“bogus LTCG”

Cash Credits & Unexplained ItemsSection 68Section 68806 judgments

The decision most relied on for bogus LTCG is PCIT v. Swati Bajaj (139 Taxmann.com 352), cited in 443 judgments on BharatTax.

Leading authorities on bogus LTCG

PCIT v. Swati Bajaj

139 Taxmann.com 352 · 2022 · High Court

443

citing judgments

Tax authorities are entitled to examine surrounding circumstances and apply the test of human probabilities to determine the genuineness of long-term capital gains arising from the sale of manipulated penny stock, even if prima facie documents appear to support the transaction.

ITO, 19(3) (4) Mumbai v. Shamim M Bharwani

69 Taxmann.com 65 · 2016 · Reported

142

citing judgments

Long Term Capital Gains (LTCG) from penny stock transactions are liable to be treated as bogus and added back under Section 68 as unexplained cash credits, especially when evidence suggests the involvement of entry operators providing accommodation entries.

Mukesh R.Marolia v. Addl. CIT

6 SOT 247 · 2006 · ITAT

139

citing judgments

The department must substantiate its allegations of a bogus long term capital gain scheme; if not substantiated, the addition made by the Assessing Officer for purported bogus LTCG derived from the purchase/sale of shares cannot be sustained. An assessee's claim for long term capital gains exemption on share transactions should be allowed where documentation supports the transactions.

5. PCIT v. Paramount Communication (P.) Ltd. Delhi High Court

392 ITR 444 · 2017 · High Court

111

citing judgments

For valid initiation of reassessment proceedings, the Assessing Officer must possess tangible material and apply independent mind to form a 'reason to believe' that income has escaped assessment. Reassessment cannot be based on mere borrowed satisfaction or unverified information without proper scrutiny.

Suman Poddar v. ITO

423 ITR 480 · 2020 · High Court

citing judgments

The Assessing Officer's detailed findings regarding bogus long-term capital gains from penny stock transactions, established through objective examination of facts and circumstantial evidence, should not be overturned by appellate authorities without a thorough investigation or fresh inquiry.

CIT-I v. Maheshchandra G. Vakil

40 Taxmann.com 326 · 2013 · High Court

citing judgments

An Assessing Officer is not justified in treating capital gain from the sale of shares as unexplained cash credit when the assessee proves the genuineness of share transactions with contract notes, broker's bank statements, DMAT accounts, and stock exchange abstracts.

6. CIT v. Jasvinder Kaur

54 Taxmann.com 10 · 2015 · High Court

citing judgments

The Assessing Officer must provide the assessee with contrary material if they dispute the genuineness of long-term capital gains claimed under section 10(38). The onus is on the revenue to prove the transaction is a colourable device.

PCIT v. Parasben Kasturchand Kochar

130 Taxmann.com 177 · 2021 · Supreme Court

citing judgments

An assessment or reassessment order is considered bad in law and without legal sanction if its completion is not in accordance with prescribed legal procedures or timelines.

Judgments citing bogus LTCG

Income Tax Officer, Ahmedabad vs. Ketu Madhukant Sheth, Ahmedabad

In the result, Revenue's appeal is dismissed and assessee's cross-

ITA 691/AHD/2024[2011-12]Status: DisposedITAT Ahmedabad27 Feb 2025AY 2011-12

Bench: Shri T.R. Senthil Kumar & Shri Makarand V. Mahadeokarआयकर अपील सं/Ita No. 691/Ahd/2024 - निर्धारण वर्ष/Ay 2011-12 & Cross Objection No.11/Ahd/2024 - निर्धारण वर्ष/Ay 2011-12 (In Ita No.691/Ahd/2024 – Ay 2011-12)

For Appellant: Shri Dhrunal Bhatt &For Respondent: Shri Waghe Prasadrao, Sr.DR

Section 143(3)Section 147Section 68Section 92

आयकर अपीलीय अधिकरण, अहमदाबाद न्यायपीठ "डी", अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD श्री टी. आर. सेन्थिल

Amit Chhaganlal Jain, Vadodara vs. The Income Tax Officer, Ward-4(1)(7), Vadodara

In the result, the appeal of the assessee is allowed

ITA 1294/AHD/2024[2013-14]Status: DisposedITAT Ahmedabad27 Feb 2025AY 2013-14

Bench: Smt.Annapurna Gupta & Shri T.R. Senthil Kumarassessment Year : 2013-14 Amit Chhaganlal Jain Ito, Ward-4(1)(7) B/4, Khanderao Colony Vs Baroda. R.V. Desai Road Opp: Gopal Der Ganotri Apartments Baroda 390 004. Pan : Agdpj 6312 M (Applicant) (Responent) : Assessee By Shri Manish J. Shah, Shri Rushin Patel & Shri Vishal Jagetia, Ars. : Shri B. P. Srivastav, Sr.Dr Revenue By सुनवाई क" तारीख/Date Of Hearing : 06/02/2025 घोषणा क" तारीख /Date Of Pronouncement: 27/02/2025

Section 142(1)Section 143(2)Section 147Section 148Section 250

Unsecured Loans etc. Data analysis coupled with circumstantial evidences led to discovery that 15 BSE listed scrips have been used for 3 generating bogus LTCG and contrived losses. During investigation, sample trail of funds was also established. The duo also admitted being involved in providing accommodation entries including bogus LTCG ... Loss, and Unsecured Loans etc. Data analysis coupled with circumstantial evidences led to discovery that 15 BSE listed scrips have been used for generating bogus LTCG and contrived losses. During investigation, sample trail of funds was also established. The duo also admitted being involved in providing accommodation entries including bogus

Rupal Kashyap Mehta, Mumbai vs. DCIT CC-4(1), Mumbai

In the result, all the appeals filed by the assessee are

ITA 6196/MUM/2024[2018-19]Status: DisposedITAT Mumbai27 Feb 2025AY 2018-19

Section 10(38)Section 127(2)Section 132(4)Section 153ASection 153D

some alleged incriminating information/ material seized / statements from / of the alleged entry providers as no incriminating material in any manner at all depicting bogus LTCG was found during the course of search in the premises of the assessee or on the strength of any search warrant in the name ... basis of some alleged material seized / statements from / of the alleged entry providers as no incriminating material in any manner at all depicting bogus LTCG was found during the course of search in the premises of the assessee or on the strength of any search warrant in the name

Rupal Kashyap Mehta, Mumbai vs. DCIT CC-4(1), Mumbai

In the result, all the appeals filed by the assessee are allowed

ITA 6195/MUM/2024[2017-18]Status: DisposedITAT Mumbai27 Feb 2025AY 2017-18

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI GIRISH AGRAWAL (Accountant Member)

Section 10(38)Section 127(2)Section 132(4)Section 153ASection 153D

Rupal Kashyap Mehta, Mumbai vs. DCIT CC-4(1), Mumbai

In the result, all the appeals filed by the assessee are

ITA 6194/MUM/2024[2016-17]Status: DisposedITAT Mumbai27 Feb 2025AY 2016-17

Section 10(38)Section 127(2)Section 132(4)Section 153ASection 153D

basis of some alleged incriminating information/material seized / statements from / of the alleged entry providers as no incriminating material in any manner at all depicting bogus LTCG was found during the course of search in the premises of the assessee or on the strength of any search warrant in the name ... basis of some alleged material seized / statements from / of the alleged entry providers as no incriminating material in any manner at all depicting bogus LTCG was found during the course of search in the premises of the assessee or on the strength of any search warrant in the name

Rupal Kashyap Mehta, Mumbai vs. DCIT CC-4(1), Mumbai

In the result, all the appeals filed by the assessee are allowed

ITA 6193/MUM/2024[2015-16]Status: DisposedITAT Mumbai27 Feb 2025AY 2015-16

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI GIRISH AGRAWAL (Accountant Member)

Section 10(38)Section 127(2)Section 132(4)Section 153ASection 153D

Rupal Kashyap Mehta, Mumbai vs. DCIT, CC-4(1), Mumbai

In the result, all the appeals filed by the assessee are allowed

ITA 6192/MUM/2024[2014-15]Status: DisposedITAT Mumbai27 Feb 2025AY 2014-15

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI GIRISH AGRAWAL (Accountant Member)

Section 10(38)Section 127(2)Section 132(4)Section 153ASection 153D

Rupal Kashyap Mehta, Mumbai vs. DCIT, CC-4(1), Mumbai

In the result, all the appeals filed by the assessee are allowed

ITA 6191/MUM/2024[2012-13]Status: DisposedITAT Mumbai27 Feb 2025AY 2012-13

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI GIRISH AGRAWAL (Accountant Member)

Section 10(38)Section 127(2)Section 132(4)Section 153ASection 153D

ACIT-Central Circle -2(1), Nagpur vs. Shri Nandkumar Khattumal Harchandani, Nagpur

In the result, appeal of the Revenue stands dismissed

ITA 411/NAG/2019[2015-16]Status: DisposedITAT Nagpur25 Feb 2025AY 2015-16

Bench: Shri V. Durga Rao & Shri K.M. Roy, Accountant, Member

For Appellant: Shri Manoj G. MoryaniFor Respondent: Shri Sandipkumar Salunke

Section 10(38)Section 68

done by income tax Department (Inv), Kolkata dated 27.04.2015, the name of the assessee featured in the list of the persons who have availed bogus LTCG and exemption u/s. 10(38) of the Income Tax Act. 2 Shri Nandkumar Khatumal Harchandani ITA no.410/Nag./2019 ... seen that the name of Shri Nandkumar Khattumal Harchandani son of Shri Khattumal Harchandani also features in the list of cases who availed bogus LTCG and claimed exemption from tax as per provision of Section 10(38) of the I.T. Act, 1961”. The assessee strongly objects to the said allegation

ACIT-Central Circle -2(1), Nagpur vs. Shri Nandkumar Khattumal Harchandani, Nagpur

ITA 410/NAG/2019[2014-15]Status: DisposedITAT Nagpur25 Feb 2025AY 2014-15

Bench: Shri V. Durga Rao & Shri K.M. Roy, Accountant, Member

For Appellant: Shri Manoj G. MoryaniFor Respondent: Shri Sandipkumar Salunke

Section 10(38)Section 68

done by Income tax Department (Inv), Kolkata dated 27.04.2015, the name of the assessee featured in the list of the persons who have availed bogus LTCG and exemption u/s. 10(38) of the Income Tax Act. ii) On the facts and circumstances of the case ... seen that the name of Shri Nandkumar Khattumal Harchandani son of Shri Khattumal Harchandani also features in the list of cases who availed bogus LTCG and claimed exemption from tax as per provision of Section 10(38) of the I.T. Act, 1961”. The assessee strongly objects to the said allegation

Manish Devendrakumar Shah, Ahmedabad vs. The ITO, Ward-5(3)(1), Ahmedabad

The appeal of the assessee is allowed in full

ITA 918/AHD/2024[2014-15]Status: DisposedITAT Ahmedabad25 Feb 2025AY 2014-15

Bench: Shri T.R. Senthil Kumar & Shri Makarand V. Mahadeokarआयकर अपील सं /Ita No.918/Ahd/2024 िनधा"रण वष" /Assessment Year : 2014-15 Manish Devendrakumar Shah The Ito बनाम/ 206, 2Nd Floor, Kalash 1 Ward-5(3)(1) V/S. Navrangpura Ahmedabad Ahmedabad – 380 009 "थायी लेखा सं./Pan: Aqjps 4226 K (अपीलाथ"/ Appellant) ("" यथ"/ Respondent) Assessee By : Shri S.N. Divatia, Ar & Shri Samir Vora, Ar Revenue By : Shri Rignesh Das, Sr.Dr सुनवाई की तारीख/Date Of Hearing : 20 /02/2025 घोषणा की तारीख /Date Of Pronouncement: 25/02/2025 आदेश/O R D E R Per Makarand V. Mahadeokar, Am:

For Appellant: Shri S.N. Divatia, AR &For Respondent: Shri Rignesh Das, Sr.DR

Section 10(38)Section 143(1)Section 147Section 250Section 68

Investigation Wing of the Income Tax Department, which indicated that LHSL was a penny stock and that the assessee was a beneficiary of a bogus LTCG scheme. The assessee was not furnished with the full text of the reasons recorded for reopening, and only a gist of the reasons ... absent. 8.15. Considering the discussion hereinabove, the assessee’s grounds challenging the addition of Rs.1,07,92,400/- under Section 68 on account of bogus LTCG and penny stock transactions (Grounds 1.1, 3.1, 3.2, and 3.3) are allowed. Accordingly, the addition of Rs.1,07,92,400/- under Section

ACIT Circle-22(1), Mumbai vs. Nilesh Haresh Parwani, Mumbai

ITA 185/MUM/2025[2016]Status: DisposedITAT Mumbai25 Feb 2025

Bench: Shri Amarjit Singh & Shri Anikesh Banerjee

For Appellant: Shri Rakesh Joshi (Virtually present)For Respondent: Shri Leqaqut Ali, Sr. DR

Section 250

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “B”, MUMBAI BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER AND SHRI ANIKESH BANERJEE

Ashok Vijaykumar Kotecha, Jalgaon vs. ACIT, Circle 1, Jalgaon

In the result, the appeal filed by the assessee is partly allowed

ITA 1453/PUN/2023[2011-12]Status: DisposedITAT Pune24 Feb 2025AY 2011-12

Bench: Shri R. K. Panda & Shri Vinay Bhamoreassessment Year : 2011-12

For Appellant: Shri Kishor B PhadkeFor Respondent: Shri Uma Shankar Prasad

Section 143(3)Section 147Section 148Section 153A

learned I-T authorities) failed to appreciate the facts that addition of Rs. 1,52,62,200 u/s 68 on account of bogus LTCG in the returned income of the appellant's return income would lead to double addition as the Hon'ble ITAT Pune Bench has already upheld ... submitted that, the assessee has mentioned that (in ground no.03), the addition of Rs.1,52,62,200/- u/s 68 on account of bogus LTCG would lead to double addition as the Hon'ble ITAT Pune Bench has already upheld the addition in the hands of assessee's brother (Shri Dilip

Santosh Bhansali HUF, Jaipur vs. ITO, Ward 6(1), Jaipur

In the result notice issued u/s

ITA 716/JPR/2024[2018-19]Status: DisposedITAT Jaipur21 Feb 2025AY 2018-19

Bench: Shri Sandeep Gosain & Shri Gagan Goyalsantosh Bhansali Huf, D-79, Patrakar Colony, Tilak Marg, Shanti Path, Jaipur 302004 Pan No. Aaohs6943N ...... Appellant Vs. Income Tax Officer Ward 6(1), Jaipur …... Respondent

For Appellant: Mr. Siddharth Ranka, AdvFor Respondent: Mr. Manoj Kumar, JCIT, Ld. DR

Section 10(38)Section 139Section 142(1)Section 147Section 148Section 148ASection 250Section 68Section 69C

IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH “A”, JAIPUR BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI GAGAN GOYAL

Smt. Teena Garg, Chandigarh vs. PCIT, Panchkula

In the result, appeal of the assessee is allowed

ITA 466/CHANDI/2024[2015-16]Status: DisposedITAT Chandigarh20 Feb 2025AY 2015-16

For Respondent: Shri Sudhir Sehgal, Advocate

Section 142(1)Section 143(2)Section 147Section 148Section 253Section 263

incorrect as the amount of LTCG of Rs.60,65,724/- as mentioned in the reasons is incorrect and secondly she had not claimed any bogus LTCG. 6. In fact it is a genuine transaction resulting in LTCG of Rs. 28,75,041 out of sale and purchase transaction of shares ... basis of information uploaded on Insight Portal by the Investigation wing that the assessee was one of the beneficiaries of bogus LTCG entries amounting to Rs.60,65,724/- ( Rs.30,24,000/- from Dayanand Singh and of Rs.30,41,724/- from Lifeline Securities Ltd.) during F.Y. 2014-15 relevant

Aparna Sudarshan, Mumbai vs. Income Tax Department, National Faceless Assessment Centre, Mumbai

In the result the appeal filed by the assessee is allowed

ITA 4698/MUM/2024[2016-17]Status: DisposedITAT Mumbai20 Feb 2025AY 2016-17

Bench: Smt. Beena Pillai ()

Section 131Section 133(6)Section 139(1)Section 142(1)Section 143(3)Section 148Section 234ASection 271(1)Section 68

addition of Rs 28,40,320 as unexplained cash credits u/ 68 of the Act for A.Y 2016-17 and also commission paid for bogus LTCG of Rs 28,403 91% of Rs 28,40,320) as unexplained money u/s 69A of the Act. the same is sustainable

ACIT, CC- 18, New Delhi vs. Shrey Properties Pvt. Ltd., New Delhi

Appeal is dismissed

ITA 5182/DEL/2017[2011-12]Status: DisposedITAT Delhi19 Feb 2025AY 2011-12

Bench: Shri Satbeer Singh Godara & Shri Manish Agarwalassessment Year: 2014-15 Vs. National Rupali Gupta, Faceless Appeal 273, Budhana Gate, Meerut, Centre, Delhi Uttar Pradesh Pan: Ajcpg6194L (Appellant) (Respondent) Assessee By None Department By Sh. Rajesh Kumar Dhanesta, Sr. Dr Date Of Hearing 13.10.2025 Date Of Pronouncement 13.10.2025 Order Per Satbeer Singh Godara, Jm This Assessee’S Appeal For Assessment Year 2014-15, Arises Against The Commissioner Of Income Tax (Appeals)/National Faceless Appeal Centre [In Short, The “Cit(A)/Nfac”], Delhi’S Din & Order No. Itba/Nfac/S/250/2024-25/1068639287(1), Dated 12.09.2024 Involving Proceedings Under Section 147 R.W.S. 144 Of The Income-Tax Act, 1961 (Hereinafter Referred To As ‘The Act’). Case Called Twice. None Appears At The Assessee’S Behest. She Had Also Not Put In Appearance On All The Earlier Five Opportunities Of Hearing As Well. The Assessee Is Accordingly Proceeded Ex-Parte. 2. It Next Transpires With The Able Assistance Coming From The Revenue Side That Both The Learned Lower Authorities Have Inter Alia Treated The Assessee’S Alleged Capital Gains Derived From Sale Of Shares Amounting To Rs.48,28,090/- As Bogus Followed By 5% Commission Expenditure Thereupon Coming To Rs.2,41,405/- As Unexplained Under Section 69C; Respectively, In Assessment Order Dated 28Th March, 2022 & Upheld In The Lower Appellate Discussion, As Followed: “4. The Present Appeal Was Filed By The Appellant On 21.04.2022 By Raising 20 Grounds Of Appeal. During The Course Of Appeal Proceedings, Hearing Notices Were Sent On 15.07.2024, 01.08.2024 & 20.08.2024. In Response To The Notices Issued The Appellant Filed Only A Brief Written Submission As Under:

Section 147Section 68Section 69C

penny stock scrip and it has been used by various operators and exit providers to provide accommodation entries in the form of bogus LTCG for the purpose of bringing un-accounted cash into the books of accounts. For this purpose, the shares of this company were used by the opera

Shri Rajendra J Keshwani (HUF), Ahmedabad vs. The Pr. CIT- Central, Ahmedabad

In the result, the appeal of the assessee is allowed

ITA 118/AHD/2021[2015-16]Status: DisposedITAT Ahmedabad18 Feb 2025AY 2015-16

Bench: Ms. Suchitra Kamble & Shri Makarand V. Mahadeokarआयकर अपील सं /Ita No.118/Ahd/2021 िनधा"रण वष" /Assessment Year : 2015-16 Shri Rajendra J. Keshwani The Pr.Cit बनाम/ (Huf) Central Circle V/S. 44, Asopalav Bungalows Ahmedabad Nr.Mukthidham Jain Temple Thaltej – 380 054 (Gujarat) "थायी लेखा सं./Pan: Aaehk 1973 J अपीलाथ%/ (Appellant) &' यथ%/ (Respondent) ….. Assessee By : Shri M.K. Patel, Advocate Revenue By : Shri V. Nandakumar, Cit-Dr सुनवाई की तारीख/Date Of Hearing : 12/02/2025 घोषणा की तारीख /Date Of Pronouncement: 18/02/2025 आदेश/O R D E R Per Makarand V. Mahadeokar, Am:

For Appellant: Shri M.K. Patel, AdvocateFor Respondent: Shri V. Nandakumar, CIT-DR

Section 115BSection 143(3)Section 263Section 68

prejudicial to the revenue inasmuch as deduction given by the AO for cost of purchase of shares while making the addition on account of bogus LTCG on Shri Rajendra J. Keshwani (HUF) Asst. Year : 2015-16 3 ground that the cost of purchase is not allowable u/s. 115BBE

DCIT 19(1), Mumbai vs. Pavan Kumar B Chandan, Mumbai

In the result, the appeal of the Revenue is dismissed

ITA 2592/MUM/2023[2015-16]Status: DisposedITAT Mumbai18 Feb 2025AY 2015-16

Bench: Shri Narender Kumar Choudhry & Shri Prabhash Shankar

For Appellant: Shri Devendra Jain,ARFor Respondent: Shri Mahesh Pamnani (Sr.DR)

Section 143(3)Section 68Section 69

which identified shares of STL as a penny stock. The AO took note of the modus operandi of the entry operators involved in facilitating bogus LTCG to beneficiaries like the assessee, which according to him is nothing but converting the black money of the beneficiaries to white. The AO doubted ... investments. The whole process of preferential allotment was a pre-arranged and a managed process so as to allot preferential shares to beneficiaries of bogus LTCG which could later be sold by them for booking accommodation entry of bogus LTCG/STCG in the garb of sale proceeds on sale of shares

Chintan Shailesh Shah, Mumbai vs. ITO Ward-30(1)(2), Now ITO Ward-41(3)(1), Mumbai

In the result, the appeal filed by the assessee stands dismissed with no order as to cost

ITA 2469/MUM/2024[2014-15]Status: DisposedITAT Mumbai17 Feb 2025AY 2014-15

Bench: Hon’Ble Shri Sandeep Gosain & Shri Prabhash Shankarchintan Shailesh Shah Vs. Ito, Ward 30(1)(2) Rushikesh, Shanti Nagar, (Now Ward 41(3)(1)) Adarsh Dugdhalaya Kautilya Bhavan, Bkc, Malad (W), Mumbai – Bandra (E), Mumbai – 400064. 400051. Pan/Gir No. Amzps2768Q (Applicant) (Respondent)

Section 10(38)Section 133(6)Section 250Section 68

fictitious long- term capital gains (LTCG) and claim bogus exemption under section 10(38), such exemption denied by Assessing Officer by way of treating bogus LTCG in penny stock under purview of unexplained cash under section 68 was justified. (iii) Sanjay Kaul [2020] 119 taxmann.com 470 (Delhi): The appellant ... assessee is dismissed." (viii) Krishna Devi ITA 6356/Del/2019 dated 04/01/2022: Hon'ble ITAT, Delhi had the occasion to decide upon similar issue of bogus LTCG claim on a similar penny stock scrip as the present appellant and upheld AO's order. (ix) Sanat Kumar [2020] 122 taxmann.com 75 (Delhi Trib