Income Tax Appellate Tribunal - Mumbai
Dcit Cc 5 2, Mumbai, Mumbai vs Symphony Merchants Private Limited, ... on 15 April, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "B" MUMBAI
BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER)
AND
MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER)
ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025
Assessment Year: 2011-12, 2013-14, 2014-15, 2015-16
DCIT CC 5 2, Symphony Merchants Pvt. Ltd.,
Room No. 427, 4th floor, Office No. 21, 10th floor, Building No.
Kautilya Bhavan, BKC, Vs. 3, Navjivan Commercial Premises
Mumbai-400051. Co-operative Society Lamington
Road,
Mumbai-400008.
PAN NO. AADCS 5411 K
Appellant Respondent
Assessee by : Ridhisha Jain, CA &
Karan Jain, Adv. (Virtually appeared)
Revenue by : Mr. Swapnil Choudhari, Sr. DR
Date of He aring : 26/02/2026
Date of pronouncement : 15/04/2026
ORDER
PER BENCH These appeals by the Revenue are directed against separate orders all dated 14.08.2025 passed by the Ld. Commissioner of Income-tax (Appeals) - 53, Mumbai [in short 'the Ld. CIT(A)'] for assessment year 2011-12, 2013-14, 2014-15 ; 2015-16 (two Symphony Merchants Pvt. Ltd. 2 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 appeals). As common issue in dispute are involved in these appeals, appeals therefore, same were heard together and disposed off by way of this consolidated order for the sake of convenience.
2. Now, we take up the appeal of the Revenue for assessment year 2011-12. grounds raised by the Revenue are reproduced
12. The grounds as under:
i) "Whether on the facts and circumstances of the case and in law, whether the Ld.CIT(A) is justified in deleting disallowance of loss of Rs. 80,46,414/ on account of loss on purchase and sale of shares in respect of penny stocks as bogus.
ii) "The Appellant crave, leave to add, alter, amend or modify any or all grounds of appeal on or before the date of hearing."
3. Briefly stated, facts of the case are that the assessee filed return of income in the year under consideration on 15.09.2011 declaring total loss of Rs.1,63,46,271/-.
Rs.1,63,46,271/ . The return of income was processed u/s 143(1) of the Act. Thereafter, in view of the rmation received from the office of Chief Commissioner of information Income-tax, tax, Kolkata vide letter dated 31.03.2016 indicating that assessee was beneficiary of the transactions of the accommodation entry in penny nny stock companies; the he Assessing Officer recorded reasons assessment and issued ons to believe that income escaped assessment notice u/s 148 of the Act.
3.1 In response, the assessee reiterated the returned loss. During reassessment, the Assessing Officer noticed that that business loss of Rs.1,65,79,960/- claimed by the assessee included the loss of Symphony Merchants Pvt. Ltd. 3 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 Rs.70,41,092/- on sale of shares of JMD Telefilms Industries and loss of Rs.10,05,322/ Rs.10,05,322/- on share of Splash Media Works Ltd aggregating to ₹80,46,414/ 80,46,414/-.. Relying primarily upon the general modus operandi reported by the Investigation Investigation Wing and other non external sources, the Assessing Officer treated the said loss as non- genuine and disallowed the same. In view of detailed investigation utilizing tools and ITD/BSE data, money control website, taxmann, court rulings, internet as well as investigation wing report as r and findings of the SEBI, the t Assessing Officer held eld the loss as non genuine. For ready reference said finding is reproduced as under:
"7.1 Kolkata Investigation Directorate had undertaken investigation into 84 penny stocks (Sunrise Asian being one of it) and has given detailed findings indicating bogus LTCG/STCL entries claimed by large number of beneficiaries. The modus operandi involving operators, intermediaries and the beneficiaries has been detailed in the investigation report prepared and disseminated by the Kolkata Directorate. Similar investigations were also conducted by the Directorate of Investigation at Mumbai and Ahmedabad.
7.2 The basic aim of this dubious scheme was to route the unaccounted money of LTCG Benefi Beneficiaries ciaries into their account/books in the garb of Long Term Capital Gain. This entry of LTCG is taken by selling the shares on the stock exchange and registering the proceeds arising out of the sale of shares into the books as LTCG. For implementing this sch scheme, shares of some Penny Stock Companies were used. The same modus is adopted for providing accommodation entry of bogus LOSS.
7.3 In this scheme, the shares of the penny stock companies are acquired by the beneficiaries of LTCG at very low prices through the route of preferential allotment (private placement) and off market transaction. These shares have a lock-in lock in period of 1 year as per Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.
Symphony Merchants Pvt. Ltd. 4
ITA No. 7058, 6979, 6980, 6981,
7059/MUM/2025
Another route to acquire the shares is through Amalgamation or merger. In this route, the beneficiaries of LTCG are allotted shares of a private limited company which is subsequently amalgamated with a listed penny stock and the beneficiaries receive shares of the listed listed penny stock in exchange of the shares of private limited company. The shares in some cases were acquired through stock exchange. These shares were then split and bonus shares were issued to increase the volume.
7.4 Thereafter, the prices of the shares of the penny stock companies are rigged and are raised through circular trading. This is managed by the "operator" of the scrip. An "Operator" is a person who is managing the overall affairs of the scheme and he is the one who contacts the entities who wish to take entry of bogus LTCG/STCL in their books and arranges the same through the scrips of penny stock companies. The Operator manages many paper/bogus companies and uses them to do circular transactions to rig the price of the shares. The shares of these penny stock companies, although listed on exchange, are always closely held and are controlled by the promoter of the, Penny Stock Company and the Operator who is arranging for the bogus LTCG/Loss. This is due to the fact that the general public is not interested interested in these shares as these companies have no credentials and this helps the operator to keep a control on the price movement of the shares.
7.5 Once the period of 1 year has passed and the share prices have been sufficiently rigged, the beneficiaries beneficiaries sell their shares at the inflated prices on the Stock Exchange. A point worth noticing here is that the purchase of the shares is not made by the public but by the bogus entities managed and controlled by operator which the promoter of the penny stock company or the operator are referred to as "Exit Providers". The unaccounted money of the beneficiaries is routed to these bogus entities "Exit Providers" and the shares held by the beneficiaries are bought by these bogus entities from the money which is the unaccounted ted money of the beneficiaries. Sometimes, the shares of the LTCG beneficiaries are purchased by the beneficiaries of LOSS who later sell their shares when the price falls and hence book bogus LOSS in their books. All these transactions are done ck exchange and as the sale of shares are done after on the stock a holding of one year they fall into the category of Long Term Capital Gain which is an exempt income as per the IT Act, 1961.
7.6 During the investigation statements of various operators, entry providers providers and the stock brokers were recorded were they Symphony Merchants Pvt. Ltd. 5 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 have admitted of providing the accommodation entries in the form of LTCG/STCL."
3.2 Further, in respect to the loss claimed by the assessee, the Ld. Assessing Officer with reference to the general modus operandi opera considered the specific scrips traded by the assessee and he held that mode of acquisition of the said shares were not explained and the assessee sold the shares at very low prices. The relevant finding of the Assessing Officer is reproduced as under:
"9.1 The submissions made by the assessee and reply to show cause is considered. The facts of the case, investigations made by various directorates, statements recorded during the assessment proceedings are considered. From the discussion in the preceding paras it is concluded that long term capital gains booked by assessee in her books were pre-arranged pre arranged method to evade taxes and launder money. Following are the findings and the reasons which substantiates the findings:-
findings:
shares: The assessee has
(a) Mode of acquisition of the shares:
purchased 75,000 shares of M/s JMD Telefilms Industries Ltd. at Rs. 89,91,010/ and 15,000 shares of M/s. Splash Media 17,56,225/ . The assessee has not given any Works Ltd. at Rs. 17,56,225/-.
reply regarding the query about to which director/ key management anagement person/business premises/financial analysis of JMD Telefilms Industries' and 'Splash Media Works Ltd. This itself shows that the transaction itself is a planned one and bills has been taken just for the sake of formalities.
(b) Sale of shares and unusual rise in the price: Further the assessee has sold 75,000 shares of M/s JMD Telefilms 19,49,918/ and 15,000 shares of M/s.
Industries Ltd. at Rs. 19,49,918/-
Splash Media Works Ltd. at Rs. 7,50,903/-, 7,50,903/ , thus resulting the 80,46,414/-,, which is 25 times the loss on sale of shares at Rs. 80,46,414/ decrease of the cost price within one year, and as discussed the decrease in share prices is not holding to any commercial principles and market factors.
(c) Findings of Investigation wing: The findings of the Directorate igation of Mumbai and Kolkata as discussed above of Investigation have proved associated brokers, entry operators and the Symphony Merchants Pvt. Ltd. 6 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 assessee had worked out an arrangement in which the shares were acquired by the assessee, the share prices were rigged and then with the help of entry operators by routing the cash, shares were sold at high price to arrive at tax free capital gains.
(d) Analysis of transactions: Facts revealed that such trading transactions of purchase and sale of shares are not been effected, for commercial purpose but to create artificial gains, with a view to evade taxes.
i. Transactions of shares were not governed by market factors prevalent at relevant time in such trade, but same were product of design and mutual connivance on part of assessee and the operators.
ii. The assessee resorted to a preconceived scheme to procure LTCG/STCL by way of price difference in share transactions not supported by market factors.
iii. Cumulative events in such transactions of shares revealed nature and fell in that same were devoid of any commercial nature realm of not being bona fide and, hence, impugned LTCG/STCL is not allowable.
iv. Failure of Assessee to discharge his onus: The assessee has not been able to prove the unusual rise and fall of share prices to be natural and based on the market forces. It is evident that such share transactions were closed circuit transactions and clearly structured one.
v.. Ignorance of the assessee about shares and penny stock companies: Assessée has failed to show of having any knowledge about the shares traded and having any knowledge about the fundamentals of the penny stock companies. In the statement u/s 131 the assessee has mentioned that he has purchased the shares of this company as just do investment and his nephew does all the analysis works. When When asked about the performance of this company, he replied that she does not know about it.
vi. Financial analysis of the penny stock companies: The networth of the penny stock company is negligible. Even though the networth of the company and the business activity of the company is negligible the share prices have been artificially rigged to unusual high.
Symphony Merchants Pvt. Ltd. 7
ITA No. 7058, 6979, 6980, 6981,
7059/MUM/2025
vii. Arranged transactions: The transactions entered by the assessee involve the series of preconceived steps, the performance of each of which is depending depending on the others being carried out. The true nature of such share transactions lacked commercial contents, being artificially structured transactions, entered into with the sole intent, to evade taxes.
9.2 The facts and circumstances of the case, as record recorded above, clearly suggest that the revenue cannot take or accept such believe transactions, as presented by the assessee. Truth make-believe or genuineness of such transactions must prevail over the smoke screen, created by way of pre pre-meditated meditated series of steps en by the assessee, with a view to imparting a colour of taken genuineness and character of commercial nature, to such share transactions. Needless to say that one has to look at the whole transactions. and a series of steps taken to accomplish such share transactions, ctions, in an integrated manner, with a view to ascertaining the true nature and character of such purchase and sale of shares."
3.3 Further, the Assessing Officer relied on the various judicial decisions in his impugned order and held the business loss of Rs.80,46,414/- as not allowable.
4. On further appeal, the Ld. CIT(A) rejected the challenge of the assessee to the reasons recorded however that issue is not in he Ld. CIT(A), after considering the dispute before us. But on merit, the submissions of the assessee and the judicial precedents, deleted the addition, holding that: (i) the transactions were carried out through recognized stock exchange; (ii) payments were routed through banking channels and and supported by contract notes and demat statements; (iii) the assessee is regularly engaged in trading of shares and the transactions were part of its normal business activity; (iv) no independent enquiry was conducted by the rse material or regulatory finding was Assessing Officer; (v) no adverse Symphony Merchants Pvt. Ltd. 8 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 brought on record to establish the assessee's involvement in any manipulation; and (vi) the addition was made merely on the basis of general investigation reports and presumptions. the Ld. CIT(A) following the decision of the Jurisdictional High Court in the case of PCIT v. Ziauddin A Siddique (supra) and other decisions of the Co Co-
ordinate Bench in respect of scrips deleted the loss disallowed by the ld AO observing as under:
"7. Ground 2 The assessee had purchased and sold 15000 und no. 2- shares of Splash Media Works Ltd on 27/01/2011 and 10/03/2011 for Rs. 17,56,225/ 17,56,225/- and Rs.7,50,903/ respectively. It had also purchased 75000 shares of JMD 16/06/2010 to Telefilms Industries Itd between period from 16/06/2010 13/07/2010 for purchase value of Rs.89,91,010/ Rs.89,91,010/- and sold 75000 shares of JMD Telefilms between period from 18/11/2010 to 25/11/2010 for sale value of Rs. 19,49,918/ 19,49,918/-.
80,46,414/ . The AO has The assessee has incurred loss of Rs. 80,46,414/-.
findings of the Directorate of Investigation of stated that findings Mumbai and Kolkata have proved associated brokers, entry operators and the assessee had worked out an arrangement in which the shares were acquired by the assessee, the share prices were rigged and then with the help of entry operators by routing the cash, shares were sold at high price to arrive at tax free capital gains. The AO has also discussed price movement in these shares and concluded that such trading transactions of purchase and sale of shares are not been been effected, for commercial purpose but to create artificial gains, with a view to evade taxes. Thus, considering all the materials on record, the 80,46,414/ on account of AO has disallowed an amount of Rs. 80,46,414/-
assessee had filed a loss in respect of these penny stocks. The assessee detailed submission and contentions raised by it are summarized as under:
1) The appellant has genuinely purchased and sold the shares on the floor of BSE complying the rules and regulation of BSE & also that of Hon'ble SEBI.
2) There is no adverse finding by the Hon'ble DIT(Inv) Mumbai or Kolkata against the appellant even the name of the appellant is Symphony Merchants Pvt. Ltd. 9 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 not there in either the report of Hon'ble SEBI or any information from Hon'ble DIT(Inv).
3) There is not an iota of evidence of any nature against ag the appellant that he is part of price rigging or has purchased the shares with pre-determined pre mind to incur loss.
4) Before concluding that appellant is party to dubious transactions no opportunity of cross examination of the person statement the Ld AO has relied has been given nor on whose statement any documents provided for rebuttal based on which AO arrived at such conclusion considered genuine loss as ingenuine.
5) The contention produced by the Ld AO in the assessment order are not his own but borrowed fromfrom Hon'ble SEBI and Hon'ble DIT(Inv) report. The Ld AO has not brought on record any independent finding or any adverse evidence against appellant to support his claim E TAX DEPART
6) Here it is pertinent to bring to your honour's notice that the ssed against the appellant is a stereo type which he order passed has passed in the case of person where specific information from Hon'ble SEBI or Hon'ble DIT(Inv) is available. Since in the case of appellant neither any information from Hon'ble DIT(Inv) adverse comment from Hon'ble SEBI in their order is nor any adverse there the appellant should not have been treated at par along with the person whose name was there in Hon'ble DIT(Inv) report as well as in the order of SEBI order In the case of appellant, he has purchased and sold the shares in open market on the floor of recognised stock exchange, the addition made on unfounded ground with prejudice mind without bringing on record any evidence is uncalled for and needs forthwith deletion.
7.1 Further, the assessee has relied on various case laws.
7.2 I have considered the facts of the case and submission of the assessee. I find that the assessee is a regular trader and has shown trading of shares as its business. The assessee is carrying out share trading profitloss (delivery and non delivery) and Future and Options (F&O) trading. The assessee has submitted financial statements, investment statement and stock in trade statement for the last three financial years. The assessee has trading in several scrips other than Splash Media Medi Works Ltd. and JMD Telefilms Industries Pvt. Ltd. The activity of the assessee company shows that it has been regularly trading. in the shares and other instruments and trading in the shares Symphony Merchants Pvt. Ltd. 10 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 of Splash Media Works Ltd. and JMD Telefilms Industries Pvt. Ltd d is not an isolated transaction.
7.3. I further noted that the assessee had purchased and sold these shares on the floor of the BSE through banking channels and has paid STT on the same. The assessee has also statement. No produced copy of the contract notes and bank statement. doubt has been raised by the AO on such documents. I find that AO has relied upon the finding of the investigation wing relating to sudden increase in price and fall thereon. AO has not pointed out as to whether the assessee is part of such prprice ice rigging. No independent enquiry has been conducted by the AO to establish that assessee has booked bogus business loss. Further, there is no adverse finding reported by the SEBI against the assessee. In this regards, reliance is placed on the decision in the case of decision of the Hon'ble Jurisdictional High Court in the case of PCIT vs. Ziauddin A Siddique (Income tax Appeal No. 2012 of 2017 dated 4th March, 2022) wherein the Hon'ble Bombay High Court has observed as under: under:-.
2. We have considered the impugned order with the assistance of learned counsels and we have no reason to interfere. There is a finding of fact by the Tribunal that the transaction of purchase and sale of shares of the alleged penny stock of shares of Ramkrishna Fincap Ltd ("RFL") is done through stock exchange and through the registered Stock Brokers. The payments have been made through banking channels and even Security Transaction Tax ("STT") has also been paid. The Assessing Officer also has not criticized the documentation involving inv the sale and purchase of shares. The Tribunal has also come to a finding that there is no allegation against the assessee that it has participated in any price rigging in the market on the shares of RFL.
3. Therefore we find nothing perverse in the order of the Tribunal.
4. Mr. Walve placed reliance on a judgement of the Apex Court (Central) 1 vs. NRA Iron in Principal Commissioner of Income tax (Central)-1 & Steel (P) Ltd (2019)(103 taxmann.com 48) (SC) but that does not help the revenue in as much as the facts in that case were entirely different.
5. In our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test Symphony Merchants Pvt. Ltd. 11 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 issue at hand, then, we do not think is applied to decide the issue that question as pressed raises any substantial question of law.
..."
7.4 Further, ITAT in the followings decisions has deleted addition made by the AO in respect of the same scrips as entered into by the assessee.
i) JMD Telefilms Industries Pvt. Ltd Shri Mahaveer Kanwarlal Ranka, vs ACIT 28(2)[ ITA No.224/M/2024 & ITA 2010 11] has deleted the addition made No.965/M/2024 Α.Υ. 2010-11] by the AO in respect of transaction in shares of JMD Telefilms Industries Pvt. Ltd. Relevant portion portion of the order of the ITAT is reproduced as under:
"6. We have heard the parties and perused the material available on record. The Ld. D.R. at the outset has placed on record one order dated 28.06.2019 passed by the adjudicating authority of SEBI, wherein wherein the M/s. JMD Tele Films Industry Ltd. is also a party against whom the monetary penalty of Rs.5,00,000/ has been levied by considering the allegations of Rs.5,00,000/-
price rigging of shares by some other persons for the period from 15.06.2009 to 02.07.2009. AdmitteAdmittedly dly there are no allegations have been leveled and even no investigation has been carried out and no penalty or restriction has been imposed against the Assessee herein. The Assessee by filing the relevant documents duly supported the transactions of purch purchase and sales as stated above by us. It is also a fact that purchase and sale of the transactions have been transacted through banking channel and shares were purchased and sold through Bombay Stock Exchange and the Assessee also kept the share for a d more than one year. On the aforesaid facts and period circumstances, it goes to show the Assessee has been able to discharge its onus cast upon u/s 68 of the Act and therefore no addition u/s 68 of the Act is warranted. Further, the Assessee by producing the re relevant levant documents such as books of accounts, bank statement, contract notes of shares, broker ledger account and Dmat statement etc. has prima-facieprima discharged its onus to establish the genuineness of the purchase and sale of the shares under consideration. Further, no role of the Assessee qua rigging of the shares, has not been assigned or established by any person including SEBI. Further, no allegations have been leveled by any persons, on whose statement the AO has relied on. Further, even otherwise, no investigation/action nvestigation/action has been carried out or taken against the Assessee. Even otherwise the authorities below have not Symphony Merchants Pvt. Ltd. 12 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 doubted the documents produced by the Assessee. And therefore, on the aforesaid analyzations and in our considered view, the Assessee cannot cannot be fastened with the liability, simply on the findings of the investigation wing, allegations qua rigging of the share prices, unusual mode of acquisition etc. 'as alleged. rise in the prices of the share, financial analysis of the penny stock company and a 5.2 The Jurisdictional High Court in various cases including in CIT 3 vs. Ziauddin A Siddique in Income Tax the case of Pr. CIT-3 Appeal No:2012 of 2017 decided on 04.03.2022 has also dealt with the identical issue as involved in the instant case, where the AOO though considered the documents submitted by the Assessee in support of its claim qua sale and purchase of shares however, not criticized the same and there was no allegation against the Assessee that he has participated in any price rigging of the scrips scrips involved. For ready reference, the decision of the Hon'ble High Court is reproduced herein below:
"JUDGEMENT
1. The following question of law is proposed:
"Whether on the facts and in the circumstances of the case and Justified in deleting the in law, the Hon'ble Tribunal was Justified addition of Rs. 1,03,33,925/ 1,03,33,925/- made by AO u/s 68 of the I.T. Act, 1961, ignoring the fact that the shares were bought/acquired from off market sources and thereafter the same was demated and registered in stock exchange and increase iin n share price of Ramkrishna Fincap Ltd. is not supported by the financials and, therefore, the amount of LTCG of Rs. 1,03,33,925/ 1,03,33,925/- claimed by the assessee is nothing but unaccounted income which was rightly added u/s 68 of the I. T. Act, 19617"
2. We have considered the impugned order with the assistance of the learned Counsels and we have no reason to interfere. There is a finding of fact by the Tribunal that the transaction of purchase and sale of the shares of the alleged penny stock of Ramkrishna Fincap Ltd. ("RFL") is done through stock shares of Ramkrishna exchange and through the registered Stock Brokers. The payments have been made through banking channels and even Security Transaction Tax ("STT") has also been paid. The Assessing Officer also has not criticized criticized the documentation involving the sale and purchase of shares. The Tribunal has also come to a finding that there is no allegation against assessee that it has participated in any price rigging in the market on the shares of RFL Symphony Merchants Pvt. Ltd. 13 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025
3. Therefore, we find nothing perverse in the order of the nothing Tribunal.
4. Mr. Walve placed reliance on a judgment of the Apex Court in Principal Commissioner of Income-tax Income (Central)-1 1 vs. NRA Iron & Steel (P.) Ltd. 2019 (103) taxmann.com 48 (SC). but that does not help the revenue in as much as the facts in that case were entirely different.
5. In our view, the Tribunal has not committed any perversity or applied Incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test ed to decide the issue at hand, then, we do not think is applied that question as pressed raises any substantial question of law.
6. The appeal is devoid of merits and it is dismissed with no order as to costs."
5.3 We further observe that the Hon'ble Apex Court in the t case of Pr. CIT vs. Renu Agarwal (2023) 456 ITR 249(SC) has dismissed the SLP against the judgment passed in ITA No.44 of 2022 on 06.07.2022 by the Hon'ble Allahabad High Court, wherein the Hon'ble High Court has also dealt with the identical issue as involved nvolved in the instant case and ultimately affirmed the deletion of identical addition allegedly made on penny stock, by holding as under:
"Judgment Heard Sri Krishna Agarawal, learned counsel for the appellant.
This appeal under section 260A of the Income-tax Income tax Act, 1961 has been filed challenging the order dated January 17, 2022, passed by the Income Income- tax Appellate Tribunal, Lucknow Bench 'SMC' Lucknow in I. T. A No. 205 of 2020 (assessment year 2014-15).
The basic question involved in the present appeal is with regard to dele- tion of some amount which was added by the Assessing Officer on the allegation of penny stock.
respondent assessee was allowed against the The appeal of the respondent-assessee assess- ment order. The appeal filed by the assessee was Com- missioner (Appeals) Against the appellate allowed by the Com income tax appeal order the Revenue had filed the aforesaid income-tax which has been dismissed by the Income-tax Income tax Appellate Symphony Merchants Pvt. Ltd. 14 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 Income tax Appellate Tribunal. After detailed discussion, the Income-tax Tribunal has recorded the following findings fin of fact:
"The above findings recorded by the learned Commissioner (Appeals) are quite exhaustive whereby he has discussed the basis on which the Assessing Officer had made the additions. While allowing relief to the assessee, the learned Commissioner (Appeals) has specifically held that there is no adverse comment in the form of general and specific statement by the principal officer of the stock exchange or by the company whose shares were involved in these transactions and he held that the Assessing Officer only quoted the facts pertaining to various completely unrelated persons whose statements were recorded and on the basis of unfounded presumptions. He further held that the name of the appellants were neither quoted by any of such persons nor any material relating to the assessee was found at any place where investigation was done by the Investigation Wing The learned Commissioner (Appeals) relying on various 'orders of the Lucknow Benches and other Benches has allowed relief to the asses- lacing reliance on the asses see by placing evidence filed by the assessee before the Assessing Officer. I do not find any adversity in the order of the learned Commissioner (Appeals) specifically keeping in view the fact that the Lucknow relying on the judgment of Benches in a number of cases after relying the hon'ble Delhi High Court in the case of Krishna Devi had allowed relief to various assessees."
The concurrent findings of fact have been recorded by the first Income tax Appellate Tribunal Thus, appellate authority and the Income-tax bstantial question of law is involved in the present appeal. no substantial The matter is concluded by findings of fact. For the reasons aforestated, we do not find any good reason to entertain this appeal. Consequently, it is dismissed."
ordinate Bench of 5.4 We further observe that the Hon'ble Co-ordinate the Tribunal at Mumbai in the case of Kamlesh Gupta vs. DCIT 1462/M/2020 has also dealt with the identical scrip as involved in the instant case and ultimately in the similar facts case deleted the and circumstances as involved in the instant case identical addition by holding as under:
"13. We, thus, in the backdrop of our aforesaid deliberations are of the considered view that de hors any cogent material made available on record by the department which would prove to the hilt that the assessee had not carried out any genuine Symphony Merchants Pvt. Ltd. 15 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 transaction of purchase/sale of shares of JMD Telefilms Industries Ltd. and, in the garb of bogus entry of a tax exempt LTCG u/s 10(38) of the Act, laundered his unaccounted money, substantiated claim of having carried out the assessee"s duly substantiated genuine transaction of purchase/sale of shares of JMD Telefilms Industries Ltd. which is duly supported by him on the basis of documentary evidence, could not have been dislodged. Accordingly, for the reasons discussed at llength ength by hereinabove, not finding favour with the view taken by the set aside the orders of the lower lower authorities, we herein set-aside authorities qua treating the transaction of purchase/sale of shares of JMD Telefilms Industries Ltd. by the assessee as a us transaction and, consequently vacate the addition made bogus by the A.O under Sec. 68 of Rs. 6,06,49,780/ 6,06,49,780/-.. The Grounds of appeal Nos. 2 & 3 are allowed in terms of our aforesaid observations.
14. As we have held the transaction of purchase/sale of shares of JMD Telefilms Industries Ltd by the assessee as a genuine transaction, therefore, the addition made by the A.O u/s 69C of 36,38,987/ towards alleged commission which the Rs. 36,38,987/-
assessee as per him would have paid for facilitating the bogus transaction of pur purchase/sale chase/sale of shares has to meet the same fate and, is resultantly vacated. The Ground of appeal No. 4 is allowed in terms of our aforesaid observations
15. The assessee has further assailed the levy of interest u/s 234B of the Act. As the levy of interest as per the judgment of the Hon"ble. Supreme Court in the case of CIT vs. Anjum M.H Ghaswala (2002) 252 ITR 1 (SC) is mandatory, therefore, the A.O is directed to rework out the same while giving appellate effect to our order. The Ground of appeal No. 5 is allowed for statistical purposes in terms of our aforesaid observations".
5.5 Coming to the instant case, we reiterate that the Assessee by producing the relevant documents referred to above before the authorities below as well as before us has duly discharged disch the onus cast upon him u/s 68 of the Act and admittedly there is no adverse order/penalty order against the Assessee. Even otherwise, no role has been attributed and/or established qua rigging of the shares upon the Assessee. Hence, considering the pecullar ecullar facts and circumstances in totality, we are inclined to allow the claim of the Assessee u/s 10(38) of the Act, by deleting the additions under consideration. Hence, the additions under consideration are deleted. No.224/M/2024 is allowed."
Symphony Merchants Pvt. Ltd. 16
ITA No. 7058, 6979, 6980, 6981,
7059/MUM/2025
ii) Splash Ltd Asha Himmat Bhadra Vs DCIT, Circle
h Media Ltd-
32(1)(Ι.Τ.Α. No.2154/Mum/2024 Assessment Years: 2011-12).
2011Relevant portion of order of the ITAT is reproduced as under-
under "3. We have heard Ld. Counsel of both the parties, perused the material placed on record and judgements cited before us and also orders passed by the revenue authorities. From the records, we noticed that as per the facts of the present case, the assessee purchased 2500 shares of M/s. Splash Media (name changed to Luharuka Media & Infra Ltd. for Rs. 3.27.496/-
3.27.496/ on 19.8.2015 through Alliance Finstock Ltd., a broker duly registered with SEBI by executing purchase order online on BSE's electronic trading platform for execution of sale and purchase order of securities for which she has received delivery del directly in her d mat account maintained with Axis Bank Ltd. In d-mat this regard, copy of purchase bill issued by share broker ie. Alliance Finstcok Ltd. has been placed on paper book which is at page No. 23. The assessee has made payment thereof on .2009 through account payee cheque drawn on Axis Bank 18.08.2009 Ltd. which was cleared on 18.8.2009 itself. The said shares were delivered in D-mate D mat account form in the account of D-mat of assessee on 8.12.2009. In. order to support the said contention the assessee had bank statement highlighting the payment made towards purchase and copy of D mat account D-mat which are at page No. 25 to 26 of the paper book.
4. Thereafter the said company had declared Bonus in the ratio of 3:1 on 23.12.2009 Le three bonus shares for every ever share held on record date. Therefore, in this way the assessee was eligible to 7500 bonus shares and the same were credited to assessee's D-mat D mat account thereby total making holding of 10,000 shares as on 31.12.2009. Later on the company split the stock inn the ratio of 10:1 ie. Rs. 10 per share was split into Rs. 1/- per share. Thereby taking the assessee's holding of shares to 1,00,000 shares of Rs. 1/- 1/ each as on 2.8.2010. A copy of financial statements of Splash Media Ltd. for F.Y. 2009- 2009 10 is also placed placed on record at page No. 47 to 86 of the paper book.
5. Now the basic contention is that the shares of Splash Media Ltd. were received on preferential basis or in amalgamation or merger of any private company with listed company or in off transaction as narrated in the proceedings is incorrect. market transaction Looking at the volatility and better returns the assessee sold these equity shares at Recognized Bombay Stock Exchange through broker namely M/s. Alliance Finstock Ltd at various Symphony Merchants Pvt. Ltd. 17 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 rates for total value of Rs. 1 ,00,13,050/and the detailed content 1,00,13,050/and in following chart-
chart
6. The assessee realized the sale consideration in her saving bank account of Axis Bank Ltd., Malad and in this regard a copy of bank statements showcasing the payments received from the broker on account of shares sold by the assessee at page No. 19-22 22 and the copy of sale bills/contract notes issued by the assessee's broker for sale of shares are at page No. 27- 27 36 of the paper book.
7. It is important to mention that the price of script M/s. Slash Media Ltd was being determined, at recognized stock exchange, which is not in control of assessee. However, just because the Income Tax Department got the information from the Investigation Wing that M/s Splash Media Ltd. is a penny stock, in her view it does not mean that the assessee has indulged into misappropriation. In this regard, reliance is being placed upon the decision in the case of Vinay Kumar Dhingra HUF Vs. ITO by the Coordinate Bench of ITAT Delhi dated 28.6.2021, the transactions are similar to the case wherein all the facts of the of the assessee.
8. Moreover, the Ld AR has also relied upon the decision of the Coordinate Bench of the ITAT in the case of sister of the assessee titled Varshaben Laherikant Bhadra Vs. ITO (ITA No. 1665/Mum/2024 dated 19.5.2025), wherein it was held as under "8. We have heard the rival submissions and also perused the relevant findings in the impugned orders. Apart from the fact Symphony Merchants Pvt. Ltd. 18 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 that the shares were purchased and sold only on electronic platform of Bombay Stock Ex Exchange change through registered stock broker from SEBI after paying STT, it has been brought on record by the Ld. Counsel that husband of the assessee was a regular trader and investor in shares and assessee had also made investments in several other shares. Thu Thuss assessee was also a regular investor in shares. During the course of hearing we had enquired from the assessee whether there is any investigation or finding of the SEBI on the scrip of M/s. Splash Media & Infra Ltd, now known as Luharuka Medin & Infra Ltd. Lt It has been brought on record that on 31.10.2017 the department had sent a letter along with the report of Director of Income Tax, Investigation, Kolkata with regard to investigation of the scrip of M/s Splash Media & Infra Ltd. The General Manager, Investigation Investigation Department of SEBI vide report dated 11.10.2017 have submitted the report of the Investigation Wing and also to the ACIT, Central Circle 4(4), Mumbai that the investigation of SEBI did not find violation of provisions of the SEBI Act, 1992 and S SEBI EBI (PFUTP) Regulations. Along with the letter there is a confidential report given to Pr.DIT (Investigation), Kolkata which had sought for the information regarding the alleged manipulation in market price of shares of certain companies including M/s. Splash Splash Media & Infra Ltd. The SEBI in his report has analysed the volume and price of the trading of the M/s Splash Media & Infra Ltd. for various patch starting Varshaben Laherikant Bhadra from 15.09.2009 onwards. In their exhaustive report they categoricall y stated that there was categorically no manipulation pattern observed in the trading of M/s Splash Media & Infra Ltd. and therefore no adverse inference is drawn. The report deals with all the buyers and the sellers of the scrip in the Stock Exchange in various periods and after detailed examination and inquiry, in the report it is categorically stated that in none of the period there was no specific instance or manipulative pattern which can show that price was rigged or scrip was manipulated to provide any accommodation accommodati entry Thus. it was reported that there was no manipulation and no adverse has been drawn. Since it is an exhaustive report, therefore the contents of the same cannot be reproduced. This SEBI report itself clarifies the doubts of the Id. AO and also ctor, Investigation Wing, Kolkata who had specifically Director, referred this matter that it should be further investigated by the SEBL SEBI did not find any manipulation in the prices or that the prices were rigged by some entities either by the buyers or ellers and no adverse inference have been drawn even by the sellers with regard to the exit providers. Thus, the SEBI report itself absolves the case of the assessee."
Symphony Merchants Pvt. Ltd. 19
ITA No. 7058, 6979, 6980, 6981,
7059/MUM/2025
9. Moreover, the entire premise of the Id. AO is based on that the DIT (inv.) Report which itself has been been clarified by the SEBI to the Investigation Wing to whom specific information was shared by the Pr.DIT, Investigation, Kolkata. Once in the investigation it has been held that there was no manipulation in the scrip of M/s. Splash Media && Infra Ltd., an andd the trading at Bombay Stock Exchange was genuine and the prices quoted in Varshaben Laherikant Bhadra the Stock Exchange over the time were in accordance with the SEBI Rules and Regulations, no adverse can be drawn in the case of assessee. Accordingly, in i view of the documents submitted by the assessen as well as the report of the SEBI specifically with regard to the M/s. Splash Media & Infra Ltd., the transaction of purchase and sale of shares online through Bombay Stock Exchange cannot be held to be bogus bog or non- genuine and accordingly, addition of Rs. 1,00,99,878/ made u/s 68 of the Act is deleted. Consequentially, the adhoc commission made @3% is also deleted.
10. In the result, appeal of the assessee is allowed."
9 We noticed that the Coordinate Benc Bench h of ITAT in the case of sister of the assessee has dealt with the same script regarding same assessment year and had deleted the addition by recording well reasoned order Apart from this, Ld. AR has also relied upon number of other cases, wherein also samesam script was dealt with by the Coordinate Bench of ITAT. The details of which is as under ARI Ward 55(5), New Delhi ITA No.
1. Damyanti Mundhra Vs..ITO, Ward-55(5), 1721/DEL/2019
2. Amit H. Patal (HUF) Vs. DCIT CC DCIT-CC 3(4) ITA Nos.
5761.5762,5764 & 5765/M/2019 and Mundhra and Sons Vs ITO, Ward 55(5), New
3. Gopal Chand Delhi ITA No. 1375/DEL/2019 Ward 55(5), New Delhi ITA No.
4. Ramdev Mundhra Vs. ITO, Ward-55(5), 1722/DEL/2019
5. Shriya Devi Mundhra Vs. ITO, Ward 55(5), New Delhi. ITA No. 1523/DEL/2019
6. Gopal Chand Mundhra Vs. ITO, War 55(5), New Delhi ПА Ward-55(5), No. 1524/DEL/2019 Symphony Merchants Pvt. Ltd. 20 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025
7. Ramprasad Agarwal v. Income Tax Officer 2(3)(2), Mumbai ITA No. 1228 and 4843/Mumbai/2018.
10. Therefore considering the totality of the facts and circumstances of the present case and also taking into consideration on the decision of the Coordinate Bench in the same script more particularly in the case of sister of the assessee, wherein the same script and the same assessment year is involved and hence adhering to the principles of judicial discipline, we also allow the grounds consistency and judicial discipline, raised by the assessee and direct the Id. AO to delete the additions made under section 68 & 69C of the Act.
11. In the result, the appeal filed by the assessee is allowed."
7.5 Hence taking into consideration submissio submissionn of the assessee and judicial decisions, it is held that the share transactions carried out by the assessee are genuine and hence, AO is 80,46,414/ on account of directed to delete the addition of Rs. 80,46,414/- disallowance of loss in respect of transaction in the shares of Splash Media Works Ltd and JMD Telefilms Industries Ltd.
Accordingly, ground of the appeal is Allowed."
Allowed.
5. The Ld. Departmental Representative (DR) referred to the order of the Assessing Officer and submitted that in view of investigation nd the inquiries carried out by the Assessing Officer, the loss wing and claimed by the assessee was not genuine and being fictitious in nature and therefore, it has been rightly disallowed by the Assessing Officer.
6. On the contrary, the learned counsel for the assessee supported the order of the learned CIT(A) and submitted that the impugned transactions of purchase and sale of shares were carried out through registered stock brokers on the recognized stock exchange. It was contended that there is no material on record to Symphony Merchants Pvt. Ltd. 21 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 establish any involvement of the assessee in any alleged accommodation entry arrangement. The learned counsel drew our attention to the contract notes placed in the Paper Book, evidencing that the transactions were executed through the stock exchange mechanism. It was submitted that the purchases were effected through registered brokers, duly reflected in broker bills containing details of debit and credit entries, including other transactions, and subjected to statutory levies such as Securities Transaction Tax Securities (STT).It was further submitted that payments for purchase of shares were made through account payee cheques, and the shares were duly credited to the assessee's demat account through the transactions were executed on depository system. Similarly, the sale transactions the electronic platform of the stock exchange, and the shares were transferred through the demat mechanism, with sale proceeds received through normal banking channels. The learned counsel submitted that the assessee had undertaken such investments based on its independent commercial assessment; however, during the year under consideration, it incurred an aggregate loss of ₹80,46,414/- on sale of shares of Splash Media Works Ltd. and JMD Telefilms Industries Ltd. It was further contended that the assessee had no privity with either the ultimate purchaser or seller in such transactions, as trades on the stock exchange are system driven. The primary allegation of the anonymous and system-driven.
Assessing Officer, namely that the assessee received cash in lieu of Symphony Merchants Pvt. Ltd. 22 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 booking losses as per a generalized modus operandi, was specifically refuted. It was emphasized that no evidence whatsoever has been brought on record to demonstrate that the assessee received any unaccounted cash or was a beneficiary of any accommodation modation entry scheme.
scheme
7. We have heard the rival submissions and carefully perused the material available on record. It is an undisputed position that the assessee is a Non-Banking Non Banking Financial Company (NBFC) duly and is, inter alia, engaged registered with the Reserve Bank of India and in the business of trading in shares and securities. During the year under consideration, the assessee derived income from multiple streams, including profit/loss from share trading (both delivery-
delivery
based and non-delivery),
delivery), dividend income, profit/loss from
derivatives trading, and investment income. The Assessing Officer noted that the assessee had incurred trading losses in the scrips of 70,41,092/- and JMD Telefilms Industries Ltd. amounting to ₹70,41,092/ Splash Media Works Ltd. amounting tto 10,05,322/-.
₹10,05,322/ The disallowance of such losses has primarily been founded on information received from the Directorate of Investigation, Kolkata, the contents of which have already been set out in the preceding paragraphs.
7.1 consideration is whether the loss claimed The central issue for consideration by the assessee on share transactions can be disregarded as non-
non
Symphony Merchants Pvt. Ltd. 23
ITA No. 7058, 6979, 6980, 6981,
7059/MUM/2025
genuine merely on the basis of general investigation reports and abnormal price movements in certain scrips. It is an undisputed position that the assessee has furnished complete documentary evidence in support of the transactions, including (i) contract notes issued by registered stock brokers; (ii) demat account statements evidencing delivery of shares; and bank statements reflecting payment and receipt through through normal banking channels.
Significantly, the Assessing Officer has not disputed the documents The disallowance is founded authenticity of these documents.
entirely on generalized findings of the Investigation Wing regarding alleged manipulation in certain penny stock scrips. However, no specific material has been brought on record to establish any nexus between the assessee and the alleged accommodation entry activities It is well settled that suspicion, operators or price rigging activities.
substitute legal proof.. The application of the however strong, cannot substitu test of human probabilities must be supported by cogent material. In the absence of such material, documentary evidences produced by the assessee cannot be disregarded. Further, the Assessing Officer has not conducted any independent enquiry to verify the genuineness of the transactions. No attempt has been made to examine the brokers, counterparties, or any other relevant persons. The reliance placed on third third-party party statements, without affording cross amination, further renders such material opportunity of cross-examination, devoid of evidentiary value. We also note that no adverse finding Symphony Merchants Pvt. Ltd. 24 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 has been recorded by SEBI or any other regulatory authority against the assessee,, nor has any evidence been brought on record to demonstrate flow of unaccounted money. The consistent judicial view, including that of the Hon'ble jurisdictional High Court, is that transactions carried out through recognized stock exchange and supported by documentary evidence cannot be treated as bogus merely on the basis basis of general reports or abnormal price fluctuations,, in absence of evidence establishing the assessee's involvement in manipulation.
7.2 he Revenue's case is built entirely on the We find that tthe "general modus operandi" of penny stocks. While the Investigation Investigat Wing's reports provide a vital starting point for enquiry, they do not, by themselves, constitute legal proof against an individual Assessee. As established by the Hon'ble Supreme Court in Sumati Dayal vs. CIT (supra),, while the "test of human probabil probabilities"
ities" is a valid tool, it cannot be used to override undisputed documentary evidence unless a "smoke screen" is explicitly proven. In the instant case, the Revenue has failed to bridge the gap between "market manipulation by third parties" and "participation by "participation the Assessee." The transactions were routed through the institutional mechanism of a recognized Stock Exchange. The Assessee is engaged in business of share trading. The purchase and sale were "screen-based,"
"screen where s anonymous. To label such a the identity of the counterparty iis transaction "sham," the Revenue must prove that the banking Symphony Merchants Pvt. Ltd. 25 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 channel was a mere conduit for the Assessee's own unaccounted cash. No such evidence of "money circling" has been presented. The scrips in question--JMD JMD Telefilms and Splash plash Media--have Media been the subject of multiple adjudications by Coordinate Benches of this Tribunal,, which have been referred in finding of ld CIT(A).
CIT(A) In those instances, it was noted that SEBI's exhaustive reports found no manipulative pattern specifically linked to these transactions during the relevant periods. Adherence to the principle of stare decisis and judicial consistency compels us to follow these findings. The Revenue cannot penalize a professional trader for market volatility or for investing in scrips that later become "tainted" in investigation reports, provided the trade itself was bona fide. Suspicion, however grave, cannot take the place of proof. The AO has miserably failed to establish any nexus between the Assessee and the alleged leged entry-providers.
entry providers. The documentation is robust, the payments are through banking channels, and the transactions were executed at market-determined determined prices on a public exchange. In the present case, the Revenue has failed to discharge the burden cast n it to rebut the evidences produced by the assessee. upon 7.3 In view of the foregoing discussion, we are of the considered opinion that: (i) the addition made by the Assessing Officer is based on conjectures and generalized allegations; (ii) no cogent material materi has been brought on record to establish that the transactions are Symphony Merchants Pvt. Ltd. 26 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 sham or fictitious; and (iii) the findings of the Ld. CIT(A) are well-
well reasoned and in consonance with settled legal principles.
7.4 Accordingly, we find no infirmity in the order of the Ld. CIT(A) deleting the disallowance of ₹80,46,414/-. The ground No. 1 of the appeal of the Revenue is accordingly dismissed.
8. Now we take up the appeal of the Revenue for assessment year 2013-14. The ground raised by the Revenue is reproduced as under:
i)) "Whether on the facts and circumstances of the case and in law, whether the Ld.CIT(A) is justified in deleting addition of Rs.
19,49,214/- on account of loss on purchase and sale of shares as bogus."
ii) "Whether on the facts and circumstances of the case and in law, whether the Ld.CIT(A) is justified in deleting addition of Rs. 19,492/- on account of commission at the rate of 1 percent has been paid to incur non genuine business loss."
9. ear under consideration, the Revenue has challenged In the year the deletion of the business as well as commission estimated on the said trading loss. In the case facts and circumstances are identical 2011 12 except change of the scrip. The Ld. to the assessment year 2011-12 CIT(A) has deleted the said addition observing as under:
"7. Facts of the case and submission of the assessee have been examined. It is seen that the assessee has sold shares of M/s. Mudit Finlease Ltd. and has incurred business loss of Rs.
The AO has made enquiry u/s. 133(6) of the Act 19,49,214/-.. The with Bombay Stock Exchange has also discussed in the price movement in the shares of Mudit Finlease Ltd. Further, Investigation wing in its findings has stated that the shares of p arranged manner to this company have been used in pre-arranged Symphony Merchants Pvt. Ltd. 27 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 provide accommodation business profit/loss by manipulating share prices by controlled sale and purchase transactions. Thus, considering all the material, the AO has disallowed 19,49,214/- in respect of sale of shares buiness loss of Rs. 19,49,214/ shar of M/s Mudit Finance Ltd.
7.1 The assessee had filed a detailed submission and contention raised by the assessee are summarized as under:
a) The assessee has genuinely purchased and sold the shares on the floor of BSE complying the rules and regulation of BSE & also that of Hon'ble SEBI.
b) There is no adverse finding by the Hon'ble DIT(Inv) Mumbai or Kolkata against the assessee even the name of the assessee is not there in either the report of Hon'ble SEBI or any finding/information of Hon'ble DIT(Inv DIT(Inv).
c) There is not an iota of evidence of any nature against the assessee that it is part of price rigging or has purchased the shares with pre-determined pre mind to incur loss.
d) Before concluding that assessee is party to dubious opportunity of cross examination of the person transactions no opportunity on whose statement the Ld AO has relied has been given. Also the Ld AO during the assessment proceedings have not provided any documents to assessee based on which he formed an opinion for rebuttal.
produced by the Ld AO in the assessment
e) The contention produced order are not his own but borrowed one. The Ld ÀO has not brought on record any independent finding or any adverse evidence against assessee to support his claim. AO did not conduct any independent enquiry by issuing notice notice to Share broker or any person in this connection. This in itself proves that AO totally relied on the report of Investigation Wing of Income tax department and ignored the submission, documents & evidences filed by assessee.
f) Here it is pertinent to to bring to Your Honour's notice that the order passed against the appellant is a stereotype which he has passed in the case of person where specific information from Hon'ble SEBI or Hon'ble DIT(Inv) has been received in respect of Moreover, a perusal of the impugned alleged bogus scrips. Moreover, assessment order Your Honour will appreciate and admit that there is no involvement or any adverse information of involvement of assessee in either price rigging or any type of Symphony Merchants Pvt. Ltd. 28 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 manner treated the wrong doing is present. The Ld AO in causal manner name of the appellant on receipt of general information from Hon'ble DIT(Inv) on par with those having alleged to have involvement as setout in SEBI report/order. In the case of assessee, he has purchased the shares and sold in open market on the floor of recognised stock exchange hence the alleged addition made on unfounded ground with prejudice mind without bringing on record any cogent evidence is uncalled for and needs forthwith deletion.
g) Further, the Ld AO has not made any adverse comment comment on details submitted by the assessee and disregarding the fact that the assessee purchased the shares, made the payment by a/c payee cheque, received the shares in govt regulated Depository A/c, sold through recognized stock exchange, gave delivery of shares & received payment through govt recognized stock exchange. Hence the contention of the Ld AO are nothing but mere suspicion and hypothetical view that these are accommodation entries that too without any concrete evidence.
assessee has provided all the evidences in Moreover, when the assessee support of purchase and sale the genuine transaction the same cannot be held as ingenuine merely on the statement of third party. Our aforesaid view has highly been appreciated in the following decisions:
Mahesh Mund Mundra ra Mumbai vs ITO 21(1)ITA No. 1176/Mum/2012 ITO ward 20(1) vs Naveen Gupta in ITA No 696 (Delhi) SOT 2006 94 Delhi Mayur M Shah HUF Mumbai vs ITO 25(3) ITA No. 2390/Mum/2013 ChandrakantBabulal Shah vs ITO 16(2)(4) ITA No. 6108/Mum/2009 ACIT v Shri Ravindra Kumar Toshnival ITA No. 5302/Mum/2008 Jafferali K Rallonse v DCIT Central 5 in ITA No. 68/Mum/2009 DCIT v Shri Pinakir L Shok in ITA No. 3030 & 3453/M/08 Dated 14/07/2009 Mr Ramprasad Agarwal v/s ITO 2(3)(2), Mumbai (ITAT Mumbai dated 30/11/2018) Symphony Merchants Pvt. Ltd. 29 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025
h) Lastly, we bring to Your Honour's notice the relevant para 13 of the Hon'ble Apex Court decision in the case of CIT Orissa v Orissa Sponge (P) Ltd in which the Hon'ble judges have observed that when all the evidences have been provided by assessee the onus to treat the same as ingenuine shifts to, the Ld AO. Without proving the evidences no addition can be made.
"In this case the assessee had given the names and address of the alleged creditors. It was in the knowledge of the revenue that the said creditors were income tax assessee. There index number was in the file of revenue. The revenue apart from issuing notice u/s. 131 at the instance of the assessee did not pursue the matter further. The revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy or were such so could advance the alleged loans. There was no effort made to pursue the so called alleged creditors. In those circumstances the assessee could not do anything further. In the premises if the ITAT came to the conclusion that assessee has discharged the burden that buy on him then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion is based on some evidence on which a conclusion conclusio could be arrived at no question of law as such arises."
7.2 Further, the assessee has relied on various case laws.
7.3 I have considered the facts of the case and submission of the assessee. I find that the assessee is a regular trader and has shown trading trading of shares as its business. The assessee is carrying out share trading (delivery and non delivery) and Future and Options (F&O) trading. The assessee has submitted financial statements, investment statement and stock in trade three financial years. The assessee has statement for the last three trading in several scrips other than Mudit Finlease Ltd. The activity of the assessee company shows that it has been regularly trading in the shares and other instruments and trading in the shares of Mudit Finlease Ltd iis s not an isolated transaction.
7.4 I further noted that the assessee had purchased and sold these shares on the floor of the BSE through banking channels and has paid STT on the same. The assessee has also produced copy of the contract notes and bank statement.
state No doubt has been raised by the AO on such documents. I find that AO has relied upon the finding of the investigation wing relating to sudden increase in price and fall thereon. AO has not pointed out as to whether the assessee is part of such price rigging. No Symphony Merchants Pvt. Ltd. 30 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 independent enquiry has been conducted by the AO to establish that assessee has booked bogus business loss. Further, there is no adverse finding reported by the SEBI against the assessee.
the case of In this regards, reliance is placed on the decision in the decision of the Hon'ble Jurisdictional High Court in the case of PCIT vs. Ziauddin A Siddique (Income tax Appeal No. 2012 of 2017 dated 4th March, 2022) wherein the Hon'ble Bombay High Court has observed as under:
under:-.
2. We have considered the imp ugned order with the assistance impugned of learned counsels and we have no reason to interfere. There is a finding of fact by the Tribunal that the transaction of purchase and sale of shares of the alleged penny stock of shares of Ramkrishna Fincap Ltd ("RFL") is done through stock exchange and through the registered Stock Brokers. The payments have been made through banking channels and even Security Transaction Tax ("STT") has also been paid. The Assessing Officer also has not criticized the documentation involving involvi the sale and purchase of shares. The Tribunal has also come to a finding that there is no allegation against the assessee that it has participated in any price rigging in the market on the shares of RFL.
3. Therefore we find nothing perverse in the order orde of the Tribunal.
4. Mr. Walve placed reliance on a judgement of the Apex Court in Principal Commissioner of Income tax (Central)-1 (Central) 1 vs. NRA Iron & Steel (P) Ltd (2019)(103 taxmann.com 48)(SC) but that does that case were not help the revenue in as much as the facts in that entirely different.
5. In our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law.
7.5 Hence taking into consideration submission of the assessee and judicial decision, it is held that the share transactions genuine and hence, AO is carried out by the assessee are genuine directed to delete the addition of business loss of Rs.
19,49,214/- in respect of sale of shares of M/s Mudit Finance Ltd.
Accordingly, ground of the appeal is Allowed."
Allowed.
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ITA No. 7058, 6979, 6980, 6981,
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10. We have heard rival submissions of the parties and perused the relevant materials on record record.. The issue in dispute in the year under consideration is identical to the issue of the business loss in the assessment year 2011 12 where we have uphold the finding of 2011-12 the Ld. CIT(A) of deleting the disallowance disallowance. To cons o have consistency, 2011 12, we uphold the following the finding of the assessment year 2011-12 finding of the Ld. CIT(A) in the year under consideration also. Accordingly, the ground No. 1 of the appeal of the Revenue is dismissed.
10.1 The ground No. 2 of the appeal being consequential to the ground No. 1 of the appeal.
appeal We do not find any infirmity in the finding of the Ld. CIT(A) on the issue in dispute and the addition of Rs.19,49,214/- made on account of commission @ 1% is also ccordingly the ground No. 2 of the appeal of the Revenue deleted. Accordingly is also dismissed.
11. Now we take up the appeal of the Revenue for assessment year
15. The grounds raised by the Revenue are reproduced as 2014-15.
under:
i) "Whether on the facts and circumstances of the case and in the Ld.CIT(A) is justified in deleting disallowance law, whether the of loss of Rs. 1,28,36,396/-
1,28,36,396/ incurred in the business of share trading as bogus."
ii) "Whether on the facts and circumstances of the case and in law, whether the Ld.CIT(A) is justified in deleting addition of Rs. 94,031/- u/s 14A r.w.r 8D."
Symphony Merchants Pvt. Ltd. 32
ITA No. 7058, 6979, 6980, 6981,
7059/MUM/2025
12. In the ground No. 1, the Revenue has challenged loss of Rs.1,28,36,396/- which is arising on account of trading in various scrips. The facts and circumstances in the year under consideration
12. The relevant are identical to the facts in assessment year 2011-12. finding of the Ld. CIT(A) is reproduced as under:
"6. Ground no.1 to 4: The AO has received information from Investigation Wing, Kolkata that the assessee has claimed bogus LTCG/ bogus STCL on sale of various shares. The AO has noted that the assessee, had bought 22,500 numbers of shares of i) First Financial Services Ltd for Rs.51,04,465/-and Rs.51,04,465/ the same was sold of Rs. 18,47,225/ 18,47,225/- and thereby making a 32,57,240/ ) Luminaire Technologies Ltd Services Ltd' loss of Rs 32,57,240/-) L bought 2,23,000 share for Rs. 1,02,69,976/ 1,02,69,976/- and the same was 49,19,373/ and thereby making a loss of Rs sold of Rs. 49,19,373/-
iii) Purchase 5000 share of Radford Global Ltd for 53,50,603/-iii) Rs. 4,00278/-and 4,00278/ and sold of Rs. 56,386/ making a loss of Rs.
3,43,892/- iv) Purchase 6500 shares of Comfort Fincap Ltd and out of 2000 shares sold and making a loss of Rs. 3,64,546/-
3,64,546/ v) Purchase 22000 share of Ashika Credit Capital Ltd and sold out 29,69,261/ & vi) Purchase 17500 share and making loss of Rs. 29,69,261/-& 10,000 shares of Dhenu Buildcon Infra Ltd for Rs. 6,61,000/ 6,61,000/-
and sold the same quantity for Rs. 32,282/making a loss of Rs. 6,28781/- .So the total share trading loss amounting to Rs. 1,28,36,396/ after adjustment of profit of Rs. 77,864/-
1,28,36,396/-after 77,864/ in the
script namely Shree Shaleen Tex
Textiles Ltd.
6.1. The AO has relied on the findings of Investigation Wing, Kolkata, in respect of LTCG/STCL entries claimed by large number of beneficiaries, wherein it was mentioned that the entire entry providing scam comprises of various levels of rs who either introduce the unaccounted cash of operators beneficiaries in their accounts through a layer of transactions and utilize the said cash for purchase of shares at manipulated high prices which ultimately results in payment of the amount beneficiary in the guise of sale proceeds of shares back to the beneficiary ostensibly resulting in Long Term Capital Gain to the beneficiary and reverse modus operandi is adopted in order to provide entry of bogus Short Term Capital Loss. The AO has also discussed price movement in the the share transactions made by the assessee. The AO has also relied on SEBI report in the case of First Financial Services Ltd. Accordingly, AO has concluded Symphony Merchants Pvt. Ltd. 33 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 that loss booked by the assessee in its books was prearranged method to evade taxes and accordingly loss of Rs. 1,28,36,296/ was added by him into the total income of the 1,28,36,296/-
assessee an unproved loss.
6.2. The assessee has filed detailed submission and contention raised by the assessee are summarized as under:
"1) The appellant has genuinely purchased and sold the shares on the floor of BSE complying the rules and regulation of BSE & also that of Hon'ble SEBI 21 There is no adverse finding by the Hon'ble DIT(Inv) Mumbai or Kolkata against the appellant even the name of the appellant is not there in either the report of Hon'ble SEBI or any finding/information of Hon'ble DIT(Inv). SEBI order in case of appellant in respect to First financial services Itd and Radford Global Ltd is enclosed hereto, marked as Annexure-'C' Annexure and Annexure 'D' respectively. From the orders your honour will note that nothing adverse have been reported by SEBI against the appellant of any sort of wrong doing or involvement/connivance of any nature with anybody
3) There is not an iota of evidence of any nature against the appellant that he is part of price rigging or has purchased the shares with pre-determined pre determined mind to incur loss. The AO's allegation is totally based on surmise conjecture and suspicion as because only reason assigned by AO is that the named scrip were used for bogus gain/ gain/loss loss as per findings of Investigation Wing of Income Tax Department and therefore the loss suffered by assessee on scrip of Ashika Credit Capital Itd, Comfort Fincap Itd, Dhenu Buildcom Itd, First Financial Services Itd, Radford Global Ltd were Luminaire Technologies Itd and Radford disallowed.
4) Before concluding that appellant is party to dubious transactions no opportunity of cross examination of the person on whose statement the Ld AO has relied has been given. Also, assessee based on which AO did not provide any documents to assessee conclusion were drawn, for rebuttal.
5) The contention produced by the Ld AO in the assessment order are not his own but borrowed from Hon'ble SEBI and Hon'ble DIT(Inv) findings. The Ld AO has not brought on record any independent finding or any adverse evidence against appellant to support his claim.
Symphony Merchants Pvt. Ltd. 34
ITA No. 7058, 6979, 6980, 6981,
7059/MUM/2025
6) Here it is pertinent to bring to your honour's notice that the order passed against the appellant is a stereo type which he has passed in the case of person where specific information from Hon'ble SEBI or Hon'ble DIT(Inv) is available. Since in the case of appellant neither any information from Hon'ble DIT(Inv) nor any adverse comment from Hon'ble SEBI in their order is there the appellant should not have been treated at par along with the person erson whose name was there in Hon'ble DIT(Inv) report as well as in the order of SEBI order in the case of appellant, he has purchased and sold the shares in open market on the floor of recognised stock exchange, the addition made on unfounded ground with prejudice mind without bringing on record any evidence is uncalled for and needs forthwith deletion.
7) Here it is pertinent to bring to your honour's notice that the shares of M/S Dhenu Buildcom were sold from the shares assessment year which has been purchased in the previous assessment accepted as genuine then how come the genuine loss out of genuine shares sold can be treated as ingenuine is one's beyond imagination.."
6.3 Further, the assessee has relied on various case laws.
6.4 I have considered the facts of th thee case and submission of the assessee. I find that the assessee is a regular trader and has shown trading of shares as its business. The assessee is carrying out share trading (delivery and non delivery), Future and Options (F&O) trading. The assessee has submitted financial statements, investment statements, and stock in trade statement for the last three financial year. The assessee has trading in several scrip other than the scrips which were considered as penny stock by the AO. The activity of the assessee see company shows that it has been regularly trading in the shares and other instruments.
6.4.1 Further, it is seen that the assessee had purchased and sold these shares on the floor of the BSE through banking channels and has 'paid STT on the same. The as sessee has assessee also produced copy of the contract notes, and bank statement. No doubt has been raised by the AO on such documents. I find that AO has relied upon the finding of the investigation wing relating to sudden increase in price and fall thereon. AO ha has not pointed out as to whether the assessee is part of such price rigging. No independent enquiry has been conducted by the AO to establish that assessee has booked bogus short term capital loss. The AO has relied on finding of the SEBI report in the case Symphony Merchants Pvt. Ltd. 35 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 of First Financial Services. However, there is no adverse findings against the assessee in respect of SEBI report relied by the AO. In this regards, reliance is placed on the decision in the case of decision of the Hon'ble Jurisdictional High Court in the case of PCIT vs. Ziauddin A Siddique (Income tax Appeal No. 2012 of 2017 dated 4th March, 2022) wherein the Hon'ble Bombay High Court has observed as under:-
under:
".....
2. We have considered the impugned order with the assistance of learned counsels and we ha ve no reason to interfere. There is have a finding of fact by the Tribunal that the transaction of purchase and sale of shares of the alleged penny stock of shares of Ramkrishna Fincap Ltd ("RFL") is done through stock exchange and through the registered Stock Brokers. The payments have been made through banking channels and even Security Transaction Tax ("STT") has also been paid. The Assessing Officer also has not criticized the documentation involving the sale and purchase of shares. The Tribunal has also come com to a finding that there is no allegation against the assessee that it has participated in any price rigging in the market on the shares of RFL.
3. Therefore we find nothing perverse in the order of the Tribunal.
judgementt of the Apex Court
4. Mr. Walve placed reliance on a judgemen in Principal Commissioner of Income tax (Central)-1 (Central) 1 vs. NRA Iron & Steel (P) Ltd (2019)(103 taxmann.com 48) (SC) but that does not help the revenue in as much as the facts in that case were entirely different.
Tribunal has not committed any perversity or
5. In our view, the Tribunal applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test' is applied to decide the issue at hand, then, we do not think that question as pressed raise raises s any substantial question of law.
..."
6.5 Further, ITAT in the followings decisions has deleted addition made by the AO in respect of the same scrips as entered into by the assessee.
i) ASHIKA Credit Capital Ltd-
Ltd ITAT, Mumbai in the case of Abhishek Doshi vs DCIT Circle 19(1), Mumbai (ITAT Amrita Abhishek Symphony Merchants Pvt. Ltd. 36 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 Mumbai) [ITA No. 1353/Mum/2024] has deleted the addition made by the AO in respect of transaction in a same scrip. Relevant portion of the order of the ITAT is reproduce as under:
8. We heard the rival submission and considered the documents available in the record. On perusal of the records, we find that the assessee, herself never involved in price rigging of the scrips. The Ld. AO has not conducted independent investigation of the investigating authority and fully relied on the observation of of Kolkata. But no separate verification was conducted. The assessee has discharged her onus by submitting documents before the revenue authorities.
There is no information of entry/exit provider in appeal and stage.. The share was duly opened by the SEBI but assessment stage co ordinate bench in the later on the same was revoked. The co-ordinate case of assessee's husband Shri Abhishek Tejraj Doshi (supra)&Shri Abhishek Doshi (supra) has taken a view in favour of the assessee and against the rev enue. For our observations revenue.
and to arrive at the findings, we respectfully relied on the decisions of Hon'ble High Court of Bombay being a jurisdictional High Court: Pr. CIT v. Ziauddin A Siddique [Income [Income-tax tax Appeal No. 2012 of 2017, dated 4-3-2022] 4 held as under: -
"1. The following question of law is proposed: "Whether on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal was justified in deleting the addition of Rs. 1,03,33,925/ made by AO u/s 68 of the I.T. Act, 1961, ignoring 1,03,33,925/- ignori the fact that the shares were bought/acquired from off market sources and thereafter the same was DMATed and registered in stock exchange and increase in share price of Ramkrishna Fincap Ltd. is not supported by the financials and, therefore, the amount of LTCG of Rs. 1,03,33,925/- claimed by the assessee is nothing but unaccounted income which was rightly added u/s 68 of the I. T. Act, 1961?"
2. We have considered the impugned order with the assistance of the learned Counsels and we have no reason to interfere.
in There is a finding of fact by the Tribunal that the transaction of purchase and sale of the shares of the alleged penny stock of shares of Ramkrishna Fincap Ltd. ("RFL") is done through stock exchange and through the registered Stockbrokers. The ayments have been made through banking channels and even payments Security Transaction Tax ("STT") has also been paid. The Assessing Officer also has not criticized the documentation involving the sale and purchase of shares. The Tribunal has also come to a finding that there is no allegation against Symphony Merchants Pvt. Ltd. 37 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 assessee that it has participated in any price rigging in the market on the shares of RFL.
3. Therefore we find nothing perverse in the order of the Tribunal."
4. Mr. Walve placed reliance on a judgment of the Apex CourtCour in Principal Commissioner of Income-tax Income (Central)-1 1 v. NRA Iron & Steel (P.) Ltd. but that does not help the revenue in as much as the facts in that case were entirely different. 5. In our view, the Tribunal has not committed any perversity or applied incorrect in principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law. 6. The appeal iss devoid of merits and it is dismissed with no order as to costs."
the order of the Hon'ble Bombay High Court in the case of CIT vs Shyam R Pawar 229 Taxman 256 (Bom). The relevant paragraph is reproduced as below: -
"6. It is in that regard that we find that Mr. Gopal's contentions are well founded. The Tribunal concluded that there was something more which was required, which would connect the present Assessee to the transactions and which are attributed ters/Directors of the two companies. The Tribunal to the Promoters/Directors referred to the entire material and found that the investigation stopped at a particular point and was not carried forward by the Revenue. There are 1,30,000 shares of Bolton Properties Ltd. purchased by the the Assessee during the month of January 2003 and he continued to hold them till 31 March 2003. the present case related to 20,000 shares of Mantra Online Ltd for the total consideration of Rs.25,93,150/ Rs.25,93,150/-.. These shares were sold and how they were sold, on what what dates and for what consideration and the sums received by cheques have been referred extensively by the Tribunal in para 10. A copy of the DMAT account, placed at pages 36 & 37 of the Appeal Paper Book before the Tribunal showed the credit of share transaction.
tran The contract notes in Form-A Form A two brokers were available and which gave details of the transactions. The contract note is a system gene and prescribed by the Stock Exchange. From this material, in para 11 the Tribunal concluded that this was mere ccommodation of cash and enabling it to be converted into accommodation payment discrepancy pointed out by the accounted or regular payment-discrepancy Calcutta Stock Exchange regarding client Code has been referred to. Bi Tribunal concluded that itself, is not enough to Symphony Merchants Pvt. Ltd. 38 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 transactions in the impugned shares prove that the transactions bogus/sham. The details received from Stock Exchange have been relied upon and for the purpose faulting the Revenue in failing to discharge the basic onus. If the Tribunal proceeds on this line concluded that inquiry was no nott carried forward and with a view to discharge the initial or basic onus; then such conclusion of the Tribunal cannot be termed as perverse. The conclusions as recorded in para 12 of the Tribunal's order are not vitiated by any error of law apparent on the face of the record either."
7. As/a result of the above discussion, we do not find any substance in the contention of Mr. Sureshkumar that the Tribunal misdirected itself and in law. We hold that the Appeals do not raise any substantial question of law. They T are accordingly dismissed. There would no order as to costs."
Hon'ble Delhi High Court in the case of Pr.CIT vs Smt. Krishna Devi 431 ITR 361 (Del). The relevant paragraph is enclosed herewith: -
"12. Mr. Hossain's submissions relating to the spike in the share price and other factors may be enough to show circumstances that might create suspicion; however the Court has to decide an issue on the basis of evidence and proof, and not on suspicion alone. The theory of human behavior and preponderance of obabilities cannot be cited as a basis to turn a blind eye to the probabilities evidence produced by the.Respondent. With regard to the claim that observations made by the CIT(A) were in conflict with (he Impugned Order, we may only note that the said observations are general eneral in nature and later in the order, the CIT(A) itself notes that the broker did not respond to the notices. Be that as it may, the CIT(A) has only approved the order of the AO, following the same reasoning, and relying upon the report of the tion Wing. Lastly, reliance placed by the Revenue on Investigation Suman Poddar case (supra) and Sumati Dayal case (supra) is of no assistance. Upon examining the judgment of Suman Poddar case (supra) at length, we find that the decision therein was arrived at in light of the peculiar facts and circumstances demonstrated before the ITAT and the Court, such as, inter alia, lack of evidence produced by the Assessee (herein to show actual sale of shares in that case. On sucuh basis, the ITAT had returned the finding of fact against the Assessee, holding that the genuineness of share transaction was not established by him. However, this is quite different from the factual matrix At hand. Similarly, the case of Sumati Dayal (supra) too turns on Symphony Merchants Pvt. Ltd. 39 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 above stated cases, thus, are of no its own specific facts. The above assistance to the case sought to be canvassed by the Revenue.
fact finding authority, on
13. The learned ITAT, being the last fact-finding the basis of the evidence brought on record, has rightly come (o the conclusion that the lower tax authorities are not able to sustain the addition without any cogent material on record. We thus find no perversity in the Impugned Order."
Further, we respectfully relied on the orders of Hon'ble High Courts on similar facts in favour of the assessee.
........................x............... .....................x...............
The Id. D Rrespectfully relied on the order of Swati Bajaj (Supra) where the action of the Id. AO is confirmed. Accordingly, the same would prevail on the issue before this Bench. In the present case, the decision of the the Hon'ble NonJurisdictional High Court carries only a influence. The law is very well settled by the Hon'ble Supreme Court in the case of Union of India vs Kamalakshi Finance Corporation Ltd reported in 55 ELT 43 (1991) that the decision of Hon'ble Jurisd ictional High Court Jurisdictional would have higher precedence value on the Tribunal than the decision of Hon'ble Non Non-Jurisdictional Jurisdictional High Court. TAX DER The Id. DR also relied on the order of the coordinate bench ITAT-
ITAT Mumbai- ABench, in the case of Aakruti Ketan Mehta (supra)( which is favour of the revenue. Considering the submission of assessee, the order of the Dr. K.M.Abraham, Whole Time Member, Securities and Exchange Board of India bearing Order No. WTM/KMA/IVD-ERO/21/12/2008, WTM/KMA/IVD 19/07/2011, dated-19/07/2011, APB Pages 98-134 98 the suspension on Ashika Stock Broking is revoked.
In the orders impugned before us, the theory propounded by the Id. AO suggests largescale generation & investment of unaccounted monies took place, but even after conducting an evidence to support such addition invasive search action, no evidence was unearthed. As per the Id. AO, the assessee had earned & routed unrecorded income. If that were so, it would have certainly reflected in the investigated documents. The documents in the form of undisclosed sales or bogus exp expenses etc. The AO has however not been able to bring on record any material or evidence unearthed during search/ investigation which would reveal as to from which income earning activity did the assessee derive such unaccounted monies to support his theory that he had routed such unaccounted monies in the Symphony Merchants Pvt. Ltd. 40 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 guise of bogus capital gains. The order Aakruti Ketan Mehta (supra) is distinguishable in this point. The order of SEBI never contended that the assessee was involved in price rigging.
9. We find that the shares of Ashika Credit and Capital Limited were purchased from the open market i.e. recognised stock exchange through registered brokers. The purchase and sale were routed through demat accounts. The purchase and sale proper banking channels.
considerations were routed through proper The transactions were recorded in books of accounts and reflected in the return. Since the shares were held for less than one year, the appellant was offered the Short Term Capital Gain to tax @ 15%. The shares of Confidence Finance and Trading Limited, although purchased through preferential allotment, were dematerialized in the year of purchase itself. These shares were sold on recognised Stock exchange through a registered broker. The purchase and sale considerations were routed rough proper banking channels. Since the shares were held through for more than one year, the appellant was claimed exemption of LTCG under section 10(38) of the Act.
10. The learned AO had asserted in the assessment order that the assessee along with her family members had sold the shares of Ashika Credit and Capital Limited to M/s Withal Commercial Private Limited. Firstly, the shares of Ashika Credit and Capital Limited are sold through the stock exchange, wherein the identity of buyers and sellers is unknown to t each other. Secondly, the said assertion is made without any corroboration.
The Id. AO did not appreciate that Ashika Stock Broking Limited was banned from buying/selling or dealing in securities in their own/proprietary account. Later, the ban on taking /dealing with taking/dealing fresh/new clients was also lifted. The Id. AO did not appreciate that the appellant was the broker's existing client. The SEBI order EAD- 7/BJD/NJMR/2018-19/2289-2295, 7/BJD/NJMR/2018 2295, order dated dated-
28/02/2019, APB pages-74 pages 74 to 97 referred to the impugned appeal order by the Id. CIT(A) does not hold Confidence Finance and Trading Limited and its directors guilty of manipulative scheme to manipulate the price of the scrip of the said company. Only the brokers, Mr. Daulat Laxmi Chandraliya and Mr. Ghanshyam Kamlesh Kacchawa, contributing to price rise in the scrip of Confidence Finance Trading Limited in fraudulent manner. None of the directors or the assessee herself are involved in price manipulation.
Symphony Merchants Pvt. Ltd. 41
ITA No. 7058, 6979, 6980, 6981,
7059/MUM/2025
There was no specific mention of the assessee in any of the recorded orded statements which would establish her nexus with the whole arrangement of providing and accepting accommodation entries. The assessee had carried out the transaction through recognised stock exchange and thus operated in a regulatory environment and hence hence the allegation that he was hand in glove with some people who operated the scheme has no evidence. The documents submitted are contract notes, demat accounts and bank accounts before the revenue authorities which are issued by unrelated third parties, cannot be treated as sham self-serving.
We respectfully rely on the orders of the Hon'ble Jurisdictional High Court, which has similar in the factual matrix with the impugned issue. The grounds of appeal of the assessee are upheld. We set aside the impugned impugned appeal order. The additions amount to Rs. 2,67,83,731/-
2,67,83,731/ is quashed."
Ltd- Udaykumar Prabhudas Shah vs ITO
ii) Comfort Fincap Ltd Ward 29(3)(1) (ITAT Mumbai) [ITA No. 883/Mum/2023]. Relevant portion of the ITAT is reproduced as under-
under "5. Considered the rival rival submissions and material placed on record, we observe from the record that on identical facts and also where the sale of share of same scrip is involved i.e, M/s. Compfort Fincap Ltd., has been considered by the Coordinate Bench in the case of Alpa Udayk umar Shah v. ITO (supra) and Udaykumar decided the issue in favour of the assessee in the A.Y.2014 A.Y.2014-15.
While deciding the issue, the Coordinate Bench of the Tribunal in ITA.No.391/AHD/2018 dated 26:08.2022, held as under: -
"7. We have heard the rival contentions of both the parties and perused the materials available on record. In the present case, the long term capital gain declared by the assessee on sale of shares of M/s Comfort Fincap Ltd for € 1,15,49,320/-
1,15,49,320/ was addition by treated as bogus and manipulated, leading to the addition the AO under section 68 of the Act. The view of the AO was based on certain factors which have been elaborated in the preceding paragraph which has been also confirmed by the learned CIT(A).
7.1 The 1st observation of the AO for holding the impugned impu capital gain as bogus was that the at the time of investment by the Udaykumar Prabhudas Shah assessee the company, was not known in public domain and share were purchased in offline. In this regard firstly we note that the offline purchase of share is not prohibited under the statute. Secondly, if some Symphony Merchants Pvt. Ltd. 42 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 investment in the shares of a company is made, which at the relevant time was not known in public domain or in private placement does not mean that the investment is not genuine or pre-arranged some adverse materials are available on arranged unless some record.
7.2 It was also alleged that the price of the share of M/s Comfort Fincap Ltd. was increased manifolds in a short period of time which was not believed by the authorities below on the preponderance of human probabilities in the given principles of preponderance facts and circumstances. The rise in the price of the scripts of a company, having no financial base/business activity/profitability certainly gives rise to the doubt about such increase in the price. However, in the g given iven case, the impugned company was engaged in the business activity and likewise, it was regularly showing income from operation and also declaring dividend and having registered in RBI as NBFC. Further, in our considered view, the sharp rise in the price of scrip cannot be a sole criteria for reaching to the conclusion that long term capital gain the price were rigged up to generate the long-term which is exempted under section 10(38) of the Act. Such observation during the assessment proceedings provides reasons too investigate the matter in detail and the same cannot take the place of the evidence. But in the case on hand, there was no enquiry conducted either by the SEBI or the stock exchange with respect to rigging up of share price of M/s Comfort Fincap Ltd. eit her by the assessee or his broker.
either Similarly, there was no complaint filed by any of the party either to the SEBI or the stock exchange about the assessee or brokers impleading that they were involved in the activity of rigging up the price of the shares. Similarly, the AO has not conducted an enquiry from the SEBI or BSE about the assessee whether he was engaged in the frivolous activities as alleged. The AO alleged that the SEBI has prohibited the impugned market.. However, we company to enter into transaction at stock market note that the SEBI has not taken any action against the scrip of the impugned company as the action was taken against the director promoter and the company from accessing to share market.
7.3 Further, the price of a share at stock exchange cannot c be linked to the financial strength of the company, as such the same is governed by several market driven factors. The assessee is also a regular investor and have made investment in the scrip of other companies. We also note that the assessee has acquired quired 55000 shares of impugned company whereas the shares were transferred only 34400 in numbers during the Symphony Merchants Pvt. Ltd. 43 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 period of October 2013 to February 2014 and remaining shares are still held by the assessee. We also note the price of the impugned share also reached reached as high as Rs. 448 per share whereas the highest price at which, the assessee transferred was of Rs. 395 per share and lowest was of Rs. 187 per share. Thus in our considered view had the assessee indulged in pre pre-
arrange transaction for taking accommod ation entries then he accommodation should have transferred the entire holding and that too at the highest possible price.
7.4 The AO alleged that the CEO of Comfort Fin Securities and key person of the comfort group in the statement recorded before the DDIT Kolakata admittedadmitted to have provided accommodation entry in the scrip of M/s Comfort Fincap Ltd. Similar admission was also made by the other stock broker during the search and survey proceeding conducted by the DDIT Kolkata in the matter of penny stock. However on 7 ebruary, 2024 their statements were not provided to the February, assessee for the rebuttal and cross examination. It was also not brought on record that any of the person whose statement was recorded have taken the name of the assessee or his broker. We also note that hat there was no allegation against the broker through whom the assessee has purchased and sold the impugned script. What has been adopted by the AO for making the addition was the modus of operandi as highlighted by the our understanding, the mere investigation wing of Kolkata. To our modus of operandi cannot the basis of making the addition or treating the capital gain as bogus until and unless it is supported by other corroborative material documents.
7.5 On further analyzing the facts of the present case, we w note that the AO on one hand has alleged that the entire transaction was bogus but on the other hand the AO himself has allowed the cost of acquisition against the sale of shares, meaning thereby, the purchase of the shares has been admitted as genuine. The transactions of purchase and sales go hand in hand. In simple words, sale is not possible without having the purchases. Thus, once purchases has been admitted as genuine, then corresponding sales cannot be doubted until and unless some adverse material s are brought on record. As such, materials we note that the AO in the present case has taken contradictory stand. On one hand, the AO is treating the entire transaction as sham transaction and on the other hand he's allowing the term capital gain.
7.6 The alleged scam might have taken place on generating LTCG to avoid payment of tax. But it has to be established in Symphony Merchants Pvt. Ltd. 44 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 each case, by the party alleging so, that this assessee in question was part of this arrangement. The chain of events and the live link of the assessee's action that he was involved in such rigging up of share price should be established based on cogent materials. The allegation as discussed above implies that there was cash exchanged for taking exempted income by way of long term capital gain by way of cheque through banking channels. This allegation that cash had changed hands, has not been brought on record by the Revenue and there is also no such whisper in the order of the AO. There was no information brought on record suggesting that there was long term capital gain shown by exchange of cash against the long-term the assessee. Likewise we also note that the assessee has discharged the onus imposed under section 68 of the Act by furnishing the necessary documentary evidence in support of tity, genuineness of transaction and creditworthiness of the identity, the parties. Therefore the same cannot be made subject to tax under the provisions of section 68 of the Act.
7.7 We also note that there was no dispute raised by the following facts: 1. Purchase Revenue with respect to the following consideration of share was made through
2. Share was duly dematerialized in demat account
3. Shares were sold through stock exchange after the payment of STT. The transactions have been confirmed by brokers.
4. The payment were rece received ived through ECS through demat account
5. Inflow of shares are reflected in demat account. Shares are transferred through demat account and buyers do not know the assessee.
6. There is no evidence that the assessee has paid cash to the buyer or the broker or any other entry provider for booking LTCG and share were purchased by the determined buyer.
7. The assessee has no nexus or any relation with company, its director or entry operator.
8. The assessee may have got only incidental benefit of price rise. 9. The opportunity of cross examination has not been extended to the assessee despite having the request from the assessee.
Symphony Merchants Pvt. Ltd. 45
ITA No. 7058, 6979, 6980, 6981,
7059/MUM/2025
7.8 From the above, conduct of the assess assessee suggests that he was not involved in rigging or any wrongdoing. The case laws reliedd by the authorities below are distinguishable from the present facts of the case in so far there was SEBI enquiry conducted and found guilty of wrong.practices but it is not so in the case on hand. 7.9 In our view, the income generated by the cannot be held bogus only on the basis of the modus assessee cannot operandi, generalisation, and preponderance of human probabilities. In order to hold income earned by the assessee as bogus, specific evidence has to be brought on record by the Revenue to prove that the assesseeassessee was involved in the collusion with the entry operator/ stock brokers for such an arrangements. In absence of such finding, it is not justifiable to link the fact or the finding unearthed in case of some third party or parties with the transactions carried carried out by the assessee.
Further the case laws relied by the AO are with regard to the test of human probabilities which may be of greater impact but the same cannot used blindly without disposing off the evidence forwarded by the assessee. In simple words, words, there were not brought any evidence from independent enquiry to corroborate the allegation.
7.10 Now the controversy also arises whether a person who genuinely purchases the shares at a low price and sold at high price, therefore, he enjoyed the windfall windfall from such scripts, can he be disallowed the benefit of tax exemption provided under section 10(38) of the Act in a situation where it is established that the share price of the company was rigged up to extend the benefit to certain parties. The Justice cannot be delivered in a mechanical manner. In other words, what we see on the records available before us, sometime we have to travel beyond it after ignoring the same. Furthermore, while delivering the justice, we culprits should only be have to ensure in this process that culprits punished and no innocent should be castigated. An innocent person should not suffer for the wrongdoings of the other parties. In the case on hand, admittedly there was no evidence available on record suggesting that the assessee or his broker was involved in the rigging up of the price of the script of M/s Comfort Fincap Ltd. ITA NO. 883/MUM/2023 (Α.Υ: 2014-15) 2014 Udaykumar Prabhudas Shah Thus, it appears that the assessee acted in the given facts and circumstances in good-good faith.
lding so we draw support and guidance from the 7.11 In holding judgment of Hon'ble Delhi High court in case of Pr. CIT vs. Smt. Krishna Devi reported in 126 taxmann.com 80 where it was held as under:
Symphony Merchants Pvt. Ltd. 46
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11. On a perusal of the record, it is easily discernible that in the instant tant case, the AO had proceeded predominantly on the basis of the analysis of the financials of M/s Gold Line International Finvest Limited. His conclusion and findings against the Respondent are chiefly on the strength of the astounding 4849.2% jump in share share prices of the aforesaid company within a span of two years, which is not supported by the financials. On an analysis of the data obtained from the websites, the AO observes that the quantum leap in the share price is not justified; the trade pattern of the aforesaid company did not move along with the sensex; and the financials of the company did not show any reason for the extraordinary performance of its stock. We have nothing adverse to comment on the above analysis, but are concerned with the axiomatic axiomatic conclusion drawn by the AO that the Respondent had entered into an agreement to convert unaccounted money by claiming fictitious LTCG, which is exempt under section 10(38), in a preplanned manner to evade taxes. The AO extensively relied upon the search h and survey operations conducted by the Investigation Wing of the Income-tax Income tax Department in Kolkata, Delhi, Mumbai and Ahmedabad on penny stocks, which sets out the modus operandi adopted in the business of providing entries of bogus LTCG. However, the reliance reliance placed on the report, without further corroboration on the basis of cogent material, does not justify his conclusion that the transaction is bogus, sham and nothing other than a racket of accommodation entries. We do attempt to delve into the question of notice that the AO made an attempt infusion of Respondent's unaccounted money, but he did not dig deeper. Notices issued under sections 133(6)/131 of the Act were issued to M/s Gold Line International Finvest Limited, but nothing emerged ITA NO. 883/MUM/2023 (A.Y: 2014- 2014 15) Udaykumar Prabhudas Shah from this effort. The payment for the shares in question was made by Sh. Salasar Trading Company. Notice was issued to this entity as well, but when the notices were returned unserved, the AO did not take the matter any further. He thereafter simply proceeded on the basis of the financials of the company to come to the conclusion that the transactions were accommodation entries, and thus, fictitious. The conclusion drawn by the AO, that there was an agreement ert unaccounted money by taking fictitious LTCG in a to convert planned manner, is therefore entirely unsupported by any pre-planned material on record. This finding is thus purely an assumption based on conjecture made by the AO. This flawed approach forms the reason for thethe learned ITAT to interfere with the findings of the lower tax authorities. The learned ITAT after considering the entire conspectus of case and the evidence Symphony Merchants Pvt. Ltd. 47 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 brought on record, held that the Respondent had successfully discharged the initial onus cast upon it under the provisions of Section 68 of the Act. It is recorded that "There is no dispute that the shares of the two companies were purchased online, the payments have been made through banking channel, and the shares were dematerialized and the sales havehave been routed mat account and the consideration has been received from de-mat through banking channels." The above noted factors, including the deficient enquiry conducted by the AO and the lack of any independent source or evidence to show that there was an agreement between the Respondent and any other party, prevailed upon the ITAT to take a different view. Before us, Mr. Hossain has not been able to point out any evidence whatsoever to allege that money changed hands between the Respondent and the broker or or any other person, or further that some person provided the entry to convert unaccounted money for getting benefit of LTCG, as alleged. In the absence of any such material that could support the case put forth by the Appellant, the additions cannot be sustained.
sustained. 12. Mr. Hossain's submissions relating to the startling spike in the share price and other factors may be enough to show circumstances that might create suspicion; however the Court has to decide an issue on the basis of evidence and proof, and not on suspicion alone. The theory of human behavior and preponderance of probabilities cannot be cited as a basis to turn a blind eye to the evidence produced by the Respondent.
7.12 Respectfully, following the judgment of Hon'ble Delhi High Court (Supra), w wee hold that in absence of any specific finding against the assessee in the investigation wing report, the assessee cannot be held to be guilty or linked to the wrong acts of the persons investigated as far as long term capital gain earned on sale of share of M/s Comfort Fincap Ltd. is concern.
7.13 We also note that this Tribunal in the case of Parasben Kasturchand Kochar Mehta Lodha & Co. Chartered Accountant vs. ITO bearing ITA No. 549/Ahd/2008 involving identical facts and circumstances has held as under
under:
"7. We have gone through the relevant record and impugned order and heard both the parties. Assessee submitted that he is a customer of ICICI Bank and having demat account of ICICI Securities Ltd. and he has purchased shares through ICICI Securities Ltd. and money has been paid through banking channel. Copies of bank statement and Demat account have been submitted before the lower authorities.
Symphony Merchants Pvt. Ltd. 48
ITA No. 7058, 6979, 6980, 6981,
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8. Ld. A.R. also drawn our attention towards the statement of Edelweiss Broking Ltd. through the said company sha shares were sold and also shown us copy of the Contract Note and all these details were furnished before the lower authorities. The assessee has earned long term capital gain from the sale of companies share i.e. Alpha Graphic India Ltd. and Blazon Marbles.
9.. In our considered opinion, in such case assessee cannot be held that he earned Long Term Capital gain through bogus company when he has discharged his onus by placing all the relevant details and some of the shares also remained in the appellant after earning of the long term capital account of the appellant gain.
10. Ld. A.R. contention is that no statement of the Investigation Wing was given to the assessee which has any reference against the assessee.
11. In support of its contention, Id. A.R. also cited an order orde of ordinate Bench in ITA No. 62/Ahd/2018 in the matter of Co-ordinate Mohan Polyfab Pvt. Ltd. vs. ITO wherein ITAT has held that A.O. should have granted an opportunity to cross examine the person on whose statement notice was issued to the assessee for bogus long long term capital gain. But in this case, neither statement was supplying to the assessee nor cross examination was allowed by the Id. A.O. Therefore, in our considered opinion, assessee has discharged his onus and no addition can be sustained in the hands of the assessee. "
7.14 At this juncture we also feel pertinent to refer the order of coordinate bench of Indore in case of Shivnarayan Sharma & Ors bearing ITA Nos. 889/Ind/2018, 474,206,60,987/Ind/2019, where in identical fact and circumstances, it was held as under:
16. Since we are adjudicating the above stated common issue on the basis of above assessee namely Shri Shivnarayan Sharma, we note that the assessee purchased 6000 equity shares of Conart Traders Ltd on 22.10.2011 at a cost of Rs.
1,50,000/-.. There is no restriction under the law to purchase equity shares on off line mode. Vide order dated 22.3.2013 of the Hon'ble Mumbai High Court M/s Conart Traders Limited was merged with M/s SAL and in lieu there of 6000 shares of M/s SAL were received by the assessee in its demat account. After holding the equity shares for more than 12 months since purchased on 22.10.2011, assessee sold the shares of M/s SAL Symphony Merchants Pvt. Ltd. 49 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 during the period April 2014 to June 2014 through a registered broker and all the transactions of sale of shares took place on the recognised stock exchange. Sale consideration was received in the bank account attached with the Demat account. The detail of the persons purchasing the shares is not provided on the portal of SEBI and all the transactions of purchase and sale took place on the portal through registered brokers under the control of SEBI. M/s SAL has not been striked off as a shell company. Trading of shares of M/s SAL was permitted by SEBI. Prime facie, all the conditions provided u/s 10(38) of the Act seems to have been fulfilled by the assessee.
17. As regards the second issue raised is that assessee was not provided opportunity of cross examination, we observe that Ld. A.O has referred to some investigation carried out by the Department in the case of some brokers and other assessee(s) Indian Kanoon http://indiankanoon.org/doc/126928204/ 8 Udaykumar Prabhudas Shah, Mumbai vs Ito Ward 29(3) (1), Mumbai on 7 February, 2024 located at Kolkata and other company M/s SAL.
places and there is a reference of the company However it is not disputed that name of the assessee is not appearing in such report nor any evidence was found by the Ld. A.O which could indicate that assessee was also a part or connected to the alleged racket of providing accommodation entry ntry of bogus LTCG nor any proof of any agreement between the assessee and other persons mentioned in the report has been found. So the basis of addition is primarily on the statement of third party as well as the information gathered from other sources. Perusal Perusal of the records shows that the assessee has not been provided any access to such report nor any opportunity was provided to cross examine those persons who accepted to have provided accommodation entries for the observe that all the above bogus LTCG, to the assessee. 18. We observe stated facts and the issue of genuineness of LTCG and failure of the Ld. A.O to provide opportunity to cross examination by the assessee with regard to the addition made u/s 68 of the Act for the sale consideration received from sale sale of equity shares of M/s SAL and addition for estimated brokerage expenses has Co ordinate Bench of Mumbai Tribunal in the been dealt by the Co-ordinate case of Dipesh Ramesh Vardhan V/s DCIT (supra) and the same is squarely applicable on the instant 23 We therefore in the light of above judgments which appeals. are squarely applicable in the issues raised in the instant appeals are of the considered view that the claim of Long Term Capital Gain made by the respective assessee(s) deserves to be allowed as they have entered ntered into the transactions of purchase and sales duly Symphony Merchants Pvt. Ltd. 50 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 supported by the documents which have not found to be incorrect. The conditions provided u/s 10(38) of the Act have been fulfilled by the assessee(s) namely Shivnarayan Sharma, Sapan Shaw, Prayank Jain, Jain, Govind Harinarayan Agrawal (HUF) and Manish Govind Agrawal (HUF) as they have sold the equity shares held in Demat account and transactions performed on a recognised stock exchange through registered broker at the price appearing on the exchange portal and at the point of time of sale of equity shares, companies were not marked as shell companies by SEBI and nor the trading of these scrips were suspended. The assessee also deserves to succeed on the legal ground as no opportunity was awarded to mination the third person which were allegedly found cross examination to be providing accommodation entries and therefore no addition was called for in the hands of the assessee without providing opportunity of cross examination in view of the ratio laid down by Hon'ble Ap Apex ex Court in the case of Andaman Timber Industries vs. CCE 281 CTR 241 (SC) that "not allowing the assessee to cross examine the witnesses by the adjudicating authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected". 9 Indian Kanoon - http://indiankanoon.org/doc/126928204/ Udaykumar Prabhudas Shah, Mumbai Mumbai vs Ito Ward 29(3) (1), Mumbai on 7 February, 2024.
202424. We accordingly in view of our above discussions, facts and circumstances of the case and respectfully following judicial precedents and the decisions of Coordinate benches squarely applicable on the instant cases, are of the considered view that in the case of the assessee(s) namely Shivnarayan Sharma, Sapan Shaw, Prayank Jain, Govind Harinarayan Agrawal (HUF) and Manish Govind Agrawal (HUF), the claim of exempt income u/s 10(38) of the Act of Long TermTerm Capital Gain from sale of equity shares deserves to be allowed and no addition is called for the estimated brokerage expenses made in the hands of the assessee(s). Thus finding of Ld. CIT(A) is set aside and the Grounds raised by the assessee(s) in ITA Nos.889/Ind/2018, ITA NO. 883/MUM/2023 (Α.Υ: 2014- 2014
15),474/Ind/2019, 206/Ind/2019, 60/Ind/2019, 61/Ind/2019 and 987/Ind/2019 are allowed."
7.15 In view of the above discussion we hold that the capital gain earned by the assessee cannot be held as bogus merely mer on the basis of some report unearthed in case of third Symphony Merchants Pvt. Ltd. 51 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 party/parties unless cogent material is brought against particular assessee on record. Therefore, we hereby set aside the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Hence the grounds of assessee's appeal are allowed."
6. Since the issue involved in this appeal is exactly similar to the case of Alpa Udaykumar Shah v. ITO (assessee's wife case) and the facts are also identical, respectfully following the above decision in the above case, we allow the grounds raised by the assessee.
7. In the result, the appeal filed by the assessee is allowed."
iii) Dhenu Buildcon Infra Ltd-Shree Ltd Shree Mallikarjan Trad Invest Private Limited vs The ITO Ward 4(1)(3), Ahmedabad (ITAT Ahmedabad) [ITA No. 258/Ahd/2023]. Relevant portion of order of the ITAT is reproduced as under-
under "7. Heard both the partiers and perused all the relevant material available on record. It is pertinent to note that the Assessing Officer as well as the CIT(A) has not disputed the purchase of scrip of Dhenu Buildcon Private Limited. The transaction was conducted through regulatory dealing with securities as the assessee's main business is trading in securities only. The Assessing Officer in the Assessment Year 2013-1414 has accepted the business loss and in fact there was no doubt created by the Revenue in the earlier Assessment Year. In fact, from the perusal of the Assessment Order, it can be seen that dealing with entry providers has not at all been established by the Revenue that it is with the assessee but it is only on conjecture and surmises that the Assessing Officer made the addition. The invocation of Section 68 will not be applicable in the present case as the assessee has given the direct nexus related to his transaction as well as his business loss and there was no documentary evidence which was produced by the assessee before the Assessing Officer created any doubt regarding genuineness of the transaction. The assessee carried out the transaction with the brokers from the registered stock market and in fact was holding scrip for a short period of time and when the scrip was not gaining any profit, the assessee sold the same and, therefore, the assessee has loss/Business loss in the rightly claimed short term capital loss/Business present scenario. Thus, addition made by the Assessing Officer as well as confirmed by the CIT(A) is not justifiable. Hence, appeal of the assessee is allowed. 8. In the result, appeal of the assessee is allowed."
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iv)First Financial Services Ltd- ITO, BKC, Mumbai vs Bharati Bharat Manek (ITAT Mumbai) [ITA No. 2279/Mum/2024]-
2279/Mum/2024] Relevant portion of the order of tehg ITAT is reproduced as under-
"5. We notice that the Ld CIT(A) has considered various case laws in order to decide the issues in favo ur of the assessee.
favour More particularly, the Ld CIT(A) has noticed that the AO did not find fault with any of the documents furnished by the assessee in order to support the claim of purchase and sale of share of M/s First financial services Ltd. The receipt of shares and sale of shares are evidenced by the demat account of the assessee. Further, we notice that the assessee is a regular investor in shares. The documents that were relied upon by the AO were not confronted with the assessee despite being asked for by the assessee. Further, the AO did not establish that the assessee was part of the group that was manipulating the prices of shares. Under these set of facts, we notice that the decision so rendered by the Ld CIT(A) would get support from the decisio decisions rendered by the Hon'ble jurisdictional Bombay High 8 ITA No. 2279/Mum/2024 Court in the case of CIT v. Shyam R. Pawar [2015] 229 Taxman 256 (Bombay) and PCIT vs. Ziauddin A Siddique (Income tax Appeal No. 2012 of 2017 dated 4th March, 2022). 6. In view of the foregoing discussions, we do not find any reason to interfere with the order passed by the Ld CIT(A).
Accordingly, we uphold his order.
7. In the result, the appeal filed by the Revenue is dismissed.
v) Radford Global Ltd-Ltd Hitesh Mangilal Jain vs ITOIT Ward 19(1)(5) (ITAT Mumbai) [ITA No. 261-262/Mum/2024] 261 262/Mum/2024]-Relevant portion of order of the ITAT is reproduced as under-
under "12. In another case of Chirag Tejprakash Dangi Dangi-ITA No.3256/Mum/2022, one of the scrips in question was Radford Global (earlier known as PSI Global Ltd). With regard to the finding of the AO treating the said scrips ad Penny stock in whose caseprices were rigged in order to generate capital gains/loss, the tribunal has taken note of the submission of Id.AR that this company was also subject subjected ed to scrutiny by the SEBland interim order passed by it against the company was revoked subsequently.It was also claimed that the company was not subjected to any inquiry by SEBI. The tribunal in para 14 of the order has categorically observed that the de decisions rendered by the jurisdictional Bombay High Court in the cases cited above i.e. Shyam Pawar(supra), Ziauddin Siddiquue and Jamnadevi Agrawal shall apply in the present cases as well Symphony Merchants Pvt. Ltd. 53 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 since the assessee has not established that the assessee had rigged the prices and also AO did not find any fault in the documents filed by the assessee. Moreover, purchase of shares in earlier years were accepted as genuine. Shares were traded on online platform of the Stock Exchange. Therefore, sale transactions could not n be doubted."
vi) Luminaire Technologies Ltd-Rakesh Ltd Rakesh Sahewal vs DCIT CC 4(3) (ITAT Mumbai) [ITA No. 2208/Mum/2023]. Relevant portion of order of the ITAT is reproduced as under-
under "21. Considered the rival submissions and material placed on observe that the assessee is not the regular investor record, we observe and had specifically made the investment in the scrip under consideration. It is fact on record that the financials of the company are not commensurate with the purchase and sale price in the market. The assessee assessee has purchased the shares D mated the scrips and subsequently sold from open market, D-mated the same in the stock exchange. It clearly raises several doubt on the purchase and sales transactions recorded in this case. However, there is no discrepancies in thethe documents filed by the assessee claiming the deductions u/s 10(38) of the Act. At the same time, even though all the characteristics of the penny stock exists in the present case, still the revenue has not assessee in any brought on record any materials linking the assessee dubious transactions relating to entry, price rigging or exit providers. Even in the SEBI report, there is no mention or reference to the involvement of the assessee. We can only presume that the assessee is one of the beneficiary in this sactions merely an investor, who has entered in investment transactions fray to make quick profit. Even the assessing officer has applied the presumptions and concept of human probabilities to make the additions without their being any material against the assessee. We observe that the Hon'ble in the case of Pr. CIT v. Ziauddin A Siddique in Income Tax Appeal No. 2012 of 2017 dated 04.03.2022 held as under:
"1. The following question of law is proposed: "Whether on the facts and in the circumstances of the case and in law, l the Hon'ble Tribunal was justified in deleting the addition of Rs.1,03,33,925/ made by AO u/s 68 of the I.T. Act, 1961, Rs.1,03,33,925/-
ignoring the fact that the shares were bought/acquired from off market sources and thereafter the same was demated and registered inn stock exchange and increase in share price of Ramkrishna Fincap Ltd. is not supported by the financials and, therefore, the amount of LTCG of Rs. 1,03,33,925/ 1,03,33,925/- claimed by Symphony Merchants Pvt. Ltd. 54 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 the assessee is nothing but unaccounted income which was rightly added u/s 68 of the th I. T. Act, 1961?"
2. We have considered the impugned order with the assistance of the learned Counsels and we have no reason to interfere. There is a finding of fact by the Tribunal that the transaction of purchase and sale of the shares of the alleged p enny stock of penny shares of Ramkrishna Fincap Ltd. ("RFL") is done through stock exchange and through the registered Stock Brokers. The payments have been made through banking channels and even Security Transaction Tax ("STT") has also been paid. The Assessing Officer also has not criticized the documentation involving the sale and purchase of shares. The Tribunal has also come to a finding that there is no allegation against assessee that it has participated in any price rigging in the market on the shares of RFL.
3. Therefore we find nothing perverse in the order of the Tribunal.
4. Mr. Walve placed reliance on a judgment of the Apex Court in Principal Commissioner of Income-tax Income 1 vs. NRA Iron & (Central)-1 Steel (P.) Ltd. but that does not help the revenue in as much as the facts in that case were entirely different.
5. In our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied ed to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law.
6. The appeal is devoid of merits and it is dismissed with no order as to costs."
22. Further, the Hon'ble Delhi High Court in the case of o Pr. CIT v. Smt Krishna Devi in ITA 125/2020 dated 15.01.2021 held as under:
"8. Mr. Hossain argues that in cases relating to LTCG in penny stocks, there may not be any direct evidence in the hands of the Revenue to establish that the investment made in s such companies was an accommodation entry. Thus the Court should take the aspect of human probabilities into consideration that no prudent investor would invest in penny scrips. Considering the fact that the financials of these companies do not support the gains made by these companies in the stock exchange, as well as the fact that despite the notices issued by the AO, there Symphony Merchants Pvt. Ltd. 55 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 was no evidence forthcoming to sustain the credibility of these companies, he argues that it can be safely concluded that the investments nts made by the present Respondents were not genuine. He submits that the AO made sufficient independent enquiry and analysis to test the veracity of the claims of the Respondent and after objective examination of the facts and documents, the conclusion ar rived at by the AO in respect of the arrived transaction in question, ought not to have been interfered with. In support of his submission, Mr. Hossain relies upon the judgment of this Court in Suman Poddar v. ITO, [2020] 423 ITR 480 (Delhi), and of the Supreme Court Court in Sumati Dayal v. CIT, (1995) Supp. (2) SCC 453.
9. Mr. Hossain further argues that the learned ITAT has erred in holding that the AO did not consider examining the brokers of the Respondent. He asserts that this holding is contrary to the findings of the AO. As a matter of fact, the demat account statement of the Respondent was called for from the broker M/s SMC Global Securities Ltd under Section 133(6) of the Act, on perusal whereof it was found that the Respondent was not a regular investor in penn penny scrips.
10. We have heard Mr. Hossain at length and given our thoughtful consideration to his contentions, but are not convinced with the same for the reasons stated hereinafter.
11. On a perusal of the record, it is easily discernible that in the instantt case, the AO had proceeded predominantly on the basis of the analysis of the financials of M/s Gold Line International Finvest Limited. His conclusion and findings against the Respondent are chiefly on the strength of the astounding 4849.2% jump in share prices of the aforesaid company within a span of two years, which is not supported by the financials. On an analysis of the data obtained from the websites, the AO observes that the quantum leap in the share price is not the aforesaid company did not justified; the trade pattern of the move along with the sensex; and the financials of the company did not show any reason for the extraordinary performance of its stock. We have nothing adverse to comment on the above analysis, but are concerned with the axiomatic conclusion drawn by the AO that the Respondent had entered into an agreement to convert unaccounted money by claiming fictitious LTCG, which is exempt under Section 10(38), in a pre-planned pre manner to evade taxes. The AO extensively relied upon the search and survey operations conducted by the Investigation Wing of the Income Tax Department in Kolkata, Delhi, Mumbai and Ahmedabad on penny stocks, which sets out the modus Symphony Merchants Pvt. Ltd. 56 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 operandi adopted in the business of providing entries of bogus LTCG. However, the reliance reliance placed on the report, without further corroboration on the basis of cogent material, does not justify his conclusion that the transaction is bogus, sham and nothing other than a racket of accommodation entries. We do notice that the AO made an attempt to delve into the question of infusion of Respondent's unaccounted money, but he did not dig deeper. Notices issued under Sections 133(6)/131 of the Act were issued to M/s Gold Line International Finvest Limited, but payment for the shares in nothing emerged from this effort. The payment question was made by Sh. Salasar Trading Company. Notice was issued to this entity as well, but when the notices were returned unserved, the AO did not take the matter any further. He thereafter simply proceeded on the basis of the financials of the company to come to the conclusion that the transactions were accommodation entries, and thus, fictitious. The conclusion drawn by the AO, that there was an agreement to convert unaccounted money by taking fictitious LTCG in a pre pre- planned manner, is therefore entirely unsupported by any material on record. This finding is thus purely an assumption based on conjecture made by the AO. This flawed approach forms the reason for the learned ITAT to interfere with the findings of the lower tax authorities.
authorities. The learned ITAT after considering the entire conspectus of case and the evidence brought on record, held that the Respondent had successfully discharged the initial onus cast upon it under the provisions of recorded that "There is no dispute Section 68 of the Act. It is recorded that the shares of the two companies were purchased online, the payments have been made through banking channel, and the shares were dematerialized and the sales have been routed from de-mat mat account and the consideration has beebeenn received through banking channels." The above noted factors, including the deficient enquiry conducted by the AO and the lack of any independent source or evidence to show that there was an agreement between the Respondent and any other party, prevailed upon the ITAT to take a different view. Before us, Mr. Hossain has not been able to point out any evidence whatsoever to allege that money changed hands between the Respondent and the broker or any other person, or further that some person provided the ent ry to convert unaccounted money entry for getting benefit of LTCG, as alleged. In the absence of any such material that could support the case put forth by the Appellant, the additions cannot be sustained.
12. Mr. Hossain's submissions relating to the startling spike in the share price and other factors may be enough to show Symphony Merchants Pvt. Ltd. 57 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 circumstances that might create suspicion; however the Court has to decide an issue on the basis of evidence and proof, and not on suspicion alone. The theory of human behavior and preponderancence of probabilities cannot be cited as a basis to turn a blind eye to the evidence produced by the Respondent. With regard to the claim that observations made by the CIT(A) were in conflict with the Impugned Order, we may only note that the said observati observations ons are general in nature and later in the order, the CIT(A) itself notes that the broker did not respond to the notices. Be that as it may, the CIT(A) has only approved the order of the AO, following the same reasoning, and relying upon the report of the Investigation Wing. Lastly, reliance placed by the Revenue on Suman Poddar v. ITO (supra) and Sumati Dayal v. CIT (supra) is of no assistance. Upon examining the judgment of Suman Poddar (supra) at length, we find that the decision therein was arrived at in in light of the peculiar facts and circumstances demonstrated before the ITAT and the Court, such as, inter alia, lack of evidence produced by the Assessee therein to show actual sale of shares in that case. On such basis, the ITAT had returned the finding of fact against the Assessee, holding that the genuineness of share transaction was not established by him. However, this is quite different from the factual matrix at hand. Similarly, the case of Sumati Dayal v. CIT (supra) too turns ITA 125/2020 and connectedconn matters Page 10 of 10 on its own specific facts. The above- above stated cases, thus, are of no assistance to the case sought to be canvassed by the Revenue.
13. The learned ITAT, being the last fact-finding fact finding authority, on on record, has rightly come to the basis of the evidence brought on the conclusion that the lower tax authorities are not able to sustain the addition without any cogent material on record. We thus find no perversity in the Impugned Order.
14. In this view of the matter, no question of law, mu much less a substantial question of law arises for our consideration.
15. Accordingly, the present appeals are dismissed."
23. Therefore, we respectfully follow the ratio of the above decisions and inclined to allow the grounds raised by the assessee. Accordingly the ground raised by the assessee is allowed.
24. In the result, appeal filed by the assessee is allowed."
Symphony Merchants Pvt. Ltd. 58 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 Ltd Rajiv Rameshchander Babbar vs
vii) Shree Shaleen Textiles Ltd-
ITO 16(1)(5) (ITAT Mumbai ITA No. 1528/Mum/2020]. Relevant portion of orde order of the ITAT is reproduced as under-
"6. I have heard both the parties and perused the records. I note that the assessee has been regular trader in share market in the earlier years as well as in the succeeding years. The assessee filed documents to prove that the assessee has been regularly trading in shares (other shares). The Ld. AR drew our attention to page no. 7 to 37 of PB which gives the details of the assessee's share transaction for AY. 2015-16 2015 16 to AY. 2022-23.
2022 It is noted from the computation of income for AY. 2015-1616 that no business or share loss was carried forward for AY. 2015-16 2015 of the relevant assessment year viz AY. 2014-2014 15. In AY. A.Υ. 2014-15,2016 17, the business loss and unabsorbed 15,2016-17, depreciation loss of AY. 2016-17 2016 17 were carried forward. The loss carried forward of AY. 2016-17 2016 17 was set off with the business income for AY. 2017 19, the business loss and 2017-18. For AY. 2018-19, unabsorbed depreciation of AY. 2018 19 was carried forward.
2018-19 2018 19 was set off in AY. 2019- And the business loss of AY. 2018-19 2019 2020 21, business loss and unabsorbed
20. And for AY. 2020-21, depreciation for AY. 2020 2020-21 21 was carried forward. And AY.
2021-22, 22, business loss carried forward from AY. 2018-19 2018 and AY. 2020-21 2022 23, loss for AY. 2022-23 21 was set off. In AY. 2022-23, 2022 and unabsorbed depreciation depreci were carried forward.
7. Thus, it is noted that neither any loss for relevant AY. 2014- 2014 15 was carried forward nor was such loss set off in subsequent years. [Refer page no. 72 of the PB which is the computation of 2014-15 from which it is discerned that no income for AY. 2014 business loss for AY. 2014-15 2014 was carried forward].
8. The assessee has brought to the notice of the AO that share of M/s. Shree Shaleen Textiles Ltd [ in short M/s. SSTL] were purchased on the floor of the exchange through SEBİ registered regis broker. In order to prove, the veracity of the transaction, the assessee has filed contract note for purchase and sale of shares reflecting the details of Trade No., Trade Time, etc., and the purchase and sale of the shares of Shree Shaleen Textiles Ltd. is reflected in the assessee's Demat Account pursuant to delivery from the broker. It is noted that the consideration for purchase and sale of this scrip have been through the banking channel/account payee cheque which fact is reflected in the bank statement atement of assessee. Moreover, it is noted that the AO had sought confirmation of the transaction in question from registered broker viz M/s. Indira Securities Pvt. Ltd. which carried out the purchase and sale of the shares of M/s. SSTL on Symphony Merchants Pvt. Ltd. 59 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 the floor of the stock exchange; and pursuant to the same, the assessee has attached the copy of transaction statement Demat Account (Client ID: 00172520 & DP ID:12017000) maintained with M/s. Indira Securities Pvt. Ltd. (DP of CDSL) for FY. 2013- 2013 14 relevant to AY. 2014-15 2014 5 which reflects purchase and sale of shares of the M/s. Shree Shaleen Textile Ltd.
9. It was also brought to the notice of the AO that the assessee has purchased and sold the shares during the year under consideration and there is no Short Term Capital Gain(STCG)/Long in(STCG)/Long Term Capital Gain (LTCG)/Short Term Capital loss claimed in the return. Thus, according to the assessee the transaction carried out by the assessee in regard to the share of M/s. SSTL are genuine and bonafide and therefore fully However, according to assessee, the AO/Ld. CIT(A) allowable. However, has not appreciated the facts in the right perspective and has disallowed the business loss of the assessee while trading in this scrip. It is found that Assessee is a trader in shares which fact has been dis cerned from the facts discussed (supra).
discerned Therefore, the shares traded are his stock trade. And once stock-in-trade.
assessee is found to be a trader, the loss incurred during business need to be allowed as business loss. And therefore the AO is directed to allow the business business loss of Rs.41,64,684/-.
Rs.41,64,684/ 6.6 Hence taking into consideration submission of the assessee and judicial decisions, it is held that the share transaction is genuine and hence, AO is directed to delete the addition of Rs. 1,28,36,296/ made on account of bogus loss/profit in respect 1,28,36,296/-
of share transactions.
Accordingly, grounds of the appeal are Allowed."
Allowed.
13. We have heard rival submissions of the parties and perused record. As the issue in dispute is identical the relevant materials on record.
to the issue of the business
b loss in assessment year 2011-12,
2011
therefore,
herefore, following our finding in assessment year 2011-12, 2011 the Rs.1,28,36,296/ deleted by the Ld. CIT(A) is accordingly addition of Rs.1,28,36,296/-
upheld. The ground No. 1 of the appeal of the Revenue is accordingly dismissed.
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appeal pertains to
14. The Ground No. 2 of the Revenue's appeal disallowance of ₹94,031/ 94,031/- under Section 14A read with Rule 8D of the Income-tax tax Rules, 1962.
14.1 It is an admitted position that the assessee had, suo motu, disallowed a sum of ₹94,031/-
₹ while computing its total income, by ovisions of Rule 8D. The limited controversy before applying the provisions the lower authorities related to the applicability of interest disallowance under Rule 8D(2)(ii). The Ld. CIT(A), upon examining the record, noted that the Assessing Officer himself had recorded a finding that no expenditure in the nature of interest had been incurred by the assessee. Consequently, the disallowance was computed only under Rule 8D(2)(iii) at 0.5% of the average value of investments, amounting to ₹94,031/-.
CIT(A) directed the Assessing Officer 14.2 In this backdrop, the Ld. CIT(A) to verify whether the assessee had already disallowed the said amount in the return of income and, upon such verification, to delete the addition so as to avoid double disallowance and restrict the disallowance to the extent ext of Rs.94,031/-.. The relevant finding of the Ld. CIT(A) is reproduced as under:
"10.1 10.1 The AO in the assessment order has mentioned that expenses related to exempt income computed under Rule 8D of the IT Rules is to be disallowed u/s.14A of the IT Act. Further, F the AO has mentioned that since the assessee has no expenditure in the nature of interest, calculation of disallowance u/r.8D(2) (iii) comes to Rs.94,031/-
Rs.94,031/ i.e. 0.5% of Rs.3,76,12,570/ (average value of investment as on the first Rs.3,76,12,570/-
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day and the last day of previous year). Accordingly, the AO has disallowed Rs.94,031/-u/s.
Rs.94,031/ 14A of the IT Act.
10.2 During the course of appellate proceedings, the assessee submitted that it has already made disallowance of Rs.94,031/- in the computation of total income filed filed by him during the assessment proceedings. In view of the above facts, AO is directed to verify the claim of the assessee whether, it has 94,031/ u/s 14A of the already disallowed an amount of Rs. 94,031/- IT Act in the return of income and to delete the addition additio after verification."
14.3 We have considered the rival submissions and perused the material on record. The direction issued by the Ld. CIT(A) is purely verificatory in nature and is aimed at ensuring that no duplication of disallowance arises. It is a settled principle that once a disallowance has already been made by the assessee in the computation of income, the same cannot be added again. Further, in absence of any finding regarding incurrence of interest expenditure, invocation of Rule 8D(2)(ii) would not arise. The approach adopted by the Ld. CIT(A) is thus in consonance with the statutory framework and settled legal position. We do not find any infirmity in the order of tthe he Ld. CIT(A) on the issue in dispute and accordingly we uphold the same. The ground No. 2 of the appeal of the Revenue is accordingly dismissed.
15. Now, we take up the appeal of the Revenue having ITA No. 6981/Mum/2025 for assessment year 2015 16 arising order 2015-16 passed u/s 143(3) of the Act. The relevant ground raised by the Revenue is reproduced as under:
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a) "Whether on the facts and circumstances of the case and in law, whether the Ld.CIT(A) is justified in deleting disallowance with respect to share trading tr loss of Rs.40,15,720/-."
16. In the grounds raised, the issue in dispute is regarding re the trading loss of Rs.40 Rs.40,15,720/- from sale of the various scrips. The relevant finding of the Ld. CIT(A) is reproduced as under:
"6. Ground no.1 and 2: The AO has received information from Investigation Wing, Kolkata that the assessee has claimed bogus LTCG/ bogus STCL on sale of various shares. The AO has noted that the assessee has booked loss in respect of share trading as under-
under
(i) 15,000 numbers of shares of Dhanleela Investments & Rs.26,22,369/ out of which 10,000 Trading Company Ltd. for Rs.26,22,369/- were sold for Rs. 18,29,247/ and thereby making a loss of Rs.
ii) 30,000 shares of Pine Animation Limited for 2,507/-ii) Rs.28,38,562/ and the same were sold for Rs. 25,30,315/and Rs.28,38,562/- 25,30, thereby making a loss of Rs. 3,08,247/iii) opening value of 15,000 shares of Anukaran Commercial Enterprises Ltd. was of Rs. 99,750/-and 5,680/ making a loss and which were sold for Rs. 5,680/-
of Rs. 94,070/-
94,070/ iv) opening value of 60,000 shares of Global Infratech 24,24,000/ and which atech & Finance limited, was of Rs. 24,24,000/-and 11,99,167/- making a loss of Rs. 12,24,833/- were sold for Rs. 11,99,167/ 12,24,833/
v) opening value of 5,06,800 shares of Shree Shaleen Textiles Limited was of Rs. 80,58,120/-out 80,58,120/ out of which 2,56,800 were sold 0,869/- making a loss of Rs. 19,72,251/-
for Rs. 21,10,869/ 19,72,251/ & (vi) opening value of 17,900 shares of Sunrise Asian Lunited was of Rs. 87,92,480/ out of which 5,000 were sold for Rs. 20,42,188/making 4,13,812/ . So the total share making a loss of Rs. 4,13,812/-.
trading loss amounting to Rs. 40,15,720/- was claimed by the assessee.
6.1 The AO has relied on the findings of Investigation Wing, Kolkata, in respect of LTCG/STCL entries claimed by large number of beneficiaries, wherein it was mentioned that the entire entry providing scam comprises of various levels of operators who either introduce the unaccounted cash of beneficiaries in their accounts through a layer of transactions and utilize the said cash for purchase of shares at manipulated high prices which ultimately results in payment of the amount back to the beneficiary in the guise of sale proceeds of shares ostensibly resulting in Long Term Capital Gain to the beneficiary Symphony Merchants Pvt. Ltd. 63 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 and reverse modus operandi is adopted in order to provide entry of bogus Short Term Capital Loss. Accordingly, AO has h concluded that loss booked by the assessee in its books was prearranged method to evade taxes and hence, trading loss of Rs. 40,15,720/-
40,15,720/ was disallowed and added by him into the total income of the assessee as bogus loss.
6.2. The assessee has filed detailed detailed submission and contention raised by the assessee are summarized as under:
"1) The appellant has genuinely purchased and sold the shares on the floor of BSE complying the rules and regulation of BSE & also that of Hon'ble SEBI.
2) There is no adverse finding by the Hon'ble DIT (Inv) Mumbai or Kolkata against the appellant even the name of the appellant is not there in either the report of Hon'ble SEBI or any information from Hon'ble DIT(Inv), SEBI order in case of appellant in respect to pine animation is enclosed hereto, Annexure 'D', From the order your honour will note marked as Annexure-'D', that nothing adverse have been reported by SEBI against the appellant of any sort of wrong doing or involvement/connivance of any nature with anybody.
3) There is not an iota of evidence of any nature against the appellant that they are part of price rigging or has purchased the shares with predetermined pre mind to incur loss.
4) Before concluding that appellant is party to dubious transactions no opportunity of cross examinatio examinationn of the person on whose statement the Ld AO has relled has been given.
5) The contention produced by the Ld AO in the assessment order are not his own but borrowed from Hon'ble SEBI and Hon'ble DIT(Inv) report. The Ld AO has not brought on record pendent finding or any adverse evidence against any Independent appellant to support his claim.
6) Here it is pertinent to bring to your honour's notice that the order passed against the appellant is a stereo type which he has passed in the case of person where specific iinformation nformation from Hon'ble SEBI or Hon'ble DIT(Inv) is available. Since in the case of appellant neither any information from Hon'ble DIT(Inv) nor any adverse comment from Hon'ble SEBI in their order is there the appellant should not have been treated at par along with the person whose name was there in Hon'ble DIT(Inv) report as well as in the order of SEBI order In the case of Symphony Merchants Pvt. Ltd. 64 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 appellant, it has purchased and sold the shares in open market on the floor of recognised stock exchange, the addition made on unfounded ded ground with prejudice mind without bringing on record any evidence is uncalled for and needs forthwith deletion.
7) The appellant submits that without conducting any worthwhile enquiry, AO drew adverse inference against the Ld AD believed the report of the appellant only because the Ld Investigation Department was gospel truth.
8) Further it is submitted that the report received from the Investigation wing could have prompted the AO to raise questions about the allowability of loss incurred by the t. However, the onus was on the AO's shoulder to appellant.
conduct his own independent enquiry about the facts involved in the appellant's case particularly when investigation department had not conducted any enquiry either from the but the enquiries were conducted appellant or its stock broker, but against some unknown persons not connected with appellant's transactions. The AO miserably omitted to conduct any enquiry whatsoever and simply based on surmise and conjecture disallowed the loss incurred by the appellant on sale of shares of alleged 6 scrips totaling Rs.40,15,720/ which is unjustified and bad in law"
6.3 Further, the assessee has relied on various case laws.
6.4 I have considered the facts of the case and submission of the assessee. I find that the assessee is is a regular trader and has shown trading of shares as its business. The assessee is carrying out share trading (delivery and non delivery), Future and Options (F&O) trading. The assessee has submitted financial statements, investment statements, and stock in trade statement for the last three financial years. The assessee has trading in several scrips other than the scrips which were considered as penny stock by the AO. The activity of the assessee company shows that it has been regularly trading in the shares res and other instruments.
6.5 Further, it is seen that the assessee had purchased and sold these shares on the floor of the BSE through banking channels and as paid STT on the same. The assessee has also produced copy of the contract notes, and bank statement. No doubt has been raised by the AO on such documents. I find that AO has relied upon the finding of the investigation wing relating to sudden increase in price and fall thereon. AO has not pointed Symphony Merchants Pvt. Ltd. 65 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 out as to whether the assessee is part of such price rigging. No independent enquiry has been conducted by the AO to establish that assessee has booked bogus loss. Further, there is no adverse finding reported by the SEBI against the assessee. In this regards, reliance is placed on the decision in the case of decision of the Hon'ble Jurisdictional dictional High Court in the case of PCIT vs. Ziauddin A Siddique (Income tax Appeal No. 2012 of 2017 dated 4th March, 2022) wherein the Hon'ble Bombay High Court has observed as under:under:-.
"....
2. We have considered the impugned order with the assistance of learned learned counsels and we have no reason to interfere. There is a finding of fact by the Tribunal that the transaction of purchase and sale of shares of the alleged penny stock of shares of Ramkrishna Fincap Ltd ("RFL") is done through stock exchange and through thro the registered Stock Brokers. The payments have been made through banking channels and even Security Transaction Tax ("STT") has also been paid. The Assessing Officer also has not criticized the documentation involving the sale and purchase of shares. The Tribunal has also come to a finding that there is no allegation against the assessee that it has participated in any price rigging in the market on the shares of RFL.
3. Therefore we find nothing perverse in the order of the Tribunal.
placed reliance on a judgement of the Apex
4. Mr. Walve placed Court in Principal Commissioner of Income tax (Central)-1 (Central) vs. NRA Iron & Steel (P) Ltd (2019)(103 taxmann.com
48)(SC) but that does not help the revenue in as much as the facts in that case were entirely different.
5. In our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue question as pressed at hand, then, we do not think that question raises any substantial question of law.
..."
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6.6 Further, ITAT in the followings decisions has deleted addition made by the AO in respect of the same scrips as entered into by the assessee.
Dhanleela Investments & Trading Company Ltd.-
Ltd. Puja Gupta vs Cit in ITA No.6890/Delhi/2018. Relevant portion of the ITAT is reproduced as under-
under "21. Simply, because in the shares of M/s Dhanleela Investment manipulation was made by nt & Trading Co. Ltd. some manipulation few persons it cannot be concluded that all the transacti transactions which ch took place pl in the shares of the said d company were manipulated and all the persons who transacted transacted in the th shares of the said company indulged i in sham transaction. The e Revenue has brought no material on record to show sh that the assessee actualal l y indulged in some manipulation manipulati and paid cash in lieu of cheque received against sale of shares. 22. During the course of hearing, ng, before us, us, the Departmental Representative contended that SEBI has barred dealing dealing in shares of M/s Dhanleela eela Investment & Trading Co. Ltd. However, wever, Authorized Representative ve of the assessee contended that no such ban has been imposed. The Departmental Representative in in support of hi s contention ntion filed copy of SEBI order order dated 19.12.2014.
19.12.2014 However, a perusal of the said order order, particularly y para no. 32 at page 16 showshows s that amongst others M/s Dhanleela Investment & Trading prohi ed till the final order from ng Co. Ltd. was prohibited dealing ng in shares of Radford Global Gl Ltd. Thus,, it is observed that the said order has not prohibited prohi any person deali rson from dealing n shares of M/s Dhanleela Investment & Trading Co. Ltd. 23. in The assessee pleaded that substantial shares were still sti retained ned by assessee as all al shares were not ot sol d which shows bonafidede of assessee that she entered into genuine transaction.
transact Thus, principle of preponderance of probabilities will not apply appl to the case. Puja Gupta 24. In the above facts and circumstances, rcumstances, we find fi that the transaction on of the assessee of deriving long term capital gains of Rs.1,69 ,12,820/ ,12,820/- by selling shares of M/s Dhanleela Investment & Trading ng Co. Ltd. was ted as bogus by the Revenue only on the basis of suspicion treated and probability and without finding findi any defect in n the various documentary evidences fil ed by the assessee. 25. As filed transaction of the assessee as are supported by the relevant documentary evidences, evi ons made by the Assessing the additions Officerr of Rs.1,69,12,820/-
Rs.1,69,12,820/ by treating ng the sale transaction as bogus is s unsustainable. We, therefore, delete the addition additi of Rs.1,69,12,820/ 26. As we find the transaction Rs.1,69,12,820/-. saction of long term capital gains of Rs.1,69,12,820/-
Rs.1,69,12,820/ derived by the assessee as Rs.5,07,385/- made by genuine and correct further addition of Rs.5,07,385/-
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the Assessing Officer i s al so liable to be deleted and accordingly, the same is hereby deleted."
ii) Pine Animation Limited and (iii) Sunrise Asian Limited Limited- Hitesh Mangilal Jain vs ITO Ward 19(1 )(5) (ITAT Mumbai) [ITA No. 261- 261 262/Mum/2024] "13. Both the parties relied on various case laws before us. We may refer to the some of the decisions rendered by Hon'ble jurisdictional Bombay High Court. In the case of Shyam Pawar (54 taxmann.com 108) (Bom), the Hon'ble Bombay High Court has observed as under:
"3. Mr. Sureshkumar seriously complained that such finding rendered concurrently should not have been inteinterfered rfered with by the Tribunal. In further Appeal, the Tribunal proceeded not by analyzing this material and concluding that findings of fact concurrently rendered by the Assessing Officer and the Commissioner are perverse. The Tribunal proceeded on the ng that onus was on the Department to nail the Assessee footing through a proper evidence and that there was some cash transaction through these suspected brokers, on whom there was an investigation conducted by the Department. Once the onus on the Department was discharged, according to Mr.Sureshkumar, by the Revenue-Department, Revenue Department, then, such a finding by the Tribunal raises a substantial question of law. The Appeal, therefore, be admitted.
Mr.Gopal, learned Counsel appearing on behalf of the Assessee in each of thes thesee Appeals, invites our attention to the finding of the Tribunal. He submits that if this was nothing but an accommodation of cash or conversion of unaccounted money into accounted one, then, the evidence should have been complete. Change of circumstances o ought ught to have, after the result of the investigation, connected the Assessee in some way or either with these brokers and the persons floating the two companies. It is only, after the Assessee who is supposed to details including the dealing in shares and producing all the details DMAT account, the Exchange at Calcutta confirming the transaction, that the Appeal of the Assessee has been rightly allowed. The Tribunal has not merely interfered with the in concurrent orders because another view was possible. It red because it was required to interfere with them as the interfered Commissioner and the Assessing Officer failed to note some relevant and germane material. In these circumstances, he submits that the Appeals do not raise any substantial question of law and deserve to be dismissed.
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5. We have perused the concurrent findings and on which heavy reliance is placed by Mr.Sureshkumar. While it is true that the Commissioner extensively referred to the correspondence and the contents of the report of the Investigation carried carried out in paras 20, 20.1, 20.2 and 21 of his order, what was important and vital for the purpose of the present case was whether the transactions in shares were genuine or sham and bogus. If the purchase and saleof shares are reflected in the Assessee's D MAT account, yet they are DMAT termed as arranged transactions and projected to be real, then, such conclusion which has been reached by the Commissioner and the Assessing Officer required a deeper scrutiny. It was also revealed during the course of inquiry by the Assessing Officer that the Calcutta Stock Exchange records showed that the shares were purchased for code numbers S003 and R121 of Sagar Trade Pvt. Ltd. and Rockey Marketing Pvt. Ltd. respectively. Out of these two, only Rockey Marketing Pvt.Ltd. is sted in the appraisal report and it is stated to be involved in listed the modus operandi. It is on this material that he holds that the transactions in sale and purchase of shares are doubtful and not genuine. In relation to Assessee's role in all this, all that the Commissioner observed is that the Assessee transacted through brokers at Calcutta, which itself raises doubt about the genuineness of the transactions and the financial result and performance of the Company was not such as would justify the increase in n the share prices. Therefore, he reached the conclusion that certain operators and brokers devised the scheme to convert the unaccounted money of the Assessee to the accounted income and the present Assessee utilized the scheme.
that we find that Mr.Gopal's contentions
6. It is in that regard that are well founded. The Tribunal concluded that there was something more which was required, which would connect the present Assessee to the transactions and which are attributed companies. The Tribunal to the Promoters/Directors of the two companies. referred to the entire material and found that the investigation stopped at a particular point and was not carried forward by the Revenue. There are 1,30,000 shares of Bolton Properties Ltd. purchased by the Assessee during the month of January 2003 and he continued to hold them till 31 March 2003. The present case related to 20,000 shares of Mantra Online Ltd for Rs.25,93,150/-.. These shares were the total consideration of Rs.25,93,150/ sold and how they were sold, on what dates and for what consideration eration and the sums received by cheques have been referred extensively by the Tribunal in para 10. A copy of the Symphony Merchants Pvt. Ltd. 69 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 DMAT account, placed at pages 36 & 37 of the Appeal Paper Book before the Tribunal showed the credit of share transaction. The contract notes in Form-A A with two brokers were available and which gave details of the transactions. The contract note is a system generated and prescribed by the Stock Exchange. From this material, in para 11 the Tribunal concluded that this was not mere accommodation of of cash and enabling it to be converted into accounted or regular payment. The discrepancy pointed out by the Calcutta Stock Exchange regarding client Code has been referred to. But the Tribunal concluded that itself, is not enough to prove that the transactions transactions in the impugned shares were bogus/sham. The details received from Stock Exchange have been relied upon and forthe purposes of faulting the Revenue in failing to discharge the basic onus. If the Tribunal proceeds on this line and concluded that inquiry inquir was not carried forward and with a view to discharge the initial or basic onus, then such conclusion of the Tribunal cannot be termed as perverse. The conclusions as recorded in para 12 of the Tribunal's order are not vitiated by any error of law apparentt on the face of the record either.
7. As a result of the above discussion, we do not find any substance in the contention of Mr.Sureshkumar that the Tribunal misdirected itself and in law. We hold that the Appeals do not raise any substantial question of law. They are accordingly dismissed. There would no order as to costs. 8. Even the additional question cannot be said to be substantial question of law, because it arises in the context of same transactions, dealings, same investigation and same charge or allegation of accommodation of unaccounted money being converted into accounted or regular as such. The relevant details pertaining to the shares were already on record. This question is also a fall out of the issue or question dealt with by the Tribunal and and pertaining to the addition of Rs.25,93,150/-.
Rs.25,93,150/ Barring the figure of loss that is stated to have been taken, no distinguishable feature can be or could be placed on record. For the same reasons, even this additional question cannot be termed as substantial substanti question of law."
14. In the case of PCIT vs. Ziauddin A Siddique (Income tax Appeal No. 2012 of 2017 dated 4th March, 2022), the Hon'ble Bombay High Court has observed as under:
"2. We have considered the impugned order with the assistance ounsels and we have no reason to interfere. There is of learned counsels a finding of fact by the Tribunal that the transaction of purchase and sale of shares of the alleged penny stock of shares of Symphony Merchants Pvt. Ltd. 70 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 Ramkrishna Fincap Ltd ("RFL") is done through stock exchange and through the registered Stock Brokers. The payments have been made through banking channels and even Security Transaction Tax ("STT") has also been paid. The Assessing Officer also has not criticized the documentation involving the sale and purchase of shares. The Tribunal Tribunal has also come to a finding that there is no allegation against the assessee that it has participated in any price rigging in the market on the shares of RFL.
3. Therefore we find nothing perverse in the order of the Tribunal.
4. Mr. Walve placed reliance reliance on a judgement of the Apex Court (Central) 1 vs. NRA Iron in Principal Commissioner of Income tax (Central)-1 & Steel (P) Ltd (2019)(103 taxmann.com 48)(SC) but that does not help the revenue in as much as the facts in that case were entirely different.
5. In our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question a ass pressed raises any substantial question of law.
15. Further, in the case of CIT vs. Jamnadevi Agarwal (20) taxmann.com 529 (Bom), the Hon'ble Bombay High Court has held that the transactions of purchase and sale of shares cannot be considered to be bogus bogus,, when the documentary evidences furnished by the assessee establish genuineness of the claim. In the case of PCIT vs. Indravadan Jain (HUF) (ITA No. 454 of 2018) (Bom), the broker through whom, the assessee alleged to have been had carried out the transactions have been alleged indulged in price manipulations and the SEBI had also passed an order regarding irregularities and synchronized trades carried out in the shares by the said broker. However, the evidences furnished by the assessee with regard to purchase andd sale of shares were not doubted.Under these set of facts, the Hon'ble Bombay High Court held as under:
"....The CIT(A) came to the conclusion that respondent bought 3000 shares of RFL, on the floor of Kolkata Stock Exchange through registered share broker.
broker. In pursuance of purchase of shares the said broker had raised invoice and purchase price was paid by cheque and respondent's bank account has been debited. The shares were also transferred into respondent's Demat account where it remained for more than one year. After Symphony Merchants Pvt. Ltd. 71 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 a period of one year the shares were sold by the said broker on various dates in the Kolkata Stock Exchange.. Pursuant to sale of shares the said broker had also issued contract notes cum bill for sale and these contract notes and bills werewer made available during the course of appellate proceedings. On the sale of shares respondent effected delivery of shares by way of Dematinstruction slips and also received payment from Kolkata Stock Exchange. The cheque received was deposited in respondent'st's bank account. In view thereof, the CIT(A) found there was no reason to add the capital gains as unexplained cash credit under section 68 of the Act. The Tribunal while dismissing the appeals filed by the Revenue also observed on facts that these shares were purchased by respondent on the floor of Stock Exchange and not from the said broker, deliveries were taken, contract notes were issued and shares were also sold on the floor of Stock Exchange. The ITAT therefore, in our view, rightly concluded that there there was no merit in the appeal."
......................... In the earlier paragraphs, we have followed
16.........................
the binding decision rendered by Hon'ble Bombay High Court. Hence, the Ld.DR cannot place reliance on the decision rendered by Hon'ble Kolkata High Court in the case of Swati Bajaj (supra). Accordingly, we are of the view that the decision rendered in the above said case cannot be taken support of by the Revenue.
17. In view of the foregoing discussions, we are of the view that the Ld CIT(A) was justified in deleting the the addition of value of sale consideration arising on sale of shares of M/s. Pine Animation Ltd. Since we have confirmed the decision of Ld CIT(A) in holding that the sale transactions of shares cannot be doubted with, the addition made by the AO with regard rega to estimated commission expenses is also liable to be deleted. Accordingly, we confirm the order passed by Ld. CIT(A). 18. In the result, the appeal of the Revenue is dismissed.
18. In the result, the appeal of the Revenue is dismissed."
12. In another case of Chirag Tejprakash Dangi ITA No.3256/Mum/2022,one of the scrips in question was Radford Global P a g e | 25 ITA No. 257, 261 & 262/Mum/2024 A.Y. 2014-15 2015 16 Hitesh Mangilal Jain Ltd(earlier known as 15 & 2015-16 of the AO treating the PSI Global Ltd).With regard to the finding of said scrips ad Penny stock in whose caseprices were rigged in order to generate capital gains/loss,the tribunal has taken note of the submission of ld.AR that this company was also assed by it subjected to scrutiny by the SEBI and interim order passed Symphony Merchants Pvt. Ltd. 72 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 against the company was revoked subsequently. It was also claimed that the company was not subjected to any inquiry by SEBI. The tribunal in para 14 of the order has categorically observed that the decisions rendered by the jurisdictional Bombay y High Court in the cases cited above i.e. Shyam Pawar(supra),Ziauddin Siddiquue and Jamnadevi Agrawal shall apply in the present cases as well since the assessee has not established that the assessee had rigged the prices and fault in the documents filed by the also AO did not find any fault assessee.Moreover, purchase of shares in earlier years were accepted as genuine. Shares were traded on online platform of the Stock Exchange. Therefore, sale transactions could not be doubted.
13. In another case of Alka Dilip ip Doshi in ITA No.1837/Mum/2023 dated 20.02.2024 the assessee sold shares of Sunrise Asian Ltd. The tribunal has taken note of various decisions of Ahmedabad Bench of ITAT in several cases as per para 14 of the order where investment in shares of Sunrise Asian Ltd was held to be without any doubt. Accordingly, based on decisions as reproduced in other cases referred above,the LTCG was held to be genuine and the addition u/s 68 was deleted.
.................
16. Considering the above discussion,the facts on record and an the legal position emerging out of catena of dec isions of Hon'ble Supreme Courtjurisdictional High Court and direct decisions rendered by the co ordinate benches of Mumbai ,ITAT order,we co-ordinate hold that the addition made by the AO u/s 68 of the Act in both the e years under consideration are devoid of any merit.The claim of the assessee u/s 10(38) of the Act has been made based on facts which could not be rebutted by the AO.The documentary evidences could not be rejected without brin ging on record any al piece of evidence and just on the basis of certain substantial individuals who also were not produced for cross examination of their stated stands. Moreover, the jurisdictional High Court decisions cited supra are on identical facts as also the co - ordinate benches benches of Mumbai tribunal have a binding precedence. None of them could be distinguished by the ld.CIT(A) anywhere in the appellate order. Apparently, the order has in a preconceived manner dittoed the assessment order rather than by way of independent applicat application ion of mind. We have no hesitation in deleting the additions. The AO is therefore, directed to delete the additions made u/s 68 oft he Act in both theAYs 2014 -15 and 2016-17.
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17. In the result, both the above appeals of the assessee are partly allowed"
iv) Global Infratech & Finance limited- 19(1) Vs Munish limited ACIT -19(1) Financial (ITA NOs. 2637 & 2638/MUM/2022 2638/MUM/2022- (A.Ys: 2014 2014-15 & 2015-16)).Relevant
16)).Relevant portion of order of the ITAT is reproduced as under-
"11. Considered the rival submissions and material placed on rd, we observe that assessee has dealt with various scrips record, particularly, Global Infratech Limited (GBL), Luminaire Technologies Limited, UNNO Industries Limited and Shree Shalin Textiles Ltd which are suspected to be penny stock and it is also fact on reco record rd that these scrips are categorized as penny stock as per the investigation wing, Kolkata reports and Assessing Officer has heavily relied on these reports and report of SEBI to come to the conclusion that the various scrips dealt with by the assessee are penny stock and he discussed various analysis made by the investigation wing of Kolkata and other agencies and relied on various submissions of various dealers in these scrips and proceeded to disallow the claim made by the assessee on the long term capital capital loss. We also notice from the record that assessee has submitted all the relevant documents of purchase and sale of these scrips in the recognized stock exchange and all the details were submitted before the Assessing Officer including the payments were made through banking channels only. The Assessing Officer completely overlooked the various documents and supporting evidences submitted by the assessee and he has not analysed these documents and he merely proceeded to make the addition based on the inveinvestigation stigation carried on by the investigation agencies and he did not eventually make any investigation on the various documents submitted before him, merely because assessee has dealt with suspected scrips, therefore he has proceeded to make the disallowance. We observe from the record that assessee has purchased and sold these shares through recognized stock exchange and authorised brokers and nowhere it is brought on record that assessee is one of the party involved in the entry provider or involved in manip ulating the manipulating prices or it is proved that assessee is one of the exit provider. It is fact on record that all the scrips in which assessee has dealt with were already proved to be a non penny stock based on the various decisions of the various Hon'ble High Courts Courts and Tribunal benches. Apart from that, we observe that assessee is a regular trader in various scrips and particularly in this year Symphony Merchants Pvt. Ltd. 74 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 assessee has dealt with more than 150 scrips and the transactions of the assessee in trading of shares having turnover of more than □ .528.9 crores and also having substantial dividend and speculation income during this year. This proves to show that assessee is a regular investor and may be assessee has dealt with suspected scrip merely on the basis of movement of share prices and there is nothing on record to prove that assessee has anywhere involved in any types of irregularities. Therefore, we do not find any reason to interfere with the findings of the Ld.CIT(A). Accordingly, ground raised by the revenue is dismissed.
dismissed."
Limited Rajiv Rameshchander
v) Shree Shaleen Textiles Limited-
Babbar vs ITO 16(1 )(5) (ITAT Mumbai ITA No. 1528/Mum/2020]. Relevant portion of order of the ITAT is reproduced as under-
under "6. I have heard both the parties and perused the records. I note that the assessee has been regular trader in share market in the earlier years as well as in the succeeding years. The assessee filed documents to prove that the assessee has been regularly trading in shares (other shares). The Ld. AR drew our attention to page no. 7 to 37 of PB which gives the details of the 2015 16 to AY. 2022-23.
assessee's share transaction for AY. 2015-16 2022 It 2015 16 that no is noted from the computation of income for AY. 2015-16 business or share loss was carried forward for AY. 2015-16 2015 of assessment year viz AY. 2014 15. In AY. A.Y. the relevant assessm 2014-15,2016 15,2016-17, 17, the business loss and unabsorbed 2016 17 were carried forward. The loss depreciation loss of AY. 2016-17 2016- 17 was set off with the business carried forward of AY. 2016 income for AY. 2017 2017-18. For AY. 2018-19, the business loss and 2018 19 was carried forward.
unabsorbed depreciation of AY. 2018- 2018 19 was set off in AY. 2019- And the business loss of AY. 2018-19 2019 2020 21, business loss and unabsorbed
20. And for AY. 2020-21, depreciation for AY. 2020 21 was carried forward. And AY.
2020-21 22, business loss carried forward from AY. 2018-19 2021-22, 2018 and AY. 2020-2121 was set off. In AY. 2022-23, 2022 23, loss for AY. 2022-23 2022 and unabsorbed depreciation were carried forward.
7. Thus, it is noted that neither any loss for relevant AY. 2014 2014- forward nor was such loss set off in subsequent 15 was carried forward years. [Refer page no. 72 of the PB which is the computation of income for AY. 2014 15 from which it is discerned that no 2014-15 business loss for AY. 2014-15 2014 was carried forward].
8. The assessee has brought to the notice notice of the AO that share of M/s. Shree Shaleen Textiles Ltd [ in short M/s. SSTL] were Symphony Merchants Pvt. Ltd. 75 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 purchased on the floor of the exchange through SEBI registered broker. In order to prove, the veracity of the transaction, the assessee has filed contract note for purchase purchase and sale of shares reflecting the details of Trade No., Trade Time, etc., and the purchase and sale of the shares of Shree Shaleen Textiles Ltd. is reflected in the assessee's Demat Account pursuant to consideration for delivery from the broker. It is noted that the consideration purchase and sale of this scrip have been through the banking channel/account payee cheque which fact is reflected in the bank statement of assessee. Moreover, it is noted that the AO had sought confirmation of the transaction in question from fr registered broker viz M/s. Indira Securities Pvt. Ltd. which carried out the purchase and sale of the shares of M/s.SSTL on the floor of the stock exchange; and pursuant to the same, the assessee has attached the copy of transaction statement Demat unt (Client ID: 00172520 & DP ID:12017000) maintained Account with M/s. Indira Securities Pvt. Ltd. (DP of CDSL) for FY. 2013 2013- 2014 15 which reflects purchase and sale of 14 relevant to AY. 2014-15 shares of the M/s. Shree Shaleen Textile Ltd.
9. It was also brought to the notice of the AO that the assessee has purchased and sold the shares during the year under consideration and there is no Short Term Capital Gain(STCG)/Long Term Capital Gain (LTCG)/Short Term Capital loss claimed in the return. Thus, according to the asse assessee the transaction carried out by the assessee in regard to the share of M/s. SSTL are genuine and bonafide and therefore fully allowable. However, according to assessee, the AO/Ld. CIT(A) has not appreciated the facts in the right perspective and has sallowed the business loss of the assessee while trading in disallowed this scrip. It is found that Assessee is a trader in shares which fact has been discerned from the facts discussed (supra).
stock-in-trade. And once Therefore, the shares traded are his stock assessee is s found to be a trader, the loss incurred during business need to be allowed as business loss. And therefore the AO is directed to allow the business loss of Rs.41,64,684/-.
Rs.41,64,684/ 6.7 Hence taking into consideration submission of the assessee and judicial decisions, it is held that the share transaction is genuine and hence, AO is directed to delete the Rs.40,15,720/ on account of disallowance of addition of Rs.40,15,720/-
trading loss in respect of transaction of shares."
shares.
17. We have heard rival submissions of the parties parti and perused the relevant materials on record.
record. As the Ld. CIT(A) has deleted the Symphony Merchants Pvt. Ltd. 76 ITA No. 7058, 6979, 6980, 6981, 7059/MUM/2025 addition following the decision of the Hon'ble Bombay High Court and other decisions of the Co-ordinate Co ordinate Bench of the Tribunal.
he order of the Ld. Accordingly, we do not find any infirmity in tthe CIT(A) on the issue in dispute. The ground No. 1 of the appeal of the Revenue is accordingly dismissed.
18. Now, we take up the appeal of the Revenue in ITA No. 2015-16. The ground raised 7059/Mum/2025 for assessment year 2015 by the Revenue e is reproduced as under:
a) "Whether on the facts and circumstances of the case and in law, whether the Ld.CIT(A) is justified in deleting disallowance with respect to share trading loss of Rs.40,15,720/ Rs.40,15,720/-."
19. In the ground, the issue in dispute is in relation re to share Rs.14,15,720/-. We note that this appeal has been trading loss of Rs.14,15,720/ filed by the Revenue against the order dated 14.08.2025 passed by the Ld. Commissioner of Income Income-tax (Appeals) - 53, Mumbai which is arising from the order passed u/s 143(3) of the Act dated 02.01.2018. The appeal of the Revenue in ITA No. 6981/Mum/2025 2015 16 has been filed against the same order for assessment year 2015-16 of the Ld. CIT(A) dated 14.08.2025 arising from the order u/s 143(3) dated 02.01.2018. Therefore, the present appeal having ITA No. 7059/Mum/2025 is duplicate of the appeal in ITA No. 6981/Mum/2025, which we have already adjudicated in preceding paragraphs and therefore, this appeal is accordingly dismissed as infructuous.
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appeal of the Revenue are dismissed.
21. In the result, all the appeals
Order pronounced /04/2026.
ounced in the open Court on 15/0
Sd/- Sd/-
Sd/
(KAVITHA RAJAGOPAL)
RAJAGOPAL (OM
OM PRAKASH KANT)
KANT
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai;
Dated: 15/04/2026
Rahul Sharma, Sr. P.S.
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.
BY ORDER,
//True Copy//
(Assistant Registrar)
ITAT, Mumbai