2026 (5) TMI 1759

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.... 2. The Department has raised the following grounds of appeal: "(a) The Ld. CIT(A) erred in law as well as on facts in following the appeal of the assessee and treating the addition made of Rs. 26,56,595/- baseless and unwarranted. (b) The Ld. CIT(A) erred in law as well as on facts in not appreciating the information received in the respect of Shri Naresh Jain and others contained details that he was operating with his several associates to rig the stock market and to provide accommodation entries (in the form of bogus LTCG, bogus shortterm loss/gain) to various beneficiaries who intended to bring their unaccounted income into their books of account without paying taxes and thereby not appreciating that the assessee fail....

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....Officer examined the transactions undertaken by the assessee in the scrips of Goenka Business and Finance Ltd. and Ejecta Marketing Ltd. The Assessing Officer himself noted from the available records that the assessee had traded in these scrips and had earned a nominal short-term capital gain of Rs. 1,766.60 (after considering a small loss in one scrip and profit in another), which had already been duly offered to tax by the assessee in the return of income. However, by placing reliance upon the investigation report, the Assessing Officer held that the assessee had obtained accommodation entries in the garb of long-term capital gains/losses amounting to Rs. 26,56,595/- through Shri Naresh Manakchand Jain. The Assessing Officer held that suc....

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....hat the addition made by the Assessing Officer was devoid of any factual foundation. The CIT(Appeals) observed that while the Assessing Officer had reproduced certain tabular details of share transactions, the same only reflected a minor short-term capital gain already offered to tax by the assessee. Insofar as the addition of Rs. 26,56,595/- was concerned, the CIT(Appeals) noted that there was a complete absence of basic details such as the nature of transactions, the specific scrips involved, the manner in which the alleged gains accrued to the assessee, or any statement or material linking the assessee to the alleged accommodation entry provider. The CIT(Appeals) further observed that even the bank statements of the assessee did not reve....

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.... providing accommodation entries through penny stock transactions. However, as rightly observed by the learned CIT(Appeals) in para 5 of the order, the Assessing Officer has failed to bring on record any specific material to establish a live nexus between the assessee and the alleged accommodation entry provider. The assessment order is conspicuously silent on critical aspects such as the exact nature of the transactions attributed to the assessee, the specific scrips through which the alleged gains were generated, the dates and manner of such transactions, and the corresponding flow of funds. 11. The learned CIT(Appeals) has recorded that even the basic details regarding the alleged amounts of Rs. 1,97,600/- Rs. 9,10,218/- and Rs. 15,48....