notes were issued and shares were subsequently sold on stock exchange. In such circumstances, the addition treating the capital gains as unexplained was not sustained.

7.3. We also note that similar issue relating to the very same scrip of Nyssa Corporation Ltd. has been considered by Co-ordinate Benches of the Tribunal in the cases relied upon by the assessee, including Ranjanben Chunilal Gada in ITA No.5842/Mum/2025, order dated 27.01.2026, Pritin Nilesh Jain Daga in ITA No.4502/Mum/2024, order dated 10.03.2025 and RNA Trading Pvt. Ltd. in ITA No.3697/Mum/2024, order dated 11.01.2026. Transactions in the said scrip were held to be genuine on appreciation of documentary evidences and factual matrix of these cases.

7.4. The law is well settled by the Hon'ble Supreme Court in the case of Union of India vs. Kamalakshi Finance Corporation Ltd. reported in 55 ELT 43 (SC) that the decision of the Hon'ble jurisdictional High Court would have higher precedence value on the Tribunal than the decision of a Hon'ble non-jurisdictional High Court. The Hon'ble Apex Court emphasized the requirement of judicial discipline and the necessity for the authorities falling within the jurisdiction to follow the orders of the higher appellate authorities.

7.5. Respectfully following the binding decisions of the Hon'ble jurisdictional High Court of Bombay referred above, we find it appropriate to follow the same. Moreover, when there are conflicting decisions of various High Courts on the same issue, the Hon'ble Supreme Court in the case of CIT vs. Vegetable Products Ltd. [1973] 88 ITR 192 (SC) held that the construction favorable to the assessee should be adopted. Hence, by following these principles, reliance placed by the ld. CIT(A) on the decision of the Hon'ble High Court of Calcutta in the case of Swati Bajaj (supra) does not hold the field in the present case.

8.

As regards the doctrine of preponderance of probabilities relied upon by the lower authorities, we note that the said principle is applied to weigh the evidence of either side and to draw a conclusion on the basis of the facts and materials available on record. The conclusions, however, have to be drawn on the basis of admitted facts and cogent material and not merely on the basis of presumptions which might go against the assessee. Once nothing has been proved against the assessee with the aid of any direct material, nothing can be implicated against the assessee merely on the basis of presumption or suspicion, howsoever strong it might appear to be.

8.1. In the present case, assessee has duly established the nature and source of the amount of Rs.70,40,700/- representing sale proceeds of shares of Nyssa Corporation Ltd. The entire transaction is supported by documentary evidence, including purchase documents, bank statements, DMAT account, broker's contract notes and ledger account. The transaction of sale was undertaken through a SEBI registered broker on a recognized stock exchange and the consideration was received through banking channels. Revenue has not brought on record any material to establish that assessee was involved in price rigging or had participated in any accommodation entry arrangement. Considering the totality of facts and circumstances of the case, factual matrix and submissions of the parties narrated as well as discussion and observations made hereinabove, we hold that assessee has duly established the nature and source of the sale proceeds of shares of Nyssa Corporation Ltd. The addition of Rs.70,40,700/- made by the ld. Assessing Officer u/s 69A and confirmed by the ld. CIT(A) is not sustained and the same is deleted. Ground no. 3 taken by the assessee in this regard is allowed. Other grounds raised on the legal issues are left open which the assessee may raise before appropriate forum as and when the circumstances so warrant since merits of the case has been held in favor of the assessee in terms of our above observations and findings.

In the result, appeal of the assessee is allowed. 9.

Order is pronounced in the open court on 03 August, 2026

Sd/- Sd/- (Pawan Singh) (Girish Agrawal) Judicial Member Accountant Member Dated: 03 August, 2026 MP, Sr.P.S. Copy to: 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 Guard File 5 CIT BY ORDER,

(Dy./Asstt.Registrar) ITAT, Mumbai

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