BHIVRAJ MOHANLAL JAIN,AKOLA vs. ITO WARD-2, , AKOLA

Per : Narender Kumar Choudhry, Judicial Member:

This appeal has been preferred by the Assessee against the order dated 18.04.2024, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2013-14.

“ That on examination of the material on record, it is clear that the Assessee is a participant in the artificial rigging of price of stocks of M/s. Priti Mercantile & Co. The Assessee being a beneficiary was accommodated by a group of operators for conversion of Assessee’s unexplained investment into account one under the guise of this penny stock trading. Hence, it is clear that the entire sale receipts of stocks of M/s. Priti Mercantile & Co. of Rs.4,93,589/- is nothing but the unexplained investment of the Assessee for the F.Y. 2012-13 relevant to the A.Y. 2013-14. Accordingly, the said amount of Rs.4,93,589/- is hereby treated is unexplained investment u/s 69 of the Act and added to the total income of the Assessee.”

“That no reply has been furnished by the Assessee during the assessment proceedings. The broker’s statement filed during the appellate proceedings, does not refute the findings of the assessment that there has been artificial rigging of the price of stock”.

Mr. Bhivraj Mohanlal Jain 6. This Court has given thoughtful considerations to the peculiar facts and circumstances of the case and the rival contentions of the parties. This Court observes that a search was conducted on Shri Rajkumar Modi, Director of M/s. Fincop Group on dated 11.10.2018 and on the basis of information received by the AO to the effect that the Assessee is one of the beneficiaries of accommodation entries of M/s. Priti Mercantile & Co. through manipulation of stock market and has sold shares to the extent of Rs.4,93,589/-, the case of the Assessee was reopened which ultimately resulted into making the addition of Rs.4,93,589/- u/s 69 of the Act. The Assessee before this Court has demonstrated that stock credit side total of scrip value in the broker ledger is of Rs.4,93,589/- and the debit side total of scrip is of Rs.4,92,747/-, so there is a marginal difference of Rs.842/-. However, at the time of assessment both the authorities below have considered the sale side of shares by sidelining the purchase price of the shares. The Assessee further produced a certificate dated 26.02.2025 issued by Joinder Capital Services Ltd. through whom the Assessee had made the transaction wherein it is certified that the Assessee had executed intraday transactions, between various trading sessions of BSE in the share of M/s. Priti Mercantile & Co. during the assessment year under consideration. The transactions were conducted between various BSE trading sessions during the period 05.02.2013 to 22.03.2013 and all transactions were purely intraday in nature, meaning thereby the purchase and sales of shares were executed on the same day. As the shares of M/s. Priti Mercantile & Co. were not held in delivery mode, hence no payment was required and therefore no banking transactions were necessary and based on the debit and credit transactions, a total profit of Rs.842/- was earned.

Mr. Bhivraj Mohanlal Jain 6. This Court observe that the aforesaid claim of the Assessee appears to be genuine and plausible as no direct material is available on record against the Assessee qua artificial rigging and/or any other allegation against the Assessee qua manipulation of shares. The Assessee has carried out the transactions from online platform of Bombay Stock Exchange and therefore the transactions cannot be doubted. Thus, on the aforesaid aspect, as both the authorities below have considered only sale price but not the purchase price and it is a fact that the Assessee in fact has earned only Rs.842/- by making the purchase and sale of shares, respectively to the tune of Rs.4,92,747/- and Rs.4,93,589/- and therefore the addition made by the AO and affirmed by the Ld. Commissioner, is unsustainable. Thus, the addition under consideration is deleted.

Order pronounced in the open court on 15.09.2025.