AMITA RAMBILAS AGARWAL,MUMBAI vs. INCOME TAX OFFICER, LALBAUG

Ground No. 1 raised by the assessee relates to challenging the order of the Ld. CIT(A) in confirming the addition made by the AO by disallowing the LTCG exemption claimed by the assessee under Section 10(38) of the Act.

I have heard the counsel for both the parties, perused the material placed on record, the judgments cited before me, and also the orders passed by the Revenue Authorities. From the records, I noticed that, during the year under consideration, the assessee had reported LTCG of Rs. 85,35,780 on the sale of 8,000 equity shares of Sunrise Asian Ltd. (formerly known as Santoshi Maa Tradelinks Ltd.) and claimed exemption under Section 10(38) of the Act, which was rejected by the AO and upheld by the Ld. CIT(A).

On going through the case records, I found that the assessee had placed on record a number of documents to demonstrate that the shares were purchased through banking channels, and in this regard, detailed written submissions were also filed. However, the fact remains that the AO had not found any defect in the documents relied upon by the assessee. Moreover, the Coordinate Bench of the ITAT, in a number of decisions where the same scrip was involved, has deleted similar additions, and the same are reproduced herein below:  Anraj Hiralal Shah (HUF) v. ITO – ITA No. 4514/Mum/2018, order dated 16/07/2019.  Dipesh Ramesh Vardhan v. DCIT – ITA No. 7648/Mum/2019, order dated 11/08/2020.  Rambilas S. Agarwal v. DCIT – ITA No. 3238/Mum/2023, order dated 08/04/2025.  PCIT-1 v. Divyaben Prafulchandra Parmar – R/Tax Appeal No. 812 of 2023, decided on 02/01/2024. 5. The operative portion of the one of the decision of Coordinate Bench of ITAT in the case of, Anraj Hiralal Shah (HUF) V. ITO (ITA NO. 4514/Mum/2018), is reproduced herein below: 7. I have heard rival contentions and perused the record. I notice that the AO has received information about suspicious share transactions and on the basis of the same; he has disbelieved the claim of long term capital gains. 1 notice that the assessee has purchased shares through a broker named M/s Eden Financial Services and sold shares through Intime Equities Ltd. Thus, I notice that the purchase and sale of shares have been carried out through two different brokers. It is not the case of the AO that both the share brokers referred above have been identified as tainted brokers involved in fraudulent transactions. 8. The assessee has earned speculation profit in the immediately preceding year through M/s Eden Financial Services also and the said profit has been used to purchase the shares of M/s Sunrise Asian Ltd. The assessee has offered the speculation profit for income tax purposes in the immediately preceding year and it has been accepted. Further the assessee has shown the purchase of impugned shares as investment in the Balance Sheet. Hence the purchase of shares has been accepted. Further the shares have been received in the D-mat account of the assessee and they have been sold through the D-mat account only. Hence the delivery of shares also stand proved. The AO has not brought any material on record to show that the assessee was part of fraudulent price rigging. Accordingly, in the absence of any evidence to implicate the assessee or to prove that the transactions are bogus, I am of the view that the capital gains declared by the assessee cannot be doubted with. In that view of the matter, the addition made towards expenses is not also sustainable. 9. Accordingly, I set aside the order passed by Ld CIT(A) on both the issues and direct the AO to delete both the additions. 10. In the result, the appeal of the assessee is allowed.

As submitted by the assessee, the facts of the present case are identical, as the assessee had also purchased the shares through proper banking channels, held them in a demat account, sold them through a recognized stock exchange, and there is no direct evidence linking the assessee with any manipulation or accommodation entry provider.

Therefore, considering the totality of the facts and circumstances of the case, and respectfully following the decisions of the Coordinate Bench of the ITAT, while adhering to the doctrine of binding precedents and maintaining judicial consistency, I allow Ground No. 1 raised by the assessee.

In view of the findings rendered above, the other grounds raised by the assessee have become infructuous and, accordingly, do not require separate adjudication.

In the result appeal filed by the assessee stands partly allowed.