DINESH MAHESHWARI,MUMBAI vs. ACIT, THANE

ORDER \nPER NARENDRA KUMAR BILLAIYA, AM:\nThis appeal by the assessee is preferred against the order dated\n04/07/2025 by NFAC, Delhi [hereinafter “the ld. CIT(A)"] pertaining to\nAY 2014-15.\n2. The grievance of the assessee reads as under:-\n\"1. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A)\nhas erred in making additions to the returned income without appreciation of facts of\nthe case and without application of mind to the discussions/ submissions filed by the\nappellant during the course of assessment proceedings.\n2. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A)\nhas erred in making addition in income of Long Term Capital Gain of Rs.26,88,625\nwhich are exempt U/s 10 (38) mere on the allegation that this is the part of Penny Stock\nof Companies.\n3. The Ld. CIT(A) has erred on the facts and in the circumstances of the case and\nin law in not appreciating that the aforesaid LTCG has been earned by the appellant in\nthe normal course and should not be added as unexplained Cash Credit u/s 68 of the\nAct.\"\n3. Representatives of both the sides were heard at length. Case records\ncarefully and the relevant documentary evidence brought on record duly\nconsidered in light of Rule 18(6) of the ITAT Rules, 1963.\n4. Briefly stated the facts of the case are that the assessee electronically\nfiled his return of income on 27/03/2015 declaring total income at Rs.\n61,19,320/-. The return was processed u/s 143(1) of the Act and\nsubsequently selected for scrutiny assessment under CASS and\naccordingly statutory notices were issued and served upon the assessee.\n5. During the course of scrutiny proceedings, the AO noticed that the\nassessee has claimed long term capital gain on sale of shares of KDJ\nHolidayscapes & Resorts (formerly known as Gomti Finlease) and M/s.\nJayanta Mercantile. The transactions can be understood from the\nfollowing chart:-\nParticulars\nM/s. KDJ Holidayscape and\nResorts (formerly known as\nGomti Finlease)\nM/s. Jayant\nMercantile\nTotal Amount\n(in rupees)\nAmount (in\nrupees)\nQuantity\nAmount\n(in rupees)\nQuantity\nSales\n7300\n22,59,908/-\n33500\n7,12,559/-\nPurchase\n7300\n1,64,162/-\n33500\n1,19,680/-\n(out of purchase\nof 7700 shares)\nLong Term\nCapital\nGain\n20,95,746/-\n5,92,879/-\n26,88,625/-\n5.

1. The assessee carried the matter before the ld. CIT(A) but without\nany success.\n7. We have given a thoughtful consideration to the orders of the\nauthorities below. Merely because the assessee had the windfall gain from\nthe sale of the impugned scrips would not suggest that the assessee has\nindulged in some clandestine activity.\n8. The assessee is a Chartered Accountant well-versed with the stock-\nexchange activities and is a habitual investor. Statement of the assessee\nrecorded on 13/12/2016 shows that the assessee has categorically\nexplained the purchase and sale of the impugned scrips. The manner in\nwhich the shares were purchased, name of the broker. In his statement,\nthe assessee also explained that the entire transaction was done through\nD-mat account, copy of which is available on record. The assessee also\nexplained why he purchased shares of M/s. KDJ Holidayscapes & Resorts\nand M/s. Jayanta Mercantile. Since the assessee was a qualified Chartered\nAccountant, he was purchasing shares of other companies also as is\nevident from the answer given to Query 15 and explained that he has been\nbuying shares through Indianivesh Securities Ltd., and being a Chartered\nAccountant, was familiar with investments in shares.\n9. Other than the general report of the investigation wing Kolkata, the\nAO has not brought any evidence on record to suggest that the assessee\nwas actively engaged in manipulating the share prices of the impugned\nshares nor is it the case of the AO that the shares were not traded on the\nstock-exchange at the given sale-price nor it is the case of the AO that the\nshares were transacted offline and not from D-mat account. The only\nadverse finding given by the AO is because of the windfall gains made by\nthe assessee.\n10. In our considered opinion, the suspicion of the AO cannot partake\nthe colour of sham transactions. We also find that there is no investigation\ndone by SEBI neither in respect of the impugned scrips nor in respect of\nthe broker i.e., Indianivesh Securities Ltd.\n11. The Co-ordinate Bench in the case of ITO vs. Chirania Trading LLP,\nMumbai in AY 2012-13, order dated 30/10/2024, had\nthe occasion to consider the case of KDJ Holidayscapes & Resorts Ltd. and\ninteralia held as under:-\n“In our view, the Assessee had discharged the primary onus by explaining the\npurchase/sale transaction and filing all supporting documents and details. We note that\nthe Assessee had furnished Share Purchase Agreement, Open Offer document, contract\nnotes for sale of shares, demat account statement, ledger accounts, and bank statements\nto substantiate the genuineness of the purchase/sale transactions. The Appellant had\nalso filed valuation report of Yashvi Securities Limited, CRISIL Report dated\n31/03/2016, financial projections, loan sanctioning letter dated 14/03/2014 issued by\nState Bank of India etc. to show business operation of KDJH. We note that the Assessing\nOfficer has also failed to point out any defect or infirmity in the aforesaid\ndocuments/explanation furnished by the Assessee. The Assessing Officer has also failed\nto bring on record any material to shift the onus back to the Assessee.\nOn the other hand the CIT(A) has observed that the shares were purchased in the\nnormal course and were duly reflected in the financial statements of the Assessee for\ncorresponding period. We note that it is not even disputed by the Revenue that the\nshares were sold through stock exchange and/or that the same were held for more than\n12 months.\n(h) Further, the CIT(A) has granted relief to the Assessee and deleted the addition by\nplacing reliance, inter alia, upon the decision of Co-ordinate Bench of the Tribunal in\nthe case of ITO v Jimeet Modi [ITA 4297/M/2018, dated 29.07.2021] and Karishma\nAjay Agarwal Vs. ITO, Ward - 21(2)(1), Mumbai [ITA No. 2586/Mum/2022, dated\n02.03.2023] wherein additions in respect of consideration from sale of shares of KDJH\nin somewhat similar circumstances were deleted by the Tribunal. In our view, the\nAssessee stands on a better footing as per the recitation of relevant facts hereinabove.\n10.