The assessment was quashed due to the violation of natural justice principles and lack of sufficient evidence linking the assessee to fraudulent activities concerning capital gains from share trading.

ORDER

PER BENCH:

The captioned appeals preferred by the revenue emanates from the respective orders of the Ld.CIT(Appeals)/NFAC, dated 27.01.2025 for the assessment years 2018-19 & 2019-20.

2. Since both the parties herein conceded that the facts and issues involved in both these appeals are substantially similar and identical, therefore, on hearing their submission, both these matters are heard together and disposed off vide this consolidated order.

3. That before proceeding for adjudication, it is also pertinent to mention here that the assessee had filed an application under Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963 which was later withdrawn by the assessee as evident from the order sheet entry dated 19.09.2025 for both the assessment years i.e. A.Ys. 2018-19 & 2019-20.

4. First, we would take up the appeal filed by the Revenue in ITA No.151/RPR/2025 for A.Y.2018-19 for adjudication wherein grounds of appeal raised by the Revenue are as follows:

“1. Whether on facts and in the circumstances of the case, the ld. CIT(A) was justified in deleting the addition of Rs.2,04,23,038/- which was added by the A.O?

2. Whether on facts and in the circumstances of the case, the ld. CIT(A) was justified in deleting the addition of Rs.2,04,23,038/- by ignoring the findings/facts of the Investigating Wing as brought on record by the A.O.

3. The order of the Ld. CIT(A) is erroneous both in law and on facts.

4. Any other ground which may be adduced at the time of hearing.”

5. The Revenue has challenged the deletion of addition of Rs.2,04,23,038/- by the Ld. CIT(Appeals)/NFAC and hence, they are before us questioning the validity of such deletion of addition on merits.

6. The brief facts emanating in the assessment year 2018-19 are that the Income Tax Department had received information on financial transactions/activities relating to the assessee under “Risk Management System” for A.Y.2018-19 falling within the Explanation 1(i) of proviso to Section 148 of the Income Tax Act, 1961 ( for short ‘the Act’). The said information reveals that the assessee had traded in the scrip of “Oasis Tradelink Ltd.” during the year. The said scrip was rigged by the entry provider namely Shri Naresh Manakchand Jain. The fact further illustrated by the A.O in the assessment order is that a search and survey action was conducted on a syndicate of persons led by Shri Naresh Jain on 19.03.2019 by DDIT (Inv.), Mumbai. It was observed by the A.O that Shri Naresh Jain and his associates were involved in providing accommodation entries in the form of capital gains/losses in several scrips to various beneficiaries across the country. The group network in fact spreads across the country and includes various participants such as the operator, numerous beneficiaries, intermediaries who would arrange for beneficiaries, exit providers, intermediaries etc. Thereafter, the A.O writes that the assessee was one of the beneficiaries who had traded in the scrips of “Oasis Tradelink Ltd.” during the year which was rigged by the said entry provider and his associates i.e. Shri Naresh Jain and accordingly, made the impugned addition.

7. That when the matter came up before the Ld. CIT(Appeals)/NFAC, it was observed and held as follows:

“5.2. Briefly stating the background of the case, the appellant is an individual. He had originally filed his Return of Income (RoI) for A.Y. 2018-19 declaring total income of Rs.28,26,160/-. Subsequently, based on information received "under Risk Management system" that the assessee had traded in the scrip of 'Oasis Tradelink Ltd.' (hereinafter referred to as 'Oasis' in short) during the year. The said scrip was rigged by an entry provider namely `Naresh Manakchand Jain'. A Search and Survey action was conducted on a syndicate of persons led by Shri Naresh Jain on 19.03.2019 by DDIT (Inv) unit-7(1) & 7(3) Mumbai which revealed that `Naresh Jain' and his associates were involved in providing accommodation entries in the form of Long term Capita