JCIT(IN-SITU),CC-1(4), KOLKATA, KOLKATA vs. SUDHA AGARWAL, KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA Before Shri Rajesh Kumar, Accountant Member and Shri Pradip Kumar Choubey, Judicial Member ITA No.1095/KOL/2026 Assessment Year: 2011-12 JCIT(In-situ) CC-1(4)......................................................................................Appellant Aayakar Bhawan Poorva, 110 Shanti Pally, Kolkata- 700107 Vs. Sudha Agarwal..................………………....…….................................….Respondent 49A, Tollygunge Circular Road, New Alipore 700053, Kolkata- 700053, [PAN No. AFKPA5955K] Appearances by: Miraj D. Shah, A.R. appeared on behalf of the Appellant. Praveen Das Chowdhury, (Sr. D.R) ,appeared on behalf of the Respondent. Date of concluding the hearing : July 01 , 2026 Date of pronouncing the order : July 23 ,2026 ORDER Per Pradip Kumar Choubey, Judicial Member: This appeal filed by the assessee is directed against the order dated 31.10.2025 of the National Faceless Appeal Centre (NFAC), passed under Section 143(3)r.w.s147 of the Assessment Year 2011-12 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). At the very outset, it appears from the report of the Registry the appeal filed by the Revenue after delay of 84 days. The Revenue has filed petition to condone the delay. Going over the contents of the petition, the delay is hereby condoned.

ITA No.1095/Kol/2026 undertaken an investigation regarding the accommodation entry of long-term capital gain and in continuous endeavour to unearth the huge syndicate of entry operators, share brokers and money launderers involving in providing bogus accommodation of long term capital gain, short term capital loss, the directorate of investigation identified the assessee company. Notice u/s 148 of the IT Act was issued and notices u/s 142(1) of the Act were also issued, in response to the same assessee submitted reply. The Ld. AO in course of assessment proceeding found that the assessee has sold 16,000 shares on 21st Century (India Limited) during financial year 2010-11 for a total trade value of Rs. 51,57,050/-. The Ld. AO after recording the statement of Anil Kumar Khemka being the director of Devshayam Stock Broking Pvt Ltd, treated the trade value of script went first century ltd. of Rs. 51,57,050/- as bogus and added back to the total income of the assessee u/s 68 of the Act. Aggrieved by the said order assessee preferred appeal wherein appeal of the assessee has been allowed by the CT(A) by observing thus:- 5.1 I have duly considered the facts of the case and the submission of the appellant. The appellant has filed appeal raising 3 grounds of appeal against the addition of Rs. 51.57.050/- u/s 68 and Rs. 14,23.551/- u/s 234B of the Act, interest charged. The AO in the assessment order has stated that the Appellant has received Long Term Capital Gain of Rs. 51.57/050/- from the sale of shares of M/s Twenty First Century (India) Ltd. and claimed the same as exempt income u/s 10(38) which is nothing but bogus and sham transaction. 5.2 As far as, the facts of the case are concerned the AO has mentioned in the assessment order that the assessee has claimed to have earned LTCG of Rs. 51.57 050/- by selling the 16,000 shares of M/s Twenty

ITA No.1095/Kol/2026 First Century (India) Ltd. in the FY. 2010-11 These shares were purchased in the FY 2002-03. Later on, these shares were credited to the demat account of the assessee. The AO in the assessment order has further stated that the Directorate of Inv. Kolkata, had undertaken an investigation regarding the accommodation entry of Long Term Capital Gain (LTCG). They were able to identify a very large number of beneficiaries who have together taken a huge amount of bogus entries of LTCG. Further the AO also examined certain other details of this transaction and came to the conclusion that the income of Rs. 51 57 050/- claimed as Exempt LTCG is a bogus transaction and thus he made the addition of the said amount u/s 68 of the act on the ground of unexplained cash credit. Further the AO also charged interest on the LTCG of Rs. 14,23,551/-

5.3 The assessee in the appellate proceeding has filed a written submission giving the full details of the case, in which he has stated that the AO has erroneously held the gain of Rs. 51 57 050/- as bogus income without appreciating the proper fact oft he case. The appellant has stated that the AO by relying on the statements and without giving the opportunity to cross examine has made the addition. So, additions made by the AO in this case is not based on any seized/incriminating material. 5.3.1 The AO has stated that the assessee has acquired 16,000 shares of Mis Twenty First Century (India) Ltd. in the F.Y. 2002-03, received in demat A/c and fully accounted. The acquisition of shares were made through proper banking channels and credited to the demat A/c. These investments have been consistently reflected in the Balance Sheets of the assessee and in the earlier tax assessments. The department has never objected to the acquisitions of the shares in the past although the alleged statement (never provided for rebuttal).

ITA No.1095/Kol/2026 5.3.2 The appellant has further stated in its submission that while making the addition, the AO has solely relied upon the Report of the Inv. Wing Kolkata in which shares of Twenty First Century (India) Ltd. have been pointed as a Penny Stock. But the AO has failed to appreciate certain crucial specific facts relating to this case which can clearly show that the assessee is in no way involved in any kind of price manipulation as far as sale of investment is concerned. The appellant has stated that the assessee has furnished all the relevant facts such as, share application form, and the copy of cheque issued for the purchase of the above mentioned shares in the IPO copy of Bank Statement showing debit of purchase amount, Demat statement showing credit of Twenty First Century (India) shares, copy of Form 20(B). The appellant has further stated that the shares were sold in the SEBI regulated markets and delivery was from Demat A/c and the payment was received in Bank. The AO did not point out any irregularity or deficiency in the evidences produced before him. The appellant has stated that the assessee is qualified for the claim of the benefit of the Long Term Capital Gain exemption as it has complied with the provision of section 10(38) of the Act. The appellant has stated that the holding period in this case is of more than 9 years from, 2002 to February 2011, the shares were listed and traded on the Bombay Stock Exchange and the STT was paid on the sale transactions. The appellant had cited certain judicial pronouncements, where it has been held that LTGG supported by documentary evidences such as Demat Statement, Broker Notes, and Bank transactions cannot be disregarded only on the basis of suspicion alone. The detail of cases cited by the appellant in its case is as under "1.7 Judicial Precedents Supporting Genuine LTCG Claims 1. CIT vs. Mukesh Ratilal Marolia (2006) 6 SOT 247 (ITAT Mumbai): Held that LTCG supported by documentary evidence such as 4

ITA No.1095/Kol/2026 Demat statements, broker notes, and bank transactions cannot be disregarded based on suspicion alone. 2. PCIT vs. Parasben Kasturchand Kochar (Gujarat HC) [2021] 130 taxmann.com 176: Additions based on third-party statements without confrontation or evidence refuting the assessee's claims were held unsustainable. 3. Being aggrieved by and dissatisfied, the Revenue preferred appeal by taking following grounds: -

1.That on the facts and in the circumstances of this case and in law, whether the Ld. CIT(A) is correct in deleting the addition of Rs. 51,57,050/- claimed as exempt Long Term Capital Gain by the assessee in respect of sale of shares of penny scrip namely Twenty First Century (India) Ltd, which was controlled and managed by the accommodation entry operators. 2. That on the facts and in the circumstances of the case, whether the Ld. CIT(A) was justified in relying merely on paper confirmations and trades through a recognized stock exchange, while ignoring the detailed dissemination report of the Investigation Wing highlighting the systematic tax evasion scheme among clients & Stock Exchange members and the findings of the Assessing Officer regarding the involvement of the assessee in generating fictitious exempt income under the garb of penny scrip transactions. 3.That on the facts and circumstances of this case and in law, whether the Ld. CIT(A) is correct in deleting the fictitious exempt income on transactions of penny scrip through the accommodation entry operator, while ignoring the binding precedent of the Hon'ble jurisdictional High Court in the case PCIT v. Swati Bajaj [2022] 139 taxmann.com 352 (Calcutta) and the recent decision in PCIT v Zulu Merchandise Pvt. Ltd. (ITAT/88 of 2025 dated 01.08.2025). 5

ITA No.1095/Kol/2026 4.That on the facts and in the circumstances of this case and in law, whether the Ld. CIT(A) was justified in accepting the view of the assessee that cross examination was mandatory, even though under Section 250(4) of the Act the Ld.

ITA No.1095/Kol/2026 through proper banking channels and investments have been consistently reflected in the balance-sheet of the assessee. The department has never objected to the acquisitions of the shares in the past. It is important to mention here that assessee has furnished shared application form, copy of the cheque issued for the purchase of the shares in the ITO, copy of bank statement, copy of Form 20B, etc. Entire transaction through verifiable channels, demat statement and bank statements corporate the transaction beyond doubt. 5.1. Keeping in view the above facts and considering the orders passed by the CIT(A) we do not find any merit the appeal filed by the Revenue. Accordingly, appeal of the Revenue is hereby dismissed.

Kolkata, the 23rd July , 2026.

Sd/- Sd/-

[Rajesh Kumar] [Pradip Kumar Choubey] Accountant Member Judicial Member

DC Dated:. 23 .07.2026.

Copy of the order forwarded to: 7

ITA No.1095/Kol/2026 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- 5. CIT(DR)

//True copy// By order Assistant Registrar, Kolkata Benches