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Income Tax Appellate Tribunal, DELHI BENCH “E”, DELHI
Before: SH. SUDHIR KUMAR & SH. MANISH AGARWAL
Date of hearing: 28/10/2025 Date of Pronouncement: 31/12/2025 ORDER PER SUDHIR KUMAR, JUDICIAL MEMBER:
This appeal by the assessee is directed against the order of the Commissioner Of Income Tax (Appeals)-23, New Delhi [hereinafter referred to as “Ld. CIT(A)”] dated 02.06.2022 arising out of the assessment order dated 30-12-2016 passed u/s. 153A r.w.s. 143(3) of the Act (in short “the Act”) pertaining to A.Y. 2013-14 on the following grounds:-
The Ld. CIT(A) has grossly erred on facts as well as in law in not annulling the assessment order u/s. 153A r.w.s. 143(3) in spite of the fact that the proceedings u/s. 153A r.w.s. 143(3) are ex facie illegal, arbitrary and without jurisdiction.
The Ld. CIT(A) has grossly erred on facts as well as in law in not annulling the assessment order u/s. 153A r.w.s. 143(3) in spite of the fact that no incriminating material was found for the year under consideration during the course of the search upon the appellant and no assessment proceedings were pending on the date of search.
3. The Ld. CIT(A) has grossly erred on facts as well as in law in not annulling the assessment order u/s. 153A r.w.s. 143(3) in spite of the fact that the impugned document was found from the premise of a third person and not from the premises of the appellant.
4. The Ld. CIT(A) has grossly erred on facts as well as in law in confirming the addition of Rs. 1,25,47,408/- on account of long term capital gains on sale of shares of M/s Anukaran Commercial Enterprises Ltd. Made by the AO in spite of the fact that no incriminating material was found during the course of the search upon the appellant pertaining to the impugned addition.
5. The Ld. CIT(A) has grossly erred on facts as well as in law in confirming the addition of Rs. 1,25,47,408/- on account of long term capital gains on sale of shares of M/s Anukaran Commercial Enterprises Ltd. Made by the AO on the basis of certain document which does not pertain to the year under consideration.
6. The Ld. CIT(A) has grossly erred in law as well as on facts in confirming the addition of Rs. 1,25,47,408/- on account of long term capital gains on sale of shares of M/s Anukaran Commercial Enterprises Ltd. though the genuineness of the transaction was duly proved.
The Ld. CIT(A) has grossly erred in law as well as on facts in confirming the addition of Rs. 7,52,844/- on account of alleged commission @ 6% on the above stated long term capital gains on sale of shares of M/s Anukaran Commercial Enterprises Ltd.
The Ld. CIT(A) has grossly erred in law as well as on facts in holding that there is no infirmity in the assessment order on account of non availability of cross examination. 2. The brief facts of the case are that the original return of income was filed by the assessee on 15.7.2013 at an income of Rs. 92,34,610/-. Search and seizure proceedings u/s. 132 of the Income Tax Act, 1961 were conducted in the case of Bhushan Steel Limited Group and its group concerns, residential / factory premises of partners, directors and proprietors of the group on 13.06.2014. The case of the assessee was also covered in the said search operation u/s. 132 of the Act. Subsequently, notice u/s. 153A of the Act dated 2.5.2016 was issued. In response to the same, the assessee filed his return of income on 4.10.2016 at an income of Rs. 92,34,610/-. Thereafter, notices u/s. 143(2) and 142(1) of the Act alongwith detailed questionnaire were issued on 04.10.2016 and served on the assessee. In response thereto the assessment proceeding were attended from time to time and necessary details filed and clarifications furnished. While framing the assessment the AO proceeded to make addition of Rs. 1,29,19,571/- on account of alleged bogus Long Term Capital Gain (LTCG) and Rs. 7,75,174/- on account of alleged unaccounted commission expenses @6% for arranging the Long Term Capital Gains. AO noted that during the year, the assessee had earned Long Term Capital gains of Rs. 1,29,19,571/- on the sale of listed securities on which the Securities Transaction Tax had been duly paid and which was accordingly claimed exempt u/s. 10(38) of the Act. The AO on the basis of an analysis of the statement recorded in the course of search u/s. 132 on 13.06.2014, the results/ analysis of the search / survey carried out on various other parties, an analysis of certain other data including financial results of the companies, and share price movement of the underlying securities, an order of the Securities Exchange Board of India etc. has proceeded to hold that the said Long Term Capital Gains is bogus. The AO relied on statements of various persons and proceeded to hold that the Long Term Capital Gains earned by the assessee is a sham transaction and represents undisclosed income of the assessee by making the addition of Rs. 1,29,19,571/- and simultaneously, AO has also proceeded to make an addition on account of alleged unaccounted commission expenses @6% of the total Long Term Capital Gains amounting to Rs. 7,75,174/- and assessed the income of the assessee at Rs. 2,29,29,355/-. Against the assessment order, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 02.06.2022, dismissed the appeal of the assessee.
Aggrieved, assessee is in appeal before the Tribunal.
Before us, Ld. AR for the assessee submits that assessee was allotted 60000 shares on 02.03.2012 of M/s Anukaran Commercial Enterprises Ltd. and thereafter bonus shares were issued. All these shares available and credited in the DMAT account of the assessee. Thereafter, the shares were split and accordingly, the assessee is having total 10,80,000 shares out of which 1,93,000 shares were sold during the year and total capital gain of Rs. 1,25,47,408/- was declared and claimed as exempt u/s. 10(38) of the Act being LTCG. Ld. AR further submitted that the shares were purchased after payment through on-line and they were available in the DMAT account of the assessee for a period of more than one year and sold through recognized Stock Exchange for which the necessary copies of the bills etc. were submitted. Therefore, the gains declared deserve to be accepted as Long Term Capital Gain genuinely declared. Ld. AR further submits that AO based on the statement of one Shri R.K. Kedia wherein, he stated that the accommodation entries were provided to Shri Brij Bhushan Singal, Bhushan Steel Group Companies and their promoters, however, nowhere in statement, name of the assessee was stated by him, nor any incriminating material whatsoever was found. Ld. AR also drew our attention to the decision of the Coordinate Bench in the case of Shri Brij Bhushan Singal passed in & 1484/Del/2018 (AYrs. 2013-14 & 2014-15) vide order dated 7.12.2018 wherein, based on similar documents, the addition made was deleted by the Coordinate Bench, therefore, he prayed that the addition may be deleted in the instant case also. It is also submitted by Ld. AR that in the case of company, M/s Anukaran Commercial Enterprises Ltd. no adverse order was passed by SEBI nor against the assessee any action was taken by any such authority.
On the other hand, Ld. CIT(DR) vehemently supported the order of the lower authorities and submits that there are ample details found during the course of search wherein, the evidences were gathered regarding assessee’s indulgence in obtaining of accommodation entries and therefore, the capital gain declared by the assessee during the year under appeal deserve to be hold as bogus and further the commission on the sale thereof be treated as the income of the assessee in obtaining such accommodation entries.
Heard the parties and perused the material available on record. The sole issue in this case is with respect to treatment of capital gain declared by the assessee on the sale of shares of M/s M/s Anukaran Commercial Enterprises Ltd. which was treated by the AO as bogus and sham transaction solely on the basis of statement of one Shri R.K. Kedia, who in his statement stated that he has provided the accommodation entries in the shape of capital gain to M/s Brij Bhushan Steel and their promoters. The relevant extract of the statement are reproduced at Page Nos. 23 & 24 of the assessment order. In the case of Brij Bhushan Singal, similar addition from the sale of shares of the same company were held as bogus wherein, in second appeal before the Tribunal, the Coordinate Bench in & 1484/Del/2018 (AYrs. 2013-14 & 2014-15) vide order dated 7.12.2018 has deleted the addition by observing in para no. 44 as under:- “44. Therefore, in view of overwhelming decisions of the various high courts and coordinate benches before us and which came to our knowledge. Even on the merit, we hold that the long-term capital earned by the assessee cannot be charged to tax under section 68 of the Act. Therefore, we reverse the finding of the lower authorities and direct the AO to grant the benefit of section 10(38) of the Act on the long-term capital gain earned by the assessee on sale of shares. Accordingly, as a natural corollary, we also delete the addition of 6% unaccounted commission expenditure also. Accordingly, ground number 2 and 3 of all the 3 appeals for 3 assessment years in case of the assessee are allowed.”
6.1 It is further seen that the shares were purchased by the assessee under preferential allotment and they were credited to the DMAT account of the assessee. After purchases on various occasions, the shares allotted as bogus and after split they were credited and finally the shares were sold in the recognized Stock Exchange through Member Broker and the relevant copies of the contracts, notes etc. are available at Pages 28-45 of the Paper Book. Further, payment for purchase as well as sale receipts were received by the assessee through banking channels and necessary evidences of the bank statements were available in the Paper Book Pages 46-47. The assessee also requested for cross examination of the witnesses of the Department with Shri R.K. Kedia and the necessary request was made in this regard, a copy of which is available at pages 49-50 of the Paper Book. It is also a matter of record that no incriminating document whatsoever was found from the possession of the assessee and as observed above, the sole basis is the evidence in the shape of statement of Shri R.K. Kedia recorded during the search operation wherein, he admitted of providing accommodation entries to Bhushan Steel Group. However, he has never stated that the assessee is the beneficiary of such accommodation entries. In view of above and by respectfully following the decision of the Coordinate Bench in the case of Brij Bhushan Singhal (Supra) wherein, after considering all these facts, the Coordinate Bench of the Tribunal has held that the capital gain declared from the sale of shares of M/s Anukaran Commercial Enterprises Ltd. as genuine. Therefore, we hereby delete the addition made by the AO by treating the capital gain declared as unexplained. Further, the addition made towards commission @6% is unwarranted and accordingly, the same is deleted. In the result, the issues on the merits as raised vide ground nos. 4 to 8 by the assessee are allowed in the aforesaid manner. 6.2 Since we have already allowed the grounds on merits as aforesaid, the remaining grounds have become academic.