INCOME TAX OFFICER, WARD-3(3)(2), AHMEDABAD, AHMEDABAD vs. MANAN ARATI PATEL, AHMEDABAD

ITA 923/AHD/2026Status: DisposedITAT Ahmedabad06 October 2026AY 2022-238 pages
AI SummaryAllowed

What were the facts?

The Revenue appealed against an order of the NFAC, Delhi, for Assessment Year 2022-23. The assessee filed an original return declaring Rs. 131,04,21,050/- and a revised return of Rs. 130,97,79,670/-. The Assessing Officer (AO) selected the case for scrutiny to examine short-term capital gains under Section 111A and deductions under Section 54 against long-term capital gains. The assessee received Rs. 153,74,42,250/- from selling 87,000 shares of Vini Cosmetics Private Limited (VCPL), disclosing LTCG of Rs. 153,50,81,981/-. The AO treated the entire sale consideration as an unexplained cash credit and made other additions, assessing total income at Rs. 161,51,21,966/-. The CIT(A) partly allowed the assessee's appeal, deleting the addition of Rs. 153,74,42,250/-.

What did the Tribunal hold?

The Tribunal held that the AO was incorrect in treating the investment in VCPL shares as unsubstantiated or bogus and the sale proceeds as unexplained credit. The assessee had provided substantial evidence, including a share purchase agreement dated 19.06.2021 involving Cosmos Asia Holdings II PTE Ltd., Singapore, as the buyer. The assessee's name appeared in the agreement for the purchase of 87,000 shares held jointly with his mother. A de-mat account statement showed the transfer of these shares on 15.07.2021. A certificate of foreign inward remittance confirmed the receipt of USD 20,644,872.70 (equivalent to INR 153,74,42,250/-) from the buyer. Form No. 20B filed by VCPL with the MCA listed the assessee as a shareholder. Crucially, a dematerialization request form indicated shares were submitted for dematerialization on 14.03.2013, and de-mat statements from 25.03.2013 onwards showed the shares in the assessee's account. The Tribunal found that the Ld. CIT(A) had rightly appreciated these facts. The addition under Section 68 was deleted.

What were the issues?

1. Whether the Ld. CIT(A) erred in law and facts by deleting the addition of Rs. 153,74,42,250/- made under Section 68 of the Income Tax Act, 1961, and considering it as Long Term Capital Gain, when the assessee allegedly failed to submit valid justification and documentary evidence for the credit in the bank account. Assessee's Contention: The shares were purchased in 2011, and while not all original documents were readily available due to the time lapse, the physical shares were dematerialized, which would not be possible with an unsigned certificate. The unsigned certificate was for internal purposes. Approval under FEMA was obtained for the transfer to a non-resident entity. The CIT(A) rightly appreciated the facts and granted relief. Revenue's Contention: The assessee failed to establish proof of ownership of VCPL shares. The share certificate dated 26.07.2011 was unsigned. The assessee did not provide share application forms, allotment advice, evidence of payment for purchase in 2011, or share transfer forms. Therefore, the AO correctly treated the sale proceeds as unexplained.

Which sections of the Income-tax Act were involved?

Section 68,Section 111A,Section 54,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD

Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri Dhinal Shah, AR
For Respondent: Shri R. V. Aroon Prasad, CIT-DR
Hearing: 29.07.2026Pronounced: 06.10.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal is filed by the Revenue against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 27.01.2026 for the Assessment Year (A.Y.) 2022-23 in the proceeding u/s. 143(3) of the Income Tax Act [hereinafter referred as “the Act”].

2.

The brief facts of the case are that the assessee filed original return of income for A. Y. 2022-23 on 29.07.2022 declaring total income of Rs.131,04,21,050/- Thereafter, a revised return was filed on 08.10.2022 declaring total income of Rs. 130,97,79,670/-. The case was selected for ITO Vs Manan Arati Patel, AY- 2022-23 2 scrutiny to examine th

The order continues below.

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