Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(ITAT) 6925

INCOME TAX APPELLATE TRIBUNAL (JODHPUR BENCH)
Mitha Lal Meena, Accountant Member, Sudhir Pareek, Judicial Member
A.C.I.T., Central Circle-2, Jodhpur – Appellant
Versus
Piyush Kumar Balar – Respondent
ITA No. 518/Jodh/2025|ITA No. 519/Jodh/2025|ITA No. 520/Jodh/2025|ITA No. 521/Jodh/2025|ITA No. 522/Jodh/2025|ITA No. 523/Jodh/2025|ITA No. 524/Jodh/2025|ITA No. 525/Jodh/2025|ITA No. 526/Jodh/2025

Advocates:
For the Appellants/Petitioners: Ld. DR
For the Respondents: Ld. AR

In completed assessments under section 153A post-search, no additions permissible without incriminating material unearthed during search; external statements and suspicions insufficient to treat exempt LTCG as bogus.

Headnote:(A) Income Tax Act, 1961 - Sections 132, 132A, 153A, 10(38) - Search and seizure - Block assessment - Completed assessment - Claim of exempt long term capital gain on sale of shares - Assessing Officer treated gains as unexplained income alleging penny stock accommodation entries based on abnormal price rise, statements of entry operators recorded prior to search, and general information - No incriminating material found or seized during search linking assessee to bogus transactions - CIT(A) deleted addition holding that in absence of incriminating material unearthed during search, no addition permissible in respect of completed/unabated assessments under section 153A - Tribunal upheld, relying on Supreme Court ruling that assessments under section 153A are intrinsically linked to search, and additions in completed assessments can only be made on basis of incriminating material found during search or requisition - Statements of third parties, external reports on price rigging, and post-search information not constituting incriminating material - Transactions verifiable from contract notes, demat statements, bank records, and routed through recognized exchanges - Onus discharged by assessee; Revenue failed to rebut genuineness. (Paras 4, 5, 6, 10, 11)

(B) Evidence - Incriminating material - Scope under section 153A - Must be documents, papers, or assets seized from assessee’s premises directly linking to undisclosed income - General suspicion, human probabilities, or external investigations insufficient to disturb concluded assessments - Principle of human probabilities applicable only where statutory jurisdiction exists. (Paras 11.1, 11.3)

Facts of the case:
Multiple appeals by Revenue against deletion of additions treating exempt long term capital gains on penny stock shares as unexplained income in post-search assessments under section 153A for multiple years, all completed prior to search date of 17.12.2015. No documents seized from assessee’s premises suggesting bogus claims; AO relied on price charts, third-party statements, and investigation reports.

Findings of Court:
Additions deleted as no incriminating material found during search; AO lacked jurisdiction under section 153A to reassess completed years without such material. Transactions genuine based on documentary evidence produced.

Issues: Whether additions sustainable under section 153A in completed assessments absent incriminating material from search; whether external statements and price rise constitute incriminating evidence justifying treating exempt gains as bogus.

Ratio Decidendi: In completed assessments, section 153A permits additions only on incriminating material unearthed during search; absent such material, concluded assessments cannot be disturbed - reaffirmed by Supreme Court; assessee discharged onus via verifiable transaction documents.

Result: Revenue’s appeals dismissed.

Table of Content
1. revenue appeals against cit(a) deletion of bogus ltcg addition. (Para 1 , 2 , 3 , 4 , 5)
2. assessee's ltcg from penny stock treated as unexplained income post-search. (Para 6)
3. cit(a) deletes addition lacking incriminating search material. (Para 7)
4. tribunal upholds cit(a) citing prior praveen balar decision. (Para 8 , 11)
5. dr argues human probabilities; rejected without incriminating evidence. (Para 9 , 10)
6. all revenue appeals dismissed per abhisar buildwell precedent. (Para 12)

ORDER

PER BENCH:

All the above appeals have been filed by the Revenue against the separate orders of Ld. CIT(A), Jaipur-5.

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. The ITA No. 518/Jodh/2025 for the Assessment Year 2013- 14 has been taken as a lead case for discussion in the case of Piyush Kumar Balar in ITA No. 518/Jodh2024 for A.Y. 2013-14; wherein the Department has taken the following grounds of appeal:

i. On the facts and in circumstances of the case, whether the Ld. CIT(A) has erred in upholding the assessee's claim of LTCG despite the admission of Shri Anuj Agarwal (one of the entry operators) that he provided accommodation entries of bogus LTCG through companies like Unisys Software & Holdings Ltd., Radford Global Ltd. and Sunrise Asian Ltd. thereby disregarding evidentiary value of statement recorded under relevant provisions of the IT Act, 1961.

ii. On the facts and in circumstances of the case, whether the Ld. CIT (A) has erred in holding the decision in favour of the assessee disregarding the fact that during the course of search proceedings, the assessee has failed to explain reasons for investing in shares of little known company like Unisys Software & Holdings Ltd.

iii. On the facts and in circumstances of the case, whether the Ld. CIT (A) has erred in holding the decision in favour of the assessee disregarding the fact that incriminating material and information relating to claim of bogus LTCG by the assessee came to the fore, pursuant to statements of assessee being recorded during the course of search proceedings.

iv. On the facts and in circumstances of the case, whether the Ld. CIT (A) has failed to appreciate the binding precedent laid by the Hon'ble Supreme Court in Principal Commissioner of Income Tax Vs. Abhisar Build Well Pvt. Ltd.(2023) wherein it 4 was categorically held that assessments u/s 153A of the 1.T. Act, Rs. 0 1961 are intrinsically linked to search operation and requisition actions under section 132 and 132A and the legislative intent of section 153A is to bring to tax the undisclosed income unearthed during OR pursuant to such search OR requisition.

V. The appellant craves leave to add, amend OR withdraw any of the ground of appeal during the course of appellate proceedings.

4. This appeal filed by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals), Jaipur–5 [CIT(A)], dated 13.03.2025 for the Assessment Year 2013–14. 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 centralisation 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 Unisys Software was a clear case

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2026 Supreme(Online)(ITAT) 6925

In completed assessments under section 153A post-search, no additions permissible without incriminating material unearthed during search; external statements and suspicions insufficient to treat exempt LTCG as bogus.

Cases Referred (1)