IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH “A”, JAIPUR BEFORE Dr. S. SEETHALAKSHMI, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER ITA No. 566/JPR/2024 (A. Y. 2014-15)

Income Tax Officer, Jaipur ...... Appellant Vs.

Kalawati Sharma, C-42, Kaladeep, Vaishali Nagar, Gokul Path, Jaipur 302021 PAN No.: ACAPS 1025K ...... Respondent Appellant by : Mr. P. C. Parwal, C.A, Ld. AR Respondent by : Mr. Kamlesh Kumar Meena, Addl. CIT (Proxy), Ld. DR Date of hearing : 15/10/2025 Date of pronouncement : 15/10/2025 O R D E R PER GAGAN GOYAL, A.M:

This appeal by revenue is directed against the order of NFAC, Delhi dated

28.02.2024 passed u/s. 250 of the Income Tax Act, 1961 (in short ‘the Act’). The revenue has raised the following grounds of appeal: -

1. Ground No.1- Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in deleting the addition of Rs. 95,11,750/-made by AO on account of bogus LTCG claimed u/s. 10(38) of the I.T. Act ignoring that the impugned transaction was manipulative/deceptive device to create profit/loss?

2. Ground No. 2 - Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) is justified in deleting the addition of Rs. 1, 90,235/-made by AO on account of commission paid for acquiring accommodation entry ignoring that such type of synchronized trading is violative of transparent norms of trading in securities?

2. The brief facts of the case are that assessee filed return of income on 27.07.2014 declaring income of Rs.6,38,840/- after claiming exemption of Rs.95,11,750/- u/s 10(38) of IT Act, 1961 on account of sale of shares of Mishka Finance & Trading Ltd (MFTL). The AO observed that searches have been conducted by the Investigation Wing of the Department at various places throughout the country. During the searches & as per the information made public by the SEBI, it is discovered that various syndicates have arranged accommodation entry of bogus LTCG, bogus STCG, bogus long/ short term capital loss through trading of shares of penny stocks. The modus operandi found is that the investors/beneficiaries hold these shares for one year or so & then sale it to one of the shell private limited companies of the operator. These facts were confirmed by the stakeholders viz. operators/ syndicate members/ brokers who were providing accommodation entries in statements recorded during action u/s 133A/132 of the IT Act. It has been manifestly accepted by them that such penny stock companies are the conduit for converting untaxed money brought on record by paying no taxes in the garb of exempted income. It is further detected that M/s Mishka Finance & Trading Ltd. (scrip code-512191) is a penny stock listed company. The assessee bought these shares at a meagre price. The price of the shares kept rising throughout the period when the shares were held by the assessee. The share price movement & the profit earned by the beneficiaries were beyond human probabilities. The AO, thereafter, at pages 6 to 15 discussed the financial results and held that the rise in the price could not be related to the fundamentals. On pages 17 to 25, he gave the trend of the share price. On pages 26 to 46, he referred to the statement of Sh. Sanjay Vora & Sh. Deepak Patwari recorded during survey operation carried out in case of M/s Anand Rathi Shares & Stock Brokers Ltd. Kolkata wherein they accepted the actual fact of these transactions. Thereafter on pages 47 to 49 he discussed the modus operandi. The AO further observed at Pg 49 to 51 that SEBI has suspended this particular scrip from trading in BSE/NSE w.e.f. 17.04.2015. Accordingly, he issued show cause notice dt. 20.11.2017 which is reproduced at page 51 to 55 of the order. In response to the same assessee filed the reply dt. 27.11.2017 which is reproduced at page 55-56 of the order.

3. The AO, however, rejected the various contentions of assessee for the reasons stated at pages 56-57 of the order and relied on vario