JOINT COMMISSIONER OF INCOME TAX, AJMER vs. VIJETA LODHA, JAIPUR

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ITA 390/JPR/2023Status: DisposedITAT Jaipur19 November 2025AY 2015-1637 pages
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What did the Tribunal hold?

The Tribunal held that the CIT(A) erred in deleting the addition of Rs. 65,63,180/- on account of LTCG. The Tribunal found no merit in the CIT(A)'s reliance on the Vigyan Lodha case without properly discussing the facts of the present case. The Tribunal noted that the AO had initiated proceedings based on information received and data available, and there was no requirement for cross-examination of witnesses. The Tribunal concluded that the LTCG claim was based on sham transactions and thus the addition was justified. Consequently, the addition of Rs. 1,42,604/- on account of commission paid for arranging accommodation entry for LTCG was also sustained, as it was consequential to the main addition. The Tribunal set aside the impugned order of the CIT(A) regarding these two additions. The judgment does not explicitly detail the findings on the STCG and its related commission, but the overall result indicates a partial allowance for the Revenue, implying these additions might also be revisited or sustained. The Tribunal ordered the Assessing Officer to make re-calculations in accordance with the decision.

What were the facts?

The Revenue is in appeal against an order dated 24.04.2023 passed by the CIT(A), NFAC. The assessee had appealed against an assessment order dated 26.12.2017 passed by the Deputy Commissioner of Income Tax, Circle-7, Jaipur, for Assessment Year 2015-16. The Assessing Officer (AO) had made four additions: Rs. 65,63,180/- on account of Long Term Capital Gain (LTCG) under Section 68, Rs. 1,42,604/- on account of commission paid under Section 69C, Rs. 7,765/- on account of Short Term Capital Gain (STCG) under Section 68, and Rs. 2,155/- on account of commission paid under Section 69C. The CIT(A) had deleted all four additions. The case was selected for scrutiny, and notices under Sections 143(2) and 142(1) were issued.

What were the issues?

1. Whether the addition of Rs. 65,63,180/- on account of LTCG is sustainable under Section 68 of the Income Tax Act, 1961, when the CIT(A) deleted it based on various judgments and a coordinate bench decision in DCIT vs. Vigyan Lodha (ITA No. 169/JP/2022)? The Revenue contends that the CIT(A) erred in deleting the addition without properly appreciating the facts and the modus operandi of bogus LTCG. The Assessee argues that the CIT(A) correctly applied the precedents. 2. Whether the addition of Rs. 1,42,604/- on account of commission paid for bogus LTCG is sustainable under Section 69C of the Act, given that the CIT(A) deleted it as consequential to the deletion of the main LTCG addition, relying on the Vigyan Lodha case? The Revenue argues that since the main LTCG addition is now being sustained, the consequential addition on account of commission should also be sustained. The Assessee argues that no commission was paid for genuine transactions. 3. Whether the addition of Rs. 7,765/- on account of STCG is sustainable under Section 68 of the Act? The Revenue contends that the CIT(A) erred in deleting this addition, which was based on the investigation report regarding UNISHREE Infra Company being a penny stock. The Assessee claims the shares were allotted through an IPO and not bogus entries. 4. Whether the addition of Rs. 2,155/- on account of commission paid for bogus STCG is sustainable under Section 69C of the Act? The Revenue argues this is consequential to the STCG addition. The Assessee argues no commission was paid.

Which sections of the Income-tax Act were involved?

Section 68,Section 69C,Section 143(2),Section 142(1),Section 10(38)

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Income Tax Appellate Tribunal, JAIPUR BENCHES,A-Bench JAIPUR

Before: SHRIGAGAN GOYAL, AM& SHRI NARINDER KUMAR, JM

52.

In view of the above discussion, reasons and findings, the impugned order passed by Learned CIT(A) deleting the addition of Rs. 65,63,180/- deserves to be set aside. We order accordingly.

Addition as regards payment of commission in arranging accommodation entry for LTCG of Rs. 65,63,180/-.

Vijeta Lodha, Jaipur.

53.

As noticed above, this addition was made by the Assessing Officer while observing that the assessee had failed to explain as to why any entity working in different cities would take so much pain in arranging bogus entry of LTCG without any benefit. In this regard, the Assessing Officer relied on what was unearthed on search/seizure operations conducted by the department in suchlike cases, including admissions by promoters/Directors of penny stock companies, share brokers to have provided bogus entries of LTCG in lieu of commission.

54.

In this regard, Learned CIT(A) simply relied on decision by Co- ordinate Bench, ITAT, Jaipur Bench in the case of Vigyan Lodha, ITA No.169/JP/2022. In said decision, it was observed that the issue was consequential to the issue of LTCG claim and that since a finding was recorded that transaction of purchase and sale of shares and consequential LTCG could not be treated as bogus, the addition on account of notional commission was not sustainable, being consequential.

55.

Herein, as noticed above, for the reasons recorded by us, the main addition made by the Assessing Officer has been sustained.

56.

Learned CIT(A) without narrating or discussing the facts of present case observed that the decision by the Co-ordinate Bench was applicable Vijeta Lodha, Jaipur. to the facts of this case. How could Learned CIT(A) so observe when he did not narrate the facts of this case or compare the same with the facts in the decision by the Co-ordinate Bench, even while dealing the main addition?

57.

When LTCG claim has been held to be bogus are based on sham transactions, there is no merit in the contention raised on behalf of the assessee that no such addition on account of payment of commission could be made. There is no explanation from the side of the assessee as to why any person or entity would provide suchlike accommodation entry without any charges, say commission herein.

Result

58.

As a result, the impugned order by Learned CIT(A) deleting the consequential addition of the amount of commission of Rs. 1,42,604/-paid by the assessee, deserves to be set aside.

Result

59.

Consequently, the appeal filed by the Revenue is partly allowed as regards the abovesaid two additions made by the Assessing Officer by File be consigned to the record room after the needful is done by the office. Order pronounced in the open court on 19/11/2025.

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