CHANDRADEVI GAUTAMCHAND JAIN,MUMBAI vs. WARD 24(1)(1), MUMBAI, LALBAUG

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ITA 2541/MUM/2026Status: DisposedITAT Mumbai29 July 2026AY 2016-175 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the addition made by the AO included LTCG from shares other than the penny stock M/s. Toyam Industries Ltd., which was the subject of the adverse report. The departmental authorities failed to properly examine the facts and the entire addition was not solely based on the penny stock issue.

What were the facts?

The assessee claimed Long Term Capital Gains (LTCG) from the sale of shares, which the Assessing Officer (AO) treated as bogus accommodation entries. The AO reopened the assessment and added the entire LTCG amount to the assessee's income under Section 68.

What were the issues?

Whether the entire LTCG addition was justified when only a portion was related to the alleged penny stock, and whether the departmental authorities properly examined all the facts before making the addition.

Which sections of the Income-tax Act were involved?

Section 68,Section 147,Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, MUMBAI

Before: SHRI SAKTIJIT DEY & SHRI GIRISH AGRAWAL

For Appellant: Shri Dharmil Jhaveri, CA
For Respondent: Shri Ajay Soneji, Sr. DR
Hearing: 07.07.2026Pronounced: 29.07.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI

BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER

ITA No.2541/Mum/2026 (Assessment Year: 2016-17)

Chandradevi Gautamchand Jain ITO Ward 24(1)(1) Flat No.1401, Building No.5, Piramal Chambers, Lalbaug, New Link Road, Lower Parel, Mumbai-400 012 Vs. Andheri (W), Azad Nagar S.O. Mumbai-400 053

PAN/GIR No. AEKPC 6743 G (Appellant) : (Respondent)

: Shri A. C. Jhaveri, F.C.A and Appellant by Shri Dharmil Jhaveri, CA Respondent by : Shri Ajay Soneji, Sr. DR

Date of Hearing : 07.07.2026 Date of Pronouncement : 29.07.2026

O R D E R Per Saktijit Dey, Vice President:

This is an appeal by the assessee against order dated 11.03.2025 passed by National

Faceless Appeal Centre (‘NFAC’ for short), Delhi for the assessment year (A.Y. for short)

2016-17.

2.

At the outset, we must observe, there is delay of 296 days in filing the appeal. The

assessee has filed an application seeking condonation of delay. Explaining the reason,

Learned counsel appearing for the assessee submitted that the assessee is a lady not well

conversant with the Income tax portal and is not aware of practice of uploading of orders

and notices thereof. He submitted, the tax consultant who was entrusted the work of filing

of Income tax return and other tax-related issues did not inform the assessee about the

2 ITA No. 2541/Mum/2026 (A.Y.2016-17) Chandradevi Gautamchand Jain vs. ITO dismissal of her appeal by learned first appellate authority. He submitted, once tax recovery

notice was received by the assessee, she became aware of dismissal of her appeal and

immediately took steps for filing the appeal before the Income Tax Appellate Tribunal.

Thus, he submitted, the delay is not due to any deliberate negligence, but on account of

bona fide reasons.

3.

Learned Departmental Representative (ld. DR for short) left it to the discretion of

the bench.

4.

Having considered rival submissions on the issue of delay, we are satisfied that the

delay in filing the appeal was due to reasonable cause. Accordingly, we condone the delay

and admit the appeal for adjudication. Though, the assessee has raised multiple grounds,

however, at the time of hearing, learned counsel appearing for the assessee confined his

submissions on merits alone. The addition which is subject matter of challenge in the

present appeal is an amount of Rs.2,97,96,812/- representing long term capital gain

(‘LTCG’ for short) treated as bogus by the Assessing Officer (AO for short) on account of

being in the nature of accommodation entry.

5.

Briefly, the facts are, the assessee is a resident individual. For the assessment year

under dispute, the assessee had filed her return of income on 12.07.2016, declaring income

of Rs.7,56,330/-. Based on information received from the Directorate of Income Tax

(Investigation) that the assessee is a beneficiary of bogus LTCG from sale of scrip of M/s.

Toyam Industries Ltd., which is a penny stock, the AO reopened the assessment under

section 147 of the Act. In response to notice under section 148 of the Act, the assessee filed

a fresh return of income reporting income as was declared in the original return of income.

3 ITA No. 2541/Mum/2026 (A.Y.2016-17) Chandradevi Gautamchand Jain vs. ITO 6. In course of assessment proceeding, in response to queries raised by the A.O., the

assessee furnished certain evidences including Demat account, same statement with receipt

on delivery report of transaction in shares. Based on the material available on record, the

AO found that M/s. Toyam Industries Ltd. is a penny stock listed on Bombay Stock

Exchange and the company was used to facilitate introduction of unaccounted income of

persons by providing them accommodation entries in the form of exempt capital gain or

short-term capital loss. He noticed that the assessee had purchased 50,000 shares of M/s.

Toyam Industries Ltd. for Rs.5 lakhs from an individual Kusum Dua, which got transferred

to assessee's Demat account on 12.04.2014. Subsequently, the assessee sold the shares in

the year 2015 through broker, by name, Emkay Global Financial Services Ltd., resulting

in LTCG of Rs.1,93,88,660/- which was claimed as exempt. Alleging that the assessee

failed to explain the genuineness of the transaction relating to sale of shares of M/s. Toyam

Industries Ltd., the AO ultimately disallowed assessee's claim of exemption of LTCG and

treated the amount credited to the books of accounts towards sale of shares as ‘unexplained

cash credit’ under section 68 of the Act and added back to her income.

7.

Though the assessee contested the aforesaid addition by filing appeal before learned

first appellate authority, however, the appeal was dismissed.

8.

Before us, learned counsel appearing for the assessee submitted that the amount of

Rs.2,97,96,812/- added by the AO and confirmed by learned first appellate authority does

not entirely represent the amount received from sale of shares of M/s. Toyam Industries

Ltd. In this context, he drew our attention to the statement of facts furnished with Form

No. 36. A perusal of the statement of facts reveals that the amount of Rs.2,97,96,812/- is

comprised of following items offered as LTCG/STCL by the assesse:

4 ITA No. 2541/Mum/2026 (A.Y.2016-17) Chandradevi Gautamchand Jain vs. ITO

Sr. No. Company’s Name LTCG (Rs.) 1 Toyam Industries Ltd. 1,93,58,797 2 Crescent Leasing Ltd. 1,08,80,000 3 Gmr. Ltd. -2,090 4 Karutari Ltd. 1,08,226 5 MMTC Ltd. -5,38,549 6 Sel. Ltd. -9,575 Total 2,97,96,812

9.

As could be seen from the aforesaid details, LTCG on account of sale of shares of

M/s. Toyam Industries Ltd. is to the extent of Rs.1,93,58,797/-. Whereas, rest of the amount

is out of sale of other scrips. A reading of the assessment order reveals that the adverse

report in possession of the AO is only with reference to M/s. Toyam Industries Ltd.

Whereas, the AO has added the entire LTCG by treating it as bogus. On going through the

orders of the departmental authorities, in the context of facts and materials brought on

record, we are of the view that they have failed to appreciate the entire facts brought on

record by the assessee. The assessee's claim that the addition made by the AO does not

entirely represent LTCG from sale of shares of M/s. Toyam Industries Ltd. needs to be

factually examined. Since, the departmental authorities have not properly examined the

facts before making the subject addition, we are inclined to set aside the impugned order

of the first appellate authority and restore the issues relating to the addition made under

section 68 of the Act for de novo adjudication by the AO. Before deciding the issue, the

AO must provide a reasonable opportunity of being heard to the assessee.

10.

In the result, the appeal is allowed for statistical purposes.

Order pronounced in the open court on 29.07.2026

Sd/- Sd/- (Girish Agrawal) (Saktijit Dey) Accountant Member Vice President Mumbai; Dated : 29.07.2026 Roshani, Sr. PS

5 ITA No. 2541/Mum/2026 (A.Y.2016-17) Chandradevi Gautamchand Jain vs. ITO

Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai

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