HETAL VINODCHANDRA SHETH,AHMEDABAD vs. THE ITO, WARD-5(3)(1), AHMEDABAD

ITA 2370/AHD/2025Status: DisposedITAT Ahmedabad16 October 2026AY 2014-158 pages
AI SummaryDismissed

What were the facts?

The assessee, Hetal Vinodchandra Sheth, filed her return for Assessment Year 2014-15 declaring long-term capital gain of Rs. 2,75,462/- claimed as exempt under Section 10(38). Reassessment proceedings were initiated based on information from DDIT (Investigation) regarding accommodation entry providers and penny-stock activities, specifically involving M/s Safal Herbs Ltd. (formerly Parikh Herbals Ltd.). The assessee had transactions in this scrip during FY 2012-13. A notice under Section 148 was issued on March 31, 2021. The assessee filed a revised return with the same particulars. The Assessing Officer (AO) completed the assessment on March 28, 2022, making an addition of Rs. 2,76,264/- under Section 68 read with Section 115BBE. The CIT(A) dismissed the assessee's appeal. The assessee is now in appeal before the ITAT against the CIT(A)'s order and the penalty imposed under Section 271(1)(c).

What did the Tribunal hold?

The Tribunal upheld the addition of Rs. 2,76,264/- made under Section 68 read with Section 115BBE. The Tribunal noted that the addition was based on investigation findings concerning the scrip being used for accommodation entries and that the CIT(A) had considered the investigation material and surrounding circumstances, including abnormal price appreciation and the assessee's lack of similar investment activity. The Tribunal referred to various co-ordinate bench decisions which held that the genuineness of share transactions cannot be determined solely by routing through the stock exchange and banking channels, but also requires consideration of surrounding circumstances, financial profile, market behavior, investigation findings, and the assessee's conduct. The assessee failed to provide material to controvert the investigation findings or distinguish her case from precedents. Consequently, the addition was upheld, and the grounds in ITA No. 2369/Ahd/2025 were dismissed. Regarding ITA No. 2370/Ahd/2025, since the quantum addition was upheld, the basis for the penalty under Section 271(1)(c) subsisted. Despite the transactions being disclosed, they were found to be non-genuine. Therefore, the penalty was also confirmed, and the grounds were dismissed. The Tribunal found no infirmity in the CIT(A)'s order confirming the penalty.

What were the issues?

1. Whether the addition of Rs. 2,76,264/- as unexplained cash credit under Section 68 read with Section 115BBE, treating long-term capital gain on sale of shares claimed as exempt under Section 10(38) as bogus, is valid, considering the assessee's claim of genuine transactions through the stock exchange supported by contract notes, demat statements, and banking transactions, and the contention that the addition was based on investigation material and third-party statements without an opportunity for cross-examination. (Assessee's contention: transactions were genuine; addition was illegal due to lack of cross-examination. Revenue's contention: surrounding circumstances and investigation findings established accommodation entries.) 2. Whether the penalty of Rs. 85,370/- imposed under Section 271(1)(c) for alleged bogus long-term capital gain is justified, given that the addition forming the basis of the penalty has been upheld. (Assessee's contention: not explicitly stated for penalty, but implied by challenging the quantum addition. Revenue's contention: penalty is justified as the addition has been upheld.)

Which sections of the Income-tax Act were involved?

Section 10(38),Section 68,Section 115BBE,Section 147,Section 144,Section 144B,Section 148,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

Before: DR. B.R.R. KUMAR, VICE-

For Appellant: Shri S.N. Divatia, AR &, Shri Samir Vora, AR
For Respondent: Shri Amit Pratap Singh, Sr. DR
Hearing: 14.09.2026Pronounced: 16.10.2026

The present two appeals have been preferred by the assessee against the orders of the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, both dated 01.08.2025, passed for Assessment Year 2014-15. ITA No. 2369/Ahd/2025 arises from the reassessment proceedings under Sections 147 r.ws. 144 r.w.s. 144B of the Income-tax Act, 1961 (hereinafter referred to as “the Act”); whereas ITA No.2370/Ahd/2025 arises from the penalty imposed under Section 271(1)(c) of the Act.

2.

The assessee has taken following grounds of appeal in ITA No.2369/Ahd/2025:- “1.1 The order passed u/s. 250 on 01.08.2025 for A.Y

The order continues below.

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