DCIT CC1 4 KOLKATA, KOLKATA vs. SHAMMI AGARWAL, KOLKATA

ITA 2671/KOL/2025Status: DisposedITAT Kolkata07 October 2026AY 2015-1610 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had discharged the onus by furnishing documentary evidence, including share application forms, cheques for purchase, bank statements, demat statements, and Form 20B. The Tribunal noted that GCM Securities Limited was a SEBI-approved, BSE-listed company with growing assets. The AO's addition was based on the Directorate of Investigation's report without specific evidence linking the assessee to manipulation. The Tribunal also relied on the ITAT Kolkata's decision in the case of Smt. Rachna Agarwal, a family member of the assessee, which involved identical facts and the same scrip, where the addition was deleted. The Tribunal found no infirmity in the CIT(A)'s order and held that the lower authorities were not justified in not allowing the exemption under Section 10(38). Accordingly, the Tribunal set aside the CIT(A)'s order and directed the AO to allow the exemption and delete the consequential addition.

What were the facts?

The Revenue is in appeal against the order of the CIT(A) for Assessment Year 2015-16. The assessee, an individual, reported Long Term Capital Gain (LTCG) of ₹79,21,754/- from the sale of 1,20,000 equity shares of M/s GCM Securities Limited, purchased for ₹2,40,000/-, and claimed it as exempt under Section 10(38). The Assessing Officer (AO), relying on a report from the Directorate of Investigation alleging GCM Securities Limited as a "penny stock" used for generating bogus LTCG, treated the entire gain as an unexplained cash credit and added it to the assessee's total income under Section 68 read with Section 115BBE. The CIT(A) allowed the assessee's appeal, deleting the addition.

What were the issues?

1. Whether the Ld. CIT(A) was correct in deleting the addition of ₹79,21,754/- under Section 68 of the Income Tax Act, 1961, on account of the alleged bogus sale of shares of a company managed by an accommodation entry operator, despite the findings of the Investigation Wing and the AO. Assessee's Contention: The assessee discharged the primary onus by providing complete documentary evidence of identity, genuineness of transactions, and creditworthiness. The AO's addition was based on the Investigation Wing's findings without specific material connecting the assessee to manipulation. GCM Securities Limited was a profit-making company with substantial assets. The assessee also relied on the ITAT Kolkata's decision in the case of a family member, Smt. Rachna Agarwal, on identical facts. Revenue's Contention: The Ld. CIT(A) erred in relying solely on routing confirmations and banking transactions, ignoring the Investigation Wing's findings, the AO's analysis, and surrounding facts that indicated the assessee routed unaccounted money as bogus LTCG. The CIT(A) was also incorrect in deleting the addition on the ground of no cross-examination opportunity, as the CIT(A) has powers to conduct inquiries. The deletion was also contrary to the jurisdictional High Court's precedent in PCIT v. Swati Bajaj and ITAT's decision in PCIT V Zulu merchandise Pvt. Ltd.

Which sections of the Income-tax Act were involved?

Section 10(38),Section 68,Section 115BBE,Section 143(3),Section 250(4)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, KOLKATA

Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey

Per Pradip Kumar Choubey, Judicial Member:

This appeal filed by the Revenue is directed against the order dated 16.09.2025 of the Office of the Commissioner of Income Tax, Appeal passed under Section 143(3) of the Assessment Year 2015-16 of the Income-Tax Act, 1961 (hereinafter referred to as “the Act”).

2.

The brief facts of the case of the revenue is that the assessee is an

The order continues below.

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