NISHANT PAREKH - LEGAL HEIR OF MINA PAREKH,JAMNAGAR vs. INCOME TAX OFFICER, WARD 1(3), JAMNAGAR

आयकर अपील�य अ�धकरण, राजकोट �यायपीठ, राजकोट। IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकरअपीलसं./ITA No. 196/RJT/2025 (�नधा�रणवष�/Assessment Year: (2012-13) Nishant Parekh – Legak Heir of Mina Income Tax Officer, wd – 1(3), Parekh Vs. Aayakar Bhavan, 322, Madhav Square, Opp. Avantika Jamnagar – 361001 Complex, Limda Lane Road, Jamnagar – 361001 �थायीलेखासं./जीआइआरसं./PAN/GIR No.: AANPP9471F (अपीलाथ�/Assessee) (��यथ�/Respondent)

Assessee by : Shri Sagar Shah, Ld. AR Respondent by : Shri Abhimanyu Singh Yadav, Ld. Sr. DR Date of Hearing : 08/10/2025 : 13/10/2025 Date of Pronouncement ORDER Per, Dr. Arjun Lal Saini, A.M.:

Captioned appeal filed by the assessee, pertaining to Assessment Year 2012- 13, is directed against the order passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by National Faceless Appeal Centre (NFAC), Delhi/Commissioner of Income-tax (Appeals), dated 26.02.2025, which in turn arises out of an order passed by the Assessing Officer u/s 147 of the Act, on 20.09.2021.

ITA No. 196/Rjt/2025 Nishant Parekh 2. Although, this appeal filed by the Assessee, for Assessment Year 2012-13, contains multiple ground of appeals. However, at the time of hearing we have carefully perused all the grounds raised by the Assessee. We find that most of the grounds raised by the Assessee, are either academic in nature or contentious in nature. However, to meet the end of justice, we confine ourselves to the core of the controversy and main grievances of the Assessee. With this background, we summarize and concise the grounds raised by the Assessee, as follows:

(i) The order passed by the Ld. Fassessing officer as well as order passed by National Faceless Appeal Centre under Section 250 is bad in law as well as on facts as the order passed by the Ld. Fassessing officer as well as order passed by National Faceless Appeal Centre under Section 250 has not proved his onus unlike assessee who already proved his onus that claim of exempt Long Term Capital Gain u/s. 10(38) is backed by third party evidence ( bills, invoices, contract note, D- mate, STT paid, purchase share through banking channel) and after fulfilment of all the conditions laid down under the provision of section 10(38), moreover, the script “Tuni Textile Ltd” is covered in favour of assessee by the decision of ITAT-Rajkot”

(ii) The order passed by the Ld. Fassessing officer as well as order passed by National Faceless Appeal Centre under Section 250 is bad in law as well as on the facts as it has erred in making additions under Sections 69 of the Income Tax Act, 1961, amounting to 27,50,000/- and alleging unexplained investments and unexplained money, respectively without considering the fact that the assessee duly furnished documentary evidence from the third party including bank statements and confirmation from the loan party, substantiating the sources of the investments made for the purchase of immovable property (shop). The assessee has verifiable and lawful sources for the investments, which stand fully explained as received from M/s Parekh Brothers. Proprietary concern of the husband's firm which can be evident from the contra ledger and bank statement. 3. Now we shall adjudicate the above, summarised and concise grounds of the assessee, one by one, as follows:

ITA No. 196/Rjt/2025 Nishant Parekh Assessment Year 2013-14, order dated 31.07.2024 whereby the issue relating to Long term capital gain, in respect of a script of Tuni Textile, has been discussed and adjudicated in favour of assessee. Learned Counsel for the assessee submitted that the present appeal is squarely covered by the aforesaid order of the Tribunal, a copy of which was also placed before the Bench.

“11. We have given our thoughtful consideration to rival contention. We have perused case file as well as paper books furnished by assessee. We note that assessee purchased 8,500 shares of Tuni Textile on 04.08.2010 from the M/s Sharukh N Tara for the sum of Rs. 1,65,048.36/-, the details are given below: Particulars Amount Share Purchase Amount 1,57,250/- Security Transaction Tax 20.56/- Shares Transaction Expense 7777.80 Total 1,65,048.36/- The assessee submitted copy of contract note received from M/s Sharukh N. Tara, vide paper book page no.14 to 15.Immediately after purchasing the shares a request letter regarding demat account details was duly sent to assessee by the Broker M/s. Sharukh N. Tara which is placed at paper book page no. 16.The assessee, also submitted Balance Sheet along with the Schedule of Investments for the financial year 2009-2010 wherein the Investment in shares of KGN is evident. The assessee has also explained, the source of purchase stating that it is from, income generated from sale proceed of various shares sold on 14.07.2010, 20.07.2010, 26.07.2010, 30.07.2010 (Evident from the sale contact notes and ledger account of M/s. Sharukh N. Tara enclosed at paper page no.19 to 27, and such sale of shares are already taxed in the relevant Assessment Year i.e. 2011-12, vide ITR and Computation of Income at paper book page no.28 to 30. Out of the sale proceeds, the shares of Tuni Textiles were purchased which is also evident from the contra ledger

ITA No. 196/Rjt/2025 Nishant Parekh account of the Broker attached. Therefore, we note that assessee has explained the source of purchase of shares in a satisfactory manner.

12.The assessee held the shares for more than 12 months of the period which is evident through the below mentioned table. Script Name Purchase Date Sale Date Period of Holding in Months

KGN 15.04.08 04.02.13 58 Tuni textile 04.08.10 15.05.12 21 Tuni textile 04.08.10 16.05.12 21 Tuni textile 04.08.10 28.05.12 22 Tuni textile 04.08.10 04.06.12 22 Tuni textile 04.08.10 05.06.12 22

The assessee has sold the shares of Tuni Textiles & KGN during F.Y. 2012-13 and the transactions carried out by the assessee through ANS Private Limited who is SEBI registered Stockbroker. The details of the transactions are as follows:

ITA No. 196/Rjt/2025 Nishant Parekh

We find that assessee submitted a copy of Contract Note & Ledger, which is placed at paper book page no.32 to 37.A copy of bank statements reflecting the Sale of Shares i.e. Receipts as mentioned in the above table are attached from page nos. 38 to 40 of the assessee`s paper book.The assessee held shares of KGN and Tuni Textiles and sold the same shares which is evident from the copy of Transaction Statement from period 01.04.2012 to 31.03.2013, vide paper book page no.41 to 43. We find that assessee has submitted above Plethora documents and evidences to support the purchase and sale transaction, however,we note that assessing officer has not refuted or discredited these evidences and documents. The assessing officer does not mention why he is not accepting these evidences.On the contrary, the assessing officer has just brushed aside these evidences without even a word on why they are not acceptable. It is a well settled Law that when an assessee has all the possible evidence in support of its claim, they cannot be brushed aside based on surmises.

13.Thus, the above-mentioned facts have been duly complied with in case of the assessee and thus, the assessee can duly claim exemption u/s 10(38) of the Act. The Hon`ble Gujarat High Court in the case of PCIT v. Champalal Gopiram Agarwal, R/TAXAPPEAL NO, 366 OF 2023 JULY25,2023, held that the Tribunal found that assessee had discharged the initial burden cast upon it under provisions of section 68. Shares of companies were purchased online, payments were made through banking channels, and shares were dematerialized. Additionally, the shares were transferred from the dematerialized account and received consideration through legitimate banking channels. The assessing officer did not have any independent source or evidence to show an agreement between the assessee and any other party to convert unaccounted money by taking the fictitious loss. The decision of assessing officer was unsupported by any material on record, and the finding was purely on an assumption basis. Thus, no substantial question of law arose from the order of the Tribunal, and the same was to be upheld. We note that the assessee submitted the following documents and evidences, before the assessing officer viz: (i) copy of contract note received from M/s Sharukh N. Tara (vide Pb. 14 to 15), (ii) Request letter regarding demat account details (vide Pb. 16), (iii) balance sheet along with the Schedule of Investments for the financial 5

ITA No. 196/Rjt/2025 Nishant Parekh year 2009 to 2010 (vide Pb. 17 to 18), (iv) Sale contract notes and ledger account of M/s Sharukh N. Tara of Shares – Source of purchase (vide Pb. 19 to 27), (v) ITR and computation of income of AY.2011-12 (vide PB. 28 to 30), (vi) Notice dated 07.04.2011 issued by BSE about subdivision of the shares from one share into 10 shares (vide Pb. 32 to 37), (vii) Contract note & ledger reflecting sale of shares (vide Pb. 32 to 37), (viii) Bank statements reflecting sale of shares (vide Pb. 38 to 40) and (ix) transaction statement from period 01.04.2012 to 31.03.2013 (vide Pb. 83 to 99).We note that by submitting the above documents and evidences, the assessee has proved that the transaction was done through the banking channel and that satisfied the condition mentioned in section 10(38) of the Act, moreover the period of holding is also 22 months. The Learned Counsel also submitted that in assessee’s case no action has been taken by the Stock Exchange Board of India (SEBI) and there is no investigation report of the SEBI.

ITA No. 196/Rjt/2025 Nishant Parekh in the year 2000-01. As the shares were in the nature of old investment, they could not be treated as penny stock by any stretch of imagination. 4. The Income-tax Appellate Tribunal further examined the question in appeal preferred by the revenue and confirmed the view of the appellate authority noticing that the shares were purchased in the year 2001 and they were sold after long time in the year 2010-11. 5. The genuineness of investment in the shares by the assessee was substantiated by him by producing copy of transaction statement for the period from 1-6-2001 to 1-10-2010. The investment was made in the year 2000-01. The shares were retained for more than ten years and were sold after such long time. These circumstances suggested that the investment was not bogus or investment made in penny stock. The shares were purchased in order to invest and not for the purpose of earning exempted income by frequent trading in short span. 6. The finding recorded by the appellate authority and confirmed by the appellate tribunal is based on material before them. They are in the realm of findings of fact. No error could be noticed in the findings and conclusion that the investment was longstanding and genuine and was not penny stock on the basis of which the capital gain was wrongly claimed. 6.1 On the facts of case, no question of law much less substantial question of law arises. 7. Resultantly, appeal is dismissed”.

16.The Hon`ble, jurisdictional Gujarat High Court in the case of Mamta Rajivkumar Agarwal, Tax Appeal No.408 of 2023, dated 11.09.2023 held that there was no evidence available on record suggesting that the assessee or his broker was involved in rigging up of the price of the script of M/s Shree Nath Commercial & Finance Ltd. The assessee had acted in good faith. The Tribunal, therefore, correctly held that the Assessing Officer had acted only on assumption which was misconceived. The Hon`ble, jurisdictional Gujarat High Court in the recent case of Shri Ambalal Chimanlal Patel, vide Tax Appeal No.260 of 2024, dated 15.04.2024 held that both the appellate authorities, that is, “CIT(A) and ITAT” have taken into consideration the notice of contract memo placed on record by the respondent assessee with regard to the purchase and sale of shares and it is also found by the assessee that the respondent was holding shares of other fifteen companies and it has continued to hold the shares over three years and therefore, sale of the shares cannot be said to be bogus merely on the basis of suspicion on account of the fact that the substantial quantum of capital gain and has been earned by the assessee on account of trading in respect of the said shares. Merely because trading in the shares of the said company was suspended on the

ITA No. 196/Rjt/2025 Nishant Parekh Stock Exchange, in absence of any material brought on record to suggest that purchase and sales of said shares was bogus, the Assessing Officer was not justified in absence of any material to support his finding that there has been collusion or connivance between the broker and the assessee for the introduction of his own unaccounted money, resulting into a bogus transaction. We note that there is no infirmity in the order passed by the CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.

ITA No. 196/Rjt/2025 Nishant Parekh 12/09/2021 in the show-cause notice issued and in response, the assessee has furnished the submission along with documentary evidence in support of her claim. However, assessing officer, rejected the contention of the assessee and made addition to the tune of Rs. 27,50,000/-, to the total income of the assessee. 10. Aggrieved, by the order of the assessing officer, the assessee carried the matter in appeal before the learned CIT(A) who has confirmed the action of the assessing officer. Therefore, assessee is in appeal before us. 11. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. Learned Counsel for the assessee argued that assessing officer has made addition in spite of all the fact explaining the source of the amount invested and placed on record vide submission dated 17.09.2021, whereas the assessment order dated 20.09.2021 is not dealing with the facts and evidences placed on record. In response to the notice of the assessing officer, the assessee has furnished the submission along with documentary evidence in support of her claim. The assessing officer, did not consider the documents and evidences of the assessee in right perspective, therefore, learned Counsel argued that addition made by the assessing officer may be deleted. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 12. We note that during the assessment proceedings, with regard to investments made for purchase of immovable property being shop, the assessee was asked to substantiate the same with supporting documentary evidence. The burden to explain

ITA No. 196/Rjt/2025 Nishant Parekh the nature and source of investments was on the assessee, who, has discharged his burden to the satisfaction of the assessing officer. The assessee had provided to the assessing officer, the relevant documents and evidences, regarding source of investments with supporting evidences. During the course of appellate proceedings, also the assessee has stated that the investment in immovable property was made from the amount borrowed from Parekh Brothers, a proprietary concern of Husband of the assessee, bearing PAN AELPP2557A on 10.06.2011, vide cheque. No.834327. The assessee further stated that his contention is duly supported by the copy of the bank statement of syndicate bank placed on record. The assessee has submitted that the amount of Rs.27,50,000/- is paid to Madhav Developers on 25.06.2011 vide cheque no.526379 and claimed that the source of the amount invested in immovable property is amount borrowed from the firm of assessee's Husband's firm-Parekh Brothers, as evident from the documentary evidences. In view of the above, the assessee has explained the source of investment and source of source is also explained which is already reflected in the records and transaction are already done from the regular and disclosed bank account therefore, the same cannot considered as unexplained. We note that assessing officer had passed the order without considering the explanation by the assessee, vide submission dated 17/09/2021. Therefore, we note that the addition made against the assessee is solely on the basis of assumptions and presumptions without any basis. The assessee has stated that the assessing officer failed to appreciate that the entire sale consideration as per the documents are paid through banking channels. As such, the same stands explained. 13. Therefore, we note that the amount has been received from the husband's proprietary concern, M/s. Prarekh Brothers and the same was subsequently paid to M/s. Madhav Developers on 25.06.2011. In support, the assessee has filed bank

ITA No. 196/Rjt/2025 Nishant Parekh account statements, ledger account in the books of M/s. Prarekh Brothers. In view these facts, we find that identity, creditworthiness and genuineness of the transactions were proved. With regard to identity of the party and genuineness of the transaction, the assessee has stated that it had received funds from her husband's firm vide bank account. Further, regarding the source of the funds, the assessee has furnished documentary evidence such as ITR copy of the husband, audited financials, treatment of loan in firm's books of accounts etc, to verify the same. Based on these facts, we note that assessee has submitted all the possible documents and evidences before the assessing officer, however, the assessing officer rejected these documents and evidences based on surmises and suspicious, which is not acceptable. In holding a particular receipt as income from undisclosed sources, the faith of the assessee cannot be decided by the revenue on the basis of surmises, suspicious and probabilities, Northern Bengal Jute Co. Ltd Vs CIT 70 ITR 407 (Cal).Hence, we are not inclined to accept the contention of the Assessing Officer in any manner and hence the addition so made is deleted. Hence this summarised and concise ground No.2 of the assessee is allowed.

Order is pronounced in the open court on 13/10/2025.

Sd/- Sd/- (DINESH MOHAN SINHA) (DR.ARJUN LAL SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) राजकोट/Rajkot िदनांक/ Date: 13/10/2025 Copy of the order forwarded to :

ITA No. 196/Rjt/2025 Nishant Parekh  The assessee  The Respondent  CIT  The CIT(A)  DR, ITAT, RAJKOT  Guard File /True copy/ By order

Assistant Registrar/Sr. PS/PS ITAT, Rajkot