TaxTMI 
TaxTMI 
2026 (3) TMI 552
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....Income Tax Officer-33 (1) (3), Mumbai ["the AO" for short), in passing the assessment order w/s 143 (3) of the Income Tax Act, 1961 ["the Act for short] in gross violation of the principles of Natural Justice. 1.2 While doing so the Ld. CIT(A) failed to appreciate that: (a) The Assessment Order is passed without affording any fair, reasonable and sufficient opportunity of being heard to the Appellant; and; (b) The assessment was framed in gross violation of principles of Natural Justice and on the basis of certain material never confronted to the Appellant and the same deserves to be quashed, 1.3 It is therefore submitted that the order passed by the Ld.CIT(A) affirming the order of the Ld. AO deserves to be quashed. ON MERITS: 2.1 In the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of the Ld. AO in taxing an amount of Rs. 75,16,569/-/s 68 of the Act, simply on the basis of surmises and conjectures and thereby denying the claim for exemption u/s 10(38) of the Act on sale of SRK IndustriesLtd. through the Bombay Stock Exchange. 2.2 While doing so, the Ld. CIT(A) failed to ....
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....olkata Based sham companies. The AO observed that the purchase of shares was off market. Shri Rakeshchand Jain is a director of company from which assessee purchased shares off market. Besides, the company was running into losses had not earned any income from operations ever and still commanded such premium valuations. There was no transaction except of this alleged scrip as reflected in the Demat Account as well. The ld.CIT(A) upheld the action of the AO concluding that he AO 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 for sale of shares as bogus and not eligible to exemption u/s 10(38) of the Act and the addition of Rs. 75,16,570/- by invoking provision of section 68 of the Act were confirmed. 4. Before us, the ld.AR has claimed that the assessee had submitted all relevant details to prove the genuineness of the said transaction. It is submitted that section 68 of the Act was wrongly applied as, admit....
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....e than 4 to 8 crore shares traded, the assessee traded only in 22,200 shares amounting to approximately 0.025%. The assessee therefore, was not in a position to affect the prices at all. This fact is conveniently overlooked by both the authorities. Off market purchases are not prohibited and in any case the purchases are not doubted as per ACIT v/s Ravinder Toshniwal - ITA 5302/M/08,Sudarshan Jalan, HUF Vs ITO-ITA 1664KOL/2018, Smt. Geeta Khare Vs ACIT-ITA 4267/M/18.The addition in this case was made simply on the basis of statements of some third persons without linking the same to the assessee and hence not sustainable. 4.2 It is also pointed out that the present case is squarely covered by the order passed by this Hon'ble Tribunal in case of assessee's husband which is Ketan H. Mehta v/s ACIT 32(2) Ι.Τ.Α. 6689/Mum/2025 and in the case of Ketan H. Mehta (HUF) v/s ITO-42(1)(1) ITA No. 770/MUM/2023 in which the assessee is a member (Karta's wife).Besides, the order could not be sustained also because the same was passed without providing him an opportunity to cross examine the parties whose statements are relied on despite specific requests. Even the statement of ....
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....vied and the consideration was routed through normal banking channel. The entire flow of these transactions is corroborated by relevant documentary evidences placed on record. While making the addition, there are no discrepancies pointed out by the Assessing Officer in the documents and the details furnished by the assessee. Ld. AO has not bothered to discuss or point out any defect or deficiency in the documents furnished by the assessee. These evidences furnished have been neither controverted by the Ld. AO during the assessment proceedings nor anything substantive brought on record to justify the addition made by him. At any stage of the present case, Revenue has not brought on record any material about participation of the assessee with any such dubious transactions relating to accommodation entry, price rigging or exit providers. To our mind, Ld. AO could have taken an adverse view only if he could point out the discrepancies or insufficiency in the evidence and details furnished in his office. Once the assessee has produced documentary evidence to establish the veracity of his claim, the burden would shift on the Revenue to establish its case. 7. On the perusal of re....
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....on cannot be sustained. In our considered view, ld. Assessing Officer has not established that the assessee was involved in price rigging. 8. We note that ld. Assessing Officer has observed about the so- called purchasers of shares sold by the assessee who have not been identified even though notices were issued u/s. 133(6) of the Act. In this context, it is worth noting that impugned share sale transactions undertaken by the assessee are on the online digital trading platform of stock exchange of BSE which is a regulated market under the aggies of a regulator viz. SEBI. There is nothing on record from the market regulator SEBI for the relevant period which establishes the 'tainted' status of the scrip involved in the present case, so as to hold the share sale transactions as bogus/accommodation entry as alleged by the ld. AO. It is also important to note that the operations and modus operandi of this regulated market does not in any way provide for any mechanism by which assessee can bring forth the identity of the buyers of his shares and their creditworthiness. Further, sale proceeds are received through the stock market process into the pre-identified bank acco....
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....properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law. 6. The appeal is devoid of merits and it is dismissed with no order as to costs." ii) PCIT vs. Indravadan Jain HUF [2023] 156 taxmann.com 605 (Bom) wherein it was held: "Where shares were purchased by assessee on floor of stock exchange and not from broker, payment was made through banking channel, deliveries were taken in DMAT account where shares remained for more than one year, contract notes were issued and shares were also sold on stock exchange, there was no reason to add capital gains as unexplained cash credit under section 68" iii) CIT vs. Shyam R. Pawar [2015] 54 taxmann.com 108 (Bom) wherein it was held: "Where DMAT account and contract note showed details of share transaction, and Assessing Officer had not proved said transaction as bogus, capital gain earned on said transaction could not be treated as unaccounted income under section 68" 9.1. We also take note of the decision of Coordinate Bench in the case of Balkrisna Gajanan Thopte vs. DCIT, in ITA No.33....