ITO.WARD.6(2), KOLKATA., KOLKATA vs. JUDICIOUS FINVEST PVT. LTD., KOLKATA

ITA 2134/KOL/2026Status: DisposedITAT Kolkata07 October 2026AY 2018-1910 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal dismissed the Revenue's appeal. The Tribunal found no infirmity in the order of the CIT(A). The assessee, a non-banking financial company, had invested Rs. 3,00,00,000/- in JM Balanced Fund via account payee cheque and received dividend income. The Tribunal noted that the assessee incurred a Short Term Capital Loss of Rs. 2,54,51,554/- from the sale of JM Balance Fund and JM Equity Fund, and earned dividend income of Rs. 3,13,41,581/-. The assessee had disallowed the STCL of Rs. 2,50,31,484/- under Section 94(7). The Tribunal observed that the investments were made in the open market, supported by mutual fund statements and banking channels, with the source of funds being the assessee's own money. There was no borrowed fund used. The purchase and sale transactions were in the open market, and there was no bar from SEBI. The Tribunal concluded that the transactions were genuine and there was no loss of revenue as the assessee had disallowed the loss under Section 94(7). Therefore, the CIT(A)'s deletion of the disallowance and addition was upheld.

What were the facts?

The Revenue appealed the order of the National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year 2018-19. The assessee, Judicious Finvest Pvt. Ltd., a company, filed its return declaring an income of Rs. 76,84,740/-. The Assessing Officer (AO) reopened the case under Section 147, alleging fictitious Long Term Capital Gains (LTCG) of Rs. 1,21,54,720/- from JM Equity Hybrid Fund. The AO noted the assessee had set off Short Term Capital Loss (STCL) of Rs. 4,20,068/- from sham transactions and added Rs. 5,09,030/- as deemed commission under Section 69C, considering the transactions as accommodation entries. The CIT(A) allowed the assessee's appeal, deleting the additions.

What were the issues?

1. Whether the CIT(A) erred in deleting the addition of Rs. 4,20,068/- on account of Short Term Capital Loss, which the AO treated as arising from sham transactions and disallowed the set-off against other capital gains, and also disallowed the addition of Rs. 5,09,030/- made under Section 69C as deemed commission, contrary to the material evidence? (Mixed question of law and fact, concerning Sections 147, 143(3), 69C). Assessee's Contention (as per CIT(A)'s order): The assessee argued that the AO's action of making an addition of Rs. 5,09,030/- on account of deemed commission under Section 69C was contrary to the material evidence. The assessee claimed to have invested Rs. 3,00,00,000/- in JM Balanced Fund by account payee cheque and received dividend income. The assessee stated that the alleged fictitious LTCG was actually a STCL of Rs. 1,21,54,720/-, which was added back under Section 94(7). The STCL of Rs. 4,20,068/- arose from transactions with JM Financial Asset Management Ltd. The assessee contended that these were genuine transactions made in the open market, supported by documentation, and the source of funds was its own. The assessee relied on judicial precedents like *Deputy Commissioner of Income-tax v. CMS Computers Ltd.*. Revenue's Contention (as per Tribunal's order): The Revenue contended that the CIT(A) erred in deleting the disallowance of Rs. 4,20,068/- and the addition of Rs. 5,09,030/- under Section 69C without considering judicial principles laid down in *Sumati Dayal vs CIT* and *CIT vs Durga Prasad More*. The Revenue also argued that the case fell under exceptional clause 3.1(h) of CBDT Circular No. 5/2024, making it eligible for appeal on merits despite the tax effect being below the monetary limit.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(3),Section 148,Section 142(1),Section 94(7),Section 69C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” 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 28.10.2025 of the Office of the National Faceless Appeal Centre (NFAC), Delhi passed under Section 147r.w.s143(3) of the Assessment Year 2018-19 of the Income-Tax Act, 1961 (hereinafter referred to as “the Act”).

2.

At the very outset, it appe

The order continues below.

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