AROKIASWAMY VELUMANI,BENGALURU vs. INCOME TAX OFFICER 15(3)(1), MUMBAI, MUMBAI

ITA 1946/MUM/2026Status: DisposedITAT Mumbai24 September 2026AY 2023-202415 pages
AI SummaryRemanded

What were the facts?

The assessee, Arokiaswamy Velumani, filed an appeal against the order of the NFAC, Delhi, for Assessment Year 2023-24. The impugned order upheld the addition made by the Assessing Officer (AO) under Section 143(3) r.w.s. 144B of the Income Tax Act, 1961. The assessee declared a total income of Rs. 4,46,76,590/-, which included a short-term capital loss (STCL) of Rs. 163,55,72,535/- on the sale of unlisted equity shares of API Holding Limited (AHL). The AO rejected this STCL, adding it back to the total income. The CIT(A) upheld the AO's decision, citing lack of commercial rationality, delay in demat transfer, and reliance on valuation reports without full disclosure. The assessee purchased shares for Rs. 171,76,90,845/- and sold them for Rs. 117,25,00,000/-, incurring the loss. The sale consideration was received on 06.09.2022, but the shares were transferred from the Demat account on 09.03.2023.

What did the Tribunal hold?

The Tribunal admitted the additional evidence filed by the assessee, which included Delivery Instruction Slips (DIS) dated 05.09.2022 and the Demat account statement. The Tribunal acknowledged that these documents were not available before the AO and required verification at the assessment stage. Therefore, the matter was set aside to the AO for the limited purpose of verifying the delivery/transfer of shares with reference to the additional evidence. The AO was directed to confine the examination strictly to this limited issue and afford the assessee a reasonable opportunity of being heard. The assessee was also directed to cooperate and furnish necessary documents. The Tribunal explicitly stated that it was not expressing any view on the merits of the claim at this stage. The Special Audit (SA) was dismissed as infructuous. The appeal was allowed for statistical purposes.

What were the issues?

1. Whether the short-term capital loss claimed by the assessee on the sale of unlisted equity shares is genuine and allowable, considering the alleged lack of commercial rationality, delay in demat transfer, and reliance on valuation reports (Section 45 of the Income Tax Act, 1961). Assessee's contentions: - The assessee relied on two valuation reports, one from M/s. Sumati Healthcare Private Limited valuing shares at Rs. 33.50 per share as of 02.09.2022, and another from AHL. - The entire transaction was conducted through regular banking channels. - The sale was undertaken to mitigate further losses due to the declining value of shares. - The delay in demat transfer was due to Axis Bank, as evidenced by a letter from the bank. - The assessee submitted entire details, including valuation reports obtained from a registered valuer, and relied on the market price method used by the valuer. - The share subscription and sale transactions were genuine and bona fide. Revenue's contentions: - The AO questioned the necessity of selling shares at a loss, especially for an assessee from a high-income group, and in the absence of dire circumstances. - The AO noted a significant delay between the receipt of sale consideration (06.09.2022) and the transfer of shares from the Demat account (09.03.2023). - The AO rejected the STCL claim, adding it back to protect the interest of the revenue.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144B,Section 250,Section 45,Section 56(2)(x),Section 50CA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI

Before: SHRI ANIKESH BANERJEE & BIJAYANANDA PRUSETH

For Respondent: Shri Manoj Kumar (CIT-DR)

Heard together (2 matters)

ITA1946/MUM/2026
SA 94/MUM/2026

Read from the judgment's own cause title. This page is filed under one of them.

PER: SHRI ANIKESH BANERJEE, (JM): The instant appeal of the assessee filed against the order of NFAC, Delhi [for brevity “Ld. CIT(A)”], order passed under Section 250 of the Income Tax Act, 1961 (for brevity ‘the Act’), for Assessment Year 2023-24, date of order

ITA 1946/MUM/2026 AROKIASWAMY VELUMANI

30.01.

2026. The impugned order emanated from the order of the Assessment Unit, Income Tax Department (for

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 144B

All 10,344 judgments and leading authorities on Section 144B →

Recent GST High Court judgments

Search GST case law →