INCOME TAX OFFICER, NEW DELHI vs. ARTI ARORA, LAJPAT NAGAR, NEW DELHI

Brief facts of the case are that assessee is an individual and not filed her return of income. Subsequently, the case was re-opened u/s 147 of the Act and notice u/s 148 was issued on 30.03.2021 based on the information received by AO that during the year under appeal, assessee has sold shares of M/s Life Line Drugs & Pharma Ltd. (“LDPL”) and claimed Long Term Capital Gain (“LTCG”) of INR 1,56,86,090/- as exempt income u/s 10(38) of the Act however, as per the information available with the AO, the capital gain was bogus. The assessee had not filed any return of income in response to the notice issued u/s 148 on 07.03.2022. The assessee has filed her ITR on 07.03.2022 declaring total income of INR 6,29,590/-. The AO observed that the assessee has neither filed any return of income u/s 139(1) of the Act nor within the time provided in the notice issued u/s 148 of the Act nor in response to notice issued u/s 142(1) and only at the fag-end of the proceedings, had filed the return of income on 07.03.2022 therefore, the return of income so filed was not accepted by the AO and the assessment was completed by making an addition of INR 1,56,86,090/- treating the LTCG as unexplained money of the assessee u/s 69A of the Act.

Against the said order, assessee filed an appeal before Ld. CIT(A) who vide order dated 03.06.2024, partly allowed the appeal of the assessee accepting the detailed written submissions filed by the assessee. Ld. CIT(A) has reproduced the submissions filed by the assessee at pages 5 to 55 of the appellate order and thereafter, proceeded to decide the appeal of the assessee wherein legal Grounds

Aggrieved by the order of Ld. CIT(A), Revenue is in appeal before the Tribunal by taking various Grounds of appeal which are as under: (a) “On the facts and in the circumstances of the case whether the Id. CIT(A) erred in deleting the addition of Rs. 1,56,86,090/- made by the AO as unaccounted money u/s 69A of the Act. (b) Whether on the facts & under the circumstances of the case, the Id. CIT(A) is justified in holding that the evidence collected by the AO during the assessment proceedings were merely conjecture and surmise without appreciating that the AO had concrete evidence to prove that the transaction reflected in the accounts of the assessee is unexplained during the period. (c) The appellant reserves right to add, alter or amend the grounds of appeal on or before the date of disposal of appeal.”

Both the effective Grounds of appeal are with respect to the deletion of additions made u/s 69A of the Act of INR 1,56,86,090/-.

On the other hand, Ld. AR for the assessee vehemently supported the order of AO and submits that the assessee before the AO during the course of assessment proceedings, had filed all the necessary details to establish the transaction of sale of shares in LDPL as genuine such as copy of purchases and sales invoices, DMAT A/c statement, bank statements etc. in terms of reply dt. 09.03.2022 through online portal, copy of acknowledgment of e-filing portal and its Annexures are placed at pages 150 to 170 of the Paper Book. As submitted above, the said Annexure contained copy of the DEMAT account statement of the assessee, copy of purchase bill, copy of share certificate, copy of the sale bills and the bank statements of the assessee. Ld. AR submits that no additional evidence whatsoever was filed before Ld. CIT(A) and therefore, there is no occasion with ld. CIT(A) to obtain Remand Report from the AO. Ld.AR further submits that the assessee has discharged the burden casted upon to it of explaining each and every aspect of the transaction of sale of shares to prove the genuineness of the LTCG declared, which facts were duly appreciated by ld. CIT(A) and deleted the additions. He further submits that the opportunity of cross- examination of the alleged entry operator whose statements were relied upon by the AO for alleging the LTCG as bogus, has not been granted to the assessee. Ld.AR further submits that under identical circumstances, Long Term Capital Gain earned from the sale of

Heard the contentions of both parties at length and perused the material available on record. It is observed that though the assessee has not appeared on many occasions nor participated in reassessment proceedings before the AO however, the fact remained that she had filed all the details via e-filing portal on 09.03.2022 of purchases of shares and its subsequent sale alongwith DEMAT a/s statement and bank statement etc. Once the assessee has discharged the burden, AO has to made independent enquiries and verification if he has doubts about the details so filed. Ld. CIT(A) appreciated these facts and deleted the additions by observing in para 5.2.5 to 5.2.29 as under:-

It is observed that while deleting the additions, Ld. CIT(A) has appreciated the facts that assessee has filed all the details with respect to the purchase and sale of shares and further placed reliance on the judgement of various High Courts wherein the additions made under identical circumstances were deleted. It is further observed that the Co-ordinate Bench of the Tribunal in the case of Anoop Jain (supra) has held that trading in the LDPL shares as genuine. Before us, the Revenue has failed to controverted the findings given by Ld. CIT(A) nor any material/evidence was placed on record to dislodge or controvert the genuineness of conclusive documentary evidences produced by the assessee in support of his claim.

It is relevant to state that LDPL, now known as Arihant Multi Commercial Ltd, is not a paper company nor a shell company. In F.Y. Page | 24

It is also a matter of fact that neither which is borne out from the assessment order itself that the assessee nor his brokers were referred anywhere as illegitimate beneficiaries of bogus long term capital gain in any of the alleged statements of the operators/broker or reports/orders of the SEBI or the Investigation Wing as relied upon by the AO.

The Hon'ble Supreme Court in the case of Adamine Construction Pvt Ltd reported in [2018] 99 Taxmann 45 while dismissing the appeal, made the following observations: "What is evident is that the AO went by only the report received and did not make the necessary further enquiries - such as into the bank accounts or other particulars available with him but rather received the entire findings on the report, which cannot be considered as primary material. Page | 25

In the case of Odeon Builders Pvt Ltd reported in 110 Taxmann.com 64, held as under: "However, on going through the judgments of the CIT, ITAT and the High Court, we find that on merits a disallowance of Rs.19,39,60,866/- was based solely on third party information, which was not subjected to any further scrutiny. Thus, the ld. CIT(A) allowed the appeal of the assessee stating: "Thus, the entire disallowance in this case is based on third party information gathered by the Investigation Wing of the Department, which have not been independently subjected to further verification by the AO who has not provided the copy of such statements to the appellant, thus denying opportunity of cross examination to the appellant, who has prima facie discharged the initial burden of substantiating the purchases through various documentation including purchase bills, transportation bills, confirmed copy of accounts and the fact of payment through cheques, & VAT Registration of the sellers & their Income Tax Return. In view of the above discussion in totality, the purchases made by the appellant from M/s Padmesh Realtors Pvt. Ltd. is found to be acceptable and the consequent disallowance resulting in addition to income made for Rs.19,39,60,866/-, is directed to be deleted." 4. The ITAT by its judgment dated 16th May, 2014 relied on the self-same reasoning and dismissed the appeal of the revenue. Likewise, the High Court by the impugned judgment dated 5th July, 2017, affirmed the judgments of the CIT and ITAT as concurrent factual findings, which have not been shown to be perverse and, therefore, dismissed the appeal stating that no substantial question of law arises from the impugned order of the ITAT. 5. In these circumstances, the Review Petitions are dismissed."

The Hon'ble Delhi High Court in the case of Fair Invest Ltd reported in 357 ITR 146 has held as under: "6. This Court has considered the submissions of the parties. In this case the discussion by the CIT(Appeals) would reveal that the assessee has filed documents including certified copies issued by Page | 26

The Co-ordinate bench of Delhi Tribunal in the case of Anoop Jain (supra) and later in the case of Ritu Jain Vs. ACIT reported in 124 Taxmann.com 440 has held the LTCH form the sale of shares of LDPL as genuine.

In view of above discussion and by respectfully following the aforesaid judgements of Hon’ble Apex Court, Hon’ble Jurisdictional High Court and Co-ordinate Bench of Tribunal, we hold that Ld. CIT(A) has rightly deleted the additions, more particularly, when the opportunity of cross-examination was also not provided to the assessee despite of specific request and without rebutting the overwhelming evidences filed by the assessee to prove the transaction of sale of shares of LDPL as genuine. Accordingly, both the Grounds of appeal raised by the Revenue are dismissed.

In the result, appeal of the Revenue is dismissed. Order pronounced in the open Court on 22.05.2026. Sd/- Sd/- (ANUBHAV SHARMA) (MANISH AGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Date:- 22.05.2026 *Amit Kumar, Sr.P.S* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT 6. Guard File ASSISTANT REGISTRAR ITAT, NEW DELHI