DCIT CC-1, LUDHIANA V. M/S OSWAL FASHION (P) LTD., G.T.ROAD (WEST), JALANDHAR BYE PASS, LUDHIANA

ITA 1020/CHANDI/2019

AI Insights

The case revolves around an appeal by the revenue against the decision of the CIT(A) which had deleted an addition of Rs. 5 Crores made by the Assessing Officer. The addition was initially made on the grounds that the assessee could not prove the identity, genuineness, and creditworthiness of the entities involved in the sale of shares. The Tribunal examined the factual findings of the CIT(A), which noted that the shares were purchased and sold through proper banking channels and were reflected in the audited financial statements. The Tribunal agreed with the CIT(A) that the source of the sale consideration was legitimate and no addition could be made based on mere suspicion or conjecture.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 774998 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 15-07-2019
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND KUMAR LD
• Assessee Lawyers: GAURAV SHARMA LD
• Keywords: Unexplained cash credit
• Section: 143(3); 153A

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, CHANDIGARH HYBRID HEARING BEFORE HON’BLE SHRI RAJPAL YADAV, VICE PRESIDENT AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपीलसं./ ITA No.1020/CHANDI/2019 (िनधाŊरणवषŊ / Assessment Year: 2011-12 DCIT Central Circle -1 Ludhiana. बनाम/ Vs. M/s Oswal Fashion (P) Limited G.T. Road (West) Jalandhar Bye Pass, Ludhiana-141001. ̾थायीलेखासं./जीआइआरसं./PAN/GIR No. AAACO-2183-R (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) अपीलाथŎकीओरAppellant by : Shri Arvind Kumar (CIT) – Ld. DR ŮȑथŎकीओरसे/Respondent by : Shri Gaurav Sharma (CA)– Ld. AR सुनवाईकीतारीख/Date of Hearing : 25-08-2025 घोषणाकीतारीख /Date of Pronouncement : 02-09-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by revenue for Assessment Year (AY) 2011-12 arises out of an order of learned Commissioner of Income Tax (Appeals)-5, Ludhiana [CIT(A)] dated 05-04-2019 in the matter of an assessment framed by Ld. Assessing Officer (AO) u/s 143(3) / 153A of the Act on 30-03-2015. The sole issue that arises for our consideration is addition of Rs.5 Crores as made by Ld. AO in the assessment order. Printed from counselvise.com 2 Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under. 2. The impugned addition stem from the fact that the assessee purchased 1 Lacs Equity shares of M/s Oswal Apparels Pvt. Ltd. (OAPL) during Financial Year (FY) 2009-10 at Rs.500/- per Share. The shares were sold by the assessee during this year on 01-11-2010 at Rs.500/- per share to two entities namely M/s Fantastic Commercials Pvt. Ltd. & M/s Gayatri Investment Consultants Pvt. Ltd. The Ld. AO thus noted that Rs.5 Crores was first given by the assessee to OAPL and an equal amount was thereafter received by the assessee from these two entities. It was further noted by Ld. AO that M/s Fantastic Commercials Pvt. Ltd. made investment of Rs.1 Crore in the assessee entity during FY 2011- 12. Earlier, the assessee group had purchased shares of these two entities which have been major introducer of share capital in assessee group of companies. It was also observed that the employees of the assessee group acted as director of the two entities. On these facts, Ld. AO alleged that the assessee could not prove the identity, genuineness and creditworthiness of these entities and accordingly, added the sale consideration so received by the assessee for Rs.5 Crores as unexplained cash credit u/s 68. 3. The Ld. CIT(A) rendered factual findings that the assessee had duly declared the purchase and sale consideration in the books of accounts. The assessee also computed Long Term Capital Loss on shares which was duly reflected in the return of income which was filed much before the date of search on assessee. The shares so purchased Printed from counselvise.com 3 by the assessee were shown in financial statements of earlier years. All the payments were through account payee cheque and duly recorded in the books of accounts. The shares transfer was duly reported to ROC. No cash payment was involved and accordingly, the impugned addition was deleted against which the revenue is in further appeal before us. 4. It could be seen that Ld. CIT(A) has rendered pertinent factual findings in the impugned order which could not be rebutted by revenue before us. It is quite clear that the shares were purchased by the assessee in earlier years through banking channels and the same were duly reflected in the respective audited financial statements of earlier years. In this year, the assessee has merely sold the shares which is duly reported to ROC. The assessee has received sale consideration through banking channels and also computed capital losses in the return of income. There is no finding by Ld. AO that it was assessee’s own money which was routed in the garb of sale consideration. The source of sale consideration could not be doubted. The purchase and sale price per share has also not been doubted. No cash payment is involved in the transaction. It is trite law that no addition could be made on the basis of mere suspicion, conjectures or surmises. Therefore, the adjudication of Ld. CIT(A) could not be faulted with. We order so. 5. The appeal stand dismissed. Order pronounced on 02-09-2025. Sd/- Sd/- (RAJPAL YADAV) (MANOJ KUMAR AGGARWAL) VICE PRESIDENT ACCOUNTANT MEMBER Printed from counselvise.com 4 Dated: आदेश की Ůितिलिप अŤेिषत /Copy of the Order forwarded to : 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकरआयुƅ/CIT 4. िवभागीयŮितिनिध/DR 5. गाडŊफाईल/GF ASSISTANT REGISTRAR ITAT CHANDIGARH Printed from counselvise.com "