RITU DEEP SARAF ,AKOLA vs. DCIT - 1, AKOLA

PDF · subscribers
ITA 763/NAG/2025Status: DisposedITAT Nagpur07 May 2026AY 2013-146 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had fulfilled all conditions for exemption under Section 10(38) and that the AO failed to provide concrete evidence to disprove the genuineness of the transactions. Relying on previous judgments concerning the same scrip, the Tribunal found the LTCG to be genuine.

What were the facts?

The assessee claimed long-term capital gains (LTCG) from the sale of equity shares of ACI Infocom Ltd. The Assessing Officer (AO) treated these gains as bogus and made additions under Section 68, along with additions for commission expenses under Section 69C.

What were the issues?

Whether the long-term capital gains from the sale of ACI Infocom Ltd. shares were genuine and eligible for exemption, and if the additions for commission expenses were justified.

Which sections of the Income-tax Act were involved?

Section 68,Section 69C,Section 10(38)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, NAGPUR ‘SMC’ BENCH, NAGPUR

Before: DR.MANISH BORAD

For Appellant: Shri Vimal Punmiya
For Respondent: Shri Surjit Kumar Saha
Hearing: 18.03.2026Pronounced: 07.05.2026

The captioned appeal at the instance of assessee pertaining to A.Y. 2013-14 is directed against the order dated 29.10.2025 framed by National Faceless Appeal Centre, Delhi (NFAC) arising out of Assessment Order dated 31.03.2022 passed u/s. 147 r.w.s.144B of the Income Tax Act, 1961 (in short ‘the Act’).

2.

The grievance of the assessee is twofold, firstly against the addition made u/s.68 of the Act for bogus long term capital gain at Rs.40,88,160/- and for the addition u/s.69C of the Act at Rs.1,22,645/- for the alleged commission expenses incurred for arranging bogus long term capital gain.

3.

At the outset, ld. Counsel for the assessee submitted that assessee has earned long term capital gain from sale of Equity shares of ACI Infocom Ltd. He submitted that the shares have been held for more than 12 months and have been sold on the recognised stock exchange and that the assessee has fulfilled all the necessary conditions as provided u/s.10(38) of the Act. He further submitted that both the lower authorities have erred in alleging the genuine long term capital gain as bogus because under similar set of facts and circumstances and in the case of transactions of long term capital gain from very same scrip ACI Infocom Ltd. various Coordinate Benches have consistently taken a view in favour of the respective assessee’s holding that long term capital gain from sale of Equity shares of ACI Infocom Ltd. is eligible for exemption u/s.10(38) of the Act. Reliance placed on various decisions including that of Coordinate Bench in the case of Kamal Khetan vs. DCIT-ITA No.2702/MUM/2025 dated 14.08.2025 which has been subsequently followed in the case of Manisha Kamal Khetan in ITA No.2698/MUM/2025 dated 11.09.2025. 4. On the other hand, Ld. Departmental Representative supported the order of ld.CIT(A) as well as ld. Assessing Officer but failed to place any binding precedent in its favour.

5.

I have the heard the rival contentions and perused the record placed before me. The only issue for my consideration is whether the long term capital gain of Rs.40,88,160/- earned by the assessee from sale of Equity shares of ACI Infocom Ltd. is a bogus long term capital gain and that whether addition for unexplained expenses u/s.69C of the Act at Rs.1,22,645/- is justified. I note that the assessee has purchased the Equity shares of ACI Infocom Ltd. and held them in the demat account, all documents exhibiting evidence of purchase are filed and thereafter sold through SEBI registered broker on recognised stock exchange platform and all the conditions prescribed u/s.10(38) of the Act has been fulfilled by the assessee. I note that under similar set of facts and circumstances this Tribunal in the case of Kamal Khetan (supra) dealing with very same issue of bogus long term capital gain from the sale of Equity shares of ACI Infocom Ltd. has examined the facts and judicial precedents and has held that sale of shares of ACI Infocom Ltd. as a genuine long term capital gain eligible for exemption u/s.10(38) of the Act. Relevant finding of the Tribunal reads as under :

“10. We have carefully considered the rival submissions and perused the relevant finding given in the impugned orders and material available on record and also the case laws cited have also been taken into account. As pointed out on behalf of the assessee, the transaction of existence of purchase and sale of M/s ACI Infocom Ltd. giving rise to LTCG claimed to be exempt under section 10(38) of the Act was fully corroborated by the documentary evidences, which is not in dispute. The shares have been credited in the demat account and transferred out of demat account at the time of sale. Both purchase and sale transactions are carried out through banking channel and by transfer of shares. The prima facie bonafides of existence of transaction executed cannot thus be doubted. It is not the case of the revenue that the capital gain arising to Assessee in not in the nature of LTCG as the shares were held by the assessee more than one & half years. The case of revenue is that such transactions is an accommodation entry and thus it is a sham, which is based on report of Investigation wing in many scrips. The abnormal increase in prices of share has led to suspicion on bonafides of transaction and was treated as accommodation entry of sham nature. Ld. AO has relied upon the modus operandi as described by the Investigation wing without carrying out any independent investigation. To discard the documentary evidences filed by the assessee and to corroborate the findings or report of the investigation, there has to be either concrete information impinging assessee; or there is information about exit providers who have specifically confirmed the purchase of shares to facilitate the accommodation entry; or SEBI has found some discrepancy in manipulation of price in stock exchange or found something irregular leading to inference that this scrip was used for the benefit of person indulging in buying and selling of the shares and banning the trade of the scrip; or the company itself has been investigated and found to be indulged in such activity; or some direct evidence or material is found implicating assessee. Then preponderance of probability goes against the assesseethat documents filed by the assessee cannot be conclusive. Presumption can be based against the assessee if all such factors are brought on record and not on some general report of Investigation Wing. Such report can be triggering point but not conclusive unless some inquiry has been done by the AO or something specific has been brought on record. That is the reason in all the judgments of Hon’ble High Court have held in favour of the assessee under these circumstances.

11.

The Hon'ble Bombay High Court in case of Indravadan Jain HUF and Hon’ble Delhi High Court in the case of KarunaGarg as well as Krishna Devi has held that an astronomical increase in the share price of a company in itself is not a justifiable ground for holding the LTCG to be an accommodation entry. Here in this case it is not even astronomical increase of price. There has to be other materials to dislodge the claim of the assessee, when existence of purchase of shares and sale is through stock exchange on line is not disputed, then other factors have to brought on record to treat that it was an accommodation entry.

12.

The whole basis of making the addition is standard modus operandi without there being any linkage with the assessee or any inquiry of the scrip or any adverse finding by agency like SEBI, which regulates the trading in stock exchange. It is trite law that additions merely on the basis of suspicious, conjectures or surmises could not be sustained in the eyes of law as held by Hon’ble Supreme Court in Omar Salay Mohamed Sait V /s CIT (1959 37 ITR 151). The suspicion however strong could not partake the character of legal evidence as held by Hon’ble Supreme Court in Umacharan Shaw & Bros. V/s CIT (1959 37 ITR 271). Therefore, we find that onus as cast upon revenue to corroborate the impugned additions by controverting the documentary evidences furnished by the assessee and by bringing on record, any cogent material to sustain those additions, could not be discharged by the revenue. The allegation of price rigging / manipulation has been levied without establishing the vital link between the assessee and various entities as stated by AO being exit providers.

13.

In this backdrop and facts and circumstances of the facts on record and lack of inquiry by the AO, we are of the view that the addition is not justified based on conjecture and surmise and the assessee is discharged primary onus which lay upon it. The Revenue, on the other hand, could not dislodge the perception that apparent is not real. On the contrary the type of error in the assessment order as pointed out by the counsel of the assessee indicates that there is no application of mind at the end of the assessing officer and he is not even verifying before concluding whether the assessee has booked losses or offered LTCG in the shares of ACI Infocom. AO referred SEBI order on the issue which was not even subject matter of the said order. Huge addition made on the basis of borrowed finding can not be sustained.

14.

In the light of factual matrix and case laws referred to before us, we see substance in the plea of the assessee that such capital gains arising on sale of shares cannot be regarded as sham profit and consequently, additions under made u/s 68 of the Act is not justified. The ld.AO has not provided anything on record to justify additions under section 69C of the Act either. As held above, modus operandi spelt by itself is not an adequate ground to impeach the transactions.

15.

Therefore, considering the entirety of facts and circumstances, we are not inclined to accept the stand of Ld. CIT (A) in sustaining the impugned additions in the hands of the assessee. Resultantly, the addition on account of alleged Long Term Capital Gains as well as estimated commission against the same, stands deleted. The grounds of appeal, to that extent, stand allowed.”

6.

The above decision is squarely applicable on the facts of the instant case and the same remain uncontroverted by ld. Sr. DR and therefore impugned finding is reversed. The addition for bogus long term capital gain at Rs.40,88,160/- and addition for unexplained expenditure at Rs.1,22,645/- are hereby deleted. Effective grounds of appeal raised by the assessee on merits are allowed.

7.

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

Order pronounced on this 07th day of May, 2026. (MANISH BORAD) ACCOUNTANT MEMBER Nagpur/ दिन ांक / Dated : 07th May, 2026. Satish

Satish Kumar Madishetty 6 आदेश की प्रतिलिपि अग्रेपिि / Copy of the Order forwarded to : अपील र्थी / The Appellant. 1. प्रत्यर्थी / The Respondent.

2.3.

The Pr. CIT concerned. विभ गीय प्रतितनधि, आयकर अपीलीय अधिकरण, न गपुर SMC बेंच, 4. न गपुर / DR, ITAT, “Nagpur SMC Bench, Nagpur ग र्ड फ़ इल / Guard File. 5. आिेश नुस र / BY ORDER,

////

More judgments on Section 68

All 29,931 judgments and leading authorities on Section 68 →

Recent GST High Court judgments

Search GST case law →