Amita Rambilas Agarwal Vs ITO (ITAT Mumbai)
The assessee appealed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, dated 18.12.2025 for Assessment Year 2014-15. The principal dispute concerned the addition of Rs. 85,35,780 representing Long-Term Capital Gain (LTCG) on the sale of shares of Sunrise Asian Ltd. (formerly Santoshima Trade Links Ltd.), which the Assessing Officer treated as unexplained cash credit under Section 68 after rejecting the assessee’s claim for exemption under Section 10(38) of the Income-tax Act, 1961. The assessee also challenged the addition of Rs. 2,56,073 alleged to be commission paid for obtaining a bogus LTCG entry and the initiation of penalty proceedings under Section 271(1)(c).
The Tribunal identified Ground No. 1 as the principal issue, namely whether the Commissioner (Appeals) was justified in confirming the denial of exemption under Section 10(38).
The Tribunal observed that during the relevant year, the assessee had disclosed LTCG of Rs. 85,35,780 on the sale of 8,000 equity shares of Sunrise Asian Ltd. and claimed exemption under Section 10(38). The claim had been rejected by the Assessing Officer and the rejection was upheld by the Commissioner (Appeals).
Upon examining the record, the Tribunal found that the assessee had produced several documents demonstrating that the shares had been purchased through banking channels and had also filed detailed written submissions in support of the claim. The Tribunal noted that the Assessing Officer had not pointed out any defect in the documentary evidence relied upon by the assessee.
The Tribunal further observed that Coordinate Benches of the ITAT had, in several cases involving the same scrip, deleted similar additions. The Tribunal reproduced the operative portion of the decision in Anraj Hiralal Shah (HUF) v. ITO, wherein it had been held that the assessee had purchased and sold shares through different brokers, the Assessing Officer had not established that the brokers were tainted, the purchase had been accepted, the shares had been reflected as investments, the delivery of shares through the demat account stood proved, and there was no material showing that the assessee was involved in fraudulent price rigging. In those circumstances, the Coordinate Bench had directed deletion of both the LTCG addition and the related addition towards expenses.
The Tribunal found that the facts of the present case were identical. It recorded that the assessee had purchased the shares through proper banking channels, held them in a demat account, sold them through a recognised stock exchange, and that there was no direct evidence linking the assessee with any manipulation or accommodation entry provider.
Considering the totality of the facts and circumstances and respectfully following the earlier decisions of the Coordinate Benches, while adhering to the doctrine of binding precedents and maintaining judicial consistency, the Tribunal allowed Ground No. 1.
In view of this finding, the Tribunal held that the remaining grounds relating to the alleged commission addition of Rs. 2,56,073 and initiation of penalty proceedings under Section 271(1)(c) had become infructuous and did not require separate adjudication.
Accordingly, the appeal was partly allowed.
Cases Discussed
- Rambilas S. Agarwal v. DCIT (ITAT Mumbai) – ITA No. 3238/Mum/2023, order dated 08/04/2025.
- PCIT-1 v. Divyaben Prafulchandra Parmar, R/Tax Appeal No. 812 of 2023, decided on 02/01/2024.
- Dipesh Ramesh Vardhan v. DCIT (ITAT Mumbai) – ITA No. 7648/Mum/2019, order dated 11/08/2020.
- Anraj Hiralal Shah (HUF) v. ITO (ITAT Mumbai) – ITA No. 4514/Mum/2018, order dated 16/07/2019.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal is filed by the Assessee against the order of Ld. Commissioner of Income Tax Faceless Appeal Centre vide DIN: ITBA/NFAC/S/250/2025-26/1083857605(1) dated 18-Dec-2025 for the Assessment Year 2014-15. The Assessee has raised the following grounds of appeal:
1. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in confirming the addition made by the Ld AO of Rs. 85,35,780/- being the Long Term Capital Gain on sale of shares of M/s Sunrise Asian Limited (earlier Santoshima Trade Links Limited) to the returned income as unexplained credit u/s 68 of the Income Tax Act, 1961 by not allowing the claim of genuine LTCG claimed as exempt u/s 10(38) of the Income Tax Act, 1961, in respect of shares sold and purchased as per prevailing law and the reasons assigned for doing so are wrong and contrary to the provisions of the Income Tax Act and the rules made thereunder.
2. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in confirming the addition of Rs. 2,56,073/- being the amount allegedly representing commission paid for obtaining the bogus LTCG entry, when no evidence whatsoever of such commission payment, arrangement or quid pro quo exists on record, and the reason assigned for doing so is wrong and contrary to the provisions of the Income Tax Act and the rules made thereunder.
3. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in confirming the initiation of penalty u/s 271(1)(c) of the Income Tax Act, 1961 by the Ld. AO when the income in question was transparently claimed and disclosed in the original return filed on 31.07.2014, thereby negating any element of concealment or furnishing of inaccurate particulars, and the reason assigned for doing so is wrong and contrary to the provisions of the Income Tax Act and the rules made thereunder.
4. Your appellant craves your leave to amend, alter, add or modify any or all grounds of appeal on or before the final disposal of the appeal.
2. Ground No. 1 raised by the assessee relates to challenging the order of the Ld. CIT(A) in confirming the addition made by the AO by disallowing the LTCG exemption claimed by the assessee under Section 10(38) of the Act.
3. I have heard the counsel for both the parties, perused the material placed on record, the judgments cited before me, and also the orders passed by the Revenue Authorities. From the records, I noticed that, during the year under consideration, the assessee had reported LTCG of Rs. 85,35,780 on the sale of 8,000 equity shares of Sunrise Asian Ltd. (formerly known as Santoshi Maa Tradelinks Ltd.) and claimed exemption under Section 10(38) of the Act, which was rejected by the AO and upheld by the Ld. CIT(A).
4. On going through the case records, I found that the assessee had placed on record a number of documents to demonstrate that the shares were purchased through banking channels, and in this regard, detailed written submissions were also filed. However, the fact remains that the AO had not found any defect in the documents relied upon by the assessee. Moreover, the Coordinate Bench of the ITAT, in a number of decisions where the same scrip was involved, has deleted similar additions, and the same are reproduced herein below:
- Anraj Hiralal Shah (HUF) v. ITO – ITA No. 4514/Mum/2018, order dated 16/07/2019.
- Dipesh Ramesh Vardhan v. DCIT – ITA No. 7648/Mum/2019, order dated 11/08/2020.
- Rambilas S. Agarwal v. DCIT – ITA No. 3238/Mum/2023, order dated 08/04/2025.
- PCIT-1 v. Divyaben Prafulchandra Parmar – R/Tax Appeal No. 812 of 2023, decided on 02/01/2024.
5. The operative portion of the one of the decision of Coordinate Bench of ITAT in the case of, Anraj Hiralal Shah (HUF) V. ITO (ITA NO. 4514/Mum/2018), is reproduced herein below:
7. I have heard rival contentions and perused the record. I notice that the AO has received information about suspicious share transactions and on the basis of the same; he has disbelieved the claim of long term capital gains. 1 notice that the assessee has purchased shares through a broker named M/s Eden Financial Services and sold shares through Intime Equities Ltd. Thus, I notice that the purchase and sale of shares have been carried out through two different brokers. It is not the case of the AO that both the share brokers referred above have been identified as tainted brokers involved in fraudulent transactions.
8. The assessee has earned speculation profit in the immediately preceding year through M/s Eden Financial Services also and the said profit has been used to purchase the shares of M/s Sunrise Asian Ltd. The assessee has offered the speculation profit for income tax purposes in the immediately preceding year and it has been accepted. Further the assessee has shown the purchase of impugned shares as investment in the Balance Sheet. Hence the purchase of shares has been accepted. Further the shares have been received in the D-mat account of the assessee and they have been sold through the D-mat account only. Hence the delivery of shares also stand proved. The AO has not brought any material on record to show that the assessee was part of fraudulent price rigging. Accordingly, in the absence of any evidence to implicate the assessee or to prove that the transactions are bogus, I am of the view that the capital gains declared by the assessee cannot be doubted with. In that view of the matter, the addition made towards expenses is not also sustainable.
9. Accordingly, I set aside the order passed by Ld CIT(A) on both the issues and direct the AO to delete both the additions.
10. In the result, the appeal of the assessee is allowed.
6. As submitted by the assessee, the facts of the present case are identical, as the assessee had also purchased the shares through proper banking channels, held them in a demat account, sold them through a recognized stock exchange, and there is no direct evidence linking the assessee with any manipulation or accommodation entry provider.
7. Therefore, considering the totality of the facts and circumstances of the case, and respectfully following the decisions of the Coordinate Bench of the ITAT, while adhering to the doctrine of binding precedents and maintaining judicial consistency, I allow Ground No. 1 raised by the assessee.
8. In view of the findings rendered above, the other grounds raised by the assessee have become infructuous and, accordingly, do not require separate adjudication.
9. In the result appeal filed by the assessee stands partly allowed.
Order pronounced in the open court on 21.07.2026
