ANJALI GUPTA,GURGAON V. ITO WARD -1(2), GURGAON

ITA 3605/DEL/2019

AI Insights

The case involves Ms. Anjali Gupta, who appealed against the order of the Commissioner of Income Tax (Appeals) confirming the addition of Rs.48,19,438 as unexplained credits under section 68 read with section 115BBE and section 10(38) of the Income Tax Act, 1961. The addition was initially made by the Income Tax Officer, Ward-1(2), Gurgaon, following a search and seizure operation and based on the financials of M/s. Kappac Pharma Ltd., which was deemed a penny stock. The Tribunal examined various judicial precedents and the specifics of the transactions conducted by the assessee, including the use of banking channels and the dematerialization of shares, to conclude that the additions were unjustified.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 785437 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2015-2016
• Appeal Filed On: 25-04-2019
• Other Referred Cases: Krishna Devi vs. CIT, Arnav Goel vs. CIT, Rachna Gupta vs. ITA No.5418/Del/2018, Archit Gupta vs. ITA No.2624-2625/Del/2018, Jamuna Devi Agarwal vs. CIT, Kuntala Mahapatra vs. CIT, Ziauddin A Siddique vs. CIT, Suman Poddar vs. ITO, Sumati Dayal vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARPREET KAUR HANSRA
• Assessee Lawyers: VIJAY KUMAR SINGLA
• Keywords: Set aside; Opportunity of being heard; Question of law; Unexplained cash credit; Fair market value; Income from undisclosed sources; Capital Gains; Accommodation entries; Penny stocks; Bogus
• Section: 143(3); 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘F’: NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTNAT MEMBER ITA No.3605/Del/2019 [Assessment Year: 2015-16] Ms. Anjali Gupta, A-84, Summit, DLF City-5, Sector-56, Gurgaon, Haryana Vs ITO, Ward-1(2), Gurgaon, PAN-AAIPG5132F Appellant Respondent Assessee by Shri Vijay Kumar Singla, CA Revenue by Ms. Harpreet Kaur Hansra, Sr. DR Date of Hearing 28.07.2025 Date of Pronouncement 27.10.2025 ORDER PER AMITABH SHUKLA, AM, This appeal has been preferred by the assessee against order dated 29.03.2019 of the ld. Commissioner of Income Tax(Appeals)-1, (hereinafter referred to as ‘ld. CIT(A)’) Gurgaon, arising out of assessment order dated 18.10.2017 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by Income Tax Officer, Ward-1(2), Gurgaon, pertaining to Assessment Year 2015-16. Printed from counselvise.com 2 ITA No.3605/Del/2019 2. The assessee has raised following grounds of appeal contesting the order of Ld. First Appellate Authority. 1. On the facts and circumstances of the case, the order passed by the learned CIT(A) is bad both in the eye of law and on facts. 2. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition made by the AO on account amount received on sale of shares of Rs. 48,19,438/- treating the same as unexplained credits u/s 68 read with section 115BBE of the Income tax Act. 3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition made by AO holding the Long Term Capital gain declared by the assessee, to be not genuine. 4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition despite the assessee bringing on record all evidences and material to prove the genuineness of the transaction. 5. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition despite the sale and purchase transactions having been done through proper banking channels and as per the rules and regulations of the Stock Exchange. 6. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition by misinterpreting the financials of the companies whose shares were sold by the assessee. 7. On the facts and circumstances of the case, the learned CIT(A) has grossly erred both on facts and in law in confirming the above addition by indulging in surmises without bringing on any direct evidence against the assessee, only on the basis of presumption and assumption. 8. On the facts and circumstances of the case, the learned CIT(A) has grossly erred both on facts and in law in confirming the above addition despite the fact that the addition is made by the AO relying on the report of the investigation wing without application of his own mind. Printed from counselvise.com 3 ITA No.3605/Del/2019 9. (i) On the facts and circumstances of the case the learned CIT(A) has erred both on facts and in law in confirming the addition made by AO despite the same having been made on the basis of material collected at the back of the assessee without giving it an opportunity to rebut the same. ii) That the above said addition has been confirmed despite the same having been made on the basis of statement recorded without giving assessee an opportunity to cross examine. 10. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the disallowance of exemption claimed by assessee u/s 10(38) of Rs. 46,19,438/- treating the same as unexplained credits without there being any basis for the same. 11. On the facts and circumstances of the case, the learned CIT(A) has grossly erred both on facts and in law in rejecting the contention of the assessee that the order has been passed by the Assessing Officer without affording adequate opportunity of being heard to the assessee.” 3. Coming to the factual matrix of the case, the assessee is contesting the action of ld. CIT(A) in confirming an addition made by ld. AO amounting to Rs.48,19,438/- invoking provisions of section 68 r.w.s. 115BE r.w.s. 10(38) of the Act. In the instant case, the assessee was noted to have indulged in sale/purchase transactions of a company by the name of M/s. Kappac Pharma Ltd.. It has been noted by the ld. AO based upon the enquiries conducted during search proceedings in the case of impugned company, inquiries by the Investigation Wing of Kolkata, as well as noting the weak financials of the company, concluded that the impugned company is a penny stock company and proceeded to make the impugned addition u/s 68 r.w.s. 115BE r.w.s. 10(38) of the Act of Rs.48,19,438/- denying the assessee the benefit of Long Term Capital Gains u/s 10(38) of the Act. The ld. CIT(A) confirmed the addition Printed from counselvise.com 4 ITA No.3605/Del/2019 made by the ld. AO relying upon the hypothesis propounded by the Ld.AO. While drawing his conclusions, the ld. CIT(A) placed reliance upon a catena of cases concerning penny stock transactions. 4. Per Contra, the ld. DR argued in favour of the order of the lower authorities. It was vehemently argued that M/s Kappac Pharma Ltd. is a penny stock company and that therefore the assessee has indulged in sham transaction and obtained bogus capital gains income. The Ld.DR further placed reliance, including through written submissions, upon a plethora of judicial pronouncements as supporting the case of the Revenue. 5. We have heard rival submissions in the light of materials available on record. The ld. Counsel for the assessee has vehemently argued that the relief accorded by the ld. First Appellate Authority is not based upon correct interpretation and understanding of the facts of the case. The ld. Counsel submitted that it had acquired 12,500 shares on 16.01.2013 of M/s. Kappac Pharma Ltd. through an off market transactions. The assessee has placed on record a voluminous paper book in support of its averments.. It was submitted that the said shares were placed in to the Demat Account on 30.08.2013 and 17.10.2013. All the above 12500 shares were sold on different dates i.e. on 22.02.;2014, 28.05.2014 and 28.11.2014 for a consideration of Rs.48,19,438/- resulting in long term capital gains which was claimed exempt within the meanings of section 10(38) of the Act. The sale transactions were routed through banking channel. Necessary evidences in support of its averments were Printed from counselvise.com 5 ITA No.3605/Del/2019 produced for examination through a paper book and the same have been placed on record. Ld. Counsel argued that there is no infirmity in the claim of the assessee. It was submitted that the assessee had made investments in the shares as an average investor having no role in the alleged price rigging activity. In support of its contentions, Ld.AR placed reliance upon a plethora of judicial precedents as supporting its case. Thus, reliance was placed upon a catena of judicial precedents , inter-alia, including in case of Krishna Devi of Hon’ble Delhi High Court dated 15.01.2021 (ITA No.125, 130 and 131 of 2020), of Hon’ble Rajasthan High Court in the case of Arnav Goel (ITa No.14/2024), of this Tribunal in case of Rachna Gupta in ITA No.5418/Del/2018 dated 20.12.2024, in the case of Archit Gupta in ITA No.2624-2625/Del/2018 dated 06.11.2024 etc. 6. On the issue of off market transactions, Hon’ble Bombay High Court in the case of Jamuna Devi Agarwal 328 ITR 656 observed that Off market transaction alone would not deem a transaction as sham transaction. The Revenue Authorities are required to see overall facts of the case like fair market value of shares purchased, utilization of banking channels, etc. 7. We have noted the decision of Hon’ble Apex Court in the case of Kuntala Mahapatra 160 taxmann.com 608 upholding the decision of Hon’ble Orissa High Court inter-alia concluding that once shares were held in Demat account for more than 12 months and thereafter sold through Stock Exchange would not disentitle a tax payers claim of exemption u/s 10(38) of the Act. Printed from counselvise.com 6 ITA No.3605/Del/2019 8. We have noted the decision of Hon’ble Delhi High Court relied upon by the assessee in the case of Krishna Devi (supra) dated 15.01.2021 observing as under:- 10. “We have heard Mr. Hossain at length and given our thoughtful consideration to his contentions, but are not convinced with the same for the reasons stated hereinafter. 11. On a perusal of the record, it is easily discernible that in the instant case, the AO had proceeded predominantly on the basis of the analysis of the financials of M/s Gold Line International Finvest Limited. His conclusion and findings against the Respondent are chiefly on the strength of the astounding 4849.2% jump in share prices of the aforesaid company within a span of two years, which is not supported by the financials. On an analysis of the data obtained from the websites, the AO observes that the quantum leap in the share price is not justified; the trade pattern of the aforesaid company did not move along with the sensex; and the financials of the company did not show any reason for the extraordinary performance of its stock. We have nothing adverse to comment on the above analysis, but are concerned with the axiomatic conclusion drawn by the AO that the Respondent had entered into an agreement to convert unaccounted money by claiming fictitious LTCG, which is exempt under Section 10(38), in a preplanned manner to evade taxes. The AO extensively relied upon the search and survey operations conducted by the Investigation Wing of the Income Tax Department in Kolkata, Delhi, Mumbai and Ahmedabad on penny stocks, which sets out the modus operandi adopted in the business of www.taxguru.in ITA 125/2020 and connected matters Page 8 of 10 providing entries of bogus LTCG. However, the reliance placed on the report, without further corroboration on the basis of cogent material, does not justify his conclusion that the transaction is bogus, sham and nothing other than a racket of accommodation entries. We do notice that the AO made an attempt to delve into the question of infusion of Respondent’s unaccounted money, but he did not dig deeper. Notices issued under Sections 133(6)/131 of the Act were issued to M/s Gold Line International Finvest Limited, but nothing emerged from this effort. The payment for the shares in question was made by Sh. Salasar Trading Company. Notice was issued to this entity as well, but when the notices were returned unserved, the AO did not take the matter any further. He thereafter simply proceeded on the basis of the financials of the company to come to the conclusion that the transactions were accommodation entries, and thus, fictitious. The conclusion drawn by the AO, that there was an agreement to convert unaccounted money by taking fictitious LTCG in a pre-planned manner, is therefore entirely unsupported by any material on record. This finding is thus purely an assumption based on conjecture made by the AO. This flawed approach forms the reason for the learned ITAT to interfere with the findings of the lower tax authorities. The learned ITAT after considering the entire conspectus of case and the evidence brought on record, held that the Respondent had successfully discharged the initial onus cast upon it under the provisions of Section 68 of the Act. It is recorded that “There is no dispute that the shares of the two companies were purchased online, the payments have been made through banking channel, and the shares were dematerialized and the sales have been routed from de-mat account and the consideration has been received through banking channels.” The above noted factors, including the deficient enquiry conducted by the AO and the lack of any independent source or evidence to show that there was an agreement between the Respondent and any other party, prevailed upon the www.taxguru.in ITA 125/2020 and connected matters Page 9 of 10 ITAT to take a different view. Before us, Mr. Hossain has not been able to point out any evidence whatsoever to allege that money changed hands between the Respondent and the broker or any other person, or further that some person provided the entry to convert unaccounted Printed from counselvise.com 7 ITA No.3605/Del/2019 money for getting benefit of LTCG, as alleged. In the absence of any such material that could support the case put forth by the Appellant, the additions cannot be sustained. 12. Mr. Hossain’s submissions relating to the startling spike in the share price and other factors may be enough to show circumstances that might create suspicion; however the Court has to decide an issue on the basis of evidence and proof, and not on suspicion alone. The theory of human behavior and preponderance of probabilities cannot be cited as a basis to turn a blind eye to the evidence produced by the Respondent. With regard to the claim that observations made by the CIT(A) were in conflict with the Impugned Order, we may only note that the said observations are general in nature and later in the order, the CIT(A) itself notes that the broker did not respond to the notices. Be that as it may, the CIT(A) has only approved the order of the AO, following the same reasoning, and relying upon the report of the Investigation Wing. Lastly, reliance placed by the Revenue on Suman Poddar v. ITO (supra) and Sumati Dayal v. CIT (supra) is of no assistance. Upon examining the judgment of Suman Poddar (supra) at length, we find that the decision therein was arrived at in light of the peculiar facts and circumstances demonstrated before the ITAT and the Court, such as, inter alia, lack of evidence produced by the Assessee therein to show actual sale of shares in that case. On such basis, the ITAT had returned the finding of fact against the Assessee, holding that the genuineness of share transaction was not established by him. However, this is quite different from the factual matrix at hand. Similarly, the case of Sumati Dayal v. CIT (supra) too turns www.taxguru.in ITA 125/2020 and connected matters Page 10 of 10 on its own specific facts. The above-stated cases, thus, are of no assistance to the case sought to be canvassed by the Revenue. 13. The learned ITAT, being the last fact-finding authority, on the basis of the evidence brought on record, has rightly come to the conclusion that the lower tax authorities are not able to sustain the addition without any cogent material on record. We thus find no perversity in the Impugned Order.....” 9. We have also noted that this Tribunal in its order in ITA No.2624-2625 dated 06.11. 2024 held as under:- 8. “........Considered the rival submissions and material placed on record. The Assessing Officer observed that assessee had made huge profit out of this investment because of this, it makes the script as suspicious and penny stock. We cannot agree to the above observation, merely because of huge profit, it does not make the script a penny stock. Further, it is fact on record that the financials of the company are not commensurate with the purchase and sale price in the market. The assessee has purchased the shares directly from the company and through share transfer from other party, subsequently, sold the same in the stock exchange. However, there are no discrepancies in the documents filed by the assessee claiming the deductions u/s 10(38) of the Act. At the same time, even though all the characteristics of the penny stock exists in the present case, still the revenue has not brought on record any materials linking the assessee in any of the dubious transactions relating to entry, price rigging or exit providers. Even in the SEBI report, there is no mention or reference to the involvement of the assessee. We can only presume that the assessee is one of the beneficiaries in these transactions merely as an investor who has entered in investment fray to make quick profit. Even the Assessing Officer has applied the presumptions and concept of human probabilities to make the additions without their being any material against the assessee. We observe that the Hon’ble Bombay High Court in the case of Pr. CIT v. Ziauddin A Siddique in Income Tax Appeal No. 2012 of 2017 dated 04/03/2022 held as under: - “1. The Printed from counselvise.com 8 ITA No.3605/Del/2019 following question of law is proposed: \"Whether on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal was justified in deleting the addition of Rs.1,03,33,925/- made by AO u/s 68 of the I.T. Act, 1961, ignoring the fact that the shares were bought/acquired from off market sources and thereafter the same was demated and registered in stock exchange and increase in share price of Ramkrishna Fincap Ltd. is not supported by the financials and, therefore, the amount of LTCG of Rs.1,03,33,925/- claimed by the assessee is nothing but unaccounted income which was rightly added u/s 68 of the I. T. Act, 1961?\" 2. We have considered the impugned order with the assistance of the learned Counsels and we have no reason to interfere. There is a finding of fact by the Tribunal that the transaction of purchase and sale of the shares of the alleged penny stock of shares of Ramkrishna Fincap Ltd. (\"RFL\") is done through stock exchange and through the registered Stock Brokers. The payments have been made through banking channels and even Security Transaction Tax (\"STT\") has also been paid. The Assessing Officer also has not criticized the documentation involving the sale and purchase of shares. The Tribunal has also come to a finding that there is no allegation against assessee that it has participated in any price rigging in the market on the shares of RFL. 3. Therefore we find nothing perverse in the order of the Tribunal. 4. Mr. Walve placed reliance on a judgment of the Apex Court in Principal Commissioner of Income-tax (Central)-1 vs. NRA Iron & Steel (P.) Ltd. but that does not help the revenue in as much as the facts in that case were entirely different. 5. In our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law. 6. The appeal is devoid of merits and it is dismissed with no order as to costs.” 9. Further, the Hon’ble Delhi High Court in the case of Pr. CIT v. Smt Krishna Devi in ITA 125/2020 dated 15.01.2021 held as under: - --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- 10. We have heard Mr. Hossain at length and given our thoughtful consideration to his contentions, but are not convinced with the same for the reasons stated hereinafter. 11. On a perusal of the record, it is easily discernible that in the instant case, the AO had proceeded predominantly on the basis of the analysis of the financials of M/s Gold Line International Finvest Limited. His conclusion and findings against the Respondent are chiefly on the strength of the astounding 4849.2% jump in share prices of the aforesaid company within a span of two years, which is not supported by the financials. On an analysis of the data obtained from the websites, the AO observes that the quantum leap in the share price is not justified; the trade pattern of the aforesaid company did not move along with the sensex; and the financials of the company did not show any reason for the extraordinary performance of its stock. We have nothing adverse to comment on the above analysis, but are concerned with the axiomatic conclusion drawn by the AO that the Respondent had entered into an agreement to convert unaccounted money by claiming fictitious LTCG, which is exempt under Section 10(38), in a pre-planned manner to evade taxes. The AO extensively relied upon the search and survey operations conducted by the Investigation Wing of the Income Tax Department in Kolkata, Delhi, Mumbai and Ahmedabad on penny stocks, which sets out the modus operandi adopted in the business of providing entries of bogus LTCG. However, the reliance placed on the report, without further corroboration on the basis of cogent material, does not justify his conclusion that the transaction is bogus, sham and nothing other than a racket of accommodation entries. We do notice that the AO made an attempt to delve into the question of infusion of Respondent’s unaccounted money, but he did not dig deeper. Notices issued under Sections 133(6)/131 of the Act were issued to M/s Gold Line International Finvest Limited, but nothing emerged from this effort. The payment Printed from counselvise.com 9 ITA No.3605/Del/2019 for the shares in question was made by Sh. Salasar Trading Company. Notice was issued to this entity as well, but when the notices were returned unserved, the AO did not take the matter any further. He thereafter simply proceeded on the basis of the financials of the company to come to the conclusion that the transactions were accommodation entries, and thus, fictitious. The conclusion drawn by the AO, that there was an agreement to convert unaccounted money by taking fictitious LTCG in a pre-planned manner, is therefore entirely unsupported by any material on record. This finding is thus purely an assumption based on conjecture made by the AO. This flawed approach forms the reason for the learned ITAT to interfere with the findings of the lower tax authorities. The learned ITAT after considering the entire conspectus of case and the evidence brought on record, held that the Respondent had successfully discharged the initial onus cast upon it under the provisions of Section 68 of the Act. It is recorded that “There is no dispute that the shares of the two companies were purchased online, the payments have been made through banking channel, and the shares were dematerialized and the sales have been routed from de-mat account and the consideration has been received through banking channels.” The above noted factors, including the deficient enquiry conducted by the AO and the lack of any independent source or evidence to show that there was an agreement between the Respondent and any other party, prevailed upon the ITAT to take a different view. Before us, Mr. Hossain has not been able to point out any evidence whatsoever to allege that money changed hands between the Respondent and the broker or any other person, or further that some person provided the entry to convert unaccounted money for getting benefit of LTCG, as alleged. In the absence of any such material that could support the case put forth by the Appellant, the additions cannot be sustained. 12. Mr. Hossain’s submissions relating to the startling spike in the share price and other factors may be enough to show circumstances that might create suspicion; however the Court has to decide an issue on the basis of evidence and proof, and not on suspicion alone. The theory of human behavior and preponderance of probabilities cannot be cited as a basis to turn a blind eye to the evidence produced by the Respondent. With regard to the claim that observations made by the CIT(A) were in conflict with the Impugned Order, we may only note that the said observations are general in nature and later in the order, the CIT(A) itself notes that the broker did not respond to the notices. Be that as it may, the CIT(A) has only approved the order of the AO, following the same reasoning, and relying upon the report of the Investigation Wing. Lastly, reliance placed by the Revenue on Suman Poddar v. ITO (supra) and Sumati Dayal v. CIT (supra) is of no assistance. Upon examining the judgment of Suman Poddar (supra) at length, we find that the decision therein was arrived at in light of the peculiar facts and circumstances demonstrated before the ITAT and the Court, such as, inter alia, lack of evidence produced by the Assessee therein to show actual sale of shares in that case. On such basis, the ITAT had returned the finding of fact against the Assessee, holding that the genuineness of share transaction was not established by him. However, this is quite different from the factual matrix at hand. Similarly, the case of Sumati Dayal v. CIT (supra) too turns ITA 125/2020 and connected matters Page 10 of 10 on its own specific facts. The above-stated cases, thus, are of no assistance to the case sought to be canvassed by the Revenue. 13. The learned ITAT, being the last fact-finding authority, on the basis of the evidence brought on record, has rightly come to the conclusion that the lower tax authorities are not able to sustain the addition without any cogent material on record. We thus find no perversity in the Impugned Order. 14. In this view of the matter, no question of law, much less a substantial question of law arises for our consideration. 15. Accordingly, the present appeals are dismissed.” 10. Therefore, we respectfully follow the ratio of the above decisions. In this case also, the Assessing Officer and Ld. CIT(A) has applied the concept of human probabilities and held the Printed from counselvise.com 10 ITA No.3605/Del/2019 above said scrips to be a penny stock without bringing on record how the assessee is involved in any of the scrupulous activities or directly linked to one of the person who has involved in manipulation/rigging of share prices, entry operator or exit provider as observed by the Hon’ble Bombay High Court in the case of Ziauddin A Siddique (supra). Therefore, there is no material with the tax authorities to substantiate their findings that the impugned transaction is non-genuine. Therefore, we are inclined to allow the ground raised by the assessee. Accordingly the grounds raised by the assessee are allowed........” 10. Again in ITA No.5418/Del/2018 in the case of Rachna Gupta, this Tribunal on the issue of penny stock companies, has held that “........9. Considered the rival submissions and material placed on record. The Assessing Officer observed that assessee had made huge profit out of this investment because of this, it makes the script as suspicious and penny stock. We cannot agree to the above observation, merely because of huge profit, it does not make the script a penny stock. Further, it is fact on record that the financials of the company are not commensurate with the purchase and sale price in the market. The assessee has purchased the shares directly from the company and through share transfer from other party, subsequently, sold the same in the stock exchange. However, there is no discrepancies in the documents filed by the assessee claiming the deductions u/s 10(38) of the Act. At the same time, even though all the characteristics of the penny stock exists in the present case, still the revenue has not brought on record any materials linking the assessee in any of the dubious transactions relating to entry, price rigging or exit providers. Even in the SEBI report, there is no mention or reference to the involvement of the assessee. We can only presume that the assessee is one of the beneficiaries in these transactions merely as an investor who has entered in investment fray to make quick profit. Even the assessing officer has applied the presumptions and concept of human probabilities to make the additions without their being any material against the assessee. We observe that the Hon’ble Bombay High Court in the case of Pr. CIT v. Ziauddin A Siddique in Income Tax Appeal No. 2012 of 2017 dated 04/03/2022 held as under: - “1. The following question of law is proposed: \"Whether on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal was justified in deleting the addition of Rs.1,03,33,925/- made by AO u/s 68 of the I.T. Act, 1961, ignoring the fact that the shares were bought/acquired from off market sources and thereafter the same was demated and registered in stock exchange and increase in share price of Ramkrishna Fincap Ltd. is not supported by the financials and, therefore, the amount of LTCG of Rs.1,03,33,925/- claimed by the assessee is nothing but unaccounted income which was rightly added u/s 68 of the I. T. Act, 1961?\" 2. We have considered the impugned order with the assistance of the learned Counsels and we have no reason to interfere. There is a finding of fact by the Tribunal that the transaction of purchase and sale of the shares of the alleged penny stock of shares of Ramkrishna Fincap Ltd. (\"RFL\") is done through stock exchange and through the registered Stock Brokers. The payments have been made through banking channels and even Security Transaction Tax (\"STT\") has also been paid. The Assessing Officer also has not criticized the documentation involving the sale and purchase of shares. The Tribunal has also come to a finding that there is no allegation against assessee that it has participated in any price rigging in the market on the shares of RFL. 3. Therefore we find nothing perverse in the order of the Tribunal. Printed from counselvise.com 11 ITA No.3605/Del/2019 4. Mr. Walve placed reliance on a judgment of the Apex Court in Principal Commissioner of Income-tax (Central)-1 vs. NRA Iron & Steel (P.) Ltd. but that does not help the revenue in as much as the facts in that case were entirely different. 5. In our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law. 6. The appeal is devoid of merits and it is dismissed with no order as to costs.” 10. Further, the Hon’ble Delhi High Court in the case of Pr. CIT v. Smt Krishna Devi in ITA 125/2020 dated 15.01.2021 held as under: - ..................................................................................................................................................... .............................................................................................................................................. 11. Therefore, we respectfully follow the ratio of the above decisions. In this case also, the Assessing Officer and Ld. CIT(A) has applied the concept of Human probabilities and held the above said scrips to be a penny stock without bring on record how the assessee is involved in any of the scrupulous activities or directly linked to one of the person who has 25 ITA No.5418/DEL/2018 ITA No.2531/Del/2022 involved in manipulation/rigging of share prices, entry operator or exit provider as observed by the Hon’ble Bombay High Court in the case of Ziauddin A Siddique (supra). Therefore, there is no material with the tax authorities to substantiate their findings that the impugned transaction is non-genuine. Therefore, we are inclined to allow the ground raised by the assessee. Accordingly the grounds raised by the assessee are allowed....” 11. Thus, we have noted that in this case the addition made by the Ld. AO is primarily based upon his conjectures and surmises qua weak financials of M/s. Kapppac Pharma Ltd. and it being branded as a penny stock company. The ld. AO has not brought on record any credible evidence through his independent enquiry, to allude any role of assessee in any price rigging. The arguments of the lower authorities are largely based upon the concept of human probability. The shares have been sold utilizing banking channels, due credits have been made Demat Account of the assessee. Consequently, we are of the considered view that no blame can be placed upon the assessee for indulging in any sham transaction. Accordingly, in view of peculiar facts of the case and also in Printed from counselvise.com 12 ITA No.3605/Del/2019 respectful compliance judicial precedents discussed hereinabove, we are of the view that there is no merit for any addition in the hands of the assessee for the impugned amount of Rs.48,19,438/- made by Ld.AO invoking provisions of section 68 r.w.s. 115BBE r.w.s. 10(38) of the Act. Accordingly, the order of Ld.CIT(A) is set aside and Ld.AO is directed to delete the impugned amount of Rs.48,19,438/-. All the grounds of appeal raised by the assessee are therefore, allowed. 12. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 27th October, 2025. Sd/- Sd/- Sd/- Sd/- [ANUBHAV SHARMA] [AMITABH SHUKLA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 27.10.2025 Shekhar Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi, Printed from counselvise.com "