DCIT , NUNGAMBAKKAM vs. ARAVIND GUPTA, ANNAMALAIPURAM

ITA 419/CHNY/2026Status: DisposedITAT Chennai07 October 2026AY 2009-1052 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal dismissed the Revenue's appeals, upholding the CIT(A)'s deletion of additions made under Section 69 for AYs 2009-10 to 2015-16. The Tribunal found that while investigation reports provide intelligence, they cannot, by themselves, prove an assessee availed of a particular mechanism. Tangible evidence linking the general modus operandi to the assessee was absent, such as evidence of cash payment, commission payment, statements from brokers or purchasers admitting pre-arrangement, or statements from entry operators identifying the assessee's transaction. The Tribunal noted the assessee had furnished documentary evidence for share transactions routed through recognized stock exchanges via banking channels. The AO doubted the transactions due to market price movement but did not find the documentary evidence forged or fictitious. The Tribunal relied on the jurisdictional Madras High Court 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 by the assessee. The Tribunal also noted similar decisions from the Mumbai Bench concerning the same company's shares. Consequently, the addition of Rs. 6,22,49,095 made under Section 68 for AY 2014-15 was also deleted. The appeals filed by the Revenue were dismissed, and the appeal filed by the assessee was allowed.

What were the facts?

The Revenue filed appeals against orders of the CIT(A) that deleted additions made under Section 69 of the Income Tax Act, 1961, for Assessment Years (AYs) 2009-10 to 2015-16. The assessee, Shri Aravind Gupta, Managing Director of OPG Group, was subjected to a search operation on August 7, 2014. The Assessing Officer (AO) made additions based on alleged accommodation entries for introducing unaccounted money into OPG Group companies through share capital, premium, and application money. For AY 2014-15, the AO also added sale consideration from shares of M/s. Surabhi Chemicals & Investments Ltd. under Section 68, denying Section 10(38) exemption. The CIT(A) deleted Section 69 additions, finding no incriminating material and relying on third-party statements without corroboration, and also accepted explanations regarding IDS declarations. However, the CIT(A) confirmed the Section 68 addition for AY 2014-15, deeming the share transaction a penny stock.

What were the issues?

1. Whether the CIT(A) erred in deleting additions of Rs. 17,32,00,000 to Rs. 2,56,91,585 made under Section 69 for AYs 2009-10 to 2015-16, based on the finding that no incriminating evidence was unearthed during the search, despite the assessment order mentioning incriminating material found at premises of M/s. Gita Power Infra Pvt. Ltd. and Shri Sudhir Singhi (Director of OPG Power companies)? (Revenue's contention: Incriminating material was found. Assessee's contention: Additions were based on uncorroborated third-party statements without supporting evidence or cash trail, violating natural justice. CIT(A) held no incriminating material was found and additions were based on uncorroborated statements. The assessee also relied on IDS declarations as an explanation.) 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, after denying exemption under Section 10(38)? (Assessee's contention: Complete documentary evidence established genuineness of share purchase and sale. Revenue's contention: The transaction constituted a penny stock. CIT(A) confirmed the addition, holding it was a penny stock transaction.)

Which sections of the Income-tax Act were involved?

Section 132,Section 153A,Section 143(3),Section 153B(1)(b),Section 69,Section 68,Section 10(38),Section 250,Section 132(4)

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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