SINDHUMATI RAMAVTAR PATHAK,MUMBAI vs. INCOME TAX OFFICER 32 3 4 MUMBAI , MUMBAI

ITA 6334/MUM/2025Status: DisposedITAT Mumbai30 September 2026AY 2014-1513 pages
AI SummaryAllowed

What were the facts?

The assessee, Sindhumati Ramavtar Pathak, filed her return of income for Assessment Year 2014-15, declaring a total income of Rs. 8,24,270/-. The Assessing Officer (AO), ITO – 32(3)(4), Mumbai, selected the return for scrutiny based on information from the Investigation Wing regarding suspected long-term capital gains (LTCG) on shares. The assessee had purchased shares of M/s Conart Traders Ltd. which were later amalgamated with M/s Sunrise Asian Ltd. She sold 11,300 shares of Sunrise Asian Ltd. for Rs. 55,66,000/-, disclosing an LTCG of Rs. 53,40,000/- and claiming exemption under section 10(38). The AO, suspecting accommodation entries, treated the entire sale consideration of Rs. 55,66,000/- as an unexplained cash credit under section 68 of the Income Tax Act, 1961, increasing the total income to Rs. 63,90,270/-. The Commissioner of Income Tax Appeals (CIT(A)) upheld the AO's action. The assessee appealed to the Income Tax Appellate Tribunal (ITAT).

What did the Tribunal hold?

The Tribunal held that the assessee had discharged her primary onus under section 68 of the Act by furnishing relevant documentary evidence, including purchase bills, bank statements, DP statements, and broker notes, to establish her claim of LTCG. The Tribunal noted that the AO had no corroborating material to make the addition, relying solely on investigation reports and SEBI reports, without any evidence of the assessee's own money being routed back or any nexus with price rigging. The Tribunal found that no action had ever been taken against the assessee by SEBI or any investigation agency. The Tribunal respectfully relied on the orders of the Hon'ble Supreme Court in PCIT vs. Smt. Renu Aggarwal and the decision of the jurisdictional High Court, as well as a Co-ordinate Bench of the ITAT in the assessee's own case for a different assessment year, which had similar facts and circumstances. The Tribunal also noted that the scrip involved had been subject to adjudication in other cases, resulting in the deletion of identical additions. Consequently, the Tribunal set aside the order of the CIT(A) and directed the AO to delete the entire addition of Rs. 55,66,000/- made under section 68 of the Act. The grounds raised by the assessee were allowed. The Tribunal expressly left undecided any issue related to interest under sections 234A, 234B, and 234C, as the substantive addition was deleted.

What were the issues?

1. Whether the Tribunal had to decide if the long-term capital gains of Rs. 55,66,000/- were to be treated as unexplained cash credit under section 68 of the Income Tax Act, 1961, as held by the AO and sustained by the CIT(A), or if the assessee had discharged her primary onus by providing documentary evidence. The assessee argued that she is a regular investor in shares, the transaction was supported by contemporaneous documentary evidence (share certificate, bank statements, amalgamation order, broker's note), and the AO and CIT(A) failed to deal with these evidences. She also contended that adverse material was not confronted and cross-examination was not provided, violating principles of natural justice. The assessee relied on her status as a regular investor and the fact that SEBI had not taken any adverse action. The revenue, through the AO and CIT(A), treated the LTCG as non-genuine and an accommodation entry based on investigation reports and statements, without appreciating the documentary evidence provided by the assessee. The revenue also relied on the statement of certain persons with whom the assessee had no transaction. The Tribunal also considered whether the decision of a non-jurisdictional High Court on a similar scrip should prevail over the jurisdictional High Court's decision or the Supreme Court's decision in the absence of specific evidence of the assessee's money being routed back or nexus with price rigging.

Which sections of the Income-tax Act were involved?

Section 68,Section 10(38),Section 234A,Section 234B,Section 234C,Section 69C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, MUMBAI

Before: SHRI NARENDER KUMAR CHOUDHRY, JM & SHRI ARUN KHODPIA, AM

For Appellant: Ms. Shivali Mhatre, Adv, Shri Ajay Soneji, Sr. DR
Hearing: 30.09.2026

Per Arun Khodpia, AM: This appeal is filed by the assessee against the order of the Commissioner of Income Tax Appeals, Addl/JCIT(A) – 4, Kolkata [in short, “the Ld. CIT(A)”], dated 22.08.2025 for the Assessment Year (AY) 2014-15, arises from the assessment order under section 143(3) of the Income Tax Act, 1961 [in short, “the Act”] dated 29.12.2016, passed by ITO – 32(3)(4), Mumbai [in short, “the Ld. AO”]. The grounds of appeal raised by the assessee are as under: Sindhumati Ramavtar Pathak “1. The Ld. Addl/Joint Commissioner Income Tax (Appeal)- 4 K

The order continues below.

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