TaxTMI 
TaxTMI 
2026 (8) TMI 1019
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.... 2018-19. The AO had received an information that the assessee had entered into significant financial transaction during the year by way of sale of shares of M/s. Kushal Tradelink Pvt. Ltd., for a total consideration of Rs. 1,60,49,630/- but no return of income was filed. The AO had, therefore, initiated proceeding u/s. 147 of the Act for escapement of income and a notice u/s. 148 of the Act was issued on 31.03.2022. The AO had treated the entire sale consideration of Rs. 1,60,49,630/- as accommodation entry taken by the assessee and added to income. The assessment was completed u/s. 147 r.w.s 144 of the Act on 27.04.2023 at total income of Rs. 1,60,50,010/-. 4. Aggrieved with the order of the AO, the assessee had filed an appeal before the first appellate authority, which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was partly allowed. 5. Now the Revenue is in appeal before us. The following grounds have been taken in this appeal: (i) On facts and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 1,60,49,630/- made by the Assessing Officer under Section 69A of the Income Tax Act, 1961, without properly appreciating ....
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.... appeal. 7. Shri Rameshwar P Meena, the Ld. SR-DR, submitted that the Ld. CIT(A) was not correct in deleting the addition of Rs. 1,60,49,630/- on account of accommodation entries obtained by sale of shares of penny scrips company of M/s. Kushal Tradelink Pvt. Ltd. He submitted that the assessee did not file her return of income and the sale proceeds/capital gain derived thereon was not disclosed to the Department. According to the Ld. SR-DR, the assessee was required to file her return even if the LTCG was claimed as exempt u/s. 10(38) of the Act. He explained that the transactions in the Kushal group scrips were utilized for allowing accommodation entries to the beneficiaries and the assessee was one such beneficiaries. He, therefore, strongly supported the order of the Assessing Officer and contended that the Ld. CIT(A) was not correct in deleting the addition. 8. Shri Biren Shah, the Ld. AR of the assessee submitted that the Ld. CIT(A) had considered the reasons recorded by the AO and rightly held that there was no evidence on record to establish that the assessee had taken any accommodation entry. He explained that the purchase and sale of shares of Kushal Tradelink Pvt. ....
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....der the circumstances, the finding of the AO that the LTCG derived by the assessee in the sale of shares of Kushal Tradelink Pvt. Ltd was bogus, is found to be based on mere presumption and not on any material fact. The Ld. CIT(A) has rightly held that the assessee had duly explained these transactions through the evidences and there was no basis to treat the sale proceeds of the assessee as unexplained. The specific finding by the Ld. CIT(A) in this regard, is reproduced below: "9.1. The brief facts of the case are that the case of the appellant, who is a non-resident individual was re-opened u/s 148A of the Act on the basis of information flagged on Insight Portal relating to a Search and seizure action u/s. 132 of the Act in the case of Kushal Group of Ahmedabad carried out on 05/02/2019. It is the allegation of the AO that Kushal Group is engaged in providing accommodation entries in the form of bogus Long Term Capital Gain/Loss (LTCG/LTCL) and Short-Term Capital gain/loss. It was observed that the appellant has also entered into the transactions in the script of "Kushal Limited" and consequently notice u/s 148 of the Act was issued on 31.03.2022 in response to which t....
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.... was beneficiary of bogus LTCG. 9.13 In view of detailed discussion made above, it is observed that addition made in present case is without any evidence and only on basis of presumption, surmises and conjectures, hence addition made u/s 69A of Rs. Rs. 1,60,49,630/- is deleted. Thus, these grounds of appeal no. 3 to 10 of the appeal are allowed. 10. The Revenue has been unable to controvert the findings of the Ld. CIT(A). Hon'ble Gujarat High Court has held in the case of Sanjaykumar Damjibhai Gangani [2025] 178 taxmann.com 276 (Gujarat) that where assessee-company claimed LTCG under section 10(38) arising out of sale of shares of S and had furnished complete evidence including contract note of shares, de-mat details, detail of bonus shares, since no adverse evidence was brought against said evidences, Assessing Officer was not justified in making addition under section 68 merely on allegation that assessee was a beneficiary of penny stock scrip. The findings of the Hon'ble Court are reproduced below: [16] Considering the contentions raised on behalf of the Revenue, the Tribunal has arrived at a finding of fact that shares of Sunrise Asian Ltd. sold by the asse....
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....pplying the same to the facts of the case, we are of the opinion that no question of law much-less any substantial question of law arises from the impugned order of the Tribunal on the same reasoning as assigned by this Court in the said case. 11. In view of the facts as already discussed earlier and also following the judicial precedents, we do not find any infirmity in the order of the Ld. CIT(A). The Assessing Officer had merely relied upon the findings of Investigation Wing without carrying out any independent investigation of his own. Nothing was brought on record that would establish that the assessee was beneficiary of alleged accommodation entries. No corroborative evidences to support the allegations of Assessing Officer are found available on record. The documentary evidences submitted by the assessee were neither proved contrary nor proved fabricated. Assuming that the brokers may have done some manipulation; but the assessee cannot be held liable for the act of the brokers when the entire transactions have been done through banking channel duly recorded in the de-mat account with a depository and traded on the stock exchange. The sale transactions took place through ....