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2026 Supreme(Online)(ITAT) 6917
INCOME TAX APPELLATE TRIBUNAL (JODHPUR BENCH)
Mitha Lal Meena, Accountant Member, Sudhir Pareek, Judicial Member
Deputy Commissioner of Income-Tax Piyush Gogad – Appellant
Versus
Piyush Gogad – Respondent
ITA No. 273/Jodh/2023 (Assessment Year 2010-11) | ITA No. 285/Jodh/2023 (Assessment Year 2013-14) | ITA No. 274/Jodh/2023 (Assessment Year 2015-16) | ITA No. 286/Jodh/2023 (Assessment Year 2016-17) | ITA No. 275/Jodh/2023 (Assessment Year 2010-11) | ITA No. 276/Jodh/2023 (Assessment Year 2013-14) | ITA No. 277/Jodh/2023 (Assessment Year 2015-16) | ITA No. 281/Jodh/2023 (Assessment Year 2016-17) | ITA No. 282/Jodh/2023 (Assessment Year 2010-11) | ITA No. 280/Jodh/2023 (Assessment Year 2013-14) | ITA No. 283/Jodh/2023 (Assessment Year 2015-16) | ITA No. 284/Jodh/2023 (Assessment Year 2016-17)
For the Appellants/Petitioners: Ld. DR
For the Respondents: Ld. AR
In completed assessments under section 153A, no addition permissible without incriminating material from search, even for suspected penny stock manipulations; verifiable transactions prevail over mere suspicion.
Headnote:(A) Income Tax Act, 1961 - Sections 10(38), 132, 153A - Search and seizure - Completed assessment - Exemption of long term capital gains on sale of shares - Assessing Officer treated gains on penny stocks as unexplained income alleging manipulation and conversion of undisclosed income, despite no incriminating material found during search - CIT(A) deleted addition holding that in unabated/completed assessments, no addition permissible without incriminating material unearthed during search - Tribunal upheld deletion relying on Supreme Court ruling that AO cannot reassess completed assessments absent such material, even if transactions show abnormal price rise without financial basis. (Paras 6, 9, 11)
(B) Evidence and burden of proof - Transactions through recognized stock exchange - Verifiable from contract notes, demat statements, bank records - Mere suspicion of penny stock manipulation or human improbability insufficient to reject genuineness where primary onus discharged by assessee. (Paras 6, 9)
Facts of the case:
Revenue appeals against deletion of additions treating exempt long term capital gains on penny stock sales as unexplained income in post-search assessments under section 153A for multiple years. Assessments were completed prior to search; no incriminating documents linking assessee to bogus transactions seized. Transactions fully documented and routed through banking channels.
Findings of Court:
No incriminating material found during search relating to impugned transactions; additions beyond jurisdiction in completed assessments; transactions genuine and verifiable.
Issues: Whether additions valid under section 153A absent incriminating material in completed assessments; whether abnormal share price rise alone proves bogus transactions.
Ratio Decidendi: In completed/unabated assessments post-search, additions under section 153A permissible only on incriminating material unearthed; general investigation reports or price surge suspicions insufficient; verifiable stock exchange transactions with documentation discharge assessee's onus.
Result: Revenue appeals dismissed.
| Table of Content |
|---|
| 1. revenue appeals against deletion of ltcg exemption (Para 2 , 3 , 4 , 5) |
| 2. cit(a) deletes addition lacking incriminating material (Para 6) |
| 3. no addition in unabated assessments without search evidence (Para 7 , 8 , 9 , 10) |
| 4. all revenue appeals dismissed (Para 11) |
ORDER
PER BENCH:
All the above appeals have been filed by the Revenue against the separate orders of Ld. CIT(A), -5, Jaipur.
2. Since the issues involved in all these appeals are common, on identical facts and hence they were heard together. We are therefore disposing of all these appeals by this consolidated order for the sake of convenience and brevity.
3. We shall take the appeal in ITA No. 273/Jodh/2023 for the Assessment Year 2010-11 as a lead case for discussion, in the case of Piyush Kumar Gogad in ITA No. 273/Jodh2023 for A.Y. 2010-11; wherein the revenue has taken the following ground of appeal:
i. On the facts and in circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 44,33,759/- made by the AO on account of disallowance of long term capital gains claimed as exempted income u/s 10(38) of the Income Tax Act, 1961 on sale of shares of M/s Filatex Fashion Ltd, and M/s Welpaper Ltd. without considering the fact that they are penny stock companies with no substantial financial worth and whose share price increased by 364% and 715%, respectively in a short span of 2 years.
4. This appeal filed by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals), Jaipur–5 [CIT(A)], dated 02.06.2023 for the Assessment Year 2010–11. The sole issue raised by the Revenue relates to deletion of addition made by the Assessing Officer on account of alleged bogus Long Term Capital Gain (LTCG) claimed exempt under section 10(38) of the Income Tax Act, 1961.
5. Briefly the facts of the case are that the assessee is an individual from Pali, Rajasthan. A search and seizure operation under section 132 of the Act was carried out in the Balar group of cases on 17.12.2015. Consequent to the centralization of cases, notice under section 153A was issued requiring the assessee to file returns for six preceding years. The Assessing Officer completed assessment under section 153A read with section 143(3) and in doing so, he treated the Long Term Capital Gain earned on sale of shares as unexplained income. According to the Assessing Officer, the abnormal price rise in the scrip of M/s Filatex Fashion Ltd, and M/s Welpaper Ltd. was a clear case of penny stock accommodation entry, and therefore, the assessee had converted undisclosed income in the garb of exempt LTCG.
6. Aggrieved with the order of the Assessing Officer, the assessee preferred appeal before the CIT(A). It was contended that the assessment for A.Y. 2010–11 had already attained finality before the date of search, and therefore, in terms of section 153A read with judicial precedents, no addition could be made in the absence of incriminating material found during the course of search. It was argued that no document or evidence had been seized from the assessee which would suggest that the LTCG was non-genuine. The assessee also filed supporting evidences such as contract notes, demat account statements, broker confirmations, and bank records to demonstrate that the purchase and sale of shares were genuine transactions routed through recognized stock exchange and through proper banking channels. The findings of CIT(A) in the case of assessee Piyush Gogad for A.Y. 2010-11, is as under:
“4.3. I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the Assessing Officer in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:-
The AO observed that search operation conducted on Gogad group of cases consisting of Shri Bher Chand Gogad, Sh. Bharat Gogad and his family members and business concerns at Pali on 17/12/2015 wher
