ARVIND GUPTA,CHENNAI vs. ACIT, CENTRAL CIRCLE-1(1), CHENNAI

ITA 4103/CHNY/2025Status: DisposedITAT Chennai07 October 2026AY 2014-1552 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal dismissed the Revenue's appeals and allowed the assessee's appeal. Regarding the additions under Section 69 for AYs 2009-10 to 2015-16, the Tribunal found that the CIT(A) correctly deleted them. The Tribunal held that while statements from third parties and investigation reports can be intelligence inputs, they cannot, by themselves, prove that a particular assessee availed of a mechanism for accommodation entries. Tangible evidence linking the assessee to the alleged arrangement, such as evidence of cash payment, commission payment, statements from brokers or entry operators, or seized correspondence, was absent. The Tribunal noted that the assessee had furnished documentary evidence for the share transactions, including purchase consideration, transfer documents, demat statements, contract notes, broker ledger, and bank statements, routed through recognized stock exchanges and banking channels. The AO's doubt based on market price movement was insufficient to discard genuine documentary evidence. The Tribunal relied on the jurisdictional Madras High Court's decision in CIT vs. Sohanraj Uttamchand, which held that mere steep appreciation in share price does not justify treating capital gains as bogus if shares are traded on a recognized stock exchange, consideration is routed through banking channels, and there's no cogent finding of price manipulation complicity. Consequently, the addition of Rs. 6,22,49,095/- under Section 68 for AY 2014-15 was also deleted, as the Tribunal found no evidence linking the assessee to any manipulation or accommodation-entry arrangement in the sale of M/s. Surabhi Chemicals & Investments Ltd. shares.

What were the facts?

The Revenue filed appeals against two orders of the CIT(A) concerning Assessment Years (AYs) 2009-10 to 2015-16. The assessee, Shri Aravind Gupta, Managing Director of OPG Group, was subjected to a search and seizure operation on August 7, 2014. Based on statements recorded and investigations, the Assessing Officer (AO) alleged accommodation entries were used to introduce unaccounted money into OPG Group companies via share capital, premium, and application money. Consequently, additions were made under Section 69 for AYs 2009-10 to 2013-14 and 2015-16, and under Section 68 for AY 2014-15 concerning sale consideration of M/s. Surabhi Chemicals & Investments Ltd. shares. The assessee appealed to the CIT(A), arguing no incriminating material was found and additions were based on uncorroborated third-party statements. The CIT(A) deleted additions under Section 69 but confirmed the addition under Section 68 for AY 2014-15.

What were the issues?

1. Whether the CIT(A) erred in deleting additions of Rs. 17,32,00,000/- (AY 2009-10) to Rs. 2,56,91,585/- (AY 2015-16) made under Section 69, based on the finding that no incriminating material was unearthed during the search, when the assessment order indicated incriminating material was found at other premises and from directors? - Revenue argued that the CIT(A) erred by disregarding seized material and verified documents that corroborated the modus operandi confessed by Shri Khemkha, and that statements from Shri Khemkha and Shri Sudhir Singhi, which were not retracted, clearly indicated the routing of unaccounted money. Revenue also contended that the CIT(A) wrongly treated the Income Declaration Scheme (IDS) declaration as conclusive proof of nexus. - Assessee contended that additions were made solely on uncorroborated third-party statements without supporting evidence or cash trail, violating natural justice, and that no incriminating material was found during the search. For AY 2014-15, the assessee provided documentary evidence for share transactions. 2. Whether the CIT(A) erred in confirming the addition of Rs. 6,22,49,095/- made under Section 68 for AY 2014-15, by treating the sale consideration of M/s. Surabhi Chemicals & Investments Ltd. shares as unexplained cash credit, despite the assessee providing documentary evidence?

Which sections of the Income-tax Act were involved?

Section 132,Section 153A,Section 153B,Section 143(3),Section 69,Section 68,Section 10(38),Section 250

AI-generated summary — verify with the full judgment below

आयकर अपील"य अ"धकरण, ‘सी’ "यायपीठ, चे"नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI "ी जॉज" जॉज" के, उपा"य" एवं सु"ी प"मावती एस, लेखा सद"य के सम" BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT AND MS PADMAVATHY S, ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos.: 419, 420, 421, 422, 423, 424 & 425/CHNY/2026 "नधा"रण वष"/Assessment Years: 2009-10, 2010-11, 2011-12, 2012-13, 2013-14, 2014-15 & 2015-16 The Deputy Commissioner of Shri Aravind Gupta, Income Tax, Vs. 17, Bishop Garden Road, Central Circle-1(1) (i/c), Raja Annamalaipuram, Chennai-34. Chennai – 600 028. PAN: AAGPG 9530R (अपीलाथ"/Appellant) (""यथ"/Respondent) & आयकर अपील सं./ITA No.: 4103/CHNY/2025 "नधा"रण वष"/Assessment Years: 2014-15 Central Circle-1(1) (i/c), Chennai – 600 028. Chennai-34. PAN: AAGPG 9530R (अपीलाथ"/Appellant) (""यथ"/Respondent) राज"व क" ओर से /Revenue by : Ms. Nayani Swapna, CIT "नधा"रती क" ओर से/Assessee by : Shri B. Ramakrishnan, FCA सुनवाई क" तार"ख/Date of Hearing : 01.09.2026 घोषणा क" तार"ख/Date of Pronouncement : 07.10.2026 ITA Nos. 419 to 425/CHNY/2026 & Aravind Gupta

आदेश /O R D E

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