SMT. REKHA MODI,MUMBAI vs. INCOME TAX OFFICER, WARD 4(2)(1), MUMBAI, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “J(SMC)” MUMBAI

BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI ANIKESH BANERJEE (JUDICIAL MEMBER)

ITA No.650, 651 and 652/MUM/2026 Assessment Year: 2013-14, 2015-16 and 2016-17

Smt. Rekha Modi, Income Tax Officer, Ward 4(2)(1), 702-A, Tranquility CHS, Mumbai, Aayakar Bhawan, Vs. Shastri Nagar Andheri (W), Maharshi Karve Road, New Mumbai – 400053, Marine Lines, Mumbai, Maharashtra, Mumbai. Maharashtra – 400020. PAN NO.ACWPM 0259 R Appellant Respondent

Assessee by : Shri. Rakesh Joshi Revenue by : Shri Mukesh Thakwani (SR DR)

Date of Hearing : 17/06/2026 : 23/06/2026 Date of pronouncement ORDER PER OM PRAKASH KANT, AM

These three appeals preferred by the assessee arise out of separate orders passed by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [“Ld. CIT(A)”], pertaining to Assessment Years 2013-14, 2015-16 and 2016-17. Since a common controversy and substantially identical facts are involved in all the appeals, same were heard together and are being

Smt. Rekha Modi, 2 ITA No. 650, 651 and 652 650, 651 and 652/MUM/2026

disposed of by this consolidated order for the sake of convenience disposed of by this consolidated order for the sake of convenience disposed of by this consolidated order for the sake of convenience and to avoid repetition of facts. and to avoid repetition of facts.

“1. On the facts and circumstances of the case as well as in law, the Learned On the facts and circumstances of the case as well as in law, the Learned On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of the Learned Assessing Officer in CIT(A) has erred in confirming the action of the Learned Assessing Officer in CIT(A) has erred in confirming the action of the Learned Assessing Officer in reopening the case u/s.147 of the Income Tax Act, 1961, without considering the reopening the case u/s.147 of the Income Tax Act, 1961, without considering the reopening the case u/s.147 of the Income Tax Act, 1961, without considering the facts and circumstances facts and circumstances of the case. 2. On the facts and circumstances of the case as well as in law, the Learned On the facts and circumstances of the case as well as in law, the Learned On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in not appreciating the fact that the assessment order passed is CIT(A) has erred in not appreciating the fact that the assessment order passed is CIT(A) has erred in not appreciating the fact that the assessment order passed is bad in law and invalid, as the same has been passed without providing bad in law and invalid, as the same has been passed without providing bad in law and invalid, as the same has been passed without providing statement/evidence and cross examination to the parties, on which reliance was statement/evidence and cross examination to the parties, on which reliance was statement/evidence and cross examination to the parties, on which reliance was placed for making an addition and without providing the opportunity of video placed for making an addition and without providing the opportunity of video placed for making an addition and without providing the opportunity of video conferencing specifically asked by the appellant during the course of assessment conferencing specifically asked by the appellant during the course of assessment conferencing specifically asked by the appellant during the course of assessment proceedings. 3. On the facts and circumstances of the case as well as in law, the Learned the facts and circumstances of the case as well as in law, the Learned the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of the Learned Assessing officer in CIT(A) has erred in confirming the action of the Learned Assessing officer in CIT(A) has erred in confirming the action of the Learned Assessing officer in making an addition of 3 Rs.37,44,772/ making an addition of 3 Rs.37,44,772/-u/s 69A of the Income Tax Act, 1961 by u/s 69A of the Income Tax Act, 1961 by treating the entire sale consi treating the entire sale consideration of M/s. ACI Infocom Ltd and M/s. Safal deration of M/s. ACI Infocom Ltd and M/s. Safal Herbs Ltd. as alleged unexplained money, without considering the facts and Herbs Ltd. as alleged unexplained money, without considering the facts and Herbs Ltd. as alleged unexplained money, without considering the facts and circumstances of the case. circumstances of the case. 4. On the facts and circumstances of the case as well as in law, the Learned On the facts and circumstances of the case as well as in law, the Learned On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirmin CIT(A) has erred in confirming the action of the Learned Assessing Officer in g the action of the Learned Assessing Officer in making an addition of Rs.5,240/ making an addition of Rs.5,240/-as alleged income from other sources, without as alleged income from other sources, without considering the fact and circumstances of the case.” considering the fact and circumstances of the case.

Smt. Rekha Modi, 3 ITA No. 650, 651 and 652 650, 651 and 652/MUM/2026

Smt. Rekha Modi, 4 ITA No. 650, 651 and 652 650, 651 and 652/MUM/2026

Smt. Rekha Modi, 5 ITA No. 650, 651 and 652 650, 651 and 652/MUM/2026

According to the AO, other evidence of Excel files, incriminating According to the AO, other evidence of Excel files, incriminatin According to the AO, other evidence of Excel files, incriminatin Word files, etc., were found from the premises of the Shri Sanjay Word files, etc., were found from the premises of the Shri Sanjay Word files, etc., were found from the premises of the Shri Sanjay Shah and Shri Jignesh Shah and they admitted of being involved in Shah and Shri Jignesh Shah and they admitted of being involved in Shah and Shri Jignesh Shah and they admitted of being involved in providing accommodation entry of long term capital gain, loss, providing accommodation entry of long term capital gain, loss, providing accommodation entry of long term capital gain, loss, unsecured loan etc. The Investigation Wing based on the reference unsecured loan etc. The Investigation Wing based on the ref unsecured loan etc. The Investigation Wing based on the ref to various scrips in the seized and impounded material, statements to various scrips in the seized and impounded material, statements to various scrips in the seized and impounded material, statements of various persons, BSE data and other data analysis of 15 scrips of various persons, BSE data and other data analysis of 15 scrips of various persons, BSE data and other data analysis of 15 scrips opined that the scrip of M/s Safal Herbs Limited was one of such opined that the scrip of M/s Safal Herbs Limited was one of such opined that the scrip of M/s Safal Herbs Limited was one of such scrip which was misused for providing accommodation entry of the scrip which was misused for providing accommodation scrip which was misused for providing accommodation long term capital gain etc. The Investigation Wing noted that said long term capital gain etc. The Investigation Wing noted that said long term capital gain etc. The Investigation Wing noted that said company did not exist at the address, evidence of exchange of cash company did not exist at the address, evidence of exchange of cash company did not exist at the address, evidence of exchange of cash against accommodation entry of bogus LTCG was found and against accommodation entry of bogus LTCG was found and against accommodation entry of bogus LTCG was found and impounded during the search in respect of certain persons. impounded during the search in respect of certain pe impounded during the search in respect of certain pe

Smt. Rekha Modi, 6 ITA No. 650, 651 and 652 650, 651 and 652/MUM/2026

of the Act. The AO also made addition of Rs.5,240 The AO also made addition of Rs.5,240/- under the head income from other sources for not providing details of income income from other sources for not providing details of income income from other sources for not providing details of income corresponding to the tax deducted at source of Rs.1,976/-. corresponding to the tax deducted at source of Rs.1,976/ corresponding to the tax deducted at source of Rs.1,976/

“7.3.2 I have carefully considered assessment order written submissions & case 7.3.2 I have carefully considered assessment order written submissions & case 7.3.2 I have carefully considered assessment order written submissions & case laws relied upon by t laws relied upon by the appellant. It is noted that appellant has transacted during the year under consideration in It is noted that appellant has transacted during the year under consideration in It is noted that appellant has transacted during the year under consideration in the shares of M/s ACI Infocom Limited. It is pertinent to mention that an the shares of M/s ACI Infocom Limited. It is pertinent to mention that an the shares of M/s ACI Infocom Limited. It is pertinent to mention that an investigation was carried out by the investigation unit with respect to M/s ACI investigation was carried out by the investigation unit with respect to M/s ACI investigation was carried out by the investigation unit with respect to M/s ACI Infocom Limited and information about the penny scrip M/s ACI Infocom Limited Limited and information about the penny scrip M/s ACI Infocom Limited Limited and information about the penny scrip M/s ACI Infocom Limited was shared by the investigation directorate regarding the manipulation of the was shared by the investigation directorate regarding the manipulation of the was shared by the investigation directorate regarding the manipulation of the price movements of the scrips of the company M/s ACI Infocom Limited on the price movements of the scrips of the company M/s ACI Infocom Limited on the price movements of the scrips of the company M/s ACI Infocom Limited on the Stock Exchange to provide acc Exchange to provide accommodation entries of bogus Long Term Capital modation entries of bogus Long Term Capital Gain. On perusal of the share price movement of the said entity it was found that On perusal of the share price movement of the said entity it was found that On perusal of the share price movement of the said entity it was found that the company M/s ACI Infocom Limited declared stock split on 23rd of January the company M/s ACI Infocom Limited declared stock split on 23rd of January the company M/s ACI Infocom Limited declared stock split on 23rd of January 2013 and it was also noticed that the share price of t 2013 and it was also noticed that the share price of the share moved from he share moved from Rs.2.63 on 24th of August 2011 to Rs. 21.90 on 21.02.2013 and then it fell back Rs.2.63 on 24th of August 2011 to Rs. 21.90 on 21.02.2013 and then it fell back Rs.2.63 on 24th of August 2011 to Rs. 21.90 on 21.02.2013 and then it fell back to Rs.2.93 on 20.08.2013. From the data available in public-domain it was to Rs.2.93 on 20.08.2013. From the data available in public to Rs.2.93 on 20.08.2013. From the data available in public further seen that the movement of the scrip reflects the "bell shaped curve" which further seen that the movement of the scrip reflects the "bell shaped curve" which further seen that the movement of the scrip reflects the "bell shaped curve" which is a typical pattern nature of any penny scrip which is rigged to attain artificial is a typical pattern nature of any penny scrip which is rigged to attain artificial is a typical pattern nature of any penny scrip which is rigged to attain artificial

Smt. Rekha Modi, 7 ITA No. 650, 651 and 652 650, 651 and 652/MUM/2026

levels so that bogus accommodation entry in the form of Long-Term Capital Gain/ levels so that bogus accommodation entry in the form of Long levels so that bogus accommodation entry in the form of Long Short Term Capital Loss can be made to respective beneficiaries. Short Term Capital Loss can be made to respective beneficiaries. Short Term Capital Loss can be made to respective beneficiaries. Statement of directors of Statement of directors of M/s ACI Infocom Limited Rajesh Babulal Shah Alok M/s ACI Infocom Limited Rajesh Babulal Shah Alok Gupta, Anand Jain, Kushalchand Jain was recorded on oath. It is seen that the Gupta, Anand Jain, Kushalchand Jain was recorded on oath. It is seen that the Gupta, Anand Jain, Kushalchand Jain was recorded on oath. It is seen that the director was not able to substantiate and provide any logical explanation to director was not able to substantiate and provide any logical explanation to director was not able to substantiate and provide any logical explanation to support the astronomical rise in price of scrip. Fur support the astronomical rise in price of scrip. Further, the director was not able ther, the director was not able to provide any documentary evidence to prove that a meeting between directors of to provide any documentary evidence to prove that a meeting between directors of to provide any documentary evidence to prove that a meeting between directors of the company and prospective allottees of equity shares was in fact conducted. the company and prospective allottees of equity shares was in fact conducted. the company and prospective allottees of equity shares was in fact conducted. Also, the director was asked to provide details of content of the presentation Also, the director was asked to provide details of content of the Also, the director was asked to provide details of content of the which was presented to the prospective allottees which convinced them to invest which was presented to the prospective allottees which convinced them to invest which was presented to the prospective allottees which convinced them to invest in their company. To this question as well the director was not able to give a in their company. To this question as well the director was not able to give a in their company. To this question as well the director was not able to give a satisfactory explanation. In view of this, the creditworthiness of the persons satisfactory explanation. In view of this, the creditworthiness of the persons satisfactory explanation. In view of this, the creditworthiness of the persons purchasing the scrip at high price is doubtful. The persons selling the scrip when hasing the scrip at high price is doubtful. The persons selling the scrip when hasing the scrip at high price is doubtful. The persons selling the scrip when the price of scrip is high at its peak are all beneficiaries of bogus Long-Term the price of scrip is high at its peak are all beneficiaries of bogus Long the price of scrip is high at its peak are all beneficiaries of bogus Long Capital Gains. In the instant case, the appellant was also found to be the beneficiary who In the instant case, the appellant was also found to be the beneficiary who In the instant case, the appellant was also found to be the beneficiary who transacted in the share scrip of M/s ACI Infocom Limited during the year under cted in the share scrip of M/s ACI Infocom Limited during the year under cted in the share scrip of M/s ACI Infocom Limited during the year under consideration Total sale and sale value in the aforesaid scrip in the name of the consideration Total sale and sale value in the aforesaid scrip in the name of the consideration Total sale and sale value in the aforesaid scrip in the name of the assessee is found at 12500 and Rs. 19,83,364/ assessee is found at 12500 and Rs. 19,83,364/-, respectively. The date of , respectively. The date of purchase and sale of the sa purchase and sale of the said Scrip as per the contract notes were 09.07.2012 id Scrip as per the contract notes were 09.07.2012 and 17.01.2013, respectively. and 17.01.2013, respectively. It is a settled position of law, as laid down by the Hon'ble Supreme Court in CIT It is a settled position of law, as laid down by the Hon'ble Supreme Court in CIT It is a settled position of law, as laid down by the Hon'ble Supreme Court in CIT v. Durga Prasad More [82 ITR 540 (SC)] that the apparent must be tested on the v. Durga Prasad More [82 ITR 540 (SC)] that the apparent must be tested on the v. Durga Prasad More [82 ITR 540 (SC)] that the apparent must be tested on the anvil of human probabilities and surrounding circumstances. Mere submission of probabilities and surrounding circumstances. Mere submission of probabilities and surrounding circumstances. Mere submission of documentary evidence such as contract notes, demat statements, and bank documentary evidence such as contract notes, demat statements, and bank documentary evidence such as contract notes, demat statements, and bank entries cannot establish genuineness if the attendant facts and circumstances entries cannot establish genuineness if the attendant facts and circumstances entries cannot establish genuineness if the attendant facts and circumstances make the transactions commercially imposs make the transactions commercially impossible or highly improbable. Applying ible or highly improbable. Applying the test of human probabilities to the facts of the present case, it is wholly the test of human probabilities to the facts of the present case, it is wholly the test of human probabilities to the facts of the present case, it is wholly unacceptable that an obscure company with negligible financial worth and no unacceptable that an obscure company with negligible financial worth and no unacceptable that an obscure company with negligible financial worth and no visible economic activity could suddenly yield astronomical gains to the assessee visible economic activity could suddenly yield astronomical gains visible economic activity could suddenly yield astronomical gains within a short duration. Hence, it is well established that revenue authorities are within a short duration. Hence, it is well established that revenue authorities are within a short duration. Hence, it is well established that revenue authorities are not bound to accept the apparent truth of documents if surrounding not bound to accept the apparent truth of documents if surrounding not bound to accept the apparent truth of documents if surrounding circumstances suggest a tax evasion motive. circumstances suggest a tax evasion motive. In view of these facts and circumstances, th In view of these facts and circumstances, the transactions claimed by the e transactions claimed by the assessee in the shares of the said company cannot be treated as genuine assessee in the shares of the said company cannot be treated as genuine assessee in the shares of the said company cannot be treated as genuine investments but are merely colourable devices arranged for tax avoidance. investments but are merely colourable devices arranged for tax avoidance. investments but are merely colourable devices arranged for tax avoidance. 7.3.3 Further, During the year under consideration, the assessee has made 7.3.3 Further, During the year under consideration, the assessee has made 7.3.3 Further, During the year under consideration, the assessee has made transactions in penny stock Safal Herbs Ltd. Assessee has carried out ctions in penny stock Safal Herbs Ltd. Assessee has carried out ctions in penny stock Safal Herbs Ltd. Assessee has carried out transactions of Rs. 17,61,408/ transactions of Rs. 17,61,408/- in the scrip of Safal Herbs Ltd during the in the scrip of Safal Herbs Ltd during the financial year 2012- -13. The amount of Rs. 17,61,408/- is shown as full amount is shown as full amount received on account of sale of the abov received on account of sale of the above referred scrip in the details submitted e referred scrip in the details submitted during the course of assessment proceedings by the appellant. during the course of assessment proceedings by the appellant. during the course of assessment proceedings by the appellant.

Smt. Rekha Modi, 8 ITA No. 650, 651 and 652 650, 651 and 652/MUM/2026

It is pertinent to mention that a search and seizure action u/s 132 of the Income It is pertinent to mention that a search and seizure action u/s 132 of the Income It is pertinent to mention that a search and seizure action u/s 132 of the Income Tax Act, 1961 was carried out on Shri Sanjay Shah and Sri Jignesh Shah at Tax Act, 1961 was carried out on Shri Sanjay Shah and Sri Jignesh Shah Tax Act, 1961 was carried out on Shri Sanjay Shah and Sri Jignesh Shah Ahmedabad by the DDIT (Investigation), Unit Ahmedabad by the DDIT (Investigation), Unit-1(3), Ahmedabad on 19.03.2019. 1(3), Ahmedabad on 19.03.2019. The search resulted into seizure of unaccounted cash of 19.37 Crores (related to The search resulted into seizure of unaccounted cash of 19.37 Crores (related to The search resulted into seizure of unaccounted cash of 19.37 Crores (related to accommodation entries and commission earned thereon) along with incriminating accommodation entries and commission earned thereon) along with incriminating accommodation entries and commission earned thereon) along with incriminating digital as well as documentary evidence. Clandestine record of unaccounted documentary evidence. Clandestine record of unaccounted documentary evidence. Clandestine record of unaccounted cash, synchronized trading, proving bogus LTCG in various BSE listed scrips and cash, synchronized trading, proving bogus LTCG in various BSE listed scrips and cash, synchronized trading, proving bogus LTCG in various BSE listed scrips and transport of such cash through angadiyas was found to be maintained in secret transport of such cash through angadiyas was found to be maintained in secret transport of such cash through angadiyas was found to be maintained in secret Tally Data file with company name "123", Tally Data file with company name "123", In this secret file, against transactions In this secret file, against transactions of shares on BSE platform, movement (angadiya) and delivery (recd) of cash is of shares on BSE platform, movement (angadiya) and delivery (recd) of cash is of shares on BSE platform, movement (angadiya) and delivery (recd) of cash is recorded. Furthermore, the receipt of commission in cash is also recorded under recorded. Furthermore, the receipt of commission in cash is also recorded under recorded. Furthermore, the receipt of commission in cash is also recorded under the head "LTG Commission". The evidence manifest that this is the record of the head "LTG Commission". The evidence manifest that th the head "LTG Commission". The evidence manifest that th accommodation entries of LTCG against receipt of cash. The evidence accommodation entries of LTCG against receipt of cash. The evidence accommodation entries of LTCG against receipt of cash. The evidence demonstrates that accommodation entry provider duo has resorted to demonstrates that accommodation entry provider duo has resorted to demonstrates that accommodation entry provider duo has resorted to synchronized trading in shares of various listed companies because it is only synchronized trading in shares of various listed companies because it is only synchronized trading in shares of various listed companies because it is only through synchronized tr through synchronized trading that the sellers are ensured accommodation entry ading that the sellers are ensured accommodation entry of bogus LTCG against cash and the buyers are ensured delivery of cash against of bogus LTCG against cash and the buyers are ensured delivery of cash against of bogus LTCG against cash and the buyers are ensured delivery of cash against such pre-determined purchase of shares. The buy and sell parties are well determined purchase of shares. The buy and sell parties are well determined purchase of shares. The buy and sell parties are well planned in this transaction, as only in such sce planned in this transaction, as only in such scenario, the cash is assured to the nario, the cash is assured to the buyer and sale proceeds share are assured in the bank account linked with buyer and sale proceeds share are assured in the bank account linked with buyer and sale proceeds share are assured in the bank account linked with demat account of seller. This is conclusive evidence of bogus LTCG and demat account of seller. This is conclusive evidence of bogus LTCG and demat account of seller. This is conclusive evidence of bogus LTCG and synchronized trading. Furthermore, other kind of Digital Data including synchronized trading. Furthermore, other kind of Digital Data including synchronized trading. Furthermore, other kind of Digital Data including incriminating MS Excel files, incriminating Word Files, WhatsApp Chats/Images minating MS Excel files, incriminating Word Files, WhatsApp Chats/Images minating MS Excel files, incriminating Word Files, WhatsApp Chats/Images and documents including Khata and documents including Khata-Bahis were also found and duly analysed. Bahis were also found and duly analysed. Stamps and bank account of various persons were also found in possession of Stamps and bank account of various persons were also found in possession of Stamps and bank account of various persons were also found in possession of accommodation i) Company does not ex ) Company does not exist at its address. Therefore, it lacks identity as ist at its address. Therefore, it lacks identity as well as genuineness. well as genuineness. ii) Evidence of exchange of cash against accommodation entries of bogus ii) Evidence of exchange of cash against accommodation entries of bogus ii) Evidence of exchange of cash against accommodation entries of bogus LTCG are found LTCG are found iii) Cyclic Rise and Fall of Price without any change in Market and/or iii) Cyclic Rise and Fall of Price without any change in Market and/or iii) Cyclic Rise and Fall of Price without any change in Market and/or Fundamentals of the compa Fundamentals of the company indicates fabricated trading. ny indicates fabricated trading. iv) Incoherent Volume vs. Trades and their ratio. It happened in case of iv) Incoherent Volume vs. Trades and their ratio. It happened in case of iv) Incoherent Volume vs. Trades and their ratio. It happened in case of price manipulation. price manipulation. v) Very high Delivery based Volume which indicates deliveries are v) Very high Delivery based Volume which indicates deliveries are v) Very high Delivery based Volume which indicates deliveries are deliberately. taken for purpose of generating fake LTCG; deliberately. taken for purpose of generating fake LTCG; deliberately. taken for purpose of generating fake LTCG; vi) Trades at Same Price during the day on many trading days. It indicates des at Same Price during the day on many trading days. It indicates des at Same Price during the day on many trading days. It indicates fabricated trades; fabricated trades;

Smt. Rekha Modi, 9 ITA No. 650, 651 and 652 650, 651 and 652/MUM/2026

vii) Time Different Analysis lead to finding that large volume and trades vii) Time Different Analysis lead to finding that large volume and trades vii) Time Different Analysis lead to finding that large volume and trades occurred in very small occurred in very small-time window i.e. Time difference between passive time window i.e. Time difference between passive order and trade. It ind order and trade. It indicates synchronized trading: viii) Meagre Order vs. Trade ratio indicates synchronized trading: viii) Meagre Order vs. Trade ratio indicates synchronized trading: viii) Meagre Order vs. Trade ratio indicates synchronized trading: ix) Selected group of clients making high trade volume in last 30 minutes Selected group of clients making high trade volume in last 30 minutes Selected group of clients making high trade volume in last 30 minutes indicates close price of the scrip was manipulated to move in a particular indicates close price of the scrip was manipulated to move in a particular indicates close price of the scrip was manipulated to move in a particular direction: x) Small group of clients mainly responsible for intra x) Small group of clients mainly responsible for intra- -day price movement both Higher side and/or Lower side: both Higher side and/or Lower side: xi) Many beneficiaries have traded in the scrip and contributed turnover of xi) Many beneficiaries have traded in the scrip and contributed turnover of xi) Many beneficiaries have traded in the scrip and contributed turnover of more than 100 Crores: more than 100 Crores: xii) SEBI has passed adverse orders w.r.t. share xii) SEBI has passed adverse orders w.r.t. shareholding of the scrip, which holding of the scrip, which shows that its shareholding has been rigged to provide bogus LTCG and shows that its shareholding has been rigged to provide bogus LTCG and shows that its shareholding has been rigged to provide bogus LTCG and contrived losses: contrived losses: xiii) Jignesh Shah and Umang Shah (accountant of Sanjay Shah) have xiii) Jignesh Shah and Umang Shah (accountant of Sanjay Shah) have xiii) Jignesh Shah and Umang Shah (accountant of Sanjay Shah) have admitted that the scrip has been used for providing accommodation entries admitted that the scrip has been used for providing accommodation entries admitted that the scrip has been used for providing accommodation entries of bogus LTCG against cash from beneficiaries. of bogus LTCG against cash from beneficiaries. Further, on perusal of financials of the company, it is noticed that despite a Further, on perusal of financials of the company, it is noticed that despite a Further, on perusal of financials of the company, it is noticed that despite a negative reserve and surplus, the company has managed to get long term negative reserve and surplus, the company has managed to get long term negative reserve and surplus, the company has managed to get long term borrowings of Rs 3.8 Cr which has not been used for the pu borrowings of Rs 3.8 Cr which has not been used for the pu borrowings of Rs 3.8 Cr which has not been used for the purposes of business but has been used for giving away short business but has been used for giving away short-term advances and is term advances and is shown as trade receivables. The company is showing revenue of Rs 62.89 shown as trade receivables. The company is showing revenue of Rs 62.89 shown as trade receivables. The company is showing revenue of Rs 62.89 lacs against which it is claiming purchases of Rs 54.13 lacs. The against which it is claiming purchases of Rs 54.13 lacs. The against which it is claiming purchases of Rs 54.13 lacs. The administrative expenses are also meagre administrative expenses are also meagre of Rs 7.04 lac and the major part of Rs 7.04 lac and the major part of it amounting to Rs 4.20 lac is towards salary which means that the of it amounting to Rs 4.20 lac is towards salary which means that the of it amounting to Rs 4.20 lac is towards salary which means that the monthly outlay towards salary expenses if only Rs 35,000 which further monthly outlay towards salary expenses if only Rs 35,000 which further monthly outlay towards salary expenses if only Rs 35,000 which further proves that there is no employee who is working in this company. All these proves that there is no employee who is working in this company. All these proves that there is no employee who is working in this company. All these facts prove that the company Safal Herbs Ltd is not engaged in any prove that the company Safal Herbs Ltd is not engaged in any prove that the company Safal Herbs Ltd is not engaged in any genuine business activity. genuine business activity. In the instant case, the appellant was found to be the beneficiary who made the In the instant case, the appellant was found to be the beneficiary who made the In the instant case, the appellant was found to be the beneficiary who made the transaction in shares of scrip M/s. Safal Herbs Ltd. (Parikh Herbals Ltd.) during transaction in shares of scrip M/s. Safal Herbs Ltd. (Parikh Herbals Ltd.) during transaction in shares of scrip M/s. Safal Herbs Ltd. (Parikh Herbals Ltd.) during the F.Y. 2012-13 relevant to A.Y. 2013 13 relevant to A.Y. 2013-14. A thorough inquiry was carried out by 14. A thorough inquiry was carried out by the Investigation Wing, Ahmedabad and after being verifying all the aspects the Investigation Wing, Ahmedabad and after being verifying all the aspects the Investigation Wing, Ahmedabad and after being verifying all the aspects regarding the incriminating documents unearthed during the course of search regarding the incriminating documents unearthed during the course of search regarding the incriminating documents unearthed during the course of search action, it was declared that action, it was declared that the transactions were accommodation entries the transactions were accommodation entries provided by the bogus. companies and tangible material appears to have been provided by the bogus. companies and tangible material appears to have been provided by the bogus. companies and tangible material appears to have been there on record. It is well known that in such cases, the "test of human there on record. It is well known that in such cases, the "test of human there on record. It is well known that in such cases, the "test of human probabilities" must be applied to discern the true nature of t probabilities" must be applied to discern the true nature of the transaction. When he transaction. When seen in the light of surrounding circumstances and modus operandi unearthed in seen in the light of surrounding circumstances and modus operandi unearthed in seen in the light of surrounding circumstances and modus operandi unearthed in

Smt. Rekha Modi, 10 ITA No. 650, 651 and 652 650, 651 and 652/MUM/2026

similar cases, it is clear that such transactions are pre similar cases, it is clear that such transactions are pre-arranged and managed arranged and managed only to provide accommodation entries in the guise of capital gains. only to provide accommodation entries in the guise of capital gains. only to provide accommodation entries in the guise of capital gains. 7.3.4 Faced with the situation, after having considered the totality of facts and aced with the situation, after having considered the totality of facts and aced with the situation, after having considered the totality of facts and circumstances of the case. I am of the considered opinion the AO has rightly circumstances of the case. I am of the considered opinion the AO has rightly circumstances of the case. I am of the considered opinion the AO has rightly made the addition of Rs. 37,44.772/ made the addition of Rs. 37,44.772/- being unexplained money u/s 69A of the being unexplained money u/s 69A of the Act. Therefore, I found no i Act. Therefore, I found no infirmity in upholding the addition made by the AO. nfirmity in upholding the addition made by the AO. Ground No. 3 is dismissed.” Accordingly, Ground No. 3 is dismissed 10. Before us, the learned counsel for the assessee invited our Before us, the learned counsel for the assessee invited our Before us, the learned counsel for the assessee invited our attention to the contract notes, demat records and other attention to the contract notes, demat records and other attention to the contract notes, demat records and other documentary evidence placed in the paper bo documentary evidence placed in the paper book. It was submitted ok. It was submitted that the purchases and sales of shares of both companies were that the purchases and sales of shares of both companies were that the purchases and sales of shares of both companies were effected through a registered stock broker on the electronic platform effected through a registered stock broker on the electronic platform effected through a registered stock broker on the electronic platform of the Bombay Stock Exchange. It was contended that neither the of the Bombay Stock Exchange. It was contended that neither the of the Bombay Stock Exchange. It was contended that neither the AO AO AO nor nor nor the the the Ld. Ld. Ld. CIT(A) CIT(A) CIT(A) brought brought brought any any any material mater mater on record demonstrating the assessee’s participation in any accommodation demonstrating the assessee’s participation in any accommodation demonstrating the assessee’s participation in any accommodation entry arrangement or establishing any nexus between the assessee entry arrangement or establishing any nexus between the assessee entry arrangement or establishing any nexus between the assessee and the alleged operators involved in manipulation of the scrips. and the alleged operators involved in manipulation of the scrips. and the alleged operators involved in manipulation of the scrips. According to the assessee, the addition had bee According to the assessee, the addition had been made merely on n made merely on suspicion arising from unusual price movements in the shares. suspicion arising from unusual price movements in the shares. suspicion arising from unusual price movements in the shares.

Smt. Rekha Modi, 11 ITA No. 650, 651 and 652 650, 651 and 652/MUM/2026

circumstances suggesting misuse of the scrips by accommodation circumstances suggesting misuse of the scrips by accommodation circumstances suggesting misuse of the scrips by accommodation entry operators. However, a careful examination of the assessment entry operators. However, a careful examination of the assessment entry operators. However, a careful examination of the assessment order reveals that no direct evidence whatsoever has been brought order reveals that no direct evidence whatsoever has been brought order reveals that no direct evidence whatsoever has been brought on record to establish that the assess on record to establish that the assessee herself was a participant in ee herself was a participant in such alleged accommodation such alleged accommodation-entry mechanism. Before an addition efore an addition can be sustained, there must exist cogent material demonstrating a can be sustained, there must exist cogent material demonstrating a can be sustained, there must exist cogent material demonstrating a live nexus between the assessee and the alleged fraudulent live nexus between the assessee and the alleged fraudulent live nexus between the assessee and the alleged fraudulent arrangement. Generalized observatio arrangement. Generalized observations regarding manipulation in a ns regarding manipulation in a particular scrip cannot, by themselves, justify an adverse inference particular scrip cannot, by themselves, justify an adverse inference particular scrip cannot, by themselves, justify an adverse inference against every investor who has traded therein. against every investor who has traded therein.

11.1 In the present case, the assessee has furnished documentary In the present case, the assessee has furnished documentary In the present case, the assessee has furnished documentary evidence showing that the shares were purch evidence showing that the shares were purchased and sold through ased and sold through a recognized stock exchange platform through a registered broker. a recognized stock exchange platform through a registered broker. a recognized stock exchange platform through a registered broker. the Ld. Counsel for the assessee filed a copy of contract notes for the Ld. Counsel for the assessee filed a copy of contract notes for the Ld. Counsel for the assessee filed a copy of contract notes for purchase and sale of the shares of M/s ACI Infocom Limited issued purchase and sale of the shares of M/s ACI Infocom Limited issued purchase and sale of the shares of M/s ACI Infocom Limited issued by the Nirmal Bang Securities Ltd. by the Nirmal Bang Securities Ltd. which are available on Page which are available on Page No.26-71 and filed contract notes for purchase and sale of the 71 and filed contract notes for purchase and sale of the 71 and filed contract notes for purchase and sale of the shares of M/s Safal Herbs Limited which are available paper book shares of M/s Safal Herbs Limited which are available paper book shares of M/s Safal Herbs Limited which are available paper book Page 72-128.Thus, t 128.Thus, the transactions are supported by contract he transactions are supported by contract notes and other contemporaneous record notes and other contemporaneous records. The Revenue has not s. The Revenue has not brought on record any evidence indicating that the assessee brought on record any evidence indicating that the assessee brought on record any evidence indicating that the assessee purchased shares through preferential allotment, off-market purchased shares through preferential allotment, off purchased shares through preferential allotment, off transactions, cash dealings, entry operators, or any other transactions, cash dealings, entry operators, or any other transactions, cash dealings, entry operators, or any other mechanism suggestive of accommodation entries. Likewise, no mechanism suggestive of accommodation entries. Likewis mechanism suggestive of accommodation entries. Likewis

Smt. Rekha Modi, 12 ITA No. 650, 651 and 652 650, 651 and 652/MUM/2026

material has been produced to show that any cash was paid by the material has been produced to show that any cash was paid by the material has been produced to show that any cash was paid by the assessee in lieu of obtaining the sale proceeds. assessee in lieu of obtaining the sale proceeds.

11.2 The entire addition has thus been founded on the premise that The entire addition has thus been founded on the premise that The entire addition has thus been founded on the premise that the concerned scrips were allegedly used by certain unscrupulous the concerned scrips were allegedly used by certain unscrupulous the concerned scrips were allegedly used by certain unscrupulous persons for providing accommodation entries. While such material sons for providing accommodation entries. While such material sons for providing accommodation entries. While such material may justify further inquiry, it cannot, in the absence of independent may justify further inquiry, it cannot, in the absence of independent may justify further inquiry, it cannot, in the absence of independent evidence connecting the assessee with the alleged scheme, evidence connecting the assessee with the alleged scheme, evidence connecting the assessee with the alleged scheme, constitute constitute constitute a a a sufficient sufficient sufficient basis basis basis for for for treating treating treating the the the entire entire entire sale sale sale consideration received by the assessee as unexplained money under ration received by the assessee as unexplained money under ration received by the assessee as unexplained money under section 69A of the Act. section 69A of the Act.

11.3 In our considered opinion, both the lower authorities failed to In our considered opinion, both the lower authorities failed to In our considered opinion, both the lower authorities failed to bring any substantive material on record demonstrating the actual bring any substantive material on record demonstrating the actual bring any substantive material on record demonstrating the actual involvement of the assessee in the al involvement of the assessee in the alleged accommodation leged accommodation-entry racket. Consequently, the addition of racket. Consequently, the addition of ₹37,44,772/ 37,44,772/- cannot be sustained. Accordingly, the orders of the lower authorities on this Accordingly, the orders of the lower authorities on this Accordingly, the orders of the lower authorities on this issue are set aside and the addition made under section 69A of the issue are set aside and the addition made under section 69A of the issue are set aside and the addition made under section 69A of the Act is hereby deleted. Act is hereby deleted.

Addition under the Head “Income from Other Sources” under the Head “Income from Other Sources” under the Head “Income from Other Sources” 12. Insofar as the addition of Insofar as the addition of ₹5,240/- under the head “Income under the head “Income from Other Sources” is concerned, we find that the issue requires from Other Sources” is concerned, we find that the issue requires from Other Sources” is concerned, we find that the issue requires factual verification. The assessee is required to explain the nature factual verification. The assessee is required to explain the nature factual verification. The assessee is required to explain the nature and source of the receipt corresponding to the tax deducted at and source of the receipt corresponding to the tax deducted at and source of the receipt corresponding to the tax deducted at source and demonstrate whet source and demonstrate whether the related income has been duly her the related income has been duly

Smt. Rekha Modi, 13 ITA No. 650, 651 and 652 650, 651 and 652/MUM/2026

offered to tax. Since the relevant factual details are not available on Since the relevant factual details are not available on Since the relevant factual details are not available on record, we deem it appropriate to restore this issue to the file of the record, we deem it appropriate to restore this issue to the file of the record, we deem it appropriate to restore this issue to the file of the AO for fresh examination. The assessee shall be at liberty to furnish AO for fresh examination. The assessee shall be at liberty to furnish AO for fresh examination. The assessee shall be at liberty to furnish all relevant documents and explanations in support of her claim, elevant documents and explanations in support of her claim, elevant documents and explanations in support of her claim, and the AO shall decide the issue afresh in accordance with law and the AO shall decide the issue afresh in accordance with law and the AO shall decide the issue afresh in accordance with law after affording reasonable opportunity of hearing to the assessee. after affording reasonable opportunity of hearing to the assessee. after affording reasonable opportunity of hearing to the assessee. Accordingly, Ground No. 4 is allowed for statistical purposes. Accordingly, Ground No. 4 is allowed for statistical purposes Accordingly, Ground No. 4 is allowed for statistical purposes

Grounds Challenging Reassessment Proceedings Grounds Challenging Reassessment Proceedings 13. Ground Nos. 1 and 2 challenge the validity of the Ground Nos. 1 and 2 challenge the validity of the Ground Nos. 1 and 2 challenge the validity of the reassessment proceedings. Since the substantive addition forming reassessment proceedings. Since the substantive addition forming reassessment proceedings. Since the substantive addition forming the basis of the reassessment has already been deleted on merits, the basis of the reassessment has already been deleted on merits, the basis of the reassessment has already been deleted on merits, adjudication of these grou adjudication of these grounds is rendered academic for the present nds is rendered academic for the present purpose. We, therefore, refrain from expressing any opinion on the We, therefore, refrain from expressing any opinion on the We, therefore, refrain from expressing any opinion on the legality of the reassessment proceedings and leave the said grounds legality of the reassessment proceedings and leave the said grounds legality of the reassessment proceedings and leave the said grounds open.

Appeals for Assessment Years 2015 Appeals for Assessment Years 2015-16 and 2016-17 14. The grounds raised in The grounds raised in ITA Nos. 651/Mum/2026 and ITA Nos. 651/Mum/2026 and 652/Mum/2026 involve identical issues arising out of substantially 652/Mum/2026 involve identical issues arising out of substantially 652/Mum/2026 involve identical issues arising out of substantially similar facts. The additions in those years have also been made on similar facts. The additions in those years have also been made on similar facts. The additions in those years have also been made on the basis of alleged accommodation entries through penny-stock the basis of alleged accommodation entries through penny the basis of alleged accommodation entries through penny transactions. Since the facts an Since the facts and circumstances are materially d circumstances are materially similar to those considered by us for Assessment Year 2013-14, our similar to those considered by us for Assessment Year 2013 similar to those considered by us for Assessment Year 2013 findings and conclusions hereinabove shall apply findings and conclusions hereinabove shall apply mutatis mutandis mutatis mutandis

Smt. Rekha Modi, 14 ITA No. 650, 651 and 652 650, 651 and 652/MUM/2026

to those appeals as well. Consequently, the additions sustained by to those appeals as well. Consequently, the additions sustained by to those appeals as well. Consequently, the additions sustained by the lower authorities in the lower authorities in those years are also deleted. those years are also deleted.

(i) the appeal of the assessee for Assessment Year 2013-14 is partly (i) the appeal of the assessee for Assessment Year 2013 (i) the appeal of the assessee for Assessment Year 2013 allowed for statistical purposes allowed for statistical purposes;

(ii) the appeals of the assessee for Assessment Years 2015-16 and (ii) the appeals of the assessee for Assessment Years 2015 (ii) the appeals of the assessee for Assessment Years 2015 2016-17 are allowed. .

Order pronounce ounced in the open Court on 23/06 06/2026.

Sd/- - Sd/ Sd/- (ANIKESH BANERJEE ANIKESH BANERJEE) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 23/06/2026 M. Ranganath Vittal , Sr. P.S. M. Ranganath Vittal , Sr. P.S.

Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai