LTCG exemption u/s 10(38) upheld with documentary evidence; suspicion cannot substitute proof.

 ORDER

Per PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER:

The present appeal has been filed by the Revenue against the order dated 16.09.2025 passed by CIT (A) Kolkata u/s 250 of the Income-tax Act, 1961 (the Act) for the assessment year 2015-16

2. The brief facts of the case of the assessee is that assessee filed its original return of income for the assessment year 2015-16 declaring total income at ₹480830/-. The case of the assessee was selected for scrutiny, notices u/s 143(2), 142(1) were issued along with questionnaire. In response to the same, the representative of the assessee appeared and submitted all necessary documents. The AO found that the assessee had traded in various scripts thus, earning net profit of ₹9185860/- as LTCG and claimed exemption of the same u/s 10(38) of the Act. A show cause notice also issued to the assessee. The ld. AO after going over the show cause reply filed by the assessee held that LTCG of ₹58,92,640/- derived from the stocks of GCM scrutiny limited as bogus and added back to the total income of the assessee u/s 68 read with section 115BBE of the Act.

3. Aggrieved by the said order assessee preferred appeal before the ld. CIT (A) wherein the appeal of the assessee was allowed by deleting the addition.

4. Being aggrieved and dissatisfied, the Revenue is in appeal. The Revenue preferred appeal by taking following grounds:-

1. That on the facts and in the circumstances of this case and in law, whether the Ld. CIT(A) is correct in deleting the addition of Rs. 58,92,640/- under section 68 of the income tax Act, 1961, to bogus sale of shares of the company manage and controlled by accommodation entry operator and not having any financial worth as per findings of the department.

2. That on the facts and in the circumstances of this case and in law, whether the Ld. CIT(A) was justified in relying merely on routing confirmations and banking channel transactions, while ignoring the findings of the Investigation Wing and the Assessing Officer; financial analysis of the scrip involved in this case and other surrounding facts, which clearly established that the assessee has routed its own unaccounted money in the form of bogus long term capital gain through accommodation entries.

3. That on the facts and in the circumstances of this case and in law, whether the Ld. CIT(A) is correct in deleting the addition of Rs. 58,92,640/- on the ground that the assessee was not provided any opportunity to cross-examine the accommodation entry provide involved in this case, even though under section 250(4) of the Act the Ld. CIT(A) has the inherent power to conduct such enquiries himself or direct the AO to do so in order to establish the finality of facts before deciding the appeal.

4. That on the facts and in the circumstances of this case and in law, whether the Ld. CIT(A) is correct in deleting the additions made by the Assessing Officer, on account of bogus long term gains from sale of penny scrip, while ignoring the binding precedent of the Hon, ble jurisdictional High Court in the case PCIT v. Swati Bajaj (2022] 139 taxmann.com 352 (Calcutta) and the recent decision in PCIT v Zulu merchandise Pvt. Ltd. (ITAT/88 of 2025 dated 01.08.2025).

5. For that the monetary limit for filing appeal before Hon'ble ITAT as prescribed by the CBDT Circular No. 09/2024 is not applicable in the present case as the case pertains to organized tax evasion and falls under the exceptional clause in para 3.1(h) of the CBDT circular No. 05/2024.

6. That the appellant craves leave to add to and/or alter, amend, modify or rescind the grounds hereinabove before or at the time of hearing of this appeal.

5. Cont