BIRENDRA SINGH NIRBHAY,SIRSI ROAD JAIPUR RAJASTHAN vs. ITO WARD 3(1) JAIPUR, NCRB INCOME TAX DEPARTMENT STATUE CIRCLE JAIPUR RAJASTHAN

ITA 704/JPR/2024Status: DisposedITAT Jaipur09 October 2025AY 2015-1640 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal allowed the assessee's appeal on both grounds. Regarding the first issue, the Tribunal found that the assessee had provided sufficient evidence of genuine transactions. The acquisition of shares through cheque payment, credit in the Demat account, online sale on the stock exchange with STT payment, and the fact that 'Channel Nine Entertainment Limited' was a listed and tradable company, even at the time of assessment, supported the genuineness. The Tribunal noted that SEBI's orders did not point to violations by the company and that the capital acquired through the IPO process was not considered invalid. Therefore, the Tribunal disagreed with the CIT(A)'s findings and held that the LTCG claimed as exempt under Section 10(38) could not be disbelieved. The addition under Section 68 was deleted. On the second issue, the Tribunal noted that the assessee had made real sales transactions and incurred only STT and brokerage charges, which were already reflected in the tax return. Therefore, the addition on account of unexplained expenditure for commission was not sustained, and the ground was allowed. The Tribunal directed the deletion of the addition.

What were the facts?

The assessee, Shri Birendra Singh Nirbhay, filed an appeal against the order of the CIT(A) for Assessment Year 2015-16. The appeal challenges the confirmation of a long-term capital gain (LTCG) of Rs. 27,87,561/- as unexplained cash credit and an addition of Rs. 1,23,680/- on account of assumed commission expenses. The assessee claims the LTCG arose from the sale of equity shares in 'Channel Nine Entertainment Limited', acquired through an account payee cheque payment and sold online via the Bombay Stock Exchange after paying Security Transaction Tax (STT). The transactions were routed through banking channels. The CIT(A) had confirmed the addition of LTCG as unexplained cash credit and reduced the commission expense addition from 6% to 4% of the sale proceeds.

What were the issues?

1. Whether the long-term capital gain of Rs. 27,87,561/- is to be treated as an unexplained cash credit under Section 68 of the Income Tax Act, 1961, or as a genuine exempt income under Section 10(38)? - Assessee's Contention: The assessee argued that the equity shares were acquired through a cheque payment to 'Channel Nine Entertainment Limited', credited to their Demat account with HDFC Securities Limited, and sold online on the Bombay Stock Exchange after paying STT. The transactions were routed through banking channels. The company is listed and tradable, and SEBI had not found violations related to it. - Revenue's Contention: The revenue, relying on investigation reports and statements of other beneficiaries, alleged that the LTCG was bogus, arising from artificial trading in penny stocks, and that commission was paid to entry providers. The CIT(A) treated it as an unexplained cash credit under Section 68. 2. Whether the addition of Rs. 1,23,680/- on account of assumed commission expenses is justified under Section 69C of the Income Tax Act, 1961? - Assessee's Contention: The assessee contended that since the transactions were genuine, no commission was paid for bogus entries, and only STT and brokerage charges, already reflected in the return, were incurred. - Revenue's Contention: The CIT(A) estimated 4% of the sale proceeds as commission paid for bogus LTCG entries, reducing it from the AO's estimate of 6%, and added it under Section 69C as unexplained expenditure.

Which sections of the Income-tax Act were involved?

Section 10(38),Section 68,Section 69C

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Income Tax Appellate Tribunal, JAIPUR BENCHES,”SMC” JAIPUR

Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM

For Respondent: Shri Shri Gautam Singh Choudhary, JCIT-DR
Hearing: 18/09/2025

PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal filed by the assessee is directed against the order of learned Commissioner of Income Tax, National Faceless Appeal Centre, Delhi[ for short CIT(A)] dated 30.03.2024 for the assessment year 2015-16 raising therein following grounds of appeal. "

1.

Rs.2787561/- The Id. CIT(A) has erred in law as well as on the facts of the case in confirming the long-term capital gain a

The order continues below.

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