ITO Vs Jasmine Jayantibhai Sanghavi (ITAT Ahmedabad)
Penny-Stock Allegation Fails—Capital Gain Supported by Demat & Bank Evidence-AO Ignored Complete Documentation; 69A/69C Additions Deleted in Full
Tribunal considered Revenue’s appeal against deletion of additions of ₹1,98,723 u/s 69A & ₹1,987 u/s 69C relating to alleged accommodation entry in the scrip of Nobel Polymers Ltd. AO treated the LTCG as bogus on the basis of investigation wing input & held that Assessee introduced unaccounted money as sale proceeds.
CIT(A) deleted the addition after noting that Assessee had submitted capital gain computation, demat statements, transaction statement, Axis Bank details & share statements, all of which were acknowledged in the assessment order itself but ignored by AO.
Tribunal held that Assessee had duly established genuineness & creditworthiness of the transaction through complete documentary trail, and that the LTCG was properly disclosed in computation for AY 2016-17. Finding CIT(A)’s reasoning sound & AO’s conclusion unsupported, Tribunal upheld deletion of both additions. Revenue’s appeal was dismissed.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The appeal is filed by the Revenue against the order dated 08.08.2025 passed by the National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year 2016-17.
2. The grounds of appeal filed by the Revenue are as under:
1. “Whether on facts and circumstances of the case and in law, the ld.CIT(A) has erred in law and on facts in holding that the reassessment proceedings initiated vide notice u/s 148 dated 30.03.2021 were based on “borrowed satisfaction” and were hence invalid, without appreciating that the information received from the investigation Wing, which was specific, reliable and based on material unearthed during a survey u/s 133A, constituted sufficient “tangible material” for the formation of a bona fide belief that income had escaped assessment?”
2. “Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) was justified in deleting the addition made of Rs.1,98,723/- being unexplained money u/s. 69A and Rs.1,987/- as unexplained expenditure u/s 69C (being 1% commission for arranging the entry) without appreciating the fact that the assessee could not provide a satisfactory explanation regarding the trade value of Rs. 1,98,723/- made in the scrip of Nobel Polymers Limited?”
3. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in law and on facts in deleting the addition of Rs.2,00,710/-(1,98,723/- u/s 69A + Rs.1,987/- u/s 69C) of the Act, by ignoring the direct and cogent evidence gathered during the investigation which established that the assessee is one of the beneficiaries who received accommodation entries by carrying out sale transactions in Penny Scrip of Company M/s Nobel Polimers Ltd., Group entities controlled and managed by Shri Sanjay Shah and Jignesh Shah?”
3. The assessee is an individual and filed his return of income on 13.02.2017 declaring total income of Rs.3,74,130/- for A.Y. 2016-17. During the year under consideration, the assessee has undertaken transactions in the scrip of M/s. Nobel Polimers Limited for trade value of Rs.1,98,723/-. The AO observed that the same was not shown in the return of income. The case was taken up for scrutiny u/s.147 of the Act after taking approval of the competent authority. Subsequently, notice u/s.148 of the Act was issued on 30.03.2021. The assessee did not file income tax return in response to notice u/s.148 of the Act. In response to notices u/s.142(1) of the Act, the assessee filed reply on 16.02.2022 alongwith capital gain/loss computation statement, demat account statement transaction statement, Axis bank account statements, details of share before the AO. The AO observed that the assessee calculated long term capital gain by selling scrip of M/s. Nobel Polimers Limited in the capital gain computation statements but did not show the long term capital gain in his income tax return. After going through the records, the AO held that the assessee brought its unaccounted money in his account through accommodation entry and has not shown bogus long term capital gone in his income tax return for the said assessment year and, thus, added Rs.1,98,723/- as bogus long term capital gain u/s.69A of the Act as accommodation entry.
