Penny Stock LTCG Cannot Be Bogus Without Evidence Against Assessee: ITAT Mumbai

ITO Vs Abhishek Harshkumar Jain (ITAT Mumbai)

Summary: These two appeals were filed by the Revenue against separate orders dated 21.06.2024 passed by the learned CIT(A) for Assessment Years 2014-15 and 2015-16. Since the grounds and facts were substantially similar, the ITAT Mumbai clubbed both appeals and decided them through a common order, treating AY 2014-15 as the lead case.

For AY 2014-15, the assessee had declared long-term capital gain of Rs. 23,27,832/- on sale of shares of Lifeline Drugs and Pharma Ltd. and claimed the gain as exempt under Section 10(38) of the Income-tax Act, 1961. The assessment was reopened under Section 147 based on information from the Investigation Wing concerning alleged accommodation entries involving penny scrips. The Assessing Officer treated the entire sale consideration of Rs. 24,00,000/- as unexplained cash credit under Section 68 and also made an addition of Rs. 72,000/- under Section 69C towards alleged commission.

Before the CIT(A), the assessee submitted documentary evidence including the share application form, purchase and sale broker notes, bank statements, demat statement and evidence of receipt of sale consideration. The assessee contended that the transaction was genuine and that the Assessing Officer had relied upon third-party information without bringing any adverse material specifically against the assessee. The CIT(A) accepted the assessee’s submissions and deleted both additions.

Before the Tribunal, the Revenue contended that the Investigation Wing had conducted a detailed investigation into penny stock companies and that the impugned transactions represented accommodation entries. The assessee, on the other hand, supported the CIT(A)’s order and submitted that complete documentary evidence had been furnished and ignored by the Assessing Officer.

The Tribunal found that the additions had been made solely on the basis of information received from the Investigation Wing. It noted that the assessee had furnished evidence supporting the purchase and sale transactions and that the CIT(A) had recorded a categorical finding that the Assessing Officer had not brought any concrete evidence against the assessee or conducted an investigation establishing the assessee’s involvement in the alleged transaction.

The Tribunal referred to decisions including PCIT Vs. Indravadan Jain, HUF, Himani M. Vakil and Parasben Kasturchand Kocher. It held that, in the absence of cogent evidence specifically against the assessee, the long-term capital gain could not be treated as unexplained cash credit merely on the basis of third-party information or allegations concerning price manipulation.

The Tribunal therefore affirmed the deletion of the Section 68 addition. Since the alleged commission addition under Section 69C was consequential and there was no independent evidence establishing unexplained expenditure, that addition was also deleted. The Revenue’s appeals for both AY 2014-15 and AY 2015-16 were dismissed.

Background and Reassessment Proceedings

The assessee, an individual, filed his return of income for AY 2014-15 on 30.08.2014 declaring income of Rs. 5,67,540/-. The assessment was subsequently reopened under Section 147 on 21.09.2016 on the basis of information available with the Assessing Officer regarding an alleged racket involving bogus entries of long-term or short-term capital gains or losses in various penny scrips.

The assessee was identified as a beneficiary of long-term capital gain arising from sale of shares of Lifeline Drugs and Pharma Ltd. Notice under Section 148 was issued on 21.09.2016. The assessee stated that his original return may be treated as a return in response to the notice.

During reassessment, the Assessing Officer noted that the assessee had claimed long-term capital gain of Rs. 23,27,832/- on sale of shares of Lifeline Drugs and Pharma Ltd. as exempt under Section 10(38). The assessee’s statement was recorded under Section 131 on 12.12.2017, followed by a show-cause notice dated 15.12.2017.

The Assessing Officer ultimately treated the sale consideration of Rs. 24,00,000/- as unexplained cash credit under Section 68 and added 3% commission as unexplained expenditure under Section 69C in the assessment order dated 27.12.2017.

Assessee’s Evidence Before the CIT(A)

Before the CIT(A), the assessee filed detailed written submissions and relied upon judicial decisions concerning similar transactions involving Lifeline Drugs and Pharma Ltd. The assessee submitted that he had purchased 15,000 shares at Rs. 60/- per share through banking channels and that the shares were subsequently split in the ratio of 1:10.

After the split, the assessee held 1,50,000 shares. Out of these, 10,000 shares were sold during AY 2014-15 for Rs. 24,00,000/-, resulting in capital gain of Rs. 23,27,832/-.

The assessee furnished the share application form, broker notes for purchase and sale, bank statements showing payment, demat statement with Nirmal Bang Securities Private Ltd. and the bank statement showing receipt of sale consideration.

The assessee contended that the Assessing Officer had not brought any concrete evidence against him and that the evidence furnished had not been controverted.

CIT(A)’s Findings

The CIT(A) recorded that the assessee had furnished documentary evidence supporting the transaction. The CIT(A) found that the Assessing Officer had not brought material on record establishing that the transaction was a sham transaction.

The CIT(A) also observed that the evidence produced by the assessee could not be rejected merely on the basis of the allegations made by the Assessing Officer. According to the findings recorded by the CIT(A), no investigation had been carried out to establish the assessee’s involvement in the alleged sham transaction.

On that basis, the CIT(A) deleted the addition under Section 68. The CIT(A) also deleted the Rs. 72,000/- commission addition under Section 69C, observing that the estimation was not supported by evidence and that, once the Section 68 addition was deleted, the commission addition had no independent force.

Revenue’s Submissions Before ITAT

The learned Senior Departmental Representative submitted that the Investigation Wing had carried out a full-fledged investigation concerning penny stock companies allegedly managed by entry operators for providing accommodation entries of short-term or long-term capital gains or losses.

The Revenue contended that the Assessing Officer had sufficient evidence to treat the gain from the impugned scrip as bogus and had recorded detailed findings in the assessment order. It was further submitted that the CIT(A) had granted relief without properly appreciating the investigation and modus operandi referred to by the Assessing Officer.

The Revenue therefore sought reversal of the CIT(A)’s findings and restoration of the Assessing Officer’s additions.

Assessee’s Submissions Before ITAT

The assessee supported the CIT(A)’s order and submitted that the entire transaction was genuine. It was contended that complete documentary evidence had been furnished and that the Assessing Officer had incorrectly recorded that no reply had been filed.

The assessee submitted that the shares had been purchased at Rs. 60/- per share, subsequently split in the ratio of 1:10 and that 10,000 shares were sold at Rs. 2,400/- per share, resulting in long-term capital gain of Rs. 23,27,832/- after considering the cost of acquisition.

The assessee also relied upon various Tribunal and High Court decisions, including Pravin C. Bokadia vs ITO, Nitesh Kumar Gadia Vs ITO, Anoop Jain vs ACIT, Smt. Ritu Jain vs ACIT, Smt. Ridhi Bagaria vs ITO, PCIT vs Renu Aggarwal and PCIT vs Kuntala Mohapatra.

ITAT Mumbai’s Findings on Section 68 Addition

The Tribunal considered the rival submissions and examined the orders of the lower authorities. It found that the Assessing Officer had made the additions solely on the basis of information received from the investigation.

The Tribunal noted that the assessee had placed on record copies of replies and supporting evidence. It also noted the CIT(A)’s finding that the assessee had furnished the share application form, broker notes, bank statements, demat statement and evidence of receipt of the sale consideration.

The Tribunal observed that the Assessing Officer had not brought any material on record to controvert the evidence furnished by the assessee. It also noted that the price rise referred to by the Assessing Officer was beyond the control of the assessee and that the period of holding was not disputed.

The Tribunal further recorded that the assessee had sold the shares through BSE and paid securities transaction tax (STT). It found no allegation against the assessee that he was involved as an entry provider or exit provider or in price manipulation.

On these facts, the Tribunal held that there was no justification for treating the long-term capital gain as unexplained cash credit under Section 68 in the absence of cogent evidence specifically against the assessee.

Reliance on Judicial Precedents

The Tribunal referred to the decision in PCIT Vs. Indravadan Jain, HUF, where the issue concerned addition under Section 68 in relation to alleged penny stock transactions.

The Tribunal also relied upon the principles stated in PCIT Vs Parasben Kasturchand Kochar, concerning documentary evidence supporting share transactions and the inability of the Revenue to establish that the transaction was pre-arranged or sham.

It further referred to the Gujarat High Court’s decision in CIT Vs Maheshchandra G Vakil concerning the treatment of capital gains as unexplained cash credit where the assessee had furnished contract notes, bank statements and demat records.

The Tribunal also referred to Himani M. Vakil, where the Gujarat High Court held, as recorded in the order, that where the assessee duly proved genuineness of share transactions through contract notes, bank statements and demat account, the Assessing Officer was not justified in treating the resulting capital gain as unexplained cash credit.

Section 69C Commission Addition

The Assessing Officer had made an addition of Rs. 72,000/- under Section 69C towards alleged commission expenses. The CIT(A) deleted the addition, holding that the estimation of commission expenditure was not supported by evidence.

The Tribunal agreed with the CIT(A). It observed that once the Section 68 addition had been deleted, the alleged commission addition had no independent force. It further recorded that there was no evidence establishing that the assessee had incurred the alleged unexplained expenditure.

Accordingly, the Section 69C addition was also deleted.

AY 2015-16 Appeal

For AY 2015-16, the Revenue raised grounds similar to those raised for AY 2014-15, with variation in the figures of additions under Sections 68 and 69C.

Since the Tribunal had dismissed the Revenue’s appeal for AY 2014-15 on the relevant factual and legal issues, it followed the principle of consistency and dismissed the Revenue’s appeal for AY 2015-16 with similar directions.

Final Decision

The Tribunal affirmed the order of the CIT(A) deleting the additions under Sections 68 and 69C. It held that the documentary evidence furnished by the assessee had not been controverted by any cogent material and that the Revenue had not established the assessee’s involvement in the alleged accommodation entry or price manipulation transaction.

The appeal of the Revenue for AY 2014-15 was dismissed. The appeal for AY 2015-16 was also dismissed following the principle of consistency.

Thus, in the combined result, both appeals filed by the Revenue were dismissed. The order was pronounced in the open Court on 05/08/2026.

Cases Discussed

• Pravin C. Bokadia vs ITO in ITA No. 736/Mum/2022 dated 13.12.2022
• Nitesh Kumar Gadia Vs ITO (2024) 161 taxmann.com 215 (Surat)
• Anoop Jain vs ACIT, (2020) 181 ITD 218 (Delhi Trib.)
• Smt. Ritu Jain vs ACIT (2021) 187 ITD 671 (Delhi Trib.)
• Smt. Ridhi Bagaria vs ITO (2023) 201 ITD 581 (Cuttack Trib.)
• PCIT vs Renu Aggarwal (2023) 456 ITR 249 SC)
• PCIT vs Kuntala Mohapatra (2024) 160 taxmann.com 608 (SC).
• Parasben Kasturchand Kocher (2021) 130 taxmann.com 176 (Guj)
• Himani M. Vakil (2014) 41 taxmann.com 425 (Guj)
• PCIT Vs. Indravadan Jain, HUF in Income Tax Appeal No.454 of 2018 dated 12.07.2023
• PCIT Vs Mamta Rajiv Kumar Agarwal (2023) 155 com 549 (Gujarat)

Alternative SEO Titles

ITAT Mumbai Deletes Penny Stock Additions Under Sections 68 and 69C

ITAT Mumbai Deletes LTCG Addition for Lack of Cogent Evidence

ITAT Mumbai Rejects Penny Stock Addition Based on Third-Party Information

ITAT Mumbai Upholds Deletion of Section 68 LTCG Addition

ITAT Mumbai Dismisses Revenue Appeals in Lifeline Drugs Share Transactions

FULL TEXT OF THE ORDER OF ITAT MUMBAI

1. These two appeals by Revenue are directed against the separate orders of ld. CIT(A) both dated 21.06.2024 for Assessment Year (AY) 2014-15 & 2015-16. In both the appeals the revenue has raised similar ground of appeals, except variation in the figure of additions under section 68 & 69C, certain facts in both the years are common. Thus, with the consent of parties both the appeals were clubbed heard together and are decided by common order. For appreciation of facts, the appeal for AY 2014-15 is treated as lead case. The revenue in its appeal for AY 2014-15 has raised following grounds of appeal:

“1. On the facts and the circumstances of the case and in law the Ld. CIT(A) erred in deleting the addition of Rs. 24,00,000/- as unexplained cash credit made by the AO without appreciating the facts of the case and modus operandi as a detailed investigation has been carried out by the Investigation Wing of Kolkata in the scrip M/s. Life Line Drugs and Pharma Ltd.

2. On the facts and the circumstances of the case and in law the Ld. CIT(A) erred in deleting the addition made by the AO without appreciating the facts that in such penny scrip, trading transactions of purchase and sales are not affected for commercial purpose but to create artificial Gain/loss and complete the cycle of circular trading with a view to evade taxes.

3. On the facts and the circumstance of the case and in law the Ld. CIT(A) erred in not appreciating the fact that transaction of shares of such penny scrip are not governed by market factors prevalent at relevant time rather transactions are product of design and mutual connivance on part of assessee and operators.

4. On the facts and the circumstance of the case and in law the Ld. CIT(A) erred in not appreciating the fact of the case and modus operandi of the scrip is utilized by entry operators for providing accommodation entries under the garb of Long Term Capital Gain/Short Term Capital Gain Loss by manipulating/rigging up the share price.

5. On the facts and circumstance of the case and in law the order of the Ld. CIT(A) suffers from perversity as it ignores the facts brought on record establishing manipulation of share prices of M/s. Life Line Drugs and Pharma Ltd. as part of colourable device to generate fictitious Long Term Capital Gain/ Short Term Capital Loss with the aim to evade taxes due.

6. On the facts and circumstance of the case and in law the Learned ld. CIT(A) erred in deleting the addition of 72,000/- being commission u/s 69C of the Act overlooking the fact that the entire transactions were stage managed with the object to facilitate the assessee to plough back its unaccounted income in the form of fictitious Long Term Capital Gain/ Short Term Capital Loss/Gain.”

2. Brief facts of the case are that assessee is individual, filed his return of income for A.Y. 2014-15 on 30.08.2014 declaring income of Rs. 5,67,540/-. Later on, the case of assessee was reopened under section 147 on 21.09.2016. The case was reopened on the basis of information with the Assessing Officer (AO) that Investigation Wing carried out investigation about racket of bogus entry provider of long term or short term capital gain or loss in various penny scrips. The assessee is one of the beneficiaries of penny scrip transaction. The assessee is beneficiary of long term capital gain on sale of scrip of Lifeline Drugs and Pharma Ltd. The AO after recording reasons of reopening issued notice under section 148 on 21.09.2016. In response to notice under section 148, the assessee filed reply and sated that return filed originally may be treated as return in response to notice under section 148. The AO after serving statutory notices proceeded for reassessment. During reassessment, the AO recorded that as per computation of income, the assessee has claimed long term capital gain of Rs. 23,27,832/- on sale of share of Lifeline Drugs and Pharma Ltd. which is claimed as exempt under section 10(38). The AO further recorded that statement of assessee was recorded under section 131 on 12.12.2017. The AO issued show cause notice dated 15.12.2017. As per show cause notice, the long term capital gain shown by assessee is not genuine and assessee was asked as to why the gain earned on sale of such share should not be treated as unexplained credit. In para 10 of assessment order, the AO recorded that assessee has not filed reply. The AO on the basis of information with him and by referring modus operandi of entry provider treated the entire sale consideration on sale of shares of Lifeline Drugs and Pharma Ltd of Rs. 24.00 as unexplained credit under section 68. The AO also added 3.00%commission expenses as unexplained expenditure for taking alleged entry of capital gain in the assessment order dated 27.12.2017.

3. Aggrieved by the action of AO, the assessee filed appeal before ld. CIT(A). Before ld. CIT(A), the assessee filed very details written submission running into 70 pages. The assessee also relied on various case laws wherein addition on sale of scrip of Lifeline Drugs and Pharma Ltd. was deleted. The assessee in its submissions submitted that his case also covered by various decision of Mumbai High Court of various Tribunals. The AO made addition on the basis of third party information. The assessee has earned genuine long term capital gain. The assessee purchased 15000 shares of Lifeline Drugs Pharma Ltd. The shares were purchased through bank account cheque. The shares were sold through Demat account. The shares were split for a face value of Rs. 6.00/- each. The investigation is recorded in the books of account. The shares were sold through stock broker registered with SEBI. The assessee furnished complete details. The security transaction was paid on sale of shares. The sale consideration was received in his bank account. No enquiry was conducted in respect of the evidences furnished by assessee. The action of AO is based on mere suspicious. The assessee also relied on various case laws, wherein it was held that where the assessee filed complete evidence to prove transaction and the AO has not brought any adverse evidence to counter such evidence and merely relied on the third party information, the additions are not justified.

4. The ld. CIT(A) on considering submission of assessee recorded the contention of assessee in various sub-para of para 7 of his order. The ld. CIT(A) recorded that assessee purchased 15000 shares of Lifeline Drugs & Pharma Ltd. the shares were purchased @ Rs.60.00 per share. The assessee made investment of Rs. 9.00 lakhs. Subsequently, the shares were split in the ratio of 1:10. Resultantly, the assessee held 1,50,000 shares in total. Out of which 10000 was sold in A.Y. 2014-15 for a consideration of Rs. 24.00 lacs resultant capital gain of Rs. 23,27,832/-. The AO treated the entire sale consideration as unexplained credit. The assessee claimed that transaction made by him is genuine and in support of his claim he has furnished share application form, broker note for sale and purchase of shares, bank statement showing the payment of Demat statement with Nirmal Bang Securities Private Ltd., Bank statement showing the sale consideration. The assessee has raised various factual and legal issue that whole show cause notice was based on assumption and presumption, no concreate evidence is brought on record by AO. The evidence produced by assessee was not negated by the AO. The price rise shown by AO is erroneous and beyond the control of assessee. There is no prohibition under the Act for purchasing share offline period of held is not disputed. He is not aware about entry or exit providers. The ld. CIT(A) by referring various decisions of jurisdictional High Court and Tribunal held that AO failed to bring on record any material to prove that transaction of assessee was shame transacted. The evidence could not be rejected. There is no evidence with the AO to implicate the assessee. The allegation of AO is without any evidence and contrary to the facts and the evidence available on record. The ld. CIT(A) also held that no investigation was carried out to prove the involvement of assessee in the alleged shame transaction. The AO has not brought any evidence against the assessee. On the basis of such categorical finding, the ld. CIT(A) deleted the addition of section 68. While deleting the addition of commission expenses of Rs. 72,000/-, the ld. CIT(A) held that estimation of commission expenses is not supported by any evidence. Moreover, when addition of section 68 is deleted, the disallowance of commission expenses has no independent force. Aggrieved by the order of ld. CIT(A), the Revenue has filed present appeal before Tribunal.

5. We have heard the submission of learned Authorised Representative (ld. AR) of the assessee and the learned Senior Departmental Representative (ld. Sr. DR) for the Revenue. The ld. Sr. DR for the Revenue submits that Investigation Wing carried out a full-fledged investigation about the penny stock companies which were managed by entry operator for providing accommodation entry of short term capital gain or long term capital gain or loss. As per Investigation Wing, the AO was having sufficient evidence to treat the gain on sale of impugned scrip as bogus capital gain. The AO meticulously gave his finding in the assessment order. The AO in his show cause notice clearly mentioned the facts that the assessee purchased shares off the market in the form of preferential shares. The said company was not having good financial result. The ld. CIT(A) allowed relief by simply taking view that there is no involvement of assessee in the same transaction. The ld. Sr. DR for the revenue prayed for reversing the finding of ld. CIT(A) and to restore the order of AO.

6. On the other hand, the ld. AR of the assessee supported the order of ld. CIT(A). The ld. AR of the assessee submits that entire transaction of assessee is genuine. The assessee furnished complete details to prove his transaction beyond doubt. The copy of reply filed by assessee vide reply dated 18.11.2017 and 19.12.2017 is placed on record. Despite filing complete evidence, the AO simply recorded that no reply is filed by assessee. The assessee purchased 15000 shares @ Rs. 60/- per share of impugned scrip. Later on, the shares were split in the ration of 1.10. The assessee sold 1000 share @ Rs. 2400/- per share and after set off of cost of acquisition, the assessee earned long term capital gain of Rs. 23,27,832/-. The assessee also sold other share in subsequent assessment years. The assessee furnished complete details to substantiate the transaction. The AO conveniently ignored the evidence furnished by assessee. The AO acted solely on the basis of information without giving any weightage to the documentary evidence. The co-ordinate bench of Tribunal in a series of decision of similar transaction deleted the addition by taking a consistent view that AO cannot make addition solely on the basis of third-party information. The ld. AR of the assessee submits that on similar set of fact, the co-ordinate bench in case of Pravin C. Bokadia vs ITO in ITA No. 736/Mum/2022 dated 13.12.2022and in Nitesh Kumar Gadia Vs ITO (2024) 161 taxmann.com 215 (Surat) deleted the similar addition on sale of similar scrip. The ld. AR of the assessee also relied on the following case laws:

> Anoop Jain vs ACIT, (2020) 181 ITD 218 (Delhi Trib.)

> Smt. Ritu Jain vs ACIT (2021) 187 ITD 671 (Delhi Trib.)

> Smt. Ridhi Bagaria vs ITO (2023) 201 ITD 581 (Cuttack Trib.)

> PCIT vs Renu Aggarwal (2023) 456 ITR 249 SC)

> PCIT vs Kuntala Mohapatra (2024) 160 taxmann.com 608 (SC).

7. We have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. We find that the AO made additions solely on the basis of information received from investigation with him. The AO also held that no reply was filed by the assessee. Before us, the ld AR of the assessee vehemently argued that the assessee filed reply before AO, copies of such reply along with the evidences filed before AO is also placed on record. We find that the ld CIT(A) while allowing relief to the assessee held that in support of his claim the assessee has furnished share application form, broker note for sale and purchase of shares, bank statement showing the payment of Demat statement with Nirmal Bang Securities Private Ltd., Bank statement showing the sale consideration. The ld CIT(A) noted that the assessee has raised various factual and legal issue that whole show cause notice was based on assumption and presumption, no concreate evidence is brought on record by AO. The evidence produced by assessee was not negated by the AO. The price rise shown by AO is erroneous and beyond the control of assessee. It was held that there is no prohibition under the Act for purchasing share offline. The period of holding is not disputed. We find that ld. CIT(A) by referring various decisions of jurisdictional High Court and Tribunal held that AO failed to bring on record any material to prove that transaction of assessee was shame transacted. The evidence could not be rejected. There is no evidence with the AO to implicate the assessee. The allegation of AO is without any evidence and contrary to the facts and the evidence available on record. The ld. CIT(A) also held that no investigation was carried out to prove the involvement of assessee in the alleged shame transaction. It was also held that the AO has not brought any evidence against the assessee and deleted both the additions.

8. We find that Hon’ble Gujarat High Court in the case of Himani M. Vakil (2014) 41 taxmann.com 425 (Guj) held that where assessee duly proved genuineness of sale transaction by bringing on record contract notes of sale and purchase, bank statement of broker and Demat account showing transfer in and out of shares, AO was not justified in bringing to tax capital gain arising from sale of shares as unexplained cash credit. Gujarat High Court in the case of Parasben Kasturchand Kocher (2021) 130 taxmann.com 176 (Guj), also held that when assessee discharged his onus by establishing that transactions were fair and transparent and all relevant details with regard to transfer furnished to Income Tax Authority and the Tribunal have also took the notice of fact that the shares remained in the account of assessee, the assessee also furnished Demat account and details of bank transaction about the sale and purchase of shares, the addition was deleted.

9. Further, we find of Hon’ble Jurisdictional High Court in the case of PCIT Vs. Indravadan Jain, HUF in Income Tax Appeal No.454 of 2018 dated 12.07.2023 also held that when Assessing Officer nowhere alleged that transactions made by assessee with a particular broker or share broker was bogus, merely because investigation was done by SEBI against the broker or its activities, the assessee cannot be said to have entered into ingenuine transaction. In a recent decision in PCIT Vs Mamta Rajiv Kumar Agarwal (2023) 155 com 549 (Gujarat) also held that where the assessee had sold the shares and earned LTCG and the Assessing Officer alleged that transaction was penny stock deal aim at illegitimately claiming LTCG exemption under section 10(38), since there was no allegation on record suggesting the assessee is involved in rigging up the price of scrips, the addition was rightly deleted by Tribunal. We find that assessee made sale of shares through BSE and paid security transaction tax (STT) and there is no allegation against the assessee he was involved in entry provider or acted as exit provider on in price manipulation. Therefore, we do not find any justification in treating the LTCG as unexplained cash credit in absence of any cogent evidence against the assessee specific.

10. We find that while considering the similar scrips that is on sale of share of Lifeline Drugs and Pharma Ltd, the coordinate bench of this Tribunal in Nitesh Kumar Gadia Vs ITO (supra) and in Praveen Bokadia Vs ITO (supra) deleted similar additions by taking view that held that where there is no material in brought to controvert the evidence filed by the assessee on record. We find that similar view was taken by various bench of Tribunal that when the assessee has discharged his primary onus in furnishing complete evidence to substantiate the transaction and the AO neither commented on such evidence nor brought any adverse material on record, the reliance on the third party statement for making addition is not justified. Thus, in view of the above factual and legal discussions, we do not find justification in making addition under section 68. Once, the addition of section 68, therefore, the addition of alleged unexplained investment under section 69C is also deleted. Otherwise, there is no evidence that the assessee has incurred alleged unexplained expenditure. Hence, we affirm the order of ld CIT(A) with our additional observations.

11. In the result, the appeal of revenue for AY 2014-15 is dismissed.

12. We find that in appeal for AY 2015-16, the revenue has raised similar grounds of appeal as raised in AY 2014-15 except variation in the figures of additions under section 68 & 69C. Considering the facts that we have dismissed the appeal of revenue in AY 2014-15, therefore following the principal of consistency, this appeal is also dismissed with similar directions. In the result, the appeal of AY 2015-16 is dismissed.

13. In the combined result, both the appeals of revenue are dismissed.

Order was pronounced in the open Court on 05/08/2026.