MR. UJJWAL,BENGALURU vs. ITO, WARD-5(2)(1), BANGALORE

ITA 809/BANG/2026Status: DisposedITAT Bangalore29 September 2026AY 2014-157 pages
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What were the facts?

The assessee, Mr. Ujjwal, filed his return for AY 2014-15 declaring an income of Rs.9,66,060/-. The Assessing Officer (AO) reopened the assessment under section 147, alleging bogus long-term capital gains (LTCG) of Rs.23,83,188/- from selling shares of Turbotech Engineering Ltd. The assessee had purchased these shares in physical form for Rs.10,000/- in cash and later sold them for Rs.24,02,500/-. The AO added Rs.23,93,188/- under section 68 as unexplained cash credit, Rs.1,19,659/- under section 69C for commission, Rs.10,000/- for share purchase, Rs.9,27,570/- under section 40A(2)(b) for related party payments, and Rs.80,170/- under section 269T for loan deposits. The CIT(A) upheld the AO's order. The assessee appealed to the ITAT.

What did the Tribunal hold?

The Tribunal held that the addition of Rs.23,93,188/- under section 68 was not sustainable. While the AO noted a significant price rise in Turbotech Engineering Ltd. shares and considered them penny stocks, the Tribunal found no material on record to demonstrate the assessee's involvement in price manipulation. The AO's addition was based on assumption and misconceived facts. The Tribunal noted that the shares were dematerialized, sold through a stock exchange after payment of STT, confirmed by a contract note, and sale proceeds were received through banking channels. There was no evidence of the assessee paying cash to any entry provider. Therefore, the Tribunal considered the assessee as a genuine investor acting in good faith. The order of the CIT(A) on this issue was set aside, and the AO was directed to delete the addition of Rs.23,93,188/-. The Tribunal also noted that Ground No.2 was not pressed and dismissed. Other grounds raised by the assessee were not argued and were consequently dismissed. The Tribunal did not decide on the additions made under sections 69C, 40A(2)(b), 269T, or the interest under sections 234A, 234B, and 234C as these grounds were not argued.

What were the issues?

1. Whether the reopening of assessment under section 147 was valid, given that it was based on generalized information and lacked specific tangible material demonstrating escapement of income, thus being based on suspicion and conjecture? (Assessee's contention: Yes, reopening is bad in law. Revenue's contention: Not recorded). 2. Whether the addition of Rs.23,93,188/- under section 68 as unexplained cash credit was justified, when the sale proceeds were received through banking channels, trades were through a recognized stock exchange with demat statements, contract notes, and broker confirmations, and the credits were explained? (Assessee's contention: Section 68 is inapplicable; addition is liable to be set aside. Revenue's contention: Relied on lower authorities). 3. Whether the addition of Rs.23,93,188/- under section 68 was valid when made purely on general observations regarding price rise and investigation reports, without cogent evidence linking the assessee to price manipulation? (Assessee's contention: Addition is based on suspicion and liable to be set aside. Revenue's contention: Relied on lower authorities). 4. Whether the addition of Rs.23,93,188/- under section 68 was valid when the AO relied on investigation reports and alleged broker statements without providing copies or an opportunity for cross-examination, violating principles of natural justice? (Assessee's contention: Violation of natural justice; addition liable to be set aside. Revenue's contention: Relied on lower authorities). 5. Whether the addition of Rs.1,19,659/- under section 69C for commission was justified, being ad hoc, based on hearsay and suspicion, without evidence of actual payment or expenditure? (Assessee's contention: Addition is liable to be set aside. Revenue's contention: Relied on lower authorities). 6. Whether the addition of Rs.10,000/- for cash paid for shares resulted in double taxation and was made without reason? (Assessee's contention: Addition is liable to be set aside. Revenue's contention: Relied on lower authorities). 7. Whether the disallowance of Rs.9,27,570/- under section 40A(2)(b) was justified, being arbitrary, unrelated to the assessee, and not appearing in documents, especially as the assessee is not carrying on business? (Assessee's contention: Disallowance is liable to be set aside. Revenue's contention: Relied on lower authorities). 8. Whether the addition of Rs.80,170/- under section 269T was justified, lacking factual foundation and being unrelated to the assessee? (Assessee's contention: Addition is liable to be set aside. Revenue's contention: Relied on lower authorities). 9. Whether the levy of interest under sections 234A, 234B, and 234C was correct when the assessee was not liable? (Assessee's contention: Interest levy is incorrect. Revenue's contention: Relied on lower authorities).

Which sections of the Income-tax Act were involved?

Section 147,Section 144B,Section 143(1),Section 148,Section 143(2),Section 142(1),Section 68,Section 69C,Section 40A(2)(b),Section 269T,Section 10(38),Section 234A,Section 234B,Section 234C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCHES, BANGALORE

Before: SHRI BALAKRISHNAN S & SHRI SOUNDARARAJAN K.

For Respondent: Shri. Pradeep S - Addl. CIT
Pronounced: 29.09.2026

PER SHRI BALAKRISHNAN S, ACCOUNTANT MEMBER:

This appeal is filed by the assessee against the order of Ld. Commissioner of Income Tax (Appeals), NFAC, vide DIN: ITBA/NFAC/S/250/2025-26/1083398687(1) dated 08-Dec-2025 for the Assessment Year 2014-15, arising out of the Order passed under section 147 r.w.s. 144B of the Act, dated 29.03.2022. 2. Briefly stated, the facts of the case are assessee fil

The order continues below.

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