← All Phrases

“circular trading”

Cash Credits & Unexplained ItemsSection 68Section 68323 judgments

The decision most relied on for circular trading is Sanjay Bimalchand Jain v. PCIT-1, Nagpur (89 Taxmann.com 196), cited in 251 judgments on BharatTax.

Leading authorities on circular trading

Sanjay Bimalchand Jain v. PCIT-1, Nagpur
89 Taxmann.com 196 · 2018 · High Court
251
citing judgments

The exemption for long-term capital gains on share transactions is unavailable if the assessee fails to discharge the onus of proving the genuineness of gains arising from dubious share transactions designed to convert unaccounted income into tax-exempt capital gains. Courts will uphold an assessment based on the Revenue's evidence of price rigging or penny stock manipulation if the assessee cannot provide cogent evidence for the abnormal rise in share value.

Celestial Aviation Trading 15 Ltd. v. ACIT
176 Taxmann.com 902 · Reported
92
citing judgments

Lease agreements are considered operating leases if they meet the criteria examined by the Tribunal, even when the Assessing Officer re-characterizes them as financial leases. The Tribunal's decision in Celestial Aviation Trading 15 Ltd. (supra) examined the terms and conditions of lease agreements and relevant circulars and precedents.

DCIT v. Sharp Mint Ltd.
159 Taxmann.com 1381 · 2024 · High Court
23
citing judgments

An ad hoc disallowance of purchases cannot be made if the corresponding sales have been accepted. Excluding both purchases and sales where transactions are fictitious would result in profits lower than the returned income.

Oriental Insurance Co. Ltd. v. DCIT
407 ITR 658 · 2018 · High Court
19
citing judgments

Income earned on sale or redemption of investments made by an insurance company is not necessarily business income and may be eligible for exemptions, even if the department contends the investments are stock-in-trade. The applicability of CBDT Circular No. 528 needs examination in such cases.

Pr.CIT v. Gaurav Bagaria
453 ITR 513 · 2023 · High Court
16
citing judgments

Transactions in shares are considered genuine if conducted through a recognized stock exchange with payments via account payee cheques, and the addition of sale proceeds as undisclosed income under section 68 is unjustified without contrary evidence.

Pr. CIT v. Prem Lal Gandhi
94 Taxmann.com 156 · 2018 · Reported
13
citing judgments

Gains arising on the sale of shares cannot be treated as sham solely because purchases were made in cash, if the surrounding facts and circumstances support the transaction.

Judgments citing circular trading

Chitra Avdhesh Mehta, Mumbai vs. ITO 33 (1) (3), Mumbai

In the result the appeal filed by the assessee stands

ITA 3229/MUM/2023[2014-15]Status: DisposedITAT Mumbai31 Aug 2026AY 2014-15

Bench: Hon’Ble Shri Sandeep Gosain

Section 10(38)Section 115BSection 143(3)Section 250Section 68

concluded that the price movements and sale, purchase transactions made by the assessee were not genuine and were the result of meticulously planned circular trading and the entities involved in these were part of this exercise in an effort to create documentary evidences for a pre- planned scheme for converting

Rameshkumar Karsanbhai Patel, Surat vs. ITO, Ward 2(3)(5), Surat

Accordingly the estimated addition made of Rs.35,166/-[0.5% of 70,33,182/-] by the AC invoking provision of section 69C of the I.T Act stand deleted. Thus this ground is allowed

ITA 669/SRT/2025[2015-16]Status: DisposedITAT Surat09 Apr 2026AY 2015-16

Bench: Dr. B.R.R. Kumar, Vice-Ms. Suchitra Kamble

Section 10(38)Section 115Section 115BSection 250Section 68Section 69C

assessment order but also he has established how the price of shares of the penny stock companies are rigged and are raised through circular trading. It is observed that the appellant is unable to file any satisfactory reply to justify the logic behind genuine purchase & sale of the above shares

DCIT., Circle-2(1), Hydrabad vs. Kalptaru Investments Private Limited, Hyderabad

ITA 1077/HYD/2025[2013-14]Status: DisposedITAT Hyderabad11 Mar 2026AY 2013-14

Bench: Shri Vijay Pal Rao & Shri Manjunatha G.आ.अपी.सं / Ita No.1077/Hyd/2025

For Appellant: Sri P Murali Mohan Rao, CAFor Respondent: Dr. Sachin Kumar, Sr. AR
Section 147Section 148

therefore, as per the investigation carried out by the Investigation Wing, Mumbai it was found that the assessee was part of the reverse and circular trading generating artificial profit and loss. Accordingly, the Assessing Officer was having tangible material to form the belief that the income assessable ... failed to disclose fully and truly all the relevant facts necessary for the assessment by concealing the involvement of the assessee in reverse and circular trading of derivatives. In support of his contention, he has relied upon the following decisions: 12 ITA.No.1077/Hyd./2025 i. Judgment of Hon'ble Gujarat

Chhaya Ketan Mehta, Mumbai vs. Income Tax Officer - 33(1)(3), Mumbai

In the result, appeal of the assessee is allowed

ITA 6543/MUM/2025[2014-15]Status: DisposedITAT Mumbai09 Mar 2026AY 2014-15

Bench: Shri Narender Kumar Choudhry & Shri Prabhash Shankar

For Appellant: Shri Nishit Gandhi, AdvFor Respondent: Shri Virabhadra Mahajan (Sr. DR)
Section 10(38)Section 14Section 143(3)

doubted genuineness of said transactions but also established how the price of shares of the penny stock companies were rigged and were raised through circular trading. It was observed that the whole transaction was pre-conceived resulting in creation of bogus claim and, therefore, were sham. Accordingly, the alleged LTCG

DCIT, Central Circle 7(1), Mumbai vs. Superways Enterprises Private Limited, Mumbai

ITA 4007/MUM/2025[2018-19]Status: DisposedITAT Mumbai27 Feb 2026AY 2018-19

Bench: Shri Saktijit Dey & Shri Jagadish

For Respondent: Shri Siddharth Srivastava
Section 132Section 143(3)Section 68

that the purchase and sales transactions cannot be termed as bogus transactions to generate accommodation entries. Though they may be in the nature of circular trading carried out with the objective of increasing the turnover to avail bank credit facilities. He observed, through such transactions bank funds are made available ... fund. Therefore, that will have no relevance from the point of view of income tax once it is established that income from such circular trading is disclosed to tax. He further observed that the accounts of the assessee have been duly audited both under the provisions of Income

DCIT, Central Circle 7(1), Mumbai vs. Superways Enterprises Private Limited, Mumbai

In the result, Revenue’s appeals are dismissed and assessee’s appeals are partly allowed

ITA 3993/MUM/2025[2017-18]Status: DisposedITAT Mumbai27 Feb 2026AY 2017-18

Bench: Shri Saktijit Dey & Shri Jagadish

For Appellant: Shri Siddharth SrivastavaFor Respondent: Shri Arun Kanti Datta, CIT-DR
Section 132Section 143(3)Section 68

sales transactions cannot be termed as bogus transactions to generate accommodation entries. Though they Superways Enerprises P. Ltd. may be in the nature of circular trading carried out with the objective of increasing the turnover to avail bank credit facilities. 10. He observed, through such transactions bank funds are made ... fund. Therefore, that will have no relevance from the point of view of income tax once it is established that income from such circular trading is disclosed to tax. He further observed that the accounts of the assessee have been duly audited both under the provisions of Income

DCIT, Central Circle 7(1), Mumbai vs. Superways Enterprises Private Limited, Mumbai

In the result, Revenue’s appeals are dismissed and assessee’s appeals are partly allowed

ITA 3976/MUM/2025[2015-16]Status: DisposedITAT Mumbai27 Feb 2026AY 2015-16

Bench: Shri Saktijit Dey & Shri Jagadish

For Appellant: Shri Siddharth SrivastavaFor Respondent: Shri Arun Kanti Datta, CIT-DR
Section 132Section 143(3)Section 68

sales transactions cannot be termed as bogus transactions to generate accommodation entries. Though they Superways Enerprises P. Ltd. may be in the nature of circular trading carried out with the objective of increasing the turnover to avail bank credit facilities. 10. He observed, through such transactions bank funds are made ... fund. Therefore, that will have no relevance from the point of view of income tax once it is established that income from such circular trading is disclosed to tax. He further observed that the accounts of the assessee have been duly audited both under the provisions of Income

DCIT, Central Circle 7(1), Mumbai vs. Superways Enterprises Private Limited, Mumbai

In the result, Revenue’s appeals are dismissed and assessee’s appeals are partly allowed

ITA 3975/MUM/2025[2014-15]Status: DisposedITAT Mumbai27 Feb 2026AY 2014-15

Bench: Shri Saktijit Dey & Shri Jagadish

For Appellant: Shri Siddharth SrivastavaFor Respondent: Shri Arun Kanti Datta, CIT-DR
Section 132Section 143(3)Section 68

sales transactions cannot be termed as bogus transactions to generate accommodation entries. Though they Superways Enerprises P. Ltd. may be in the nature of circular trading carried out with the objective of increasing the turnover to avail bank credit facilities. 10. He observed, through such transactions bank funds are made ... fund. Therefore, that will have no relevance from the point of view of income tax once it is established that income from such circular trading is disclosed to tax. He further observed that the accounts of the assessee have been duly audited both under the provisions of Income

DCIT, Central Circle 7(1), Mumbai vs. Superways Enterprises Private Limited, Mumbai

In the result, Revenue’s appeals are dismissed and assessee’s appeals are partly allowed

ITA 3972/MUM/2025[2013-14]Status: DisposedITAT Mumbai27 Feb 2026AY 2013-14

Bench: Shri Saktijit Dey & Shri Jagadish

For Appellant: Shri Siddharth SrivastavaFor Respondent: Shri Arun Kanti Datta, CIT-DR
Section 132Section 143(3)Section 68

sales transactions cannot be termed as bogus transactions to generate accommodation entries. Though they Superways Enerprises P. Ltd. may be in the nature of circular trading carried out with the objective of increasing the turnover to avail bank credit facilities. 10. He observed, through such transactions bank funds are made ... fund. Therefore, that will have no relevance from the point of view of income tax once it is established that income from such circular trading is disclosed to tax. He further observed that the accounts of the assessee have been duly audited both under the provisions of Income

Superways Enterpirses Private Limited, Mumbai vs. DCIT Central Circle -7(1), Mumbai

In the result, Revenue’s appeals are dismissed and assessee’s appeals are partly allowed

ITA 3146/MUM/2025[2019-20]Status: DisposedITAT Mumbai27 Feb 2026AY 2019-20

Bench: Shri Saktijit Dey & Shri Jagadish

For Appellant: Shri Siddharth SrivastavaFor Respondent: Shri Arun Kanti Datta, CIT-DR
Section 132Section 143(3)Section 68

sales transactions cannot be termed as bogus transactions to generate accommodation entries. Though they Superways Enerprises P. Ltd. may be in the nature of circular trading carried out with the objective of increasing the turnover to avail bank credit facilities. 10. He observed, through such transactions bank funds are made ... fund. Therefore, that will have no relevance from the point of view of income tax once it is established that income from such circular trading is disclosed to tax. He further observed that the accounts of the assessee have been duly audited both under the provisions of Income

Superways Enterpirses Private Limited, Mumbai vs. DCIT Central Circle 7(1), Mumbai

In the result, Revenue’s appeals are dismissed and assessee’s appeals are partly allowed

ITA 3145/MUM/2025[2018-19]Status: DisposedITAT Mumbai27 Feb 2026AY 2018-19

Bench: Shri Saktijit Dey & Shri Jagadish

For Appellant: Shri Siddharth SrivastavaFor Respondent: Shri Arun Kanti Datta, CIT-DR
Section 132Section 143(3)Section 68

sales transactions cannot be termed as bogus transactions to generate accommodation entries. Though they Superways Enerprises P. Ltd. may be in the nature of circular trading carried out with the objective of increasing the turnover to avail bank credit facilities. 10. He observed, through such transactions bank funds are made ... fund. Therefore, that will have no relevance from the point of view of income tax once it is established that income from such circular trading is disclosed to tax. He further observed that the accounts of the assessee have been duly audited both under the provisions of Income

Superways Enterpirses Private Limited, Mumbai vs. DCIT Central Circle 7(1), Mumbai

In the result, Revenue’s appeals are dismissed and assessee’s appeals are partly allowed

ITA 3144/MUM/2025[2017-18]Status: DisposedITAT Mumbai27 Feb 2026AY 2017-18

Bench: Shri Saktijit Dey & Shri Jagadish

For Appellant: Shri Siddharth SrivastavaFor Respondent: Shri Arun Kanti Datta, CIT-DR
Section 132Section 143(3)Section 68

sales transactions cannot be termed as bogus transactions to generate accommodation entries. Though they Superways Enerprises P. Ltd. may be in the nature of circular trading carried out with the objective of increasing the turnover to avail bank credit facilities. 10. He observed, through such transactions bank funds are made ... fund. Therefore, that will have no relevance from the point of view of income tax once it is established that income from such circular trading is disclosed to tax. He further observed that the accounts of the assessee have been duly audited both under the provisions of Income

Superways Enterpirses Private Limited, Mumbai vs. DCIT Central Circle 7(1), Mumbai

In the result, Revenue’s appeals are dismissed and assessee’s appeals are partly allowed

ITA 3143/MUM/2025[2016-17]Status: DisposedITAT Mumbai27 Feb 2026AY 2016-17

Bench: Shri Saktijit Dey & Shri Jagadish

For Appellant: Shri Siddharth SrivastavaFor Respondent: Shri Arun Kanti Datta, CIT-DR
Section 132Section 143(3)Section 68

sales transactions cannot be termed as bogus transactions to generate accommodation entries. Though they Superways Enerprises P. Ltd. may be in the nature of circular trading carried out with the objective of increasing the turnover to avail bank credit facilities. 10. He observed, through such transactions bank funds are made ... fund. Therefore, that will have no relevance from the point of view of income tax once it is established that income from such circular trading is disclosed to tax. He further observed that the accounts of the assessee have been duly audited both under the provisions of Income

Superways Enterpirses Private Limited Ltd, Mumbai vs. DCIT Central Circle 7(1), Mumbai

In the result, Revenue's appeals are dismissed and assessee's appeals are

ITA 3142/MUM/2025[2015-16]Status: DisposedITAT Mumbai27 Feb 2026AY 2015-16

Bench: Shri Saktijit Dey & Shri Jagadish

Section 132Section 143(3)Section 68

that the purchase and sales transactions cannot be termed as bogus transactions to generate accommodation entries. Though they may be in the nature of circular trading carried out with the objective of increasing the turnover to avail bank credit facilities. He observed, through such transactions bank funds are made available ... fund. Therefore, that will have no relevance from the point of view of income tax once it is established that income from such circular trading is disclosed to tax. He further observed that the accounts of the assessee have been duly audited both under the provisions of Income

Superways Enterpirses Private Limited, Mumbai vs. DCIT Central Circle 7(1), Mumbai

In the result, Revenue’s appeals are dismissed and assessee’s appeals are partly allowed

ITA 3140/MUM/2025[2013-14]Status: DisposedITAT Mumbai27 Feb 2026AY 2013-14

Bench: Shri Saktijit Dey & Shri Jagadish

For Appellant: Shri Siddharth SrivastavaFor Respondent: Shri Arun Kanti Datta, CIT-DR
Section 132Section 143(3)Section 68

sales transactions cannot be termed as bogus transactions to generate accommodation entries. Though they Superways Enerprises P. Ltd. may be in the nature of circular trading carried out with the objective of increasing the turnover to avail bank credit facilities. 10. He observed, through such transactions bank funds are made ... fund. Therefore, that will have no relevance from the point of view of income tax once it is established that income from such circular trading is disclosed to tax. He further observed that the accounts of the assessee have been duly audited both under the provisions of Income

Impressive Trading Private Limited, Mumbai vs. Income Tax Officer 10(1)(1), Mumbai

In the result, all the above appeals in ITA Nos

ITA 7300/MUM/2025[2015-16]Status: DisposedITAT Mumbai11 Feb 2026AY 2015-16

Bench: Shri Narendra Kumar Choudhry & Shri Prabhash Shankar

For Appellant: Shri Ketan Vajani, CAFor Respondent: Shri Virabhadra S. Mahajan, (Sr. DR)
Section 147Section 147oSection 148Section 148ASection 151A

Impressive Trading Pvt Ltd., Mumbai account maintained with Kotak Mahindra Bank. The assessee company was engaged in circular trading. Accordingly, certain part of the credit entries in bank account was determined as assessee’s undisclosed commission on percentage basis in all the assessment years, based on the report

Impressive Trading Private Limited, Mumbai vs. Income Tax Officer 10(1)(1), Mumbai

In the result, all the above appeals in ITA Nos

ITA 7299/MUM/2025[2014-15]Status: DisposedITAT Mumbai11 Feb 2026AY 2014-15

Bench: Shri Narendra Kumar Choudhry & Shri Prabhash Shankar

For Appellant: Shri Ketan Vajani, CAFor Respondent: Shri Virabhadra S. Mahajan, (Sr. DR)
Section 147Section 147oSection 148Section 148ASection 151A

Impressive Trading Pvt Ltd., Mumbai account maintained with Kotak Mahindra Bank. The assessee company was engaged in circular trading. Accordingly, certain part of the credit entries in bank account was determined as assessee’s undisclosed commission on percentage basis in all the assessment years, based on the report

Impressive Trading Pvt. Ltd., Mumbai vs. Income Tax Officer 10(1)(1), Mumbai

ITA 7298/MUM/2025[2013-14]Status: DisposedITAT Mumbai11 Feb 2026AY 2013-14
Section 147Section 148Section 148ASection 151A

Impressive Trading Pvt Ltd., Mumbai account maintained with Kotak Mahindra Bank. The assessee company was engaged in circular trading. Accordingly, certain part of the credit entries in bank account was determined as assessee's undisclosed commission on percentage basis in all the assessment years, based on the report

DCIT - 19(1), Mumbai, Lalbaugh vs. Bharat Ramji Bhai Manek, Grant Road Mumbai

In the result, the appeal of the revenue bearing ITA No

ITA 4339/MUM/2025[2014-15]Status: DisposedITAT Mumbai10 Feb 2026AY 2014-15

Bench: SHRI ANIKESH BANERJEE (Judicial Member), SHRI MAKARAND VASANT MAHADEOKAR (Accountant Member)

For Appellant: Shri Ronak DoshiFor Respondent: Shri Leyaqat Ali Aafaqui, (SR DR)
Section 10(38)Section 143(3)Section 250

Operandi: The CIT(A) failed to consider the holistic picture painted by the Investigation Wing. The detailed modus operandi-preferential allotment, price rigging through circular trading, use of exit providers, and statements of entry operators like Shri Raj Kumar Kedia and Shri Anil Agarwal establishes a pre-meditated scheme

Assistant Commissioner of Income Tax 32(1), Mumbai vs. Suman Gandhi, Mumbai

In the result, the appeal and the cross objection both are dismissed

ITA 3415/MUM/2025[2014-15]Status: DisposedITAT Mumbai29 Jan 2026AY 2014-15

Bench: Shri Saktijit Dey & Shri Arun Khodpiaasst. Cit-32(1) Suman Gandhi Room No. 252, Kautilya Bhavan, 2204/2205, Montereal Building, Bkc Bandra E, Vs. Shastri Nagar, Andheri (W), Mumbai-400 051 Mumbai-400 058 Pan/Gir No. Amzps 3507 P (Revenue) : (Assessee) Co No. 268/Mum/2025 (Arising Out Of Ita No. 3415/Mum/2025) (Assessment Year: 2014-15) Suman Gandhi Asst. Cit-32(1) 2204/2205, Montereal Building, Room No. 252, Kautilya Bhavan, Shastri Nagar, Andheri (W), Vs. Bkc Bandra E, Mumbai-400 058 Mumbai-400 051 Pan/Gir No. Amzps 3507 P (Assessee) : (Revenue) Assessee By : Shri K. Shivaram, Sr. Advocate & Shri Sashi Bekal Revenue By : Shri Swapnil Choudhary – Sr. Ar Date Of Hearing : 28.01.2026 Date Of Pronouncement : 29.01.2026 O R D E R Per Saktijit Dey: Captioned Appeal By The Department & Cross Objection By The Assessee, Arise Out Of Order Dated 20.03.2025, Passed By National Faceless Appeal Centre (‘Nfac’ For Short), Delhi For The Assessment Year (A.Y. For Short) 2014-15. 2

For Appellant: Shri K. Shivaram, Sr. Advocate &For Respondent: Shri Swapnil Choudhary – Sr. AR
Section 147Section 68

Assessing Officer noticed that there were instances of client code modifications. The Assessing Officer believed that the same was done to indulge in circular trading to pass on profits or losses to the clients of the assessee company as per requirements. After hearing the assessee, the Assessing Officer made additions