IN THE INCOME TAX APPELLATE TRIBUNAL, ‘E’ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER &

SHRI ARUN KHODPIA, ACCOUNTANT MEMBER ITA No.3633/Mum/2024 (Assessment Year :2018-19 Income Tax Officer , Vs. Haresh Kumar Mumbai Manjibhai Patel ITO Ward 4(3)(1), Shop No.5, B-Rubi Mumbai Apartment, Near Gitanjali Cinema, Varachha Road-

395006 PAN/GIR No.ACVPP4155E (Appellant) .. (Respondent CO No.147/Mum/2025 (Arising out of ITA No.3633/Mum/2024)

(Assessment Year :2018-19 Income Tax Officer , Vs. Haresh Kumar Mumbai Manjibhai Patel ITO Ward 4(3)(1), Shop No.5, B-Rubi Mumbai Apartment, Near Gitanjali Cinema, Varachha Road-

395006 PAN/GIR No.ACVPP4155E (Appellant) .. (Respondent Assessee by Shri Rases Shah (Virtually Present)

Revenue by Shri Himanshu Joshi, SR.DR Date of Hearing 19/08/2025 Date of Pronouncement 11/09/2025 / O R D E R आदेश PER AMIT SHUKLA (J.M):

The present appeal has been preferred by the Revenue, while the assessee has filed a Cross Objection, both directed against the order dated 12/06/2024 passed by the learned National Faceless Appeal Centre (NFAC), pertaining to the assessment year 2018–19. The impugned order emanates from the reassessment framed under section 147 read with section 144 of the Income-tax Act, 1961 (―the Act‖).

2. In its grounds of appeal, the Revenue has assailed the decision of the learned first appellate authority in deleting the substantive addition of ₹3,16,08,941/– made under section 68 of the Act, treating the same as unexplained cash credit arising from the assessee’s sale of shares of M/s. Sunstar Realty Development Ltd. The Revenue has further challenged the deletion of the consequential addition of ₹85,344/– made under section 69C, being alleged commission expenditure purportedly incurred by the assessee for obtaining accommodation entries. For the sake of clarity and ready reference, the specific grounds raised by the Revenue are reproduced hereinbelow:

1) “Whether on facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition stating that opportunity of cross examination was not given without appreciating the fact summons was issued to Shri Dipen Patel for cross examination through Video Conference but he did not attend the same?”

2) “Whether on facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition stating that the AO has not carried out investigation which is specific to the assessee without appreciating the facts that after thorough investigation, Directorate of Investigation has proved that M/s Sunstar Realty Development Ltd is a penny stock. Further, the modus operandi as well as the financials of M/s Sunstar Realty Development Ltd has elaborately been discussed in the assessment order which led to the conclusion that assessee has introduced its unaccounted money in the garb of Long Term Capital Gain.”

3) “Whether on facts and in the circumstances of the case and in law, the Ld.CIT (A) was justified in deleting the addition without appreciating the fact that that a sham transaction or make-believe transaction or colorable device part of tax planning. Reliance is placed on the decision the Hon'ble Supreme Court in a landmark judgment in the case of McDowell and Co. Ltd. v. CTO (1985) 154 ITR 148 (SC)?”

3. The brief factual matrix, essential to the adjudication of the present controversy, is that the assessee is an individual who had duly filed his return of income for the assessment year 2018–19 on 03/10/2018, declaring therein a total income of ₹18,77,700/– In the computation accompanying the said return, the assessee disclosed that he had derived long-term capital gains from the sale of equity shares of M/s. Sunstar Realty Development Ltd. (―SRDL‖). Such gains, amounting to ₹2,81,50,290/–, were claimed as exempt under section 10(38) of the Act, then prevailing, on the premise that the transactions were routed through a recognised stock exchange and were subject to payment of Securities