DCIT(CC)-8(3) , MUMBAI V. SANTOSH VIMLESH MEHTA, MUMBAI

ITA 3725/MUM/2025

AI Insights

The case involves the Income Tax Department's appeal against the order of the CIT(A) which had deleted the addition made by the Assessing Officer regarding alleged manipulation of share prices and unexplained long-term capital gains by the assessee, Santosh Vimlesh Mehta, from the sale of shares of M/s Banas Finance Ltd. The Assessing Officer had initially treated the income from these shares as undisclosed, suspecting it to be part of a scheme to provide bogus long-term capital gains. The CIT(A) found the transactions to be genuine based on the financial performance and other evidences provided by the assessee. However, the Tribunal, after considering the SEBI's findings on price manipulation and other circumstantial evidences, restored the matter to the Assessing Officer for a detailed examination.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 827512 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2026
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 27-05-2025
• Other Referred Cases: PCIT vs Swati Bajaj, Kachwala Gems vs Joint Commissioner of Income Tax, M/s Banas Finance Ltd. in ITA No. 1096/Mum/2016
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIRABHADRA MAHAJAN
• Assessee Lawyers: DEVENDRA JAIN
• Keywords: Set aside; Reassessment proceedings; Unexplained cash credit; Capital Gains; Principle of natural justice; Accommodation entries; Source of fund; Assessment record; Penny stocks; Bogus
• Section: 147; 148; 143(3); 142(1); 68; 131; 12A; 133A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “C” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI ANIKESH BANERJEE (JUDICIAL MEMBER) ITA No. 3725/MUM/2025 Assessment Year: 2012-13 DCIT(CC)-8(3) Room No. 661 6th Floor, Aaykar Bhavan, Maharshi Karve Road, Mumbai-400020 Vs. Santosh Vimlesh Mehta 10, Mumbadevi Road, Mumbadevi, Mumbai-400002 Mumbai PAN NO. ABHPM 0883 H Appellant Respondent Assessee by : Mr. Devendra Jain Revenue by : Mr. Virabhadra Mahajan, SR-DR Date of Hearing : 14/10/2025 Date of pronouncement : 09/01/2026 ORDER PER OM PRAKASH KANT, AM This appeal by the revenue is directed against order dated 21/03/2025, passed by the learned Commissioner of Income-tax (Appeals)-50, Mumbai [in short the Ld. CIT(A)] for assessment year 2012-13, raising following grounds: 1. \"Whether on the facts and in the circumstances of the case and in law, the Ld. CTT(A) erred in not appreciating the fact that the 40 rightly made addition of Rs. 3,98.43.430/- оп account of unexplained money u/s 69A of the Act being investment made in penny stock\" Printed from counselvise.com 2 \"Whether on the facts and in the circumstances of the case and in law, the Ld. CITA) erred in deleting the addition made by the AO in relation to the alleged manipulation of share prices of M/s Banas Finance Ltd., despite the statement recorded course of investigation proceedings, which indicates the appellant's involvement. The CIT(A) failed to appreciate that statements recorded during the search proceedings are credible and were supported by Circumstantial incriminating evidence suggesting irregular financial activities 3. \"The appellant craves leave to amend or alter any ground or add a new ground which may 2. Briefly stated, the facts giving rise to the controversy in the Revenue’s appeal are that the assessee, an return of income for the assessment year under consideration on 21.12.2012, declaring a total income of return, the assessee also disclosed Long ₹3,98,43,430/- arising from the sale of shares of M/s Banas Finance Ltd., which was claimed as exempt under section 10(38) of the Income-tax Act, 1961 (“the Act”). 2.1. Subsequently, the Assessing Officer received information from the Deputy Director of I alleging that the assessees that the assessee had obtained a bogus accommodation entry in the guise of Long Gain from the sale of shares of M/s Banas Finance Ltd.(BFL) The information was stated to be based, exchange data, statements of the director of M/s Banas Finance Ltd. and other connected persons, wherein it was alleged that the shares of the said company were used to provide accommodation entries of fictitious capital gains ITA No. 2 \"Whether on the facts and in the circumstances of the case and in law, the Ld. CITA) erred in deleting the addition made by the AO in relation to the alleged manipulation of share prices of M/s Banas Finance Ltd., despite the statement recorded course of investigation proceedings, which indicates the appellant's involvement. The CIT(A) failed to appreciate that statements recorded during the search proceedings are credible and were supported by Circumstantial incriminating evidence ggesting irregular financial activities \"The appellant craves leave to amend or alter any ground or add a new ground which may be necessary.\" Briefly stated, the facts giving rise to the controversy in the Revenue’s appeal are that the assessee, an individual, filed her return of income for the assessment year under consideration on 21.12.2012, declaring a total income of ₹4,64,069/ return, the assessee also disclosed Long-Term Capital Gain of arising from the sale of shares of M/s Banas Finance Ltd., which was claimed as exempt under section 10(38) tax Act, 1961 (“the Act”). Subsequently, the Assessing Officer received information from the Deputy Director of Income-tax (Investigation), Mumbai, alleging that the assessees that the assessee had obtained a bogus accommodation entry in the guise of Long- Gain from the sale of shares of M/s Banas Finance Ltd.(BFL) The information was stated to be based, inter-alia, analysis of stock exchange data, statements of the director of M/s Banas Finance Ltd. and other connected persons, wherein it was alleged that the shares of the said company were used to provide accommodation entries of fictitious capital gains to beneficiaries. The entities ITA No. 3725/Mum/2025 2 Santosh Vimlesh Mehta 2 \"Whether on the facts and in the circumstances of the case and in law, the Ld. CITA) erred in deleting the addition made by the AO in relation to the alleged manipulation of share prices of M/s during the course of investigation proceedings, which indicates the appellant's involvement. The CIT(A) failed to appreciate that statements recorded during the search proceedings are credible and were supported by Circumstantial incriminating evidence \"The appellant craves leave to amend or alter any ground or Briefly stated, the facts giving rise to the controversy in the individual, filed her return of income for the assessment year under consideration on 4,64,069/-. In the said Term Capital Gain of arising from the sale of shares of M/s Banas Finance Ltd., which was claimed as exempt under section 10(38) Subsequently, the Assessing Officer received information tax (Investigation), Mumbai, alleging that the assessees that the assessee had obtained a -Term Capital Gain from the sale of shares of M/s Banas Finance Ltd.(BFL) The , analysis of stock exchange data, statements of the director of M/s Banas Finance Ltd. and other connected persons, wherein it was alleged that the shares of the said company were used to provide accommodation to beneficiaries. The entities Printed from counselvise.com through which shares were allegedly purchased at inflated prices have been described as “exit providers” in the 2.2 On the basis of the aforesaid information and upon examination of the assessment records, the A recorded reasons to believe that income chargeable to tax had escaped assessment and accordingly issued notice under section 148 of the Act on 28.03.2019. In response, the assessee filed a return of income on 03.06.2019, reiterating the in declared in the return filed on 21.12.2012. The Assessing Officer thereafter furnished a copy of the reasons recorded for reopening, to which the assessee filed objections. The said objections were disposed of by the Assessing Officer by an 27.11.2019. 2.3 Aggrieved by the disposal of objections, the assessee approached the Hon’ble Bombay High Court by way of a writ petition. The writ petition was disposed of by order dated 22.02.2022, with a direction to the Assessing Officer to fresh order disposing of the objections. In compliance with the said directions, the Assessing Officer passed a speaking order dated 05.04.2022, rejecting the objections of the assessee. Thereafter, notices under sections 143(2) and 142(1) of the A were issued, calling upon the assessee to explain the Long Capital Gain declared on the sale of shares of M/s Banas Finance Ltd. ITA No. through which shares were allegedly purchased at inflated prices have been described as “exit providers” in the information On the basis of the aforesaid information and upon examination of the assessment records, the Assessing Officer recorded reasons to believe that income chargeable to tax had escaped assessment and accordingly issued notice under section 148 of the Act on 28.03.2019. In response, the assessee filed a return of income on 03.06.2019, reiterating the income originally declared in the return filed on 21.12.2012. The Assessing Officer thereafter furnished a copy of the reasons recorded for reopening, to which the assessee filed objections. The said objections were disposed of by the Assessing Officer by an Aggrieved by the disposal of objections, the assessee approached the Hon’ble Bombay High Court by way of a writ petition. The writ petition was disposed of by order dated 22.02.2022, with a direction to the Assessing Officer to fresh order disposing of the objections. In compliance with the said directions, the Assessing Officer passed a speaking order dated 05.04.2022, rejecting the objections of the assessee. Thereafter, notices under sections 143(2) and 142(1) of the A were issued, calling upon the assessee to explain the Long Capital Gain declared on the sale of shares of M/s Banas Finance ITA No. 3725/Mum/2025 3 Santosh Vimlesh Mehta through which shares were allegedly purchased at inflated prices information. On the basis of the aforesaid information and upon ssessing Officer recorded reasons to believe that income chargeable to tax had escaped assessment and accordingly issued notice under section 148 of the Act on 28.03.2019. In response, the assessee filed a come originally declared in the return filed on 21.12.2012. The Assessing Officer thereafter furnished a copy of the reasons recorded for reopening, to which the assessee filed objections. The said objections were order dated Aggrieved by the disposal of objections, the assessee approached the Hon’ble Bombay High Court by way of a writ petition. The writ petition was disposed of by order dated 22.02.2022, with a direction to the Assessing Officer to pass a fresh order disposing of the objections. In compliance with the said directions, the Assessing Officer passed a speaking order dated 05.04.2022, rejecting the objections of the assessee. Thereafter, notices under sections 143(2) and 142(1) of the Act were issued, calling upon the assessee to explain the Long-Term Capital Gain declared on the sale of shares of M/s Banas Finance Printed from counselvise.com 2.4 In response, the assessee explained the manner of acquisition and sale of the shares. It was submitted that all investment decisions were managed by her late husband. According to the assessee, her husband was approached by M/s Banas Finance Ltd. for preferential allotment of shares, pursuant to which an investment of The said funds were stated to have been sourced through withdrawal of capital from M/s Mehta Emporium, a partnership firm in which the assessee was a partner, and the payment was made through normal banking channels. It was further submitted that against the investment was allotted 1,00,000 equity shares of face value premium of ₹10 per share. The assessee furnished copies of the relevant bank statements and the preferential allotment letter issued by M/s Banas Finance Ltd. It was shares were subsequently dematerialised during the financial year 2010-11. Thereafter, the shares of the company were split in the ratio of 1:10 on 12.09.2011, as a result of which the assessee’s shareholding increased from 1,00,000 s 10,00,000 shares. 2.5 In financial year 2012 the month of February and March 2013 in following manner: Date Name of Scrip 01-02-2012 Banas Finance Ltd 06-02-2012 Banas Finance Ltd 21-02-2012 Banas Finance Ltd ITA No. In response, the assessee explained the manner of acquisition and sale of the shares. It was submitted that all vestment decisions were managed by her late husband. According to the assessee, her husband was approached by M/s Banas Finance Ltd. for preferential allotment of shares, pursuant to which an investment of ₹20,00,000/- was made on her behalf. s were stated to have been sourced through withdrawal of capital from M/s Mehta Emporium, a partnership firm in which the assessee was a partner, and the payment was made through normal banking channels. It was further submitted that against the investment of ₹20 lakh, the assessee was allotted 1,00,000 equity shares of face value ₹ 10 per share. The assessee furnished copies of the relevant bank statements and the preferential allotment letter issued by M/s Banas Finance Ltd. It was also stated that the shares were subsequently dematerialised during the financial 11. Thereafter, the shares of the company were split in the ratio of 1:10 on 12.09.2011, as a result of which the assessee’s shareholding increased from 1,00,000 s n financial year 2012-13, the assessee sold all the shares in the month of February and March 2013 in following manner: Name of Scrip Amount Quantity Banas Finance Ltd 128700.46 127000 Banas Finance Ltd 7057200 23000 Banas Finance Ltd 6940502.01 150000 ITA No. 3725/Mum/2025 4 Santosh Vimlesh Mehta In response, the assessee explained the manner of acquisition and sale of the shares. It was submitted that all vestment decisions were managed by her late husband. According to the assessee, her husband was approached by M/s Banas Finance Ltd. for preferential allotment of shares, pursuant was made on her behalf. s were stated to have been sourced through withdrawal of capital from M/s Mehta Emporium, a partnership firm in which the assessee was a partner, and the payment was made through normal banking channels. It was further 20 lakh, the assessee ₹10 each at a 10 per share. The assessee furnished copies of the relevant bank statements and the preferential allotment letter also stated that the shares were subsequently dematerialised during the financial 11. Thereafter, the shares of the company were split in the ratio of 1:10 on 12.09.2011, as a result of which the assessee’s shareholding increased from 1,00,000 shares to 13, the assessee sold all the shares in the month of February and March 2013 in following manner: Quantity Holding Period (Days) 127000 396 23000 401 150000 416 Printed from counselvise.com 22-02-2012 Banas Finance Ltd 24-02-2012 Banas Finance Ltd 28-02-2012 Banas Finance Ltd 29-02-2012 Banas Finance Ltd 01-03-2012 Banas Finance Ltd 06-03-2012 Banas Finance Ltd Total 2.6 The assessee assailed the findings of the Assessing Officer and contended that the transactions relating to purchase and sale of shares were genuine and not sham. In support of this contention, the assessee made the following submissions: (i) The shares were acquired pursuant to a valid share application made to the company, and the consideration for such allotment was paid through an account cheque. (ii) The sale of shares was carried out through a recognised stock exchange by a broker duly Securities and Exchange Board of India (SEBI), and the sale consideration was received through normal banking channels, as evidenced by the assessee’s bank statements. (iii) Security Transaction Tax (STT) was duly charged and paid on the sale in the contract notes issued by the broker. (iv) The trading of shares on the stock exchange is a fully automated, system personal interaction, negotiation, or collusion between the buyer and the seller. ITA No. Banas Finance Ltd 6629674.52 150000 Banas Finance Ltd 6068923.33 150000 Banas Finance Ltd 5817063.1 150000 Banas Finance Ltd 2210735.46 110522 Banas Finance Ltd 3612841.7 64478 Banas Finance Ltd 2219489.16 75000 40685129.74 10,00,000 The assessee assailed the findings of the Assessing Officer and contended that the transactions relating to purchase and sale of shares were genuine and not sham. In support of this contention, the assessee made the following submissions: The shares were acquired pursuant to a valid share application made to the company, and the consideration for such allotment was paid through an account The sale of shares was carried out through a recognised stock exchange by a broker duly registered with the Securities and Exchange Board of India (SEBI), and the sale consideration was received through normal banking channels, as evidenced by the assessee’s bank Security Transaction Tax (STT) was duly charged and paid on the sale transactions, which was clearly reflected in the contract notes issued by the broker.. The trading of shares on the stock exchange is a fully automated, system-driven process, leaving no scope for personal interaction, negotiation, or collusion between he buyer and the seller. ITA No. 3725/Mum/2025 5 Santosh Vimlesh Mehta 150000 417 150000 419 150000 423 110522 424 64478 425 75000 430 10,00,000 The assessee assailed the findings of the Assessing Officer and contended that the transactions relating to purchase and sale of shares were genuine and not sham. In support of this contention, the assessee made the following submissions: The shares were acquired pursuant to a valid share application made to the company, and the consideration for such allotment was paid through an account-payee The sale of shares was carried out through a recognised registered with the Securities and Exchange Board of India (SEBI), and the sale consideration was received through normal banking channels, as evidenced by the assessee’s bank Security Transaction Tax (STT) was duly charged and transactions, which was clearly reflected The trading of shares on the stock exchange is a fully driven process, leaving no scope for personal interaction, negotiation, or collusion between Printed from counselvise.com (v) No material was brought on record by the Assessing Officer to establish any nexus or connection whatsoever between the assessee and the alleged exit providers. (vi) Even in the statements of the alleged entry operators relied upon by th the assessee, nor any admission that accommodation entries were provided to her. (vii) The investment in the shares was made by the assessee’s late husband in good faith considering to be the right time to invest in the sh bona fide assessment of the future prospects of the company, and without any mala fide intention and 2.7 The assessee also sought copies of the material allegedly indicating her involvement in accommodation entry transactions and requested an opportunity to cross the third parties whose statements were relied upon by the Department, contending that denial of such opportunity violated the principles of natural justice. 2.8 The Assessing Officer, however, was not pe explanation furnished by the assessee. He noted that the company in question was originally incorporated as Pioneer Leasing Co. Ltd. on 06.06.1983, and its name was subsequently changed to Banas Finance Ltd. on 28.08.1986. The company obtain Financial Company (NBFC) from the Reserve Bank of India on 24.01.1999. In the assessment order, particularly in ITA No. No material was brought on record by the Assessing Officer to establish any nexus or connection whatsoever between the assessee and the alleged exit providers. Even in the statements of the alleged entry operators relied upon by the Department, there was no reference to the assessee, nor any admission that accommodation entries were provided to her. The investment in the shares was made by the assessee’s late husband in good faith considering to be the right time to invest in the shares of the company, based on his bona fide assessment of the future prospects of the company, and without any mala fide intention and The assessee also sought copies of the material allegedly indicating her involvement in accommodation entry ions and requested an opportunity to cross the third parties whose statements were relied upon by the Department, contending that denial of such opportunity violated the principles of natural justice. The Assessing Officer, however, was not persuaded by the explanation furnished by the assessee. He noted that the company in question was originally incorporated as Pioneer Leasing Co. Ltd. on 06.06.1983, and its name was subsequently changed to Banas Finance Ltd. on 28.08.1986. The company obtained registration as a Non Financial Company (NBFC) from the Reserve Bank of India on 24.01.1999. In the assessment order, particularly in ITA No. 3725/Mum/2025 6 Santosh Vimlesh Mehta No material was brought on record by the Assessing Officer to establish any nexus or connection whatsoever between the assessee and the alleged exit providers. Even in the statements of the alleged entry operators e Department, there was no reference to the assessee, nor any admission that accommodation The investment in the shares was made by the assessee’s late husband in good faith considering to be the right ares of the company, based on his bona fide assessment of the future prospects of the company, and without any mala fide intention and The assessee also sought copies of the material allegedly indicating her involvement in accommodation entry ions and requested an opportunity to cross-examine the third parties whose statements were relied upon by the Department, contending that denial of such opportunity rsuaded by the explanation furnished by the assessee. He noted that the company in question was originally incorporated as Pioneer Leasing Co. Ltd. on 06.06.1983, and its name was subsequently changed to Banas Finance Ltd. on 28.08.1986. ed registration as a Non-Banking Financial Company (NBFC) from the Reserve Bank of India on 24.01.1999. In the assessment order, particularly in Printed from counselvise.com paragraphs 5.3 to 5.7, the Assessing Officer described the general modus operandi allegedly adopted for generat long-term capital gains through penny stock companies. He explained how beneficiaries possessing unaccounted money allegedly approached operators managing such scrips, how the share prices were artificially rigged, and how exit providers were used to enable the beneficiaries to book exempt capital gains through stock exchange transactions. The Assessing Officer also referred to the typical bell in the price movement of such penny stocks. 2.9 Applying the said general modus of the present case, the Assessing Officer analysed the price movement of the shares of Banas Finance Ltd. He noted that the company issued preferential allotment of 99,00,000 equity shares of ₹10 each at a premium of 30.12.2010, followed by a stock split in the ratio of 1:10. Subsequently, on 26.03.2013, another preferential allotment was made whereby 1,17,60,000 equity shares of face value each were issued at a premium of promoters. The Asses on the Bombay Stock Exchange rose from 27.01.2011 to ₹562 on 01.02.2012, thereafter declined to ₹99.50 on 28.05.2012, again increased to and finally fell sharply to 2.10 According to the Assessing Officer, the increase in share price was accompanied by extremely low trading volumes ITA No. paragraphs 5.3 to 5.7, the Assessing Officer described the general modus operandi allegedly adopted for generat term capital gains through penny stock companies. He explained how beneficiaries possessing unaccounted money allegedly approached operators managing such scrips, how the share prices were artificially rigged, and how exit providers d to enable the beneficiaries to book exempt capital gains through stock exchange transactions. The Assessing Officer also referred to the typical bell-shaped pattern observed in the price movement of such penny stocks. Applying the said general modus operandi to the facts of the present case, the Assessing Officer analysed the price movement of the shares of Banas Finance Ltd. He noted that the company issued preferential allotment of 99,00,000 equity 10 each at a premium of ₹10 per share o 30.12.2010, followed by a stock split in the ratio of 1:10. Subsequently, on 26.03.2013, another preferential allotment was made whereby 1,17,60,000 equity shares of face value each were issued at a premium of ₹16 per share to non promoters. The Assessing Officer observed that the share price on the Bombay Stock Exchange rose from 562 on 01.02.2012, thereafter declined to 99.50 on 28.05.2012, again increased to ₹682 on 29.10.2013, and finally fell sharply to ₹13.30 on 22.12.2015. According to the Assessing Officer, the increase in share price was accompanied by extremely low trading volumes ITA No. 3725/Mum/2025 7 Santosh Vimlesh Mehta paragraphs 5.3 to 5.7, the Assessing Officer described the general modus operandi allegedly adopted for generating bogus term capital gains through penny stock companies. He explained how beneficiaries possessing unaccounted money allegedly approached operators managing such scrips, how the share prices were artificially rigged, and how exit providers d to enable the beneficiaries to book exempt capital gains through stock exchange transactions. The Assessing shaped pattern observed operandi to the facts of the present case, the Assessing Officer analysed the price movement of the shares of Banas Finance Ltd. He noted that the company issued preferential allotment of 99,00,000 equity 10 per share on 30.12.2010, followed by a stock split in the ratio of 1:10. Subsequently, on 26.03.2013, another preferential allotment was made whereby 1,17,60,000 equity shares of face value ₹1 16 per share to non- sing Officer observed that the share price on the Bombay Stock Exchange rose from ₹9.40 on 562 on 01.02.2012, thereafter declined to 682 on 29.10.2013, According to the Assessing Officer, the increase in share price was accompanied by extremely low trading volumes Printed from counselvise.com during the period of price rise, while a sudden spike in volume was noticed upon expiry of the lock preferntialy, which, according to him, coincided with the exit taken by beneficiaries claiming exempt long He further observed that such astronomical rise in share price after preferential allotment fundamentals of the company. 2.11 The Assessing Officer further analysed the trade data and concluded that the price movement of the scrip was artificially manipulated with a mala fide intent. Officer noted that price of the stock moved from 27/01/2011 (before preferential allotment) to preferential allotment) on 19/10/2013 and then suddenly fell back to prices of ₹ the period from 04.02.2011 to 07.09.2011, covering 138 trading days, only 158 trades were executed, with most days recording merely a single trade involving a minimal quantity of shares. The price during this period increased steadily from ₹9.82 to ₹281.30. The Assessing Officer observed that on several days the price i limits prescribed by the stock exchange, thereby enabling maximum appreciation without triggering regulatory intervention. Graphs depicting the number of trades and trading volumes were reproduced in the assessment or support this inference. ITA No. during the period of price rise, while a sudden spike in volume was noticed upon expiry of the lock-in period of shares , which, according to him, coincided with the exit taken by beneficiaries claiming exempt long-term capital gains. He further observed that such astronomical rise in share price after preferential allotment was not supported by the financial ntals of the company. The Assessing Officer further analysed the trade data and concluded that the price movement of the scrip was artificially manipulated with a mala fide intent. The Assessing Officer noted that price of the stock moved from 27/01/2011 (before preferential allotment) to preferential allotment) on 19/10/2013 and then suddenly fell 13.30 on 22/12/2015. He noted that during the period from 04.02.2011 to 07.09.2011, covering 138 ys, only 158 trades were executed, with most days recording merely a single trade involving a minimal quantity of shares. The price during this period increased steadily from 281.30. The Assessing Officer observed that on several days the price increase hovered just below the circuit limits prescribed by the stock exchange, thereby enabling maximum appreciation without triggering regulatory intervention. Graphs depicting the number of trades and trading volumes were reproduced in the assessment or support this inference. ITA No. 3725/Mum/2025 8 Santosh Vimlesh Mehta during the period of price rise, while a sudden spike in volume in period of shares allotted , which, according to him, coincided with the exit term capital gains. He further observed that such astronomical rise in share price was not supported by the financial The Assessing Officer further analysed the trade data and concluded that the price movement of the scrip was The Assessing Officer noted that price of the stock moved from ₹ 9.40 on 27/01/2011 (before preferential allotment) to ₹ 682 (after preferential allotment) on 19/10/2013 and then suddenly fell He noted that during the period from 04.02.2011 to 07.09.2011, covering 138 ys, only 158 trades were executed, with most days recording merely a single trade involving a minimal quantity of shares. The price during this period increased steadily from 281.30. The Assessing Officer observed that on ncrease hovered just below the circuit limits prescribed by the stock exchange, thereby enabling maximum appreciation without triggering regulatory intervention. Graphs depicting the number of trades and trading volumes were reproduced in the assessment order to Printed from counselvise.com 2.12 The Assessing Officer also noted that there were no corporate announcements, improvement in financial performance, or changes in business fundamentals of the company that could justify such a steep rise in share price. further observed that the movement of the share price bore no correlation with the general market indices, which remained relatively stable during the relevant period as against abnormal movement in the price of shares of BFL. On these premises, the Ass was the result of systematic and artificial rigging carried out through controlled and low 2.13 Further, the Assessing Officer, referred to statements of persons who colloborated BFL, including Sh GK Agrwal, promoter and director of Banas Finance limited and few exit providers, Mohite (Thene), sh Laxman Pedamkar, Dhanuka etc. It was revealed that shri Pradeep Dhanuka was the key person in the chain who introduced various bogus exit providers. In the statement recorded, Sh Pradeep Dhanuka as well as various exit providers have admitted that they had nothing to do with th were directors. Sh Pradeep Dhanuka admitted that on the instruction of Sri Giriraj Kishore Agrawal , one of the promoters of Banas finance Ltd, he had indulged in ITA No. The Assessing Officer also noted that there were no corporate announcements, improvement in financial performance, or changes in business fundamentals of the company that could justify such a steep rise in share price. further observed that the movement of the share price bore no correlation with the general market indices, which remained relatively stable during the relevant period as against abnormal movement in the price of shares of BFL. On these premises, the Assessing Officer concluded that the price rise was the result of systematic and artificial rigging carried out through controlled and low-volume trades. the Assessing Officer, referred to statements colloborated in manipulating share price of , including Sh GK Agrwal, promoter and director of Banas Finance limited and few exit providers, viz, sh Chandra Kant sh Prashant Shashikant Sawant , Laxman Pedamkar, Ms. Shweta Shyam Pedamkar, Sh Pardeep . It was revealed that shri Pradeep Dhanuka was the key person in the chain who introduced various bogus exit providers. In the statement recorded, Sh Pradeep Dhanuka as well as various exit providers have admitted that they had nothing to do with the concerned companies, wherein they were directors. Sh Pradeep Dhanuka admitted that on the instruction of Sri Giriraj Kishore Agrawal , one of the promoters of Banas finance Ltd, he had indulged in ITA No. 3725/Mum/2025 9 Santosh Vimlesh Mehta The Assessing Officer also noted that there were no corporate announcements, improvement in financial performance, or changes in business fundamentals of the company that could justify such a steep rise in share price. He further observed that the movement of the share price bore no correlation with the general market indices, which remained relatively stable during the relevant period as against abnormal movement in the price of shares of BFL. On these essing Officer concluded that the price rise was the result of systematic and artificial rigging carried out the Assessing Officer, referred to statements hare price of , including Sh GK Agrwal, promoter and director of Banas Chandra Kant Prashant Shashikant Sawant , sh Shyam Shweta Shyam Pedamkar, Sh Pardeep . It was revealed that shri Pradeep Dhanuka was the key person in the chain who introduced various bogus exit providers. In the statement recorded, Sh Pradeep Dhanuka as well as various exit providers have admitted that they had e concerned companies, wherein they were directors. Sh Pradeep Dhanuka admitted that on the instruction of Sri Giriraj Kishore Agrawal , one of the promoters of Banas finance Ltd, he had indulged in Printed from counselvise.com manipulating the scrip. The relevant part of assessment o is reproduced as under: “5.19 Further, Statements of few exit providers were recorded. In the sworn statement, the EPs (Exit Providers) have confirmed that their accounts like bank account, DMAT account were misused by certain operators. The EPs are This is the typical pattern where a group of exit providers are identified by the operator of the scheme and their identity is used by the operator to carry out bogus trades in order to provide bogus accommodation entry to beneficiaries of bogus Long Term Capital Gains. Few of the exit providens have confirmed that Shri Pradeep Dhanuka has misused their credentials by promising them Rs. 2000 to Rs. 3000 per month. Statement of Shri Pradeep Dhanuka was recorded u/s 131 of the IT Act where he has confirmed of the wrong doings and has stated that on the instruction of Shri GK Agarwal he had obtained credentials of various exit providers and has traded in their accounts. Shri G K Agarwal is one of the promoter and direc of M/s Banas Finance Ltd.  The relevant portion of the statement is reproduced as under. Statement of Chandra Kant Mohite (Exit Provider of Banas) recorded u/s 131 of IT Act dated 16.10.2017). Q.6 What is your sources of income and annual income from all your sources of income? Ans. I am working as watchman in society Shanti Garden, sector 3, Mira Road, Thane. I get Rs. 9000 per month since one and half year. Before that I used to supply tiffen to customer and ea month. Q.9 From the trading transaction records it is seen that you have made various share transactions from FY 09 12-13. Please furnish the source of transaction detai Ans. Sir, I don't have any knowledge on shares and I never in shares. In the circumstances of financial problems, I have visited Shri Pradeep Dhanuka year in the year 2009 and pleaded for help. Shri Pradeep Dhanuka called me to his Bhayander office and said that as I was in financial problem, he would provide regu of Rs.5000/-, for which he asked my PAN Xerox and further Explained he will open bank account and Demat account in my ITA No. manipulating the scrip. The relevant part of assessment o is reproduced as under: 5.19 Further, Statements of few exit providers were recorded. In the sworn statement, the EPs (Exit Providers) have confirmed that their accounts like bank account, DMAT account were misused by certain operators. The EPs are generally individuals of low income group. This is the typical pattern where a group of exit providers are identified by the operator of the scheme and their identity is used by the operator to carry out bogus trades in order to provide bogus entry to beneficiaries of bogus Long Term Capital Gains. Few of the exit providens have confirmed that Shri Pradeep Dhanuka has misused their credentials by promising them Rs. 2000 to Rs. 3000 per month. Statement of Shri Pradeep Dhanuka was 131 of the IT Act where he has confirmed of the wrong doings and has stated that on the instruction of Shri GK Agarwal he had obtained credentials of various exit providers and has traded in their accounts. Shri G K Agarwal is one of the promoter and direc of M/s Banas Finance Ltd. The relevant portion of the statement is reproduced as under. Chandra Kant Mohite (Exit Provider of Banas) recorded u/s 131 of IT Act dated 16.10.2017). Q.6 What is your sources of income and annual income from all your sources of income? Ans. I am working as watchman in society Shanti Garden, sector 3, Mira Road, Thane. I get Rs. 9000 per month since one and half year. Before that I used to supply tiffen to customer and earn rading transaction records it is seen that you have made various share transactions from FY 09 13. Please furnish the source of investment and transaction details in brief? Ans. Sir, I don't have any knowledge on shares and I never in shares. In the circumstances of financial problems, I have visited Pradeep Dhanuka year in the year 2009 and pleaded for help. Pradeep Dhanuka called me to his Bhayander office and said that as I was in financial problem, he would provide regu , for which he asked my PAN Xerox and further Explained he will open bank account and Demat account in my ITA No. 3725/Mum/2025 10 Santosh Vimlesh Mehta manipulating the scrip. The relevant part of assessment order 5.19 Further, Statements of few exit providers were recorded. In the sworn statement, the EPs (Exit Providers) have confirmed that their accounts like bank account, DMAT account were misused by certain generally individuals of low income group. This is the typical pattern where a group of exit providers are identified by the operator of the scheme and their identity is used by the operator to carry out bogus trades in order to provide bogus entry to beneficiaries of bogus Long Term Capital Gains. Few of the exit providens have confirmed that Shri Pradeep Dhanuka has misused their credentials by promising them Rs. 2000 to Rs. 3000 per month. Statement of Shri Pradeep Dhanuka was 131 of the IT Act where he has confirmed of the wrong doings and has stated that on the instruction of Shri GK Agarwal he had obtained credentials of various exit providers and has traded in their accounts. Shri G K Agarwal is one of the promoter and director The relevant portion of the statement is reproduced as under. Chandra Kant Mohite (Exit Provider of Banas) Q.6 What is your sources of income and annual income from Ans. I am working as watchman in society Shanti Garden, sector 3, Mira Road, Thane. I get Rs. 9000 per month since one and half year. rn Rs. 1000 per rading transaction records it is seen that you have made various share transactions from FY 09-10 till FY investment and Ans. Sir, I don't have any knowledge on shares and I never invested in shares. In the circumstances of financial problems, I have visited Pradeep Dhanuka year in the year 2009 and pleaded for help. Pradeep Dhanuka called me to his Bhayander office and said that as I was in financial problem, he would provide regular income , for which he asked my PAN Xerox and further Explained he will open bank account and Demat account in my Printed from counselvise.com name and he requested me to provide my blank cheques with the signature. And whenever he his office and took my signature wherever required on various forms. After he opened my bank account and demat account he might have traded in shares.  Statement of Prashant Shashikant Sawant (Exit provider of Banas) recorded u/s 131 of 1 T Act dated 16.1 Q.10 From the trading transaction records it is seen that you have made various share transactions. Please furnish the source of investment and transaction details in brief? Ans. Sir, I don't have any knowledge on shares and I never invested a single rupee in shares. I met Shri Pradeep Dhanuka in party office of Maharashtra Nava Nirmana year 2009. At that time and he asked about my personal details. I said I was jobless and also said I have been facing financ problems. So he suggested me that he will do some business in my name and whatever he was doing was through cheques and RTGS only and I will get some money. So I accepted for his proposal in the year 2010 and gave my PAN card Xerox copy and photo and s on various application forms.  Statement of ShyamLaxman Pedamkar (Exit Provider of Banas recorded u/s 131 of 1 T Act dated 16.10.2017. Q.9 From the trading transaction records it is seen that you have made various share transactions from FY 10 13-14. Please furnish the source of investment and transaction details in brief? Ans. Sir, I don't have any knowledge on shares and I never invested in shares. In the circumstances of financial problems, I have visited Shri Pradeep Dhanuka year in t Chairman of Lions Club of Bhyandar and pleaded for help in paying school fees of my elder daughter. He has given cheque of around Rs.20,000/-in the name of my elder daughter to her school, Royal Girls High School, Mira Road Eas 2011. After six months Shri Pradeep Dhanuka called me to his Bhayander office and said that as I was in financial problem, he would provide regular income of Rs.2,000/ he asked my PAN Xerox and account and Demat account in my name and he requested me to provide my blank cheques with the signature. And whenever required my signatures he called me to his office and ITA No. name and he requested me to provide my blank cheques with the signature. And whenever he required my signatures hè called me to his office and took my signature wherever required on various forms. After he opened my bank account and demat account he might have Prashant Shashikant Sawant (Exit provider of recorded u/s 131 of 1 T Act dated 16.10.2017). Q.10 From the trading transaction records it is seen that you have made various share transactions. Please furnish the source of investment and transaction details in brief? Ans. Sir, I don't have any knowledge on shares and I never invested single rupee in shares. I met Shri Pradeep Dhanuka in party office of Maharashtra Nava Nirmana Sena at Mira Bhayandar Office in the year 2009. At that time and he asked about my personal details. I said I was jobless and also said I have been facing financ problems. So he suggested me that he will do some business in my name and whatever he was doing was through cheques and RTGS only and I will get some money. So I accepted for his proposal in the year 2010 and gave my PAN card Xerox copy and photo and s on various application forms. ShyamLaxman Pedamkar (Exit Provider of Banas recorded u/s 131 of 1 T Act dated 16.10.2017. Q.9 From the trading transaction records it is seen that you have made various share transactions from FY 10 14. Please furnish the source of investment and transaction details in brief? Ans. Sir, I don't have any knowledge on shares and I never invested in shares. In the circumstances of financial problems, I have visited Shri Pradeep Dhanuka year in the year 2010-2011 who is the Chairman of Lions Club of Bhyandar and pleaded for help in paying school fees of my elder daughter. He has given cheque of around in the name of my elder daughter to her school, Royal Girls High School, Mira Road East as school fees in the year 2010 or 2011. After six months Shri Pradeep Dhanuka called me to his Bhayander office and said that as I was in financial problem, he would provide regular income of Rs.2,000/- to Rs.3,000/ he asked my PAN Xerox and further explained he will open bank account and Demat account in my name and he requested me to provide my blank cheques with the signature. And whenever required my signatures he called me to his office and ITA No. 3725/Mum/2025 11 Santosh Vimlesh Mehta name and he requested me to provide my blank cheques with the required my signatures hè called me to his office and took my signature wherever required on various forms. After he opened my bank account and demat account he might have Prashant Shashikant Sawant (Exit provider of 0.2017). Q.10 From the trading transaction records it is seen that you have made various share transactions. Please furnish the source of investment and transaction details in brief? Ans. Sir, I don't have any knowledge on shares and I never invested single rupee in shares. I met Shri Pradeep Dhanuka in party office Sena at Mira Bhayandar Office in the year 2009. At that time and he asked about my personal details. I said I was jobless and also said I have been facing financial problems. So he suggested me that he will do some business in my name and whatever he was doing was through cheques and RTGS only and I will get some money. So I accepted for his proposal in the year 2010 and gave my PAN card Xerox copy and photo and signed ShyamLaxman Pedamkar (Exit Provider of Banas Q.9 From the trading transaction records it is seen that you have made various share transactions from FY 10-11 till FY 14. Please furnish the source of investment and Ans. Sir, I don't have any knowledge on shares and I never invested in shares. In the circumstances of financial problems, I have visited 2011 who is the Chairman of Lions Club of Bhyandar and pleaded for help in paying school fees of my elder daughter. He has given cheque of around in the name of my elder daughter to her school, Royal t as school fees in the year 2010 or 2011. After six months Shri Pradeep Dhanuka called me to his Bhayander office and said that as I was in financial problem, he to Rs.3,000/-, for which further explained he will open bank account and Demat account in my name and he requested me to provide my blank cheques with the signature. And whenever required my signatures he called me to his office and took my Printed from counselvise.com signature wherever required on various bank account and demat account he might have traded in the above mentioned shares, In this process I received share trading messages on my mobile. I asked Shri Pradeep Dhanuka about the messages, he explained that whatever he was and there was no need to panic.  Statement of Shweta Shyam Pedamkar(Exit Provider of BANAS) recorded u/s 131 of IT Act dated 16.10.2017. Q.6 What are your sources of income and annual income from all your sources of income? Ans. Sir I am house wife and donot have any earnings. Q.7 Have you ever invested in shares/mutual funds? If yes, please give details. Ans. Sir, I never traded in shares. Q8 From the trading transaction records it is seen that you have made various shar 13-14. Please furnish the source of investment and transaction deta Ans. Sir, I don't have any knowledge on shares. I don't have any knowledge in bank account transaction. When we were in financial difficulties I approached Shri Pradeep, Dhanuka for help with my husband. Shri Pradeep Dhanuka offered to give me monthly income of Rs 2000-Rs 3000 for which I had to provide my PAN card Xerox, and sign various application forms and provide many blank signed cheque to him. 7.15 Further with respect to clarity of matter brief role of operator and sub operator of the scheme are discussed herewith: \"The operator (entry operator) is a person, who manages the overall scheme of the scam. He is in control of numerous p companies which are utilized for routing of cash. The beneficiaries desiring bogus LTCG/STCL approach the operator. The operator is also in control of some penny stock companies whose shares are listed on a recognized stock exchange. Penny Stock trades at a relatively low price and market capitalization and very often, there is no real business being carried on by such companies. These types of stocks are generally considered to be highly speculative and high risk because of their ITA No. signature wherever required on various forms. After he opened my bank account and demat account he might have traded in the above mentioned shares, In this process I received share trading messages on my mobile. I asked Shri Pradeep Dhanuka about the messages, he explained that whatever he was doing was through cheques only and there was no need to panic. Shweta Shyam Pedamkar(Exit Provider of BANAS) recorded u/s 131 of IT Act dated 16.10.2017. Q.6 What are your sources of income and annual income from all your sources of income? Ans. Sir I am house wife and donot have any earnings. Q.7 Have you ever invested in shares/mutual funds? If yes, please give details. Ans. Sir, I never traded in shares. Q8 From the trading transaction records it is seen that you have made various share transactions from FY 10 14. Please furnish the source of investment and transaction details in brief? Ans. Sir, I don't have any knowledge on shares. I don't have any knowledge in bank account transaction. When we were in financial lties I approached Shri Pradeep, Dhanuka for help with my husband. Shri Pradeep Dhanuka offered to give me monthly income Rs 3000 for which I had to provide my PAN card Xerox, and sign various application forms and provide many blank signed 7.15 Further with respect to clarity of matter brief role of operator and sub operator of the scheme are discussed herewith: (entry operator) is a person, who manages the overall scheme of the scam. He is in control of numerous p companies which are utilized for routing of cash. The beneficiaries desiring bogus LTCG/STCL approach the operator. The operator is also in control of some penny stock companies whose shares are listed on a recognized stock exchange. Penny Stock is a stock that trades at a relatively low price and market capitalization and very often, there is no real business being carried on by such companies. These types of stocks are generally considered to be highly speculative and high risk because of their lack of liquidity, large bid ITA No. 3725/Mum/2025 12 Santosh Vimlesh Mehta forms. After he opened my bank account and demat account he might have traded in the above mentioned shares, In this process I received share trading messages on my mobile. I asked Shri Pradeep Dhanuka about the messages, doing was through cheques only Shweta Shyam Pedamkar(Exit Provider of BANAS) Q.6 What are your sources of income and annual income from Ans. Sir I am house wife and donot have any earnings. Q.7 Have you ever invested in shares/mutual funds? If yes, Q8 From the trading transaction records it is seen that you e transactions from FY 10-11 till FY 14. Please furnish the source of investment and Ans. Sir, I don't have any knowledge on shares. I don't have any knowledge in bank account transaction. When we were in financial lties I approached Shri Pradeep, Dhanuka for help with my husband. Shri Pradeep Dhanuka offered to give me monthly income Rs 3000 for which I had to provide my PAN card Xerox, and sign various application forms and provide many blank signed 7.15 Further with respect to clarity of matter brief role of operator and sub operator of the scheme are discussed herewith: (entry operator) is a person, who manages the overall scheme of the scam. He is in control of numerous paper/bogus companies which are utilized for routing of cash. The beneficiaries desiring bogus LTCG/STCL approach the operator. The operator is also in control of some penny stock companies whose shares are is a stock that trades at a relatively low price and market capitalization and very often, there is no real business being carried on by such companies. These types of stocks are generally considered to be highly lack of liquidity, large bid- Printed from counselvise.com ask spreads, small capitalization and limited following and disclosure. Sometimes, there are a number of intermediaries who work for the operator. These intermediarias introduce the beneficiaries to the operator or in many ca agents/operator their own.\"  Statement of Pradeep Dhanuka (Exit Provider and sub of Banas) director of VRP Financial Services Pvt Limited, Rupak Developers Pvt Ltd and Romy Realty Pvt ltd recorded u/s 131 of 1 T Act dated 24.10.2017. Q.8 Please state the list of companies/firms in which you or your family members are/were directors/partners Ans. Sir, I and my wife were directors in companies as below. 1 V R P Financial services Pvt. Lid both me and my wife are directors in this company 2 Rupak Developers Put Ltd resigned 3 years ago. 3 ROMY REALTY PRIVATE company but resigned 3 years ago, Q.9 Please provide details of business activities of the companies as mentioned by you in your reply to question no.8 in which you or your wife are directors. Ans. Sir, I am unaware Ltd, Rupak Developers Put Ltd, ROMY REALTY PRIVATE LIMITED. Q.10 In your reply to my question no.9 you have mentioned that you do not know the business activities of the companies in which you or your wife same and tell me how you do not know the activities of the companies when you or your wife hold the position of director in these companies. Ans. Sir, I and my wife Smt Nidhi Dhanuka are just dummy directors in the companies mentioned in my reply to your question no.8 VRP Financial services Put.Ltd, Rupak Developers Put Ltd, ROMY REALTY PRIVATE LIMITED. I was approached by Shri G K Agrawal ITA No. ask spreads, small capitalization and limited following and Sometimes, there are a number of intermediaries who work for the operator. These intermediarias introduce the beneficiaries to the operator or in many cases these intermediaries become agents/operator of the operator and deal with the beneficiaries on Pradeep Dhanuka (Exit Provider and sub director of VRP Financial Services Pvt Limited, Rupak Developers Pvt Ltd and Romy Realty Pvt ltd recorded u/s 131 of 1 T Act dated 24.10.2017. Q.8 Please state the list of companies/firms in which you or your family members are/were directors/partners ns. Sir, I and my wife were directors in companies as below. P Financial services Pvt. Lid both me and my wife are directors 2 Rupak Developers Put Ltd- I was director in this company but resigned 3 years ago. 3 ROMY REALTY PRIVATE LIMITED- my wife was director in this company but resigned 3 years ago, Q.9 Please provide details of business activities of the companies as mentioned by you in your reply to question no.8 in which you or your wife are directors. Ans. Sir, I am unaware of the activities of VRP Financial services Pvt. Ltd, Rupak Developers Put Ltd, ROMY REALTY PRIVATE LIMITED. Q.10 In your reply to my question no.9 you have mentioned that you do not know the business activities of the companies in which you or your wife are directors. Please confirm the same and tell me how you do not know the activities of the companies when you or your wife hold the position of director in these companies. Ans. Sir, I and my wife Smt Nidhi Dhanuka are just dummy directors nies mentioned in my reply to your question no.8 VRP Financial services Put.Ltd, Rupak Developers Put Ltd, ROMY REALTY PRIVATE LIMITED. I was approached by Shri G K Agrawal ITA No. 3725/Mum/2025 13 Santosh Vimlesh Mehta ask spreads, small capitalization and limited following and Sometimes, there are a number of intermediaries who work for the operator. These intermediarias introduce the beneficiaries to the ses these intermediaries become sub of the operator and deal with the beneficiaries on Pradeep Dhanuka (Exit Provider and sub-operator director of VRP Financial Services Pvt Limited, Rupak Developers Pvt Ltd and Romy Realty Pvt ltd recorded u/s 131 of 1 T Q.8 Please state the list of companies/firms in which you or ns. Sir, I and my wife were directors in companies as below. P Financial services Pvt. Lid both me and my wife are directors I was director in this company but my wife was director in this Q.9 Please provide details of business activities of the companies as mentioned by you in your reply to question no.8 of the activities of VRP Financial services Pvt. Ltd, Rupak Developers Put Ltd, ROMY REALTY PRIVATE LIMITED. Q.10 In your reply to my question no.9 you have mentioned that you do not know the business activities of the companies are directors. Please confirm the same and tell me how you do not know the activities of the companies when you or your wife hold the position of director Ans. Sir, I and my wife Smt Nidhi Dhanuka are just dummy directors nies mentioned in my reply to your question no.8 VRP Financial services Put.Ltd, Rupak Developers Put Ltd, ROMY REALTY PRIVATE LIMITED. I was approached by Shri G K Agrawal Printed from counselvise.com who told me to provide my details like PAN card copy, Address proof, and signed var Agrawal. All the activities of these companies are controlled by Shri GK Agrawal. Q.13 From the trading transaction records of VRP Financial services Pvt. Ltd, Rupak Developers Pvt Ltd, ROMY REALTY PRIVATE LIMITED i are made. Please furnish the source of investment and transaction details in brief? Ans. Sir I am not aware of any of the activities of the abovementioned companies. All activities are controlled by Shri GK Agrawal Q.14 Please tell me who used to file the return of income of VRP Financial services Pvt. Ltd, Rupak Developers Pvt Ltd, ROMY REALTY PRIVATE LIMITED. Ans. Sir, Shri GK Agrawal used to file the return of income of all the above mentioned companies. Q.15 I am showing you the statement recorded on oath u/s 131 of PRASHANT SHASHIKANT SAWANT, Shyam Laxman Pedamkar, Shweta Shyam Pedamkar, Chandrakant Babu Mohite on 16.10.2017 at 2ND FLOOR, 231, SCINDIA HOUSE, BALLARD ESTATE, MUMBAI Ans. Yes Sir I confirm that I have seen the statement recorded on oath u/s 131 of PRASHANT SHASHIKANT SAWANT, Shyam Laxman Pedamkar, Shweta Shyam Pedamkar, Chandrakant Babu Mohite on 16.10.2017 at 2ND FLOOR, 231, SCINDIA HOUSE, BALLARD ESTATE, MUMBAI Q.16 Please confirm if you agree with the statement recorded on oath u/s 131 of PRASHANT SHASHIKANT SAWANT, Shyam Laxman Pedamkar, Shweta Shyam Pedamkar, Chandrakant Babu Mohite on 15.10.2017 at 2ND FLOOR, 231, SCINDIA HOUSE, BALLARD ESTATE, MUM Ans. Sir, I agree that whatever has been recorded in the above mentioned statements is true. Q.17 Please tell me why you have used the names of PRASHANT SHASHIKANT SAWANT, Shyam Laxman Pedamkar, Shweta Shgam Pedamkar, Chandrakant Babu Mohite ITA No. who told me to provide my details like PAN card copy, Address proof, and signed various documents as suggested by Shri G K Agrawal. All the activities of these companies are controlled by Shri Q.13 From the trading transaction records of VRP Financial services Pvt. Ltd, Rupak Developers Pvt Ltd, ROMY REALTY PRIVATE LIMITED it is seen that various share transactions are made. Please furnish the source of investment and transaction details in brief? Ans. Sir I am not aware of any of the activities of the abovementioned companies. All activities are controlled by Shri GK Q.14 Please tell me who used to file the return of income of VRP Financial services Pvt. Ltd, Rupak Developers Pvt Ltd, ROMY REALTY PRIVATE LIMITED. Ans. Sir, Shri GK Agrawal used to file the return of income of all the above mentioned companies. I am showing you the statement recorded on oath u/s 131 of PRASHANT SHASHIKANT SAWANT, Shyam Laxman Pedamkar, Shweta Shyam Pedamkar, Chandrakant Babu Mohite on 16.10.2017 at 2ND FLOOR, 231, SCINDIA HOUSE, BALLARD ESTATE, MUMBAI-400038. Please confirm the Ans. Yes Sir I confirm that I have seen the statement recorded on oath u/s 131 of PRASHANT SHASHIKANT SAWANT, Shyam Laxman Pedamkar, Shweta Shyam Pedamkar, Chandrakant Babu Mohite on 16.10.2017 at 2ND FLOOR, 231, SCINDIA HOUSE, BALLARD ESTATE, MUMBAI-400038. Q.16 Please confirm if you agree with the statement recorded on oath u/s 131 of PRASHANT SHASHIKANT SAWANT, Shyam Laxman Pedamkar, Shweta Shyam Pedamkar, Chandrakant Babu Mohite on 15.10.2017 at 2ND FLOOR, 231, SCINDIA HOUSE, BALLARD ESTATE, MUMBAI-400038. Ans. Sir, I agree that whatever has been recorded in the above mentioned statements is true. Q.17 Please tell me why you have used the names of PRASHANT SHASHIKANT SAWANT, Shyam Laxman Pedamkar, Shweta Shgam Pedamkar, Chandrakant Babu Mohite ITA No. 3725/Mum/2025 14 Santosh Vimlesh Mehta who told me to provide my details like PAN card copy, Address ious documents as suggested by Shri G K Agrawal. All the activities of these companies are controlled by Shri Q.13 From the trading transaction records of VRP Financial services Pvt. Ltd, Rupak Developers Pvt Ltd, ROMY REALTY t is seen that various share transactions are made. Please furnish the source of investment and Ans. Sir I am not aware of any of the activities of the abovementioned companies. All activities are controlled by Shri GK Q.14 Please tell me who used to file the return of income of VRP Financial services Pvt. Ltd, Rupak Developers Pvt Ltd, Ans. Sir, Shri GK Agrawal used to file the return of income of all the I am showing you the statement recorded on oath u/s 131 of PRASHANT SHASHIKANT SAWANT, Shyam Laxman Pedamkar, Shweta Shyam Pedamkar, Chandrakant Babu Mohite on 16.10.2017 at 2ND FLOOR, 231, SCINDIA HOUSE, 400038. Please confirm the same. Ans. Yes Sir I confirm that I have seen the statement recorded on oath u/s 131 of PRASHANT SHASHIKANT SAWANT, Shyam Laxman Pedamkar, Shweta Shyam Pedamkar, Chandrakant Babu Mohite on 16.10.2017 at 2ND FLOOR, 231, SCINDIA HOUSE, BALLARD Q.16 Please confirm if you agree with the statement recorded on oath u/s 131 of PRASHANT SHASHIKANT SAWANT, Shyam Laxman Pedamkar, Shweta Shyam Pedamkar, Chandrakant Babu Mohite on 15.10.2017 at 2ND FLOOR, 231, SCINDIA Ans. Sir, I agree that whatever has been recorded in the above Q.17 Please tell me why you have used the names of PRASHANT SHASHIKANT SAWANT, Shyam Laxman Pedamkar, Shweta Shgam Pedamkar, Chandrakant Babu Mohite by Printed from counselvise.com creating bank accounts, DEMAT gecount and done share transactions in their name. Ans. Sir, I was approached by Shri GK Agrawal who told me to arrange few persons whose bank and DEMAT account can be used for share transaction. Shri GK Agrawal promised t 2,500 every month for each such person who provides their details. Out of this Rs. 2,500 I used to retain Rs.500 with me and give Rs. 2000 to each such person. Q.18 Please provide me list of persons whose details you have collected for conduc Ans. Sir, the following are the list of persons whose details like PAN, Address proof I have collected to conduct share transaction. SL No Name 1 Yogeeta Kadam 2 Tisha Rane 3 Chandrakant BabuMohite 4 Sandesh Pawar 5 KashiramKadam 6 Shyam Pedamkar 7 Shweta Pedamkar 8 Ghanshyam Kachhawa 9 Bhawarpuri Goswami 10 Sandesh Mhabdi 11 Rajesh Dambre 12 Reshma Dambre 13 Prashant Sawant 14 Mangesh Dhotre 15 MansiDhotre 16 Himmat Bhatt 17 Tushar Rane 18 Sharwan Kumar Agarwal Further, once gain statement of Pradeep Dhanuka sub operator of Banas) has been recorded on oath in conformity with the arrangement of the scheme of providing Bogus LTCO, STCL or Trading loss using the scrip of Banas Finance Ltd.  Statement of Pradeep Dhanuka (Exit Provider and sub of Banas) director of VRP Financial Services Pvt Limited, Rupak Developers Pvt Ltd and Romy Realty Pvt ltd was recorded u/s 131 of the IT Act, 1961 10.01.2019. ITA No. creating bank accounts, DEMAT gecount and done share transactions in their name. Ans. Sir, I was approached by Shri GK Agrawal who told me to arrange few persons whose bank and DEMAT account can be used for share transaction. Shri GK Agrawal promised to pay me Rs. 2,500 every month for each such person who provides their details. Out of this Rs. 2,500 I used to retain Rs.500 with me and give Rs. 2000 to each such person. Q.18 Please provide me list of persons whose details you have collected for conducting share transaction. Ans. Sir, the following are the list of persons whose details like PAN, have collected to conduct share transaction. Name PAN Yogeeta Kadam AHUPK9485E Tisha Rane AHRPK8922D Chandrakant BabuMohite ΑΝΚΡΜ2741H Sandesh Pawar AXGPP3868C KashiramKadam AHUPK9461E Shyam Pedamkar AGGPP8468 Shweta Pedamkar BGZPP3221L Ghanshyam Kachhawa ARYPK8621 Bhawarpuri Goswami AJCPG3474B Sandesh Mhabdi AMZPM1605 Rajesh Dambre AHAPD8240L Reshma Dambre ARNPD4171D Prashant Sawant APMPS4035A Mangesh Dhotre AJPPD8297E MansiDhotre BFZPQ6082A Himmat Bhatt AGAPB6742 Tushar Rane AJCPR9314H Sharwan Kumar Agarwal ΑΝΕΡΑ8313M Further, once gain statement of Pradeep Dhanuka (Exit provider and sub operator of Banas) has been recorded on oath in conformity with the arrangement of the scheme of providing Bogus LTCO, STCL or Trading loss using the scrip of Banas Finance Ltd. Pradeep Dhanuka (Exit Provider and sub director of VRP Financial Services Pvt Limited, Rupak Developers Pvt Ltd and Romy Realty Pvt ltd was recorded u/s 131 of the IT Act, 1961 10.01.2019. ITA No. 3725/Mum/2025 15 Santosh Vimlesh Mehta creating bank accounts, DEMAT gecount and done share Ans. Sir, I was approached by Shri GK Agrawal who told me to arrange few persons whose bank and DEMAT account can be used o pay me Rs. 2,500 every month for each such person who provides their details. Out of this Rs. 2,500 I used to retain Rs.500 with me and give Rs. Q.18 Please provide me list of persons whose details you have Ans. Sir, the following are the list of persons whose details like PAN, have collected to conduct share transaction. AHUPK9485E AHRPK8922D ΑΝΚΡΜ2741H AXGPP3868C AHUPK9461E AGGPP8468F BGZPP3221L ARYPK8621Q AJCPG3474B AMZPM1605Q AHAPD8240L ARNPD4171D APMPS4035A AJPPD8297E BFZPQ6082A AGAPB6742Q AJCPR9314H ΑΝΕΡΑ8313M (Exit provider and sub operator of Banas) has been recorded on oath in conformity with the arrangement of the scheme of providing Bogus LTCO, STCL or Pradeep Dhanuka (Exit Provider and sub Operator director of VRP Financial Services Pvt Limited, Rupak Developers Pvt Ltd and Romy Realty Pvt ltd was recorded u/s 131 of Printed from counselvise.com Q.7 Please state the list of companies/firms in which you or your family members are/w Ans. Sir, I and my wife were directors in companies as below. M/s VRP Financial services Pvt Ltd directors in this company, M/s Rupak Developers Pvt Ltd M/s ROMY REALTY PR company. Q.8 Please provide details of business activities of the companies, as mentioned by you above, in. which you were director. Ars Sir, I am unaware of the business activities of M/s VRP Financial services Q.9 Please state how come you were not aware of business activities of the companies in which you were a director. Ans. Sir, I was just a dummy director in the companies mentioned above. I was approached by provide details such as PAN card copy, address proof etc. I used to just sign documents as suggested/instructed by Shri G K Agrawal. All the activities of these companies were controlled by Shri G K Agrawal Q.10 Please provide contact address and phone number of Shri GK Agrawal Ans. Sir, Office address of Shri G K Agrawal is E New Link Road, Andheri West, Mumbai His mobile number is 9930522633. Q.11 Please state how do you know Shri G Ans. Sir, I know Shri G K Agrawal since last many years. I used to work under him at M/s Shreeji Analytical Lab Limited. Q.12 I am showing you the statement, recorded on oath u/s 131 of Income Tax Act, 1961, of PRASHANT SHASHIKANT SAWANT, Shyam Laxman Pedamk Pedamkar, ChandrakantBabuMohite on 16.10.2017 at 2ND ITA No. Q.7 Please state the list of companies/firms in which you or your family members are/were directors/partners. Ans. Sir, I and my wife were directors in companies as below. M/s VRP Financial services Pvt Ltd-both me and my wife were directors in this company, M/s Rupak Developers Pvt Ltd-I was director in this company. M/s ROMY REALTY PRIVATE LIMITED- my wife was director in this Q.8 Please provide details of business activities of the companies, as mentioned by you above, in. which you were Ars Sir, I am unaware of the business activities of M/s VRP s Pvt ltd and M/s Rupak Developers Put Ltd. Q.9 Please state how come you were not aware of business activities of the companies in which you were a director. Ans. Sir, I was just a dummy director in the companies mentioned above. I was approached by Shri G K Agrawal who told me to provide details such as PAN card copy, address proof etc. I used to just sign documents as suggested/instructed by Shri G K Agrawal. All the activities of these companies were controlled by Shri G K provide contact address and phone number of Shri GK Agrawal Ans. Sir, Office address of Shri G K Agrawal is E-109, Crystal Plaza, New Link Road, Andheri West, Mumbai His mobile number is Q.11 Please state how do you know Shri G K Agrawal . Sir, I know Shri G K Agrawal since last many years. I used to work under him at M/s Shreeji Analytical Lab Limited. Q.12 I am showing you the statement, recorded on oath u/s 131 of Income Tax Act, 1961, of PRASHANT SHASHIKANT SAWANT, Shyam Laxman Pedamkar, Shweta Shyam Pedamkar, ChandrakantBabuMohite on 16.10.2017 at 2ND ITA No. 3725/Mum/2025 16 Santosh Vimlesh Mehta Q.7 Please state the list of companies/firms in which you or ere directors/partners. Ans. Sir, I and my wife were directors in companies as below. both me and my wife were I was director in this company. my wife was director in this Q.8 Please provide details of business activities of the companies, as mentioned by you above, in. which you were Ars Sir, I am unaware of the business activities of M/s VRP ltd and M/s Rupak Developers Put Ltd. Q.9 Please state how come you were not aware of business activities of the companies in which you were a director. Ans. Sir, I was just a dummy director in the companies mentioned Shri G K Agrawal who told me to provide details such as PAN card copy, address proof etc. I used to just sign documents as suggested/instructed by Shri G K Agrawal. All the activities of these companies were controlled by Shri G K provide contact address and phone number of 109, Crystal Plaza, New Link Road, Andheri West, Mumbai His mobile number is K Agrawal . Sir, I know Shri G K Agrawal since last many years. I used to Q.12 I am showing you the statement, recorded on oath u/s 131 of Income Tax Act, 1961, of PRASHANT SHASHIKANT ar, Shweta Shyam Pedamkar, ChandrakantBabuMohite on 16.10.2017 at 2ND Printed from counselvise.com FLOOR, 231, SCINDIA HOUSE, BALLARD ESTATE, MUMBAI 400038. Please comment. Ans. Sir I agree with whatever has been stated by PRASHANT SHASHIKANT SAWANT, Shyam Laxonan Pedamkar, Shweta S Pedamkar and Chandrakant Babu Mohite in their statements recorded on oath u/s 131 of Income Tax Act, 1961, on 16.10.2017 at 2ND FLOOR, 231, SCINDIA HOUSE, BALLARD ESTATE, MUMBAF 400038. All share transactions in name of these people were done by me on instructions of Mr GK Agrawal Sometimes, the transactions were done by Mr GK Agrawal also. Q.13 Please state why you have used the names of PRASHANT SHASHIKANT SAWANT, Shyam Laxman Pedamkar, Shweta Shyam Pedamkar and Chandrakant Babu Mohite to create bank /demat accounts for the purpose of share transactions. Ans. Sir, I was approached by Shri G K Agrawal who told me to arrange few persons whose bank and DEMAT account could be used for share transactions. Shri GK Agrawal promised to pay me Rs. 3,000 (in cash) every month for each such person who provided his/her details. Out of this Rs. 3,000 I used to retain Rs. 1,000 with me and give Rs. 2000/ Q.14 Please state the name of persons whose details you have collected for conducting sh above Ans. Sir, following are the name of the persons whose details like PAN, address proof, signature etc. were misused to conduct share transactions: SL No Name 1 Yogeeta Kadam 2 Tisha Rane 3 Chandrakant BabuMohite 4 Sandesh Pawar 5 KashiramKadam 6 Shyam Pedamkar 7 Shweta Pedamkar 8 Ghanshyam Kachhawa 9 Bhawarpuri Goswami 10 Sandesh Mhabdi 11 Rajesh 12 Reshma Dambre 13 Prashant Sawant ITA No. FLOOR, 231, SCINDIA HOUSE, BALLARD ESTATE, MUMBAI 400038. Please comment. Ans. Sir I agree with whatever has been stated by PRASHANT SHASHIKANT SAWANT, Shyam Laxonan Pedamkar, Shweta S Pedamkar and Chandrakant Babu Mohite in their statements recorded on oath u/s 131 of Income Tax Act, 1961, on 16.10.2017 at 2ND FLOOR, 231, SCINDIA HOUSE, BALLARD ESTATE, MUMBAF 400038. All share transactions in name of these people were done instructions of Mr GK Agrawal Sometimes, the transactions were done by Mr GK Agrawal also. Q.13 Please state why you have used the names of PRASHANT SHASHIKANT SAWANT, Shyam Laxman Pedamkar, Shweta Shyam Pedamkar and Chandrakant Babu Mohite to create k /demat accounts for the purpose of share transactions. Ans. Sir, I was approached by Shri G K Agrawal who told me to arrange few persons whose bank and DEMAT account could be used for share transactions. Shri GK Agrawal promised to pay me Rs. cash) every month for each such person who provided his/her details. Out of this Rs. 3,000 I used to retain Rs. 1,000 with me and give Rs. 2000/- to each such person. Q.14 Please state the name of persons whose details you have collected for conducting share transaction as mentioned Ans. Sir, following are the name of the persons whose details like PAN, address proof, signature etc. were misused to conduct share Name PAN Yogeeta Kadam AHUPK9485E Tisha Rane AHRPK8922D Chandrakant BabuMohite ΑΝΚΡΜ2741H Sandesh Pawar AXGPP3868C KashiramKadam AHUPK9461E Shyam Pedamkar AGGPP8468 Shweta Pedamkar BGZPP3221L Ghanshyam Kachhawa ARYPK8621 Bhawarpuri Goswami AJCPG3474B Sandesh Mhabdi AMZPM1605 Rajesh Dambre AHAPD8240L Reshma Dambre ARNPD4171D Prashant Sawant APMPS4035A ITA No. 3725/Mum/2025 17 Santosh Vimlesh Mehta FLOOR, 231, SCINDIA HOUSE, BALLARD ESTATE, MUMBAI- Ans. Sir I agree with whatever has been stated by PRASHANT SHASHIKANT SAWANT, Shyam Laxonan Pedamkar, Shweta Shyam Pedamkar and Chandrakant Babu Mohite in their statements recorded on oath u/s 131 of Income Tax Act, 1961, on 16.10.2017 at 2ND FLOOR, 231, SCINDIA HOUSE, BALLARD ESTATE, MUMBAF 400038. All share transactions in name of these people were done instructions of Mr GK Agrawal Sometimes, the transactions Q.13 Please state why you have used the names of PRASHANT SHASHIKANT SAWANT, Shyam Laxman Pedamkar, Shweta Shyam Pedamkar and Chandrakant Babu Mohite to create k /demat accounts for the purpose of share transactions. Ans. Sir, I was approached by Shri G K Agrawal who told me to arrange few persons whose bank and DEMAT account could be used for share transactions. Shri GK Agrawal promised to pay me Rs. cash) every month for each such person who provided his/her details. Out of this Rs. 3,000 I used to retain Rs. 1,000 with Q.14 Please state the name of persons whose details you have are transaction as mentioned Ans. Sir, following are the name of the persons whose details like PAN, address proof, signature etc. were misused to conduct share AHUPK9485E AHRPK8922D ΑΝΚΡΜ2741H AXGPP3868C AHUPK9461E AGGPP8468F BGZPP3221L ARYPK8621Q AJCPG3474B AMZPM1605Q AHAPD8240L ARNPD4171D APMPS4035A Printed from counselvise.com 14 Mangesh Dhotre 15 MansiDhotre 16 Himmat Bhatt 17 Tushar Rane 18 Sharwan Kumar Agarwal Q.15 Please state what Agrawal by using the bank/demat accounts of various persons as mentioned by you above. Ans. Sir, Shri G K Agrawal used to instruct me on phone to purchase and sell shares in the name of persons as mentioned above. Q.16 Please state the name of shares which you purchased/sold, on instruction of Mr GK Agrawal, in the name of various persons as mentioned above. Ans. Sir I have done share transaction in various scrips in the names of persons as mentioned above. One scr now is M/s Banas Finance Ltd. Q.17 Please state why did you follow the instruction of Shri GK Agrawal and did share transactions in names of various persons as mentioned above. Ans. Sir my financial condition was weak. In such a Mr G K Agrawal promised to pay me Rs. 3,000 per month per person for opening of bank/demat accounts for share transactions, I accepted his proposal and started working for him. Q.18 Please state how funds were arranged to indulge in share transactions in name of various persons as mentioned above. Ans. Sir, Shri G K Agrawal used to arrange funds. He can only answer in this regard.  Tusar Ramchandra Rane accommodation entr Limited was also recorded where he was no idea that he was director of Banas Finance Limited. The relevant portion of the statement is reproduced below for ready reference: Q.10 Please name all the Companies/Firms/Concerns in which you are a Director/Partner/Proprietor? Ans, Sir, I do No know about this, ITA No. Mangesh Dhotre AJPPD8297E MansiDhotre BFZPQ6082A Himmat Bhatt AGAPB6742 Tushar Rane AJCPR9314H Sharwan Kumar Agarwal ΑΝΕΡΑ8313M Q.15 Please state what business activity was done by Shri GK Agrawal by using the bank/demat accounts of various persons as mentioned by you above. Ans. Sir, Shri G K Agrawal used to instruct me on phone to purchase and sell shares in the name of persons as mentioned above. Q.16 Please state the name of shares which you purchased/sold, on instruction of Mr GK Agrawal, in the name of various persons as mentioned above. Ans. Sir I have done share transaction in various scrips in the names of persons as mentioned above. One scrip which I remember right now is M/s Banas Finance Ltd. Q.17 Please state why did you follow the instruction of Shri GK Agrawal and did share transactions in names of various persons as mentioned above. Ans. Sir my financial condition was weak. In such a situation, when Mr G K Agrawal promised to pay me Rs. 3,000 per month per person bank/demat accounts for share transactions, I accepted his proposal and started working for him. Q.18 Please state how funds were arranged to indulge in transactions in name of various persons as mentioned Ans. Sir, Shri G K Agrawal used to arrange funds. He can only answer in this regard. Tusar Ramchandra Rane (Past director of Banas Finance when accommodation entry given by selling scrip) of Ba Limited was also recorded where he was no idea that he was director of Banas Finance Limited. The relevant portion of the statement is reproduced below for ready reference: Q.10 Please name all the Companies/Firms/Concerns in which Director/Partner/Proprietor? Ans, Sir, I do No know about this, ITA No. 3725/Mum/2025 18 Santosh Vimlesh Mehta AJPPD8297E BFZPQ6082A AGAPB6742Q AJCPR9314H ΑΝΕΡΑ8313M business activity was done by Shri GK Agrawal by using the bank/demat accounts of various persons Ans. Sir, Shri G K Agrawal used to instruct me on phone to purchase and sell shares in the name of persons as mentioned above. Q.16 Please state the name of shares which you purchased/sold, on instruction of Mr GK Agrawal, in the name Ans. Sir I have done share transaction in various scrips in the names ip which I remember right Q.17 Please state why did you follow the instruction of Shri GK Agrawal and did share transactions in names of various situation, when Mr G K Agrawal promised to pay me Rs. 3,000 per month per person bank/demat accounts for share transactions, I Q.18 Please state how funds were arranged to indulge in transactions in name of various persons as mentioned Ans. Sir, Shri G K Agrawal used to arrange funds. He can only (Past director of Banas Finance when y given by selling scrip) of Banas Finarice Limited was also recorded where he was no idea that he was director of Banas Finance Limited. The relevant portion of the Q.10 Please name all the Companies/Firms/Concerns in which Printed from counselvise.com Q.11 As per details form MCA it is seen that you were director of M/s Banas Finance Limited. Please comment on the same. Ans. Sir, I do not know anything about this, I had provided copy of my PAN card, signed some forms and my address proof, signed blank cheque to Shri Pradeep Dhanuka, who might have me Director of this company and also filed my return of Income. During the search action statement of Tanu Agarwal the promoters and directors of the Banas Finance was taken on 10.01.2019. The relevant portion of the statement is reproduced as below: > Statement of Tanu Agrawal recorded on oath during the search action on 10.01.2019 Q.10 Please provide details of bu companies an mentioned by you above, in which you are director. Ans. Sir, above mentioned entities are in the business of dealing in commodities, securities and financial services. Q.12 From data available with public domain it i the share price of BFL (Face Value 10) has risen from below Rs. 10 in Feb 2011 to above Rs.550 in January 2012 and then to Rs. 709.5 in December 2013. In this regard Please explain the reason for astronomical rise in the price of the scrip BFL 14. Please substantiate your reply with documentary evidence which would bring forth the financial health/prospects of the company. ITA No. Q.11 As per details form MCA it is seen that you were director of M/s Banas Finance Limited. Please comment on the same. Ans. Sir, I do not know anything about this, I had provided copy of my PAN card, signed some forms and my address proof, signed blank cheque to Shri Pradeep Dhanuka, who might have me Director of this company and also filed my return of Income. During the search action statement of Girraf Kishor Agrawal the promoters and directors of the Banas Finance was taken on 10.01.2019. The relevant portion of the statement is reproduced as below: > Statement of Tanu Agrawal recorded on oath during the search action on 10.01.2019 Q.10 Please provide details of business activities of the companies an mentioned by you above, in which you are Ans. Sir, above mentioned entities are in the business of dealing in commodities, securities and financial services. Q.12 From data available with public domain it i the share price of BFL (Face Value 10) has risen from below Rs. 10 in Feb 2011 to above Rs.550 in January 2012 and then to Rs. 709.5 in December 2013. In this regard Please explain the reason for astronomical rise in the price of the scrip BFL during the F.Y. 2012 14. Please substantiate your reply with documentary evidence which would bring forth the financial health/prospects of the ITA No. 3725/Mum/2025 19 Santosh Vimlesh Mehta Q.11 As per details form MCA it is seen that you were director of M/s Banas Finance Limited. Please comment on the same. Ans. Sir, I do not know anything about this, I had provided copy of my PAN card, signed some forms and my address proof, signed blank cheque to Shri Pradeep Dhanuka, who might have me Director Girraf Kishor Agrawal and the promoters and directors of the Banas Finance was taken on 10.01.2019. The relevant portion of the statement is > Statement of Tanu Agrawal recorded on oath during the search siness activities of the companies an mentioned by you above, in which you are Ans. Sir, above mentioned entities are in the business of dealing in Q.12 From data available with public domain it is seen that the share price of BFL (Face Value 10) has risen from below Rs. 10 in Feb 2011 to above Rs.550 in January 2012 and then In this regard Please explain the reason for astronomical rise during the F.Y. 2012-13 to 2013- 14. Please substantiate your reply with documentary evidence which would bring forth the financial health/prospects of the Printed from counselvise.com Ans: Sir, I don't know anything about it. Q.13 Please state how come you were not astronomical share price fluctuation of company in which you are director. Ans: Sir, I would like to say that I was made director in BFL and other entities by my husband Shri Girraj Kishor Agrawal and all affairs related to company are looked aft regard he is right person who can answer your queries.  Statement of Girraj Kishor Agrawal recorded on oath during the search action on 10.01.2019 Q.13 From data available with public domain it is seen that the share price of BFL Rs. 10 in Feb 2011 to above Rs.550 in January 2012 and then to Rs. 709.5 in December 2013. In this regard please explain the reason for astronomical rise in the price of the scrip BFL during the F.Y. 2012 reply with documentary evidence which would bring forth the financial health/prospects of the company. ITA No. Ans: Sir, I don't know anything about it. Q.13 Please state how come you were not astronomical share price fluctuation of company in which you are director. Ans: Sir, I would like to say that I was made director in BFL and other entities by my husband Shri Girraj Kishor Agrawal and all affairs related to company are looked after by my husband. In this regard he is right person who can answer your queries. Statement of Girraj Kishor Agrawal recorded on oath during the search action on 10.01.2019 Q.13 From data available with public domain it is seen that the share price of BFL (Face Value 10) has risen from below Rs. 10 in Feb 2011 to above Rs.550 in January 2012 and then to Rs. 709.5 in December 2013. In this regard please explain the reason for astronomical rise in the price of the scrip BFL during the F.Y. 2012-13 to 2013-14. Please substantiate your reply with documentary evidence which would bring forth the financial health/prospects of the company. ITA No. 3725/Mum/2025 20 Santosh Vimlesh Mehta Q.13 Please state how come you were not aware of astronomical share price fluctuation of company in which Ans: Sir, I would like to say that I was made director in BFL and other entities by my husband Shri Girraj Kishor Agrawal and all er by my husband. In this regard he is right person who can answer your queries. Statement of Girraj Kishor Agrawal recorded on oath during the Q.13 From data available with public domain it is seen that (Face Value 10) has risen from below Rs. 10 in Feb 2011 to above Rs.550 in January 2012 and then to Rs. 709.5 in December 2013. In this regard please explain the reason for astronomical rise in the price of the scrip BFL . Please substantiate your reply with documentary evidence which would bring forth the Printed from counselvise.com Ans: Sir, I would not know the specific reason for rise and fall in the price of the Share of BFL Q.14 Please explain why during 2012-13 and 2013 condition/prospects of the company. Ans. Sir, as stated earlier! don't know the specific reason for rise and fall of share prices of BFL Q.15 On perusal of trade the entities which are purchasing the scrip of BFL (Exit Providers) are persons who do not have any financial credentials. Below is the list of some of such persons along with their income and amount invested in BFL. S.N. Name 1 Chandrakant Mohite 2 Prashant Sawant ITA No. Ans: Sir, I would not know the specific reason for rise and fall in the price of the Share of BFL Q.14 Please explain why the scrip price of BFL has risen 13 and 2013-14 without any matching financial condition/prospects of the company. Ans. Sir, as stated earlier! don't know the specific reason for rise and fall of share prices of BFL Q.15 On perusal of trade data of BFL it is seen that most of the entities which are purchasing the scrip of BFL (Exit Providers) are persons who do not have any financial credentials. Below is the list of some of such persons along with their income and amount invested in BFL. Name PAN Amount Invested Chandrakant Mohite AΝΚΡΜ274Η 19.4 Cr Prashant Sawant APMPS403A 5.5 ITA No. 3725/Mum/2025 21 Santosh Vimlesh Mehta Ans: Sir, I would not know the specific reason for rise and fall in the the scrip price of BFL has risen 14 without any matching financial Ans. Sir, as stated earlier! don't know the specific reason for rise data of BFL it is seen that most of the entities which are purchasing the scrip of BFL (Exit Providers) are persons who do not have any financial credentials. Below is the list of some of such persons along Comments Night Watchman by Profession Person is of Low means Printed from counselvise.com 3 Shaweta Padamakar 4 Shyam Padamkar Lakshman 5 Tushar Rane 6 Rupak Developers Private Limited 7 Romy Realty Private Limited 8 VRP Financial Put Ltd Now I am showing you the statement recorded on oath u/s 131 on 16/10/2017 of Shri Chandrakant Mohite, Prashant Sawant, Shaweta Padamakar, Shyam Lakshman Padamkar, Tushar Rane Please offer your comments as to how entities without any creditworthiness are able to invest huge finds by way of providing exit to various ben Ans. Sir, I confirm that I have been shown the statements of Shri Chandrakant on Mohite, Prashant Sawant, Shaweta Padamakar, Shyam Lakshman Padamkar, Tushar Rane but I have no idea why are they saying this. I just want to say please produce which shows any wrong doing from my side. Q.16 Statement on oath u/s 131 of the IT Act on 10.01.2019 of directors of few Exit Providers in the scrip M/s BFL were ITA No. Shaweta Padamakar BGZPP3221L 3.7.Cr Shyam Padamkar Lakshman AGGPP8468F 4.4 Cr Tushar Rane AJCPR9314H Rupak Developers Private Limited 14.09 Cr Romy Realty Private Limited 10.3 Cr Financial Put 13.7Cr Now I am showing you the statement recorded on oath u/s 16/10/2017 of Shri Chandrakant Mohite, Prashant Sawant, Shaweta Padamakar, Shyam Lakshman Padamkar, Tushar Rane Please offer your comments as to how entities without any creditworthiness are able to invest huge finds by way of providing exit to various beneficiaries. Ans. Sir, I confirm that I have been shown the statements of Shri Chandrakant on Mohite, Prashant Sawant, Shaweta Padamakar, Shyam Lakshman Padamkar, Tushar Rane but I have no idea why are they saying this. I just want to say please produce which shows any wrong doing from my side. Statement on oath u/s 131 of the IT Act on 10.01.2019 of directors of few Exit Providers in the scrip M/s BFL were ITA No. 3725/Mum/2025 22 Santosh Vimlesh Mehta living in chawl Person odd jobs and living in 1 RK Person does odd jobs and living in 1 RK Taxi driver and earn income 1 to 1.5 Lac per annum the The entity does not exist at registered address The entity does not exist at the registered address The entity does not exist at the registered address Now I am showing you the statement recorded on oath u/s 16/10/2017 of Shri Chandrakant Mohite, Prashant Sawant, Shaweta Padamakar, Shyam Lakshman Padamkar, Tushar Rane Please offer your comments as to how entities without any creditworthiness are able to invest huge finds by Ans. Sir, I confirm that I have been shown the statements of Shri Chandrakant on Mohite, Prashant Sawant, Shaweta Padamakar, Shyam Lakshman Padamkar, Tushar Rane but I have no idea why are they saying this. I just want to say please produce any evidence Statement on oath u/s 131 of the IT Act on 10.01.2019 of directors of few Exit Providers in the scrip M/s BFL were Printed from counselvise.com recorded. Shri Pradeep Dhanuka is director of such Bogus Exit Provider companies recorded on oath u/s 131 on 10/01/2019 of Bhrt Pradeep Dhanuka, Director of Rupak Developers Private Limited, Romy Realty Private Limited, V R P Financial Pvt Ltd, please go through the same and confirm that you have un contents of the same. Ans: Yes Sir, I have read the contents but I am not concerned with that. Q.17 In the statement of Shri Pradeep Dhanuka shown to you above in reply to question no: 8 he has mentioned as below. Q.8 Please provide details companies as mentioned by you above, in which you are director. Ans. Sir, I am unaware of the activities of VRP Financial services Pvt. Ltd, Rupak Developers Pvt Ltd, ROMY REALTY PRIVATE LIMITED. Q.9 Please state how come y activities of the companies in which you are director Ans: Sir, I was just a dummy directors in the companies mentioned abovel was approached by Shri GK Agrawal who told me to provide my details such as PAN card copy, Address sign documents as suggested/instructed by Shri G. K. Agrawal. All the activities of these companies were controlled by Shri G.K. Agrawal. Please offer your comment Ans: Sir, I have no idea why he is saying like this. Please ask produce evidences of my involvement Q.19 It is seen that the company BFL has issued preferential shares at several occasions to many allottees. Please provide documentary evidence/details regarding the same. Ans. Sir, BFL issued preferential shar F.Y. 2012-13 (as per my memory) but at present I don't have any details with me. Q.20. Please provide copy of offer of invitation of preferential allotment of shares done on above two occasions. ITA No. recorded. Shri Pradeep Dhanuka is director of such Bogus Exit Provider companies. Now I am showing you the statement recorded on oath u/s 131 on 10/01/2019 of Bhrt Pradeep Dhanuka, Director of Rupak Developers Private Limited, Romy Realty Private Limited, V R P Financial Pvt Ltd, please go through the same and confirm that you have un contents of the same. Ans: Yes Sir, I have read the contents but I am not concerned with Q.17 In the statement of Shri Pradeep Dhanuka shown to you above in reply to question no: 8 he has mentioned as below. Q.8 Please provide details of business activities of the companies as mentioned by you above, in which you are Ans. Sir, I am unaware of the activities of VRP Financial services Pvt. Ltd, Rupak Developers Pvt Ltd, ROMY REALTY PRIVATE LIMITED. Q.9 Please state how come you were not aware of business activities of the companies in which you are director Ans: Sir, I was just a dummy directors in the companies mentioned abovel was approached by Shri GK Agrawal who told me to provide my details such as PAN card copy, Address proof etc. I used to just sign documents as suggested/instructed by Shri G. K. Agrawal. All the activities of these companies were controlled by Shri G.K. Please offer your comment Ans: Sir, I have no idea why he is saying like this. Please ask produce evidences of my involvement Q.19 It is seen that the company BFL has issued preferential shares at several occasions to many allottees. Please provide documentary evidence/details regarding the same. Ans. Sir, BFL issued preferential shares two times in F.Y 2010 13 (as per my memory) but at present I don't have any Q.20. Please provide copy of offer of invitation of preferential shares done on above two occasions. ITA No. 3725/Mum/2025 23 Santosh Vimlesh Mehta recorded. Shri Pradeep Dhanuka is director of such Bogus . Now I am showing you the statement recorded on oath u/s 131 on 10/01/2019 of Bhrt Pradeep Dhanuka, Director of Rupak Developers Private Limited, Romy Realty Private Limited, V R P Financial Pvt Ltd, please go through the same and confirm that you have understood the Ans: Yes Sir, I have read the contents but I am not concerned with Q.17 In the statement of Shri Pradeep Dhanuka shown to you above in reply to question no: 8 he has mentioned as below. of business activities of the companies as mentioned by you above, in which you are Ans. Sir, I am unaware of the activities of VRP Financial services Pvt. Ltd, Rupak Developers Pvt Ltd, ROMY REALTY PRIVATE LIMITED. ou were not aware of business activities of the companies in which you are director Ans: Sir, I was just a dummy directors in the companies mentioned abovel was approached by Shri GK Agrawal who told me to provide proof etc. I used to just sign documents as suggested/instructed by Shri G. K. Agrawal. All the activities of these companies were controlled by Shri G.K. Ans: Sir, I have no idea why he is saying like this. Please ask him to Q.19 It is seen that the company BFL has issued preferential shares at several occasions to many allottees. Please provide documentary evidence/details regarding the same. es two times in F.Y 2010-11 & 13 (as per my memory) but at present I don't have any Q.20. Please provide copy of offer of invitation of preferential Printed from counselvise.com Ans. Sir, at present I don't Q. 21. Please provide copy of resolution of shareholder approving offer of Invitation for preferential allotment of shares done on two times. Ans. Sir, as stated earlier at present I don't have details with me. Q.22 Please provide preference allowtess. Ans. Sir, at present I don't have details with me. Q. 23 Please provide details of meeting held by directors of the company with the prospective preferential allotees documentary evidence Ans. Sir, at present I don't have details with me Q.24. Please provide Details of prospects/future project of the company which was presente convince them to invest in your company. Ans. Sir, at present I don't have details with me. Q. 25 Please provide the list of persons who attended the meeting. Ans. Sir, at present I don't have details with me. 7.13 Hence, it has been noticed that the whole process of preferential allotment was staged event in bogus LTCG plan with the operators and subscribe to the shares of penny stock for availing entry of bogus LTCG. The company Banas Finance has no financials and no future potential and the whole process of preferential allotment i was not able to substantiate and provide any logical explanation to support the astronomical rise in price of scrip. Further the director was not able to provide any documentary evidence to prove that a meeting between direc of equity shares was in fact conducted. Also the director was asked to provide details of content of the presentation which was presented to the prospective allottees which convinced them to invest in their company. To this question as well the director was not able to give a satisfactory explanation. Further, In the instant case Banas Finance ITA No. Ans. Sir, at present I don't have details with me. Q. 21. Please provide copy of resolution of shareholder approving offer of Invitation for preferential allotment of shares done on two times. Ans. Sir, as stated earlier at present I don't have details with me. Q.22 Please provide copy of offer letter issued to prospective preference allowtess. Ans. Sir, at present I don't have details with me. Q. 23 Please provide details of meeting held by directors of the company with the prospective preferential allotees documentary evidence regarding the same. Ans. Sir, at present I don't have details with me Q.24. Please provide Details of prospects/future project of the company which was presented to the preferential allottees convince them to invest in your company. ent I don't have details with me. Q. 25 Please provide the list of persons who attended the . Sir, at present I don't have details with me. 7.13 Hence, it has been noticed that the whole process of preferential allotment was staged event in which the beneficiaries of bogus LTCG plan with the operators and subscribe to the shares of penny stock for availing entry of bogus LTCG. The company Banas Finance has no financials and no future potential and the whole process of preferential allotment is a managed event. The director was not able to substantiate and provide any logical explanation to support the astronomical rise in price of scrip. Further the director was not able to provide any documentary evidence to prove that a meeting between directors of the company and prospective allottees of equity shares was in fact conducted. Also the director was asked to provide details of content of the presentation which was presented to the prospective allottees which convinced them to invest in their pany. To this question as well the director was not able to give a satisfactory explanation. Further, In the instant case Banas Finance ITA No. 3725/Mum/2025 24 Santosh Vimlesh Mehta Q. 21. Please provide copy of resolution of shareholder approving offer of Invitation for preferential allotment of Ans. Sir, as stated earlier at present I don't have details with me. copy of offer letter issued to prospective Q. 23 Please provide details of meeting held by directors of the company with the prospective preferential allotees Q.24. Please provide Details of prospects/future project of the d to the preferential allottees to Q. 25 Please provide the list of persons who attended the 7.13 Hence, it has been noticed that the whole process of which the beneficiaries of bogus LTCG plan with the operators and subscribe to the shares of penny stock for availing entry of bogus LTCG. The company Banas Finance has no financials and no future potential and the whole s a managed event. The director was not able to substantiate and provide any logical explanation to support the astronomical rise in price of scrip. Further the director was not able to provide any documentary evidence to prove that a tors of the company and prospective allottees of equity shares was in fact conducted. Also the director was asked to provide details of content of the presentation which was presented to the prospective allottees which convinced them to invest in their pany. To this question as well the director was not able to give a satisfactory explanation. Further, In the instant case Banas Finance Printed from counselvise.com Limited the Securities and Exchange of India (SEBI) passed an Penalty order dated 27 April 2018 in the shares and violation of the provisions of the Securities and Exchange Board of India Act 1992. The remarks of the A.O. of SEBI during investigation procedures are as under: \"M/s. Handful Investrade P. Ltd. (Noticce 1) had acquired more than capital; it was required to make disclosure to the company and the BSE under Regulation 7(1) of SAST Regulations 1997 and under Regulation 13(1) of PIT Regulations, 1992 by January 03, 2011. It was observed that Noticee 1 did not make disclosur exchange under Regulation 7(1) of SAST Regulations, 1997. It was also observed that Noticee 2. did not disclose to stock exchanges under Regulation 13(6) of PIT Regulation 1992. BFL failed to make the disclosures received from M/s. Handful I stock exchange. Therefore it was alleged that BFL (Notioce 2) violated Regulations 7(3), 8(3) of SAST Regulations, 1997 and Regulation 13(6) of SEBI (PIT) Regulations, 1992. Noticee 1 & 2 vide letters dated March 26, 2018 submitted th made the disclosures to BSE as require under Regulation 7(3), 8(3) of SAST Regulations, 1997 and Regulation 13(6) of PIT Regulations 1992 and the acknowledgement of the same from the BSE was submitted in support of their disclosure requirement. dated December 30, 2010 addressed to BSE, which had the acknowledgement seal of BSE dated December 30, 2010. Noticee 2 submitted copy of its letter dated January 2, 2011 addressed to BSE BSE dated December 30, 2010. I note that letter dated January 2, 2011 promoter director of BFL. I pursed the documents submitted by the Noticee 2 and note that there is apparent contradiction on the face of record. I note that copy of the letter dated January 2, 2011, addressed to BSE regarding disclosure was acknowledged by BSE on December 31, 2010. It is not possible to acknowledge the future dated document on prior date. This cl fabricated the document as an afterthought to create documentary evidence to demonstrate that they made submission within the prescribed timelines. the disclosures relate to same event and considering the apparent fabrication of documents, I have taken serious view of the manipulative intent of Noticees' to cover the wrong deeds and deliberately mislead me. Therefore, I do not give any credence to the evidences submitted by Noticees' and consider the evidence on record (confirmation by BSE) that no ITA No. Securities and Exchange of India (SEBI) passed an Penalty order dated 27 April 2018 for irregularity in the in the shares and violation of the provisions of the Securities and Exchange Board of India Act 1992. The remarks of the A.O. of SEBI during investigation procedures are as under: \"M/s. Handful Investrade P. Ltd. (Noticce 1) had acquired more than capital; it was required to make disclosure to the company and the BSE under Regulation 7(1) of SAST Regulations 1997 and under Regulation 13(1) of PIT Regulations, 1992 by January 03, 2011. It was observed that Noticee 1 did not make disclosure to the stock exchange under Regulation 7(1) of SAST Regulations, 1997. It was also observed that Noticee 2. did not disclose to stock exchanges under Regulation 13(6) of PIT Regulation 1992. BFL failed to make the disclosures received from M/s. Handful Investrade P. Ltd. to stock exchange. Therefore it was alleged that BFL (Notioce 2) violated Regulations 7(3), 8(3) of SAST Regulations, 1997 and Regulation 13(6) of SEBI (PIT) Regulations, 1992. Noticee 1 & 2 vide letters dated March 26, 2018 submitted th made the disclosures to BSE as require under Regulation 7(3), 8(3) of SAST Regulations, 1997 and Regulation 13(6) of PIT Regulations 1992 and the acknowledgement of the same from the BSE was submitted in support of their claim that they complied wi disclosure requirement. Noticee 1 submitted copy of its letter dated December 30, 2010 addressed to BSE, which had the acknowledgement seal of BSE dated December 30, 2010. Noticee 2 submitted copy of its letter dated January 2, 2011 addressed to BSE, which had the acknowledgement seal of BSE dated December 30, 2010. I note that letter dated January 2, 2011 was signed by Giraj Kishore Agrawal, promoter director of BFL. I pursed the documents submitted by the Noticee 2 and note that there is apparent ontradiction on the face of record. I note that copy of the letter dated January 2, 2011, addressed to BSE regarding disclosure was acknowledged by BSE on December 31, 2010. It is not possible to acknowledge the future dated document on prior date. This clearly establishes that Noticee 2 had fabricated the document as an afterthought to create documentary evidence to demonstrate that they made submission within the prescribed timelines. Given that both the disclosures relate to same event and considering the apparent fabrication of documents, I have taken serious view of the manipulative intent of Noticees' to cover the wrong deeds and deliberately mislead me. Therefore, I do not give credence to the evidences submitted by Noticees' and consider the evidence on record (confirmation by BSE) that no ITA No. 3725/Mum/2025 25 Santosh Vimlesh Mehta Securities and Exchange of India (SEBI) passed an for irregularity in the trading in the shares and violation of the provisions of the Securities and Exchange Board of India Act 1992. The remarks of the A.O. of SEBI during investigation procedures are as under: \"M/s. Handful Investrade P. Ltd. (Noticce 1) had acquired more than 5% of share capital; it was required to make disclosure to the company and the BSE under Regulation 7(1) of SAST Regulations 1997 and under Regulation 13(1) of PIT Regulations, 1992 by January 03, 2011. It was observed that Noticee 1 did not make disclosure to the stock exchange under Regulation 7(1) of SAST Regulations, 1997. It was also observed that Noticee 2. did not disclose to stock exchanges under Regulation 13(6) of PIT Regulation 1992. BFL failed to make nvestrade P. Ltd. to stock exchange. Therefore it was alleged that BFL (Notioce 2) violated Regulations 7(3), 8(3) of SAST Regulations, 1997 and Noticee 1 & 2 vide letters dated March 26, 2018 submitted that they made the disclosures to BSE as require under Regulation 7(3), 8(3) of SAST Regulations, 1997 and Regulation 13(6) of PIT Regulations 1992 and the acknowledgement of the same from the BSE was aim that they complied with the Noticee 1 submitted copy of its letter dated December 30, 2010 addressed to BSE, which had the acknowledgement seal of BSE dated December 30, 2010. Noticee 2 submitted copy of its letter dated January 2, 2011 , which had the acknowledgement seal of BSE dated December 30, 2010. I note that letter dated signed by Giraj Kishore Agrawal, promoter director of BFL. I pursed the documents submitted by the Noticee 2 and note that there is apparent ontradiction on the face of record. I note that copy of the letter dated January 2, 2011, addressed to BSE regarding disclosure was acknowledged by BSE on December 31, 2010. It is not possible to acknowledge the future dated document early establishes that Noticee 2 had fabricated the document as an afterthought to create documentary evidence to demonstrate that they made Given that both the disclosures relate to same event and considering the apparent fabrication of documents, I have taken serious view of the manipulative intent of Noticees' to cover the wrong deeds and deliberately mislead me. Therefore, I do not give credence to the evidences submitted by Noticees' and consider the evidence on record (confirmation by BSE) that no Printed from counselvise.com disclosures were made by Noticees as required and thus conclude Noticee 1 and 2 failed to make any disclosure to BSE I note that Noticee 1 pursuant to acquisition of 14, 50,000 shares through preferential allotment at the rate of Rs 20 each including premium of Rs 10 each. This information is material for investors and therefore should be promptly to investors. Further, Noticee did not seem to have any interest to follow up with BSE to ensure such material information was available in public domain. There are various modes of communication through which it could inform BSE. I note from the letter head of Noticees that they had fax number and email id. The responsibility of Noticees will not rest with mere submission of documents at BSE. Being listed company, it is also its responsibility to ensure prompt matter of Banas Finance Limited Page 15 of 43 wash of its responsibility by merely submissions documents at BSE. I also take note trading of Noticee 2 was suspended due to non listing agreement. In view of above, I conclude that Noticee 1 & under SAST Regulations 1997 and PIT Regulations 1992 respectively. Therefore I conclude that the allegation against M/s. Handful Investrade P. Ltd for violation of Regulation 7(1) of SAST Regulations, 1997 and against Noticee 2 for Regulations 7(3), 8(3) of SAST Regulations, 1997 and Regulation 13(6) of PIT Regulations, 1992 stand established.\" 5.20. As no satisfying logical explanation has been given by either the exit providers or the directors to justify that the trans were genuine without malicious intent and the same has been established in the order of the SEBI dated 27.04.2018, it is established that the scrip M/s Banas Finance Limited has been used to provide bogus Long Term Capital Gains to various beneficiaries.” 2.14 The Assessing Officer also took note of the findings of the Securities and Exchange Board of India (SEBI) in relation to the trading in the shares of M/s Banas Finance Ltd. and supplied said report to the assessee. It was observed that SEBI, after conduct ITA No. disclosures were made by Noticees as required and thus conclude Noticee 1 and 2 failed to make any disclosure to I note that Noticee 1 was included in the promoter category of BFL pursuant to acquisition of 14, 50,000 shares through preferential allotment at the rate of Rs 20 each including premium of Rs 10 each. This information is material for investors and therefore should be to investors. Further, Noticee did not seem to have any interest to follow up with BSE to ensure such material information was available in public domain. There are various modes of communication through which it could inform BSE. I note from the ad of Noticees that they had fax number and email id. The responsibility of Noticees will not rest with mere submission of documents at BSE. Being listed company, it is also its responsibility to ensure prompt disclosure and cannot Adjudication Order in th matter of Banas Finance Limited Page 15 of 43 wash of its responsibility by merely submissions documents at BSE. I also take note trading of Noticee 2 was suspended due to non- listing agreement. In view of above, I conclude that Noticee 1 & 2 failed to disclose under SAST Regulations 1997 and PIT Regulations 1992 respectively. Therefore I conclude that the allegation against M/s. Handful Investrade P. Ltd for violation of Regulation 7(1) of SAST Regulations, 1997 and against Noticee 2 for Regulations 7(3), 8(3) of SAST Regulations, 1997 and Regulation 13(6) of PIT Regulations, 1992 stand established.\" 5.20. As no satisfying logical explanation has been given by either the exit providers or the directors to justify that the trans were genuine without malicious intent and the same has been established in the order of the SEBI dated 27.04.2018, it is established that the scrip M/s Banas Finance Limited has been used to provide bogus Long Term Capital Gains to various The Assessing Officer also took note of the findings of the Securities and Exchange Board of India (SEBI) in relation to the trading in the shares of M/s Banas Finance Ltd. and supplied said report to the assessee. It was observed that SEBI, after conducting investigation in some cases involving ITA No. 3725/Mum/2025 26 Santosh Vimlesh Mehta disclosures were made by Noticees as required and thus conclude Noticee 1 and 2 failed to make any disclosure to was included in the promoter category of BFL pursuant to acquisition of 14, 50,000 shares through preferential allotment at the rate of Rs 20 each including premium of Rs 10 each. This information is material for investors and therefore should be to investors. Further, Noticee did not seem to have any interest to follow up with BSE to ensure such material information was available in public domain. There are various modes of communication through which it could inform BSE. I note from the ad of Noticees that they had fax number and email id. The responsibility of Noticees will not rest with mere submission of documents at BSE. Being listed company, it is also its responsibility disclosure and cannot Adjudication Order in the matter of Banas Finance Limited Page 15 of 43 wash of its responsibility by merely submissions documents at BSE. I also take -compliance of 2 failed to disclose under SAST Regulations 1997 and PIT Regulations 1992 respectively. Therefore I conclude that the allegation against M/s. Handful Investrade P. Ltd for violation of Regulation 7(1) of SAST Regulations, 1997 and against Noticee 2 for violation of Regulations 7(3), 8(3) of SAST Regulations, 1997 and Regulation 13(6) of PIT Regulations, 1992 stand established.\" 5.20. As no satisfying logical explanation has been given by either the exit providers or the directors to justify that the transactions were genuine without malicious intent and the same has been established in the order of the SEBI dated 27.04.2018, it is established that the scrip M/s Banas Finance Limited has been used to provide bogus Long Term Capital Gains to various The Assessing Officer also took note of the findings of the Securities and Exchange Board of India (SEBI) in relation to the trading in the shares of M/s Banas Finance Ltd. and supplied said report to the assessee. It was observed that ing investigation in some cases involving Printed from counselvise.com investors in the said scrip, found the allegations of price manipulation to be substantiated. 2.15 Having regard to the material gathered by the Investigation Wing, the statements of the alleged exit providers, the trading pattern observed on the stock exchange, and the findings recorded in the SEBI investigation, the Assessing Officer concluded that, when examined on the touchstone of human probabilities, the transactions undertaken by the assessee in respect of s Banas Finance Ltd. did not represent genuine market transactions. According to the Assessing Officer, the transactions were structured and orchestrated with the object of availing tax-exempt long accommodation entries. 2.16 Accordingly, by the assessment order dated 22.04.2022 passed under section 147 read with section 143(3) of the Income-tax Act, 1961, the Assessing Officer rejected the assessee’s claim of long ₹3,98,43,430/- and treated the said amount as undisclosed income of the assessee. 3. Aggrieved by the assessment order, the assessee preferred an appeal before the of the reassessment proceedings as well as the addition made on merits. Before the learned CIT(A), the assessee reiterated the submissions advanced before the Assessing Officer and asserted that the transactions relating to ITA No. investors in the said scrip, found the allegations of price manipulation to be substantiated. Having regard to the material gathered by the Investigation Wing, the statements of the alleged exit e trading pattern observed on the stock exchange, and the findings recorded in the SEBI investigation, the Assessing Officer concluded that, when examined on the touchstone of human probabilities, the transactions undertaken by the assessee in respect of sale of shares of M/s Banas Finance Ltd. did not represent genuine market transactions. According to the Assessing Officer, the transactions were structured and orchestrated with the object exempt long-term capital gains through n entries. Accordingly, by the assessment order dated 22.04.2022 passed under section 147 read with section 143(3) tax Act, 1961, the Assessing Officer rejected the assessee’s claim of long-term capital gain amounting to nd treated the said amount as undisclosed income of the assessee. Aggrieved by the assessment order, the assessee preferred an appeal before the ld “CIT(A)”, challenging both the validity of the reassessment proceedings as well as the addition made on merits. Before the learned CIT(A), the assessee reiterated the submissions advanced before the Assessing Officer and asserted that the transactions relating to purchase and sale of ITA No. 3725/Mum/2025 27 Santosh Vimlesh Mehta investors in the said scrip, found the allegations of price Having regard to the material gathered by the Investigation Wing, the statements of the alleged exit e trading pattern observed on the stock exchange, and the findings recorded in the SEBI investigation, the Assessing Officer concluded that, when examined on the touchstone of human probabilities, the transactions ale of shares of M/s Banas Finance Ltd. did not represent genuine market transactions. According to the Assessing Officer, the transactions were structured and orchestrated with the object term capital gains through Accordingly, by the assessment order dated 22.04.2022 passed under section 147 read with section 143(3) tax Act, 1961, the Assessing Officer rejected the term capital gain amounting to nd treated the said amount as undisclosed Aggrieved by the assessment order, the assessee preferred , challenging both the validity of the reassessment proceedings as well as the addition made on merits. Before the learned CIT(A), the assessee reiterated the submissions advanced before the Assessing Officer and purchase and sale of Printed from counselvise.com shares of M/s Banas Finance Ltd. were genuine and carried out in the normal course of business. 3.1 It was contended that the statutory conditions prescribed for claiming exemption under section 10(38) of the Act had been duly satisfie for a period exceeding one year, that they were listed and sold through a recognised stock exchange, and that security transaction tax (STT) was duly paid on such sale transactions. 3.2 The assessee further relied upon precedents and submitted that the genuineness of the long term capital gain stood established by documentary and circumstantial evidence, including transactions routed through banking channels, trading on a recognised stock exchange, contemporaneous documentation, absence of any unaccounted cash transactions, and the failure of the Assessing Officer to afford an opportunity of cross of third parties whose statements were relied upon. It was also emphasised that no material evid record to demonstrate manipulation of the scrip by the assessee. 3.3 The assessee further submitted that in the case of M/s Banas Finance Ltd., the Assessing Officer had made additions under section 68 of the Act in respect of amou through preferential allotment; however, the Tribunal, in ITA No. 1096/Mum/2016, had deleted the said additions, thereby ITA No. shares of M/s Banas Finance Ltd. were genuine and carried out in the normal course of business. It was contended that the statutory conditions prescribed for claiming exemption under section 10(38) of the Act had been duly satisfied, namely, that the shares were held for a period exceeding one year, that they were listed and sold through a recognised stock exchange, and that security transaction tax (STT) was duly paid on such sale transactions. The assessee further relied upon various judicial precedents and submitted that the genuineness of the long term capital gain stood established by documentary and circumstantial evidence, including transactions routed through banking channels, trading on a recognised stock emporaneous documentation, absence of any unaccounted cash transactions, and the failure of the Assessing Officer to afford an opportunity of cross of third parties whose statements were relied upon. It was also emphasised that no material evidence had been brought on record to demonstrate manipulation of the scrip by the The assessee further submitted that in the case of M/s Banas Finance Ltd., the Assessing Officer had made additions under section 68 of the Act in respect of amou through preferential allotment; however, the Tribunal, in ITA No. 1096/Mum/2016, had deleted the said additions, thereby ITA No. 3725/Mum/2025 28 Santosh Vimlesh Mehta shares of M/s Banas Finance Ltd. were genuine and carried It was contended that the statutory conditions prescribed for claiming exemption under section 10(38) of the d, namely, that the shares were held for a period exceeding one year, that they were listed and sold through a recognised stock exchange, and that security transaction tax (STT) was duly paid on such sale transactions. various judicial precedents and submitted that the genuineness of the long- term capital gain stood established by documentary and circumstantial evidence, including transactions routed through banking channels, trading on a recognised stock emporaneous documentation, absence of any unaccounted cash transactions, and the failure of the Assessing Officer to afford an opportunity of cross-examination of third parties whose statements were relied upon. It was also ence had been brought on record to demonstrate manipulation of the scrip by the The assessee further submitted that in the case of M/s Banas Finance Ltd., the Assessing Officer had made additions under section 68 of the Act in respect of amounts received through preferential allotment; however, the Tribunal, in ITA No. 1096/Mum/2016, had deleted the said additions, thereby Printed from counselvise.com holding the preferential allotment transactions to be genuine. It was contended that once the investment itself had been judicially accepted as genuine, the consequential sale thereof could not be treated as bogus. 3.4 It was also pointed out that the investigation conducted by SEBI covered the period from November 2010 to September 2011, whereas the assessee’s sale transacti place in February and March 2012, which was outside the period of investigation. The assessee further submitted that her sales occurred after the share prices had already declined substantially from their peak, and therefore, the timing and pattern of sale did not conform to the alleged modus operandi of price manipulators, who ordinarily exit at peak prices to maximise gains. 3.5 The assessee further submitted that the SEBI adjudication order, which penalised certain entities for alleged price manipulation in the scrip of Banas Finance Ltd., did not name or implicate the assessee in any manner. It was contended that the Assessing Officer had erroneously extended the findings of the SEBI order to the assessee without any factual foundation. It was a listing of the company on a regulated exchange such as the Bombay Stock Exchange, and the absence of any regulatory action against the company itself for price rigging, supported the legitimacy of its operations and the t in its shares. ITA No. holding the preferential allotment transactions to be genuine. It was contended that once the investment itself had been udicially accepted as genuine, the consequential sale thereof could not be treated as bogus. It was also pointed out that the investigation conducted by SEBI covered the period from November 2010 to September 2011, whereas the assessee’s sale transacti place in February and March 2012, which was outside the period of investigation. The assessee further submitted that her sales occurred after the share prices had already declined substantially from their peak, and therefore, the timing and n of sale did not conform to the alleged modus operandi of price manipulators, who ordinarily exit at peak prices to The assessee further submitted that the SEBI adjudication order, which penalised certain entities for alleged ipulation in the scrip of Banas Finance Ltd., did not name or implicate the assessee in any manner. It was contended that the Assessing Officer had erroneously extended the findings of the SEBI order to the assessee without any factual foundation. It was also highlighted that the continued listing of the company on a regulated exchange such as the Bombay Stock Exchange, and the absence of any regulatory action against the company itself for price rigging, supported the legitimacy of its operations and the transparency of trading ITA No. 3725/Mum/2025 29 Santosh Vimlesh Mehta holding the preferential allotment transactions to be genuine. It was contended that once the investment itself had been udicially accepted as genuine, the consequential sale thereof It was also pointed out that the investigation conducted by SEBI covered the period from November 2010 to September 2011, whereas the assessee’s sale transactions took place in February and March 2012, which was outside the period of investigation. The assessee further submitted that her sales occurred after the share prices had already declined substantially from their peak, and therefore, the timing and n of sale did not conform to the alleged modus operandi of price manipulators, who ordinarily exit at peak prices to The assessee further submitted that the SEBI adjudication order, which penalised certain entities for alleged ipulation in the scrip of Banas Finance Ltd., did not name or implicate the assessee in any manner. It was contended that the Assessing Officer had erroneously extended the findings of the SEBI order to the assessee without any lso highlighted that the continued listing of the company on a regulated exchange such as the Bombay Stock Exchange, and the absence of any regulatory action against the company itself for price rigging, supported ransparency of trading Printed from counselvise.com 3.6 It was also reiterated that despite specific requests, no opportunity of cross statements were relied upon by the Assessing Officer was granted, in violation of the principles of n 3.7 After considering the submissions of the assessee and the material placed on record, the learned CIT(A) accepted the assessee’s contentions. The learned CIT(A) held that the rise in the share price of the company was supported by its f fundamentals. In this regard, the learned CIT(A) noted that the company’s turnover had increased from Assessment Year 2010 2011–12 and 2012 which could reas influence market price. It was observed that share price movements are driven by multiple factors, including investor sentiment, and that the growth in revenue and future prospects of the company could not be disregar learned CIT(A) also took note of the fact that the company continued to remain listed on the Bombay Stock Exchange and had even acquired another listed entity, thereby lending credence to its commercial legitimacy. the Ld. CIT(A) is reproduced as under: “11. Now, coming to the observations of the Ld.AO that the price of the shares is not supported by the fundamentals of the company. The appellant has submitted the financials of this company and has contended that when this c its operation in A.Y 2010 which has increased to Rs. 7 crores in the AY 2011 ITA No. It was also reiterated that despite specific requests, no opportunity of cross-examination of the persons whose statements were relied upon by the Assessing Officer was granted, in violation of the principles of natural justice. After considering the submissions of the assessee and the material placed on record, the learned CIT(A) accepted the assessee’s contentions. The learned CIT(A) held that the rise in the share price of the company was supported by its f fundamentals. In this regard, the learned CIT(A) noted that the company’s turnover had increased from ₹ Assessment Year 2010–11 to ₹7 crores in Assessment Years 12 and 2012–13, reflecting substantial revenue growth, which could reasonably enhance investor confidence and influence market price. It was observed that share price movements are driven by multiple factors, including investor sentiment, and that the growth in revenue and future prospects of the company could not be disregar learned CIT(A) also took note of the fact that the company continued to remain listed on the Bombay Stock Exchange and had even acquired another listed entity, thereby lending credence to its commercial legitimacy. The relevant fi CIT(A) is reproduced as under: 11. Now, coming to the observations of the Ld.AO that the price of the shares is not supported by the fundamentals of the company. The appellant has submitted the financials of this company and has contended that when this company started its operation in A.Y 2010-11, the turnover was only Rs. 2 lakhs which has increased to Rs. 7 crores in the AY 2011 ITA No. 3725/Mum/2025 30 Santosh Vimlesh Mehta It was also reiterated that despite specific requests, no examination of the persons whose statements were relied upon by the Assessing Officer was atural justice. After considering the submissions of the assessee and the material placed on record, the learned CIT(A) accepted the assessee’s contentions. The learned CIT(A) held that the rise in the share price of the company was supported by its financial fundamentals. In this regard, the learned CIT(A) noted that the ₹2 lakhs in 7 crores in Assessment Years 13, reflecting substantial revenue growth, onably enhance investor confidence and influence market price. It was observed that share price movements are driven by multiple factors, including investor sentiment, and that the growth in revenue and future prospects of the company could not be disregarded. The learned CIT(A) also took note of the fact that the company continued to remain listed on the Bombay Stock Exchange and had even acquired another listed entity, thereby lending The relevant finding of 11. Now, coming to the observations of the Ld.AO that the price of the shares is not supported by the fundamentals of the company. The appellant has submitted the financials of this ompany started 11, the turnover was only Rs. 2 lakhs which has increased to Rs. 7 crores in the AY 2011-12 and Printed from counselvise.com 2012-13 showing revenue growth at 350 times. This growth in revenue has increased investor confidence which led to the in the price of these shares. The price rise on the stock exchange depends on multiple factors and mostly it is driven by the investors' sentiment. In this case, the substantial rise in revenue along with future prospects of the company has contributed to the rise in price of this alleged share. Regarding the authenticity of Banas Finance, the appellant has submitted that this company is still listed on BSE and is regularly traded. Further, recently it has acquired another listed company, Proaim Enterprises Ltd. From the details submitted by the appellant, I find that there is substantial force in the appellant's contention and hence the same cannot be brushed aside.” 3.8 The learned CIT(A) further placed reliance on the order of the Tribunal dated Finance Ltd. in ITA No. 1096/Mum/2016 for Assessment Year 2011–12, wherein the preferential allotment made by the company was held to be genuine. 3.9 The learned CIT(A) also concurred with the assessee’s submission that her name did not figure in the SEBI order dated 27.04.2018, nor was there any reference to her therein. It was further observed that the period considered by SEBI for investigation did not coincide with the period during which the assessee had sold the sha 3.10 Further, the Ld. CIT(A) refer assessee which was rec 11/01/2019 as part of a survey conducted under of the Act on 10/01/2019 on M/s Mehta Sawant Raj Hanwant Raj and observed that in said statement the assessee stated that investment was made by her late husband Sh Kumar Mehta. It was noted that there was no admission or ITA No. 13 showing revenue growth at 350 times. This growth in revenue has increased investor confidence which led to the in the price of these shares. The price rise on the stock exchange depends on multiple factors and mostly it is driven by the investors' sentiment. In this case, the substantial rise in revenue along with future prospects of the company has d to the rise in price of this alleged share. Regarding the authenticity of Banas Finance, the appellant has submitted that this company is still listed on BSE and is regularly traded. Further, recently it has acquired another listed company, rises Ltd. From the details submitted by the appellant, I find that there is substantial force in the appellant's contention and hence the same cannot be brushed aside.” The learned CIT(A) further placed reliance on the order of the Tribunal dated 02.01.2019 in the case of M/s Banas Finance Ltd. in ITA No. 1096/Mum/2016 for Assessment Year 12, wherein the preferential allotment made by the company was held to be genuine. The learned CIT(A) also concurred with the assessee’s her name did not figure in the SEBI order dated 27.04.2018, nor was there any reference to her therein. It was further observed that the period considered by SEBI for investigation did not coincide with the period during which the assessee had sold the shares. the Ld. CIT(A) refered to the statement of the assessee which was recorded under section 131 of the A 11/01/2019 as part of a survey conducted under ct on 10/01/2019 on M/s Mehta Sawant Raj Hanwant ved that in said statement the assessee stated that investment was made by her late husband Sh It was noted that there was no admission or ITA No. 3725/Mum/2025 31 Santosh Vimlesh Mehta 13 showing revenue growth at 350 times. This growth in revenue has increased investor confidence which led to the rise in the price of these shares. The price rise on the stock exchange depends on multiple factors and mostly it is driven by the investors' sentiment. In this case, the substantial rise in revenue along with future prospects of the company has d to the rise in price of this alleged share. Regarding the authenticity of Banas Finance, the appellant has submitted that this company is still listed on BSE and is regularly traded. Further, recently it has acquired another listed company, rises Ltd. From the details submitted by the appellant, I find that there is substantial force in the appellant's contention and hence the same cannot be brushed aside.” The learned CIT(A) further placed reliance on the order 02.01.2019 in the case of M/s Banas Finance Ltd. in ITA No. 1096/Mum/2016 for Assessment Year 12, wherein the preferential allotment made by the The learned CIT(A) also concurred with the assessee’s her name did not figure in the SEBI order dated 27.04.2018, nor was there any reference to her therein. It was further observed that the period considered by SEBI for investigation did not coincide with the period during which the to the statement of the orded under section 131 of the Act on section 133A ct on 10/01/2019 on M/s Mehta Sawant Raj Hanwant ved that in said statement the assessee stated that investment was made by her late husband Shri Vimlesh It was noted that there was no admission or Printed from counselvise.com material in the said statement to suggest that the transactions were non-genuine, and therefo be drawn against the assessee. 3.11 Relying upon various judicial precedents and upon an overall appreciation of facts and evidence, the learned CIT(A) concluded that the transactions of purchase and sale of shares of M/s Banas Finance Ltd. could not be characterised as bogus accommodation entry transactions, and accordingly deleted the addition made by the Assessing Officer. 4. We have carefully considered the rival submissions and perused the material available on record. position that before the learned CIT(A), the assessee had challenged the assessment both on the validity of the reassessment as well as on merits. However, the learned CIT(A) has not rendered any finding on the validity of the reassessment. Before us, the Revenue has confined its challenge only to the deletion of the addition on merits. The assessee has neither filed a cross nor invoked Rule 27 of the Income Rules, 1963. Consequently not an issue arising for our consideration. The sole question before us is whether the learned CIT(A) was justified in deleting the addition made on merits. 4.1 Upon an overall appreciation of facts and evidence, we are unable to concur with the findings of the learned CIT(A). ITA No. material in the said statement to suggest that the transactions genuine, and therefore, no adverse inference could be drawn against the assessee. Relying upon various judicial precedents and upon an overall appreciation of facts and evidence, the learned CIT(A) concluded that the transactions of purchase and sale of shares Banas Finance Ltd. could not be characterised as bogus accommodation entry transactions, and accordingly deleted the addition made by the Assessing Officer. We have carefully considered the rival submissions and perused the material available on record. It is an undisputed position that before the learned CIT(A), the assessee had challenged the assessment both on the validity of the reassessment as well as on merits. However, the learned CIT(A) has not rendered any finding on the validity of the ment. Before us, the Revenue has confined its challenge only to the deletion of the addition on merits. The assessee has neither filed a cross-appeal nor a cross nor invoked Rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963. Consequently, the validity of the reassessment is not an issue arising for our consideration. The sole question before us is whether the learned CIT(A) was justified in deleting the addition made on merits. Upon an overall appreciation of facts and evidence, we re unable to concur with the findings of the learned CIT(A). ITA No. 3725/Mum/2025 32 Santosh Vimlesh Mehta material in the said statement to suggest that the transactions re, no adverse inference could Relying upon various judicial precedents and upon an overall appreciation of facts and evidence, the learned CIT(A) concluded that the transactions of purchase and sale of shares Banas Finance Ltd. could not be characterised as bogus accommodation entry transactions, and accordingly deleted the addition made by the Assessing Officer. We have carefully considered the rival submissions and It is an undisputed position that before the learned CIT(A), the assessee had challenged the assessment both on the validity of the reassessment as well as on merits. However, the learned CIT(A) has not rendered any finding on the validity of the ment. Before us, the Revenue has confined its challenge only to the deletion of the addition on merits. The appeal nor a cross-objection tax (Appellate Tribunal) , the validity of the reassessment is not an issue arising for our consideration. The sole question before us is whether the learned CIT(A) was justified in Upon an overall appreciation of facts and evidence, we re unable to concur with the findings of the learned CIT(A). Printed from counselvise.com The assessee has primarily relied upon documentary evidences such like share application dated 11/12/2010 to the M/s Banas Finance Ltd for allotment of preferential share, payment for investment banking channel, copy of preferential allotment letter dated 01/01/2011 issued by the company, Copy of De copy of broker’s note issued by the RBK Share Broking Ltd , Copy of Bank statement in which sale am etc., to establish the genuineness of the transactions. CIT(A) also concurred with assessee and observed that the assessee had furnished all the documentary evidences to substantiate the transactions and the Assessing Officer has not pointed out any discrepancy in the document furnished by the assessee. However we do not agree with the above finding of the Ld. CIT(A). Tho trail generated in the ordinary course of such transactions and, by themselves, do not conclusively establish the genuineness of the claim. It is well settled that transactions routed through banking channels or supported by statutory documentation are not sacrosanct and must still withstand the test of surrounding circumstan probabilities. The Hon’ble Supreme Court in the case of Kachwala Gems, Jaipur vs Joint Commissioner of Income Tax, Jaipur is 288 ITR 10 (SC) payment through banking channel is itself is not a sacrosanct to establish the genuineness of the transaction. ITA No. The assessee has primarily relied upon documentary evidences like share application dated 11/12/2010 to the M/s Banas Finance Ltd for allotment of preferential share, payment for investment in preferential allotment by way of banking channel, copy of preferential allotment letter dated 01/01/2011 issued by the company, Copy of De- copy of broker’s note issued by the RBK Share Broking Ltd , Copy of Bank statement in which sale amount was received to establish the genuineness of the transactions. CIT(A) also concurred with assessee and observed that the assessee had furnished all the documentary evidences to substantiate the transactions and the Assessing Officer has not pointed out any discrepancy in the document furnished by the assessee. However we do not agree with the above finding of the Ld. CIT(A). Those documents merely constitute a paper trail generated in the ordinary course of such transactions mselves, do not conclusively establish the genuineness of the claim. It is well settled that transactions routed through banking channels or supported by statutory documentation are not sacrosanct and must still withstand the test of surrounding circumstances and human The Hon’ble Supreme Court in the case of Kachwala Gems, Jaipur vs Joint Commissioner of Income 288 ITR 10 (SC) has held that payment through banking channel is itself is not a sacrosanct the genuineness of the transaction. Similarly copy ITA No. 3725/Mum/2025 33 Santosh Vimlesh Mehta The assessee has primarily relied upon documentary evidences like share application dated 11/12/2010 to the M/s Banas Finance Ltd for allotment of preferential share, in preferential allotment by way of banking channel, copy of preferential allotment letter dated -mat account, copy of broker’s note issued by the RBK Share Broking Ltd , ount was received to establish the genuineness of the transactions. The Ld. CIT(A) also concurred with assessee and observed that the assessee had furnished all the documentary evidences to substantiate the transactions and the Assessing Officer has not pointed out any discrepancy in the document furnished by the assessee. However we do not agree with the above finding se documents merely constitute a paper trail generated in the ordinary course of such transactions mselves, do not conclusively establish the genuineness of the claim. It is well settled that transactions routed through banking channels or supported by statutory documentation are not sacrosanct and must still withstand ces and human The Hon’ble Supreme Court in the case of M/s. Kachwala Gems, Jaipur vs Joint Commissioner of Income has held that making payment through banking channel is itself is not a sacrosanct Similarly copy Printed from counselvise.com of the De-mat account or copy of the broker’s note do not establish that transaction was genuine as a same are issued as part of paper trail of transactions. Accordingly contention of the a substantiate the genuineness of the transaction. 4.2 The next contention of the assessee that there is no mention of the assessee in SEBI investigation and period of the such investigation is not same to the period of sale of shares by the assessee. 4.3 Before us ld department representative has filed a cop of adjudication order issued by the SEBI, which has been held by the Ld. CIT(A) pages order, the SEBI has mentioned that based on the internal alert investigation was carried out in the irregularities in the trading in the shares of Bannas finance Ltd on following entities: 1. Handful Investrade P Ltd (PAN: AAACH2018Q) 2. Banas Finance Ltd(PAN: AAACB2236J) 3. Ms. Sarita Chandak (PAN:ACEPL0255A) 4. Rajat Share Broking Pvt. Ltd(PAN: AAACR2695B) 5. Gurudev Inve (PAN:AAEHJ1610D) 6. Rahul Kumar Agarwal (PAN:AFNPA4015R) 7. Bhanwarlal Bahulal Suthar (PAN: ANVPS7451B) 8. Hetal Nilesh Gor (PAN: ALDPG9625M) ITA No. mat account or copy of the broker’s note do not establish that transaction was genuine as a same are issued as part of paper trail of transactions. Accordingly, contention of the assessee that above mentioned documents substantiate the genuineness of the transaction. The next contention of the assessee that there is no mention of the assessee in SEBI investigation and period of the such investigation is not same to the period of sale of shares Before us ld department representative has filed a cop of adjudication order issued by the SEBI, which has been held by the Ld. CIT(A) as not related to the assessee. In this 43 pages order, the SEBI has mentioned that based on the internal alert investigation was carried out in the irregularities ding in the shares of Bannas finance Ltd on following 1. Handful Investrade P Ltd (PAN: AAACH2018Q) 2. Banas Finance Ltd(PAN: AAACB2236J) 3. Ms. Sarita Chandak (PAN:ACEPL0255A) 4. Rajat Share Broking Pvt. Ltd(PAN: AAACR2695B) 5. Gurudev Investment HUF (Prop Jayesh Narendra Kesharia) (PAN:AAEHJ1610D) 6. Rahul Kumar Agarwal (PAN:AFNPA4015R) 7. Bhanwarlal Bahulal Suthar (PAN: ANVPS7451B) 8. Hetal Nilesh Gor (PAN: ALDPG9625M) ITA No. 3725/Mum/2025 34 Santosh Vimlesh Mehta mat account or copy of the broker’s note do not establish that transaction was genuine as a same are issued , we reject the above mentioned documents The next contention of the assessee that there is no mention of the assessee in SEBI investigation and period of the such investigation is not same to the period of sale of shares Before us ld department representative has filed a copy of adjudication order issued by the SEBI, which has been held not related to the assessee. In this 43 pages order, the SEBI has mentioned that based on the internal alert investigation was carried out in the irregularities ding in the shares of Bannas finance Ltd on following stment HUF (Prop Jayesh Narendra Kesharia) Printed from counselvise.com 9 Anmol Finance Company (Rajesh Tukaram Dambre) (PAN:AHAPD8240L) 4.4 The report, further notes that company Finance Ltd allotted 99 lakhs equity shares at a price of per share on preferential basis to 49 entities. The also one of the person who was allotted shares on preference basis at the rate of Rs.20 per share. For ready reference, the relevant observation of the SEBI adjudicator is reproduced as under: “16. Before proceeding with the charges against Noticees, it i relevant to note that during the period November 03, 2010 to September 09, 2011 (IP) the price of the scrip increased from Rs. 9.37 to high of Rs. 292.60 (hitting circuit filter limit on all trading days) registering an increase of Rs.283.23. (i.e. 3,022.73%). During the same period, BSE Sensex declined from 20,465.74 to 16,866.97 registering a decrease of 3,598.77 points (i.e. 17.58%). I also note that there was no trading prior to November 3, 2010. The first trading day was on November 3, 2010 for 50 sh was on February 4, 2011 i.e. after a gap of 3 months. Thereafter, the price of the scrip touched upper circuit limit on 85 consecutive trading days till June 13, 2011 with only one trade for 50 shares on eac 14, 2011 and scrip touched upper circuit limit for next 56 consecutive trading days till September 7, 2011 with only single trades for shares ranging from 1 share to 50 shares. Thus, it is evident that the scrip is highly of the scrip from February 4, 2011 was Rs 9.83 and increased to Rs 281. 3 on September 7, 2011. Thus, I note that there were trading on June 14, 2011, September 8 and 9, 2011 where in 17 trades, 7 trades and 25 trades for 1050 sh 1506 shares respectively.” 4.5 The report observed that shares of were manipulated by M/s Anmol Finance through connivance of sh Pradeep Dhanuka and sh Giriral Agrwal. The relevant ITA No. 9 Anmol Finance Company (Rajesh Tukaram Dambre) (PAN:AHAPD8240L) The report, further notes that company allotted 99 lakhs equity shares at a price of per share on preferential basis to 49 entities. The also one of the person who was allotted shares on preference basis at the rate of Rs.20 per share. For ready reference, the relevant observation of the SEBI adjudicator is reproduced as 16. Before proceeding with the charges against Noticees, it i relevant to note that during the period November 03, 2010 to September 09, 2011 (IP) the price of the scrip increased from Rs. 9.37 to high of Rs. 292.60 (hitting circuit filter limit on all trading days) registering an increase of Rs.283.23. (i.e. .73%). During the same period, BSE Sensex declined from 20,465.74 to 16,866.97 registering a decrease of 3,598.77 points (i.e. 17.58%). I also note that there was no trading prior to November 3, 2010. The first trading day was on November 3, 2010 for 50 shares at a price of Rs 9.37. The next trading day was on February 4, 2011 i.e. after a gap of 3 months. Thereafter, the price of the scrip touched upper circuit limit on 85 consecutive trading days till June 13, 2011 with only one trade for 50 shares on each day. There were 5 trades on June 14, 2011 and scrip touched upper circuit limit for next 56 consecutive trading days till September 7, 2011 with only single trades for shares ranging from 1 share to 50 shares. Thus, it is evident that the scrip is highly illiquid scrip. The price of the scrip from February 4, 2011 was Rs 9.83 and increased to Rs 281. 3 on September 7, 2011. Thus, I note that there were trading on June 14, 2011, September 8 and 9, 2011 where in 17 trades, 7 trades and 25 trades for 1050 shares, 754 shares, 1506 shares respectively.” The report observed that shares of Bannas were manipulated by M/s Anmol Finance through connivance of sh Pradeep Dhanuka and sh Giriral Agrwal. The relevant ITA No. 3725/Mum/2025 35 Santosh Vimlesh Mehta 9 Anmol Finance Company (Rajesh Tukaram Dambre) The report, further notes that company M/s Banas allotted 99 lakhs equity shares at a price of ₹ 20 per share on preferential basis to 49 entities. The assessee is also one of the person who was allotted shares on preference basis at the rate of Rs.20 per share. For ready reference, the relevant observation of the SEBI adjudicator is reproduced as 16. Before proceeding with the charges against Noticees, it is relevant to note that during the period November 03, 2010 to September 09, 2011 (IP) the price of the scrip increased from Rs. 9.37 to high of Rs. 292.60 (hitting circuit filter limit on all trading days) registering an increase of Rs.283.23. (i.e. .73%). During the same period, BSE Sensex declined from 20,465.74 to 16,866.97 registering a decrease of 3,598.77 points (i.e. 17.58%). I also note that there was no trading prior to November 3, 2010. The first trading day was on November 3, ares at a price of Rs 9.37. The next trading day was on February 4, 2011 i.e. after a gap of 3 months. Thereafter, the price of the scrip touched upper circuit limit on 85 consecutive trading days till June 13, 2011 with only one h day. There were 5 trades on June 14, 2011 and scrip touched upper circuit limit for next 56 consecutive trading days till September 7, 2011 with only single trades for shares ranging from 1 share to 50 shares. illiquid scrip. The price of the scrip from February 4, 2011 was Rs 9.83 and increased to Rs 281. 3 on September 7, 2011. Thus, I note that there were trading on June 14, 2011, September 8 and 9, 2011 where in ares, 754 shares, Bannas finance Ltd were manipulated by M/s Anmol Finance through connivance of sh Pradeep Dhanuka and sh Giriral Agrwal. The relevant Printed from counselvise.com observations in the report as under: “70. It is noted during the investigation period that, only 20 sellers sold entire traded quantity of 9,595 shares, during the investigation period. Noticee No. (herein after referred as 'Anmo sale quantity of 6,490 shares. 71. As mentioned earlier, during the investigation period, 144 trades contributed to positive LTP of Rs. 287.08. Of these 144 positive LTP trades, 140 trades contributed to NHP of Rs. and all of them were first trades. Out of 140 NHP trades, for 118 trades (i.e.84.28% of NHP trades), Anmol Finance was counterparty (seller) to the trades. Of the 118 NHP trades (on 118 days) where Anmol Finance was the seller, on 116 days, Anmol was the only entity placing sell orders in small quantity (i.e. at minimum lot of 50 shares) which was much lower than the quantity for which buyers were available and during these 116 trading days, there were no trades other than these 116 trades. By virtue of these sell orders placed by Anmol, the price of the scrip could go by Rs. 186.78. From the above, it is apparent that the supply of shares (delivery) in the scrip was artificial and majorly controlled by Anmol. 72. From the above, it is clear that Anm the market in small quantities, with an intention for registering price on the stock exchange. Even though there is no evidence to suggest that buyers and sellers are connected, but the pattern suggests that it was artificially su registering higher price on the stock exchange on daily basis. Connection between promoters and M/s Anmol Finance 73. Anmol Finance Company is a sole proprietary firm and Shri. Rajesh Tukaram Dambre is the sole proprieto was holding 11,500 Investigation period. It is observed that Anmol Finance had purchased 11,500 shares (which constitutes 3.83% of paid up capital of the company) through off market from the promoter namely Alefiya Shabbir Khorakiwala on August 17, 2010. 74. It is noted that Anmol was trading through JRG Securities P. Ltd (JRG) and SPS Share Brokers P. Ltd during the Investigation period. JRG vide its submissions dated January 12, 2015 stated that entity namely Shri. Pradeep Dhanuka was placing orders on ITA No. in the report are reproduced for ready reference 70. It is noted during the investigation period that, only 20 sellers sold entire traded quantity of 9,595 shares, during the investigation period. Noticee No.-9, M/s Anmol Finance Company (herein after referred as 'Anmol Finance') was the top seller with sale quantity of 6,490 shares. 71. As mentioned earlier, during the investigation period, 144 trades contributed to positive LTP of Rs. 287.08. Of these 144 positive LTP trades, 140 trades contributed to NHP of Rs. and all of them were first trades. Out of 140 NHP trades, for 118 trades (i.e.84.28% of NHP trades), Anmol Finance was counterparty (seller) to the trades. Of the 118 NHP trades (on 118 days) where Anmol Finance was the seller, on 116 days, Anmol s the only entity placing sell orders in small quantity (i.e. at minimum lot of 50 shares) which was much lower than the quantity for which buyers were available and during these 116 trading days, there were no trades other than these 116 trades. of these sell orders placed by Anmol, the price of the scrip could go by Rs. 186.78. From the above, it is apparent that the supply of shares (delivery) in the scrip was artificial and majorly controlled by Anmol. 72. From the above, it is clear that Anmol Finance sold shares in the market in small quantities, with an intention for registering price on the stock exchange. Even though there is no evidence to suggest that buyers and sellers are connected, but the pattern suggests that it was artificially supply of shares for the purpose of registering higher price on the stock exchange on daily basis. Connection between promoters and M/s Anmol Finance 73. Anmol Finance Company is a sole proprietary firm and Shri. Rajesh Tukaram Dambre is the sole proprietor. Anmol Finance was holding 11,500 shares in demat at the beginning of the Investigation period. It is observed that Anmol Finance had purchased 11,500 shares (which constitutes 3.83% of paid up capital of the company) through off market from the promoter namely Alefiya Shabbir Khorakiwala on August 17, 2010. 74. It is noted that Anmol was trading through JRG Securities P. Ltd (JRG) and SPS Share Brokers P. Ltd during the Investigation period. JRG vide its submissions dated January 12, 2015 stated tity namely Shri. Pradeep Dhanuka was placing orders on ITA No. 3725/Mum/2025 36 Santosh Vimlesh Mehta uced for ready reference 70. It is noted during the investigation period that, only 20 sellers sold entire traded quantity of 9,595 shares, during the 9, M/s Anmol Finance Company Finance') was the top seller with 71. As mentioned earlier, during the investigation period, 144 trades contributed to positive LTP of Rs. 287.08. Of these 144 positive LTP trades, 140 trades contributed to NHP of Rs. 283.23 and all of them were first trades. Out of 140 NHP trades, for 118 trades (i.e.84.28% of NHP trades), Anmol Finance was counterparty (seller) to the trades. Of the 118 NHP trades (on 118 days) where Anmol Finance was the seller, on 116 days, Anmol s the only entity placing sell orders in small quantity (i.e. at minimum lot of 50 shares) which was much lower than the quantity for which buyers were available and during these 116 trading days, there were no trades other than these 116 trades. of these sell orders placed by Anmol, the price of the scrip could go by Rs. 186.78. From the above, it is apparent that the supply of shares (delivery) in the scrip was artificial and ol Finance sold shares in the market in small quantities, with an intention for registering price on the stock exchange. Even though there is no evidence to suggest that buyers and sellers are connected, but the pattern pply of shares for the purpose of registering higher price on the stock exchange on daily basis. Connection between promoters and M/s Anmol Finance 73. Anmol Finance Company is a sole proprietary firm and Shri. r. Anmol Finance shares in demat at the beginning of the Investigation period. It is observed that Anmol Finance had purchased 11,500 shares (which constitutes 3.83% of paid up capital of the company) through off market from the promoter namely Alefiya Shabbir Khorakiwala on August 17, 2010. 74. It is noted that Anmol was trading through JRG Securities P. Ltd (JRG) and SPS Share Brokers P. Ltd during the Investigation period. JRG vide its submissions dated January 12, 2015 stated tity namely Shri. Pradeep Dhanuka was placing orders on Printed from counselvise.com behalf of Anmol Finance and they had provided transcripts of recordings of order placement in the trading account of Anmol Finance to suggest that Shri. Pradeep Dhanuka was placing orders for Anmol Fi 75. It is noted that Shri. Pradeep Dhanuka and Shri. Girraj Agrawal (Director, Compliance Officer & CFO of Banas Finance) were common directors during the period under investigation, in two companies namely Axon Infotech Ltd. (listed compan BSE), Five X Finance & Investment Ltd. (listed company at BSE), therefore both are connected to each other. 76. It is noted that Anmol sold shares in small quantities although buy orders in large quantities at higher rates/upper circuit filter rates despite holding larger number of shares as explained above. It is clear that Mr. Pradeep Dhanuka using the account of Anmol had intentionally sold mi pending buy orders for large quantities to prop up the price (ie. NHP of Rs 186.78 (65.95% of total NHP) and 84.28% of instances of NHP trades). 77. From the above, it is apparent that Anmol was consistently marking the price in the market by selling shares in small quantities and manipulated Had M/s Anmol finance has not sold shares the scrip price. upper circuit filter price, the price consistently in smaller quantities at of the scrip would not have moved up substantially from Rs. 9.37 to Rs. 281.20. Such artificial scrip price, mainly benefits the promoters and large shareholders. Since the orders were placed by Shri. Pradeep Dhanuka and he was connected to the Director, Compliance Officer & CFO of the artificially raised the scrip price through controlled supply. 78. 1 note from the de received 11,300 shares on February 15, 2011 from Rajesh Tukaram Dambre and was already holding 200 shares before the transfer. From the pattern of trading by Noticee read in conjunction with the off market transfer consistently for 118 trading days with same pattern established beyond doubt the manipulative intent to increase the price. Further, due to close connection with promoter of BFL coupled only 240 shareholders, it is possible to control shares were closely held by few shareholders. The fact that despite exponential increase in share price, none of the existing shareholders of the company did not find it attractive to sell the shares and make gains clearly hints at ITA No. behalf of Anmol Finance and they had provided transcripts of recordings of order placement in the trading account of Anmol Finance to suggest that Shri. Pradeep Dhanuka was placing orders for Anmol Finance Company. 75. It is noted that Shri. Pradeep Dhanuka and Shri. Girraj Agrawal (Director, Compliance Officer & CFO of Banas Finance) were common directors during the period under investigation, in two companies namely Axon Infotech Ltd. (listed compan BSE), Five X Finance & Investment Ltd. (listed company at BSE), therefore both are connected to each other. 76. It is noted that Anmol sold shares in small quantities although buy orders in large quantities at higher rates/upper circuit filter despite holding larger number of shares as explained above. It is clear that Mr. Pradeep Dhanuka using the account of Anmol had intentionally sold minimum lot of 50 shares despite of pending buy orders for large quantities to prop up the price (ie. Rs 186.78 (65.95% of total NHP) and 84.28% of instances of NHP trades). 77. From the above, it is apparent that Anmol was consistently marking the price in the market by selling shares in small quantities and manipulated Had M/s Anmol finance has not sold shares the scrip price. upper circuit filter price, the price consistently in smaller quantities at of the scrip would not have moved up substantially from Rs. 9.37 to Rs. 281.20. Such artificial scrip price, mainly benefits the promoters and large olders. Since the orders were placed by Shri. Pradeep Dhanuka and he was connected to the Director, Compliance Officer & CFO of the company, they connived each other and artificially raised the scrip price through controlled supply. 78. 1 note from the demat account statement of Amol that it had received 11,300 shares on February 15, 2011 from Rajesh Tukaram Dambre and was already holding 200 shares before the transfer. From the pattern of trading by Noticee read in conjunction with the off market transfer and controlled sale consistently for 118 trading days with same pattern established beyond doubt the manipulative intent to increase the price. Further, due to close connection with promoter of BFL coupled only 240 shareholders, it is possible to control the supply of shares as shares were closely held by few shareholders. The fact that despite exponential increase in share price, none of the existing shareholders of the company did not find it attractive to sell the shares and make gains clearly hints at complete control the ITA No. 3725/Mum/2025 37 Santosh Vimlesh Mehta behalf of Anmol Finance and they had provided transcripts of recordings of order placement in the trading account of Anmol Finance to suggest that Shri. Pradeep Dhanuka was placing 75. It is noted that Shri. Pradeep Dhanuka and Shri. Girraj Agrawal (Director, Compliance Officer & CFO of Banas Finance) were common directors during the period under investigation, in two companies namely Axon Infotech Ltd. (listed company at BSE), Five X Finance & Investment Ltd. (listed company at BSE), 76. It is noted that Anmol sold shares in small quantities although buy orders in large quantities at higher rates/upper circuit filter despite holding larger number of shares as explained above. It is clear that Mr. Pradeep Dhanuka using the account of Anmol imum lot of 50 shares despite of pending buy orders for large quantities to prop up the price (ie. Rs 186.78 (65.95% of total NHP) and 84.28% of instances 77. From the above, it is apparent that Anmol was consistently marking the price in the market by selling shares in small quantities and manipulated Had M/s Anmol finance has not sold shares the scrip price. upper circuit filter price, the price consistently in smaller quantities at of the scrip would not have moved up substantially from Rs. 9.37 to Rs. 281.20. Such artificial scrip price, mainly benefits the promoters and large olders. Since the orders were placed by Shri. Pradeep Dhanuka and he was connected to the Director, Compliance company, they connived each other and artificially raised the scrip price through controlled supply. mat account statement of Amol that it had received 11,300 shares on February 15, 2011 from Rajesh Tukaram Dambre and was already holding 200 shares before the transfer. From the pattern of trading by Noticee read in and controlled sale consistently for 118 trading days with same pattern established beyond doubt the manipulative intent to increase the price. Further, due to close connection with promoter of BFL coupled only the supply of shares as shares were closely held by few shareholders. The fact that despite exponential increase in share price, none of the existing shareholders of the company did not find it attractive to sell the complete control the Printed from counselvise.com company had over the shareholders. Such an inference is apparent due to the direct involvement of promoter in controlled supply of shares and devising a deceptive scheme with full knowledge of the list of shareholders available and acc them. Further, many of the investors were also holding shares in physical form which further facilitated company to increase its price effortless without active involvement or connivance with any buyers. The positive corporate news in public dom sufficient buying pressure from gullible investors who would crave for shares to participate in the price rally. sell transactions are as follows 4.6 The report finally concluded that price of the shares of company were manipulated as under: “79. In view of above, I conclude that the price manipulation was planned and executed by Anmol (promoter's related entities) through complete control over the supply of shares which smoothly facilitated sustenance of consecutively hit upper circuit limit for 116 trading sessions. Thus, I conclude that the allegations against Noticee no. manipulating the sc through controlled sale orders (in minimum market lot) at upper circuit price, for registering trades on 116 trading days at BSE in violation of Regulation 3 (a), (b), (c), (d), 4 (1), 4 (2) (b) & (e) of PFUTP read wi stand established. 4.7 The investigation conducted by SEBI has conclusively demonstrated that the price rise in the shares of M/s Banas Finance Ltd. during the relevant period was not a result of genuine market forces but was the outcome of systematic and deliberate price manipulation orchestrated by entities connected with the promoters of the company. Although the assessee is not specifically named in the SEBI adjudication order, the report categorically price during the investigation period was artificial and ITA No. company had over the shareholders. Such an inference is apparent due to the direct involvement of promoter in controlled supply of shares and devising a deceptive scheme with full knowledge of the list of shareholders available and acc them. Further, many of the investors were also holding shares in physical form which further facilitated company to increase its price effortless without active involvement or connivance with any buyers. The positive corporate news in public domain will create sufficient buying pressure from gullible investors who would crave participate in the price rally. The details of the total sell transactions are as follows ………………………… report finally concluded that price of the shares of manipulated. The relevant finding is reproduced In view of above, I conclude that the price manipulation was planned and executed by Anmol (promoter's related entities) h complete control over the supply of shares which smoothly facilitated sustenance of consecutively hit upper circuit limit for 116 trading sessions. Thus, I conclude that the allegations against Noticee no.-9, Anmol Finance Company for manipulating the scrip price and contributed to LTP & NHP through controlled sale orders (in minimum market lot) at upper circuit price, for registering trades on 116 trading days at BSE in violation of Regulation 3 (a), (b), (c), (d), 4 (1), 4 (2) (b) & (e) of PFUTP read with section 12A (a), (b) and (c) of SEBI Act, 1992 stand established.” The investigation conducted by SEBI has conclusively demonstrated that the price rise in the shares of M/s Banas Finance Ltd. during the relevant period was not a result of market forces but was the outcome of systematic and deliberate price manipulation orchestrated by entities connected with the promoters of the company. Although the assessee is not specifically named in the SEBI adjudication order, the report categorically holds that the prevailing market price during the investigation period was artificial and ITA No. 3725/Mum/2025 38 Santosh Vimlesh Mehta company had over the shareholders. Such an inference is apparent due to the direct involvement of promoter in controlled supply of shares and devising a deceptive scheme with full knowledge of the list of shareholders available and accessible to them. Further, many of the investors were also holding shares in physical form which further facilitated company to increase its price effortless without active involvement or connivance with any ain will create sufficient buying pressure from gullible investors who would crave The details of the total ………………………… report finally concluded that price of the shares of . The relevant finding is reproduced In view of above, I conclude that the price manipulation was planned and executed by Anmol (promoter's related entities) h complete control over the supply of shares which smoothly facilitated sustenance of consecutively hit upper circuit limit for 116 trading sessions. Thus, I conclude that the 9, Anmol Finance Company for rip price and contributed to LTP & NHP through controlled sale orders (in minimum market lot) at upper circuit price, for registering trades on 116 trading days at BSE in violation of Regulation 3 (a), (b), (c), (d), 4 (1), 4 (2) (b) & (e) of th section 12A (a), (b) and (c) of SEBI Act, 1992 The investigation conducted by SEBI has conclusively demonstrated that the price rise in the shares of M/s Banas Finance Ltd. during the relevant period was not a result of market forces but was the outcome of systematic and deliberate price manipulation orchestrated by entities connected with the promoters of the company. Although the assessee is not specifically named in the SEBI adjudication holds that the prevailing market price during the investigation period was artificial and Printed from counselvise.com manipulated. The assessee, having acquired shares by way of preferential allotment from the promoter himself, was required to satisfactorily explain the commercial r investment and the extraordinary appreciation in share value. The assessee has failed to discharge this onus. 4.8 The company recorded net profit of Rs. 0.30 lakhs, Rs. 8.1 lakhs and Rs. 2 lakhs for financial year ended on March, 2010, March, 2011 and March , 2012. The assessee explained that price rise in share of Bannas Finance ltd was due to increase in profit of the company. This explanation of assessee is not acceptable particularly for the reason that price rise in the shares of Bannas Finanacial Ltd is attributable manipulation of the prices. In the subsequent period of financial year ending March 2012 also the decrease in the profit as compared to profit in financial year ending March 2011 and therefore price rise in shares year 2011-12 is also not attributable to the financials of the company. The explanation advanced by the assessee that the price rise was supported by the financial performance of the company is not borne out from the record. The finan results of the company do not justify the phenomenal increase in share price, either during the investigation period or thereafter. In such a situation the explanation of the assessee that price rise was attributable to the financial of the company is rejected. ITA No. manipulated. The assessee, having acquired shares by way of preferential allotment from the promoter himself, was required to satisfactorily explain the commercial rationale for such investment and the extraordinary appreciation in share value. The assessee has failed to discharge this onus. The company recorded net profit of Rs. 0.30 lakhs, Rs. 8.1 lakhs and Rs. 2 lakhs for financial year ended on March, arch, 2011 and March , 2012. The assessee explained that price rise in share of Bannas Finance ltd was due to increase in profit of the company. This explanation of assessee is not acceptable particularly for the reason that price rise in nnas Finanacial Ltd is attributable manipulation of the prices. In the subsequent period of financial year ending March 2012 also the decrease in the profit as compared to profit in financial year ending March 2011 and therefore price rise in shares during the financial 12 is also not attributable to the financials of the The explanation advanced by the assessee that the price rise was supported by the financial performance of the company is not borne out from the record. The finan results of the company do not justify the phenomenal increase in share price, either during the investigation period or In such a situation the explanation of the assessee that price rise was attributable to the financial of the company ITA No. 3725/Mum/2025 39 Santosh Vimlesh Mehta manipulated. The assessee, having acquired shares by way of preferential allotment from the promoter himself, was required ationale for such investment and the extraordinary appreciation in share value. The company recorded net profit of Rs. 0.30 lakhs, Rs. 8.1 lakhs and Rs. 2 lakhs for financial year ended on March, arch, 2011 and March , 2012. The assessee explained that price rise in share of Bannas Finance ltd was due to increase in profit of the company. This explanation of assessee is not acceptable particularly for the reason that price rise in nnas Finanacial Ltd is attributable to the manipulation of the prices. In the subsequent period of financial year ending March 2012 also the decrease in the profit as compared to profit in financial year ending March during the financial 12 is also not attributable to the financials of the The explanation advanced by the assessee that the price rise was supported by the financial performance of the company is not borne out from the record. The financial results of the company do not justify the phenomenal increase in share price, either during the investigation period or In such a situation the explanation of the assessee that price rise was attributable to the financial of the company Printed from counselvise.com 4.9 Further, we note that the Securities and Exchange Board of India (SEBI) has specifically recorded findings regarding the role of the promoter of M/s Banas Finance Ltd., Shri Giriraj Agrawal, in the manipulation of the share prices of the company. It is an admitted position that the assessee acquired the shares through preferential allotment directly from the said promoter in a private arrangement. In these circumstances, the burden squarely lay upon the assessee to satisfactorily esta the genuineness of the preferential allotment by producing the said promoter or by otherwise substantiating the commercial bona fides of the transaction. The assessee has failed to discharge this onus. 4.10 This failure, when viewed in conjunction wi statements of Shri Giriraj Agrawal, Shri Pradeep Dhanuka, and other identified exit providers, leads to a reasonable inference that the assessee acquired the shares under a pre understanding with the expectation of earning tax term capital gains at artificially manipulated prices. 4.11 The reliance placed by the assessee on the decision of the Tribunal in the case of M/s Banas Finance Ltd. (supra), wherein the addition made under section 68 of the Act was deleted, is misconceived. In the said decision, the Tribunal examined the receipt in the hands of the company and held that the amount could not be treated as unexplained cash credit of the company, as it represented funds received from the assessee. However, the ITA No. Further, we note that the Securities and Exchange Board of India (SEBI) has specifically recorded findings regarding the role of the promoter of M/s Banas Finance Ltd., Shri Giriraj Agrawal, in the manipulation of the share prices of the company. It is an admitted position that the assessee acquired the shares through preferential allotment directly from the said promoter in a private arrangement. In these circumstances, the burden squarely lay upon the assessee to satisfactorily esta the genuineness of the preferential allotment by producing the said promoter or by otherwise substantiating the commercial bona fides of the transaction. The assessee has failed to This failure, when viewed in conjunction wi statements of Shri Giriraj Agrawal, Shri Pradeep Dhanuka, and other identified exit providers, leads to a reasonable inference that the assessee acquired the shares under a pre understanding with the expectation of earning tax- erm capital gains at artificially manipulated prices. The reliance placed by the assessee on the decision of the Tribunal in the case of M/s Banas Finance Ltd. (supra), wherein the addition made under section 68 of the Act was deleted, is . In the said decision, the Tribunal examined the receipt in the hands of the company and held that the amount could not be treated as unexplained cash credit of the company, as it represented funds received from the assessee. However, the ITA No. 3725/Mum/2025 40 Santosh Vimlesh Mehta Further, we note that the Securities and Exchange Board of India (SEBI) has specifically recorded findings regarding the role of the promoter of M/s Banas Finance Ltd., Shri Giriraj Agrawal, in the manipulation of the share prices of the said company. It is an admitted position that the assessee acquired the shares through preferential allotment directly from the said promoter in a private arrangement. In these circumstances, the burden squarely lay upon the assessee to satisfactorily establish the genuineness of the preferential allotment by producing the said promoter or by otherwise substantiating the commercial bona fides of the transaction. The assessee has failed to This failure, when viewed in conjunction with the statements of Shri Giriraj Agrawal, Shri Pradeep Dhanuka, and other identified exit providers, leads to a reasonable inference that the assessee acquired the shares under a pre-arranged -exempt long- The reliance placed by the assessee on the decision of the Tribunal in the case of M/s Banas Finance Ltd. (supra), wherein the addition made under section 68 of the Act was deleted, is . In the said decision, the Tribunal examined the receipt in the hands of the company and held that the amount could not be treated as unexplained cash credit of the company, as it represented funds received from the assessee. However, the Printed from counselvise.com Tribunal did not adjudicate upon the issue whether the payment made by the assessee was part of an arrangement designed to generate bogus long- of the promoters and other connected persons, which form the foundation of the presen examined in the said proceedings. 4.12 Accordingly, the said decision does not advance the assessee’s case and cannot be construed as a judicial endorsement of the genuineness of the impugned transactions in the hands of the assessee. 4.13 The plea that the transactions were executed on a recognised stock exchange through an anonymous, screen system also does not advance the assessee’s case, as regulatory authorities themselves have found that such platforms can and were misused for manipulation. 4.14 The learned counsel for the assessee placed reliance on the decision of the co-ordinate Bench of the Tribunal in the case of Nakchhatra Vimlesh Kumar Mehta 3777/Mum/2025. However, we are of th the said decision does not advance the assessee’s case, as each case must necessarily turn on its own facts and attendant circumstances. 4.15 .The decision of the Hon’ble Calcutta High Court in PCIT vs Swati Bajaj (2022) 139 taxmann. ITA No. adjudicate upon the issue whether the payment made by the assessee was part of an arrangement designed to -term capital gains. Further, the statements of the promoters and other connected persons, which form the foundation of the present addition, were neither in issue nor examined in the said proceedings. Accordingly, the said decision does not advance the assessee’s case and cannot be construed as a judicial endorsement of the genuineness of the impugned transactions in of the assessee. The plea that the transactions were executed on a recognised stock exchange through an anonymous, screen system also does not advance the assessee’s case, as regulatory authorities themselves have found that such platforms can and were misused for manipulation. The learned counsel for the assessee placed reliance on the ordinate Bench of the Tribunal in the case of Nakchhatra Vimlesh Kumar Mehta in ITA Nos. 3726 and 3777/Mum/2025. However, we are of the considered view that the said decision does not advance the assessee’s case, as each case must necessarily turn on its own facts and attendant .The decision of the Hon’ble Calcutta High Court in PCIT vs Swati Bajaj (2022) 139 taxmann.com 352 constitutes a leading ITA No. 3725/Mum/2025 41 Santosh Vimlesh Mehta adjudicate upon the issue whether the payment made by the assessee was part of an arrangement designed to term capital gains. Further, the statements of the promoters and other connected persons, which form the t addition, were neither in issue nor Accordingly, the said decision does not advance the assessee’s case and cannot be construed as a judicial endorsement of the genuineness of the impugned transactions in The plea that the transactions were executed on a recognised stock exchange through an anonymous, screen-based system also does not advance the assessee’s case, as regulatory authorities themselves have found that such platforms can be The learned counsel for the assessee placed reliance on the ordinate Bench of the Tribunal in the case of in ITA Nos. 3726 and e considered view that the said decision does not advance the assessee’s case, as each case must necessarily turn on its own facts and attendant .The decision of the Hon’ble Calcutta High Court in PCIT vs com 352 constitutes a leading Printed from counselvise.com authority on the tax treatment of alleged Long Term Capital Gains (LTCG) arising from transactions in penny stocks and on the scope of enquiry under section 68 of the Income 1961. The judgment firmly reiterates that over substance and that tax authorities are entitled duty-bound—to pierce the apparent legality of documents where surrounding circumstances indicate a colourable device. 4.16 At the heart of the ruling is the principle that documentary compliance is not conclusive Court held that production of contract notes, demat statements, bank entries, STT payment details, and proof of transactions through recognised stock exchanges does not automatically establish genuineness. Such documents only show the nature of transactions. Where shares of obscure or financially weak companies exhibit span, uncorrelated with market trends or company fundamentals, the assessee must offer a rational explanation. statutory burden under section 68 remains undischarged. 4.17 The Hon’ble High Court reaffirmed the continuing vitality of the doctrines laid down in Dayal v. CIT, holding t behaviour, and preponderance of probabilities in tax adjudication. Direct evidence of collusion or price manipulation is rarely available in such cases. Therefore, tax ITA No. authority on the tax treatment of alleged Long Term Capital Gains (LTCG) arising from transactions in penny stocks and on the scope of enquiry under section 68 of the Income 1961. The judgment firmly reiterates that form cannot prevail and that tax authorities are entitled to pierce the apparent legality of documents where surrounding circumstances indicate a colourable device. At the heart of the ruling is the principle that documentary compliance is not conclusive. The Hon’ble High Court held that production of contract notes, demat statements, bank entries, STT payment details, and proof of transactions through recognised stock exchanges does not automatically establish genuineness. Such documents only show the nature of transactions. Where shares of obscure or financially weak companies exhibit astronomical price rise within a short uncorrelated with market trends or company fundamentals, the assessee must offer a credible, commercially . In the absence of such explanation, the statutory burden under section 68 remains undischarged. The Hon’ble High Court reaffirmed the continuing vitality of the doctrines laid down in CIT v. Durga Prasad More , holding that human conduct, normal business behaviour, and preponderance of probabilities are decisive tools in tax adjudication. Direct evidence of collusion or price manipulation is rarely available in such cases. Therefore, tax ITA No. 3725/Mum/2025 42 Santosh Vimlesh Mehta authority on the tax treatment of alleged Long Term Capital Gains (LTCG) arising from transactions in penny stocks and on the scope of enquiry under section 68 of the Income-tax Act, orm cannot prevail and that tax authorities are entitled—and indeed to pierce the apparent legality of documents where surrounding circumstances indicate a colourable device. At the heart of the ruling is the principle that mere The Hon’ble High Court held that production of contract notes, demat statements, bank entries, STT payment details, and proof of transactions through recognised stock exchanges does not automatically establish genuineness. Such documents only show the apparent nature of transactions. Where shares of obscure or financially astronomical price rise within a short uncorrelated with market trends or company credible, commercially In the absence of such explanation, the statutory burden under section 68 remains undischarged. The Hon’ble High Court reaffirmed the continuing vitality of CIT v. Durga Prasad More and Sumati human conduct, normal business are decisive tools in tax adjudication. Direct evidence of collusion or price manipulation is rarely available in such cases. Therefore, tax Printed from counselvise.com authorities and courts are entitle from circumstantial evidence, including trading patterns, volume behaviour, timing of price rise and fall, lack of economic justification, and the assessee’s financial profile. 4.18 A significant aspect of the judgment is it “working backwards” investigation methodology Department. The Hon’ble High Court rejected the contention that investigation must begin with the assessee. It held that, given the scale and organised nature of accommodation e the Department was justified in first identifying penny stock companies, entry operators, brokers, and the modus operandi, and thereafter examining individual beneficiaries. Such an approach was described as pragmatic, proportionate, and consistent with the objective of uncovering large evasion. 4.19 On procedural fairness, the Hon’ble High Court clarified that non-furnishing of the investigation report or denial of cross examination does not ipso facto vitiate the assessment. The decisive test is prejudice named in third-party statements and additions are not based solely on such statements but on independent analysis of facts and circumstances, the absence of cross a curable irregularity. Natural justice, the Court emphasised, is flexible and cannot be stretched to paralyse legitimate tax ITA No. authorities and courts are entitled to draw reasonable inferences from circumstantial evidence, including trading patterns, volume behaviour, timing of price rise and fall, lack of economic justification, and the assessee’s financial profile. A significant aspect of the judgment is its approval of the “working backwards” investigation methodology adopted by the Department. The Hon’ble High Court rejected the contention that investigation must begin with the assessee. It held that, given the scale and organised nature of accommodation entry operations, the Department was justified in first identifying penny stock companies, entry operators, brokers, and the modus operandi, and thereafter examining individual beneficiaries. Such an approach was described as pragmatic, proportionate, and onsistent with the objective of uncovering large On procedural fairness, the Hon’ble High Court clarified furnishing of the investigation report or denial of cross does not ipso facto vitiate the assessment. The prejudice. Where the assessee is not specifically party statements and additions are not based solely on such statements but on independent analysis of facts and circumstances, the absence of cross-examination is, at best, a curable irregularity. Natural justice, the Court emphasised, is flexible and cannot be stretched to paralyse legitimate tax ITA No. 3725/Mum/2025 43 Santosh Vimlesh Mehta d to draw reasonable inferences from circumstantial evidence, including trading patterns, volume behaviour, timing of price rise and fall, lack of economic s approval of the adopted by the Department. The Hon’ble High Court rejected the contention that investigation must begin with the assessee. It held that, given the ntry operations, the Department was justified in first identifying penny stock companies, entry operators, brokers, and the modus operandi, and thereafter examining individual beneficiaries. Such an approach was described as pragmatic, proportionate, and onsistent with the objective of uncovering large-scale tax On procedural fairness, the Hon’ble High Court clarified furnishing of the investigation report or denial of cross- does not ipso facto vitiate the assessment. The Where the assessee is not specifically party statements and additions are not based solely on such statements but on independent analysis of facts examination is, at best, a curable irregularity. Natural justice, the Court emphasised, is flexible and cannot be stretched to paralyse legitimate tax Printed from counselvise.com enquiries, especially in matters involving public revenue and systemic abuse. 4.20 Finally, the judgment of Hon’ble High Court cla claims of being a “small investor,” reliance on broker advice, or absence of SEBI action do not dilute the assessee’s statutory burden. Investment decisions in high explanation grounded in commercial logic. Where such l absent and gains appear fantastical, the inference of a sham transaction is legally sustainable. 4.21 The disallowance made by the Assessing Officer case is not founded merely on statements of third parties but is based on a cumulative c abnormal price movements, illiquid trading patterns, financial fundamentals of the company and the failure of the assessee to offer a credible explanation consistent with ordinary human conduct. Applying the well probabilities and preponderance of probabilities, we are facie view that the transactions in question do not represent genuine investment activity. 4.22 In the present case, the assessee has failed to satisfactorily explain the role of the promoter of the company in the process of price manipulation, as well as the commercial justification for acquiring the shares through preferential allotment by way of a private arrangement. No credible explanation has been offered as to how the assessee identified the scrip as a potential investment ITA No. enquiries, especially in matters involving public revenue and Finally, the judgment of Hon’ble High Court cla claims of being a “small investor,” reliance on broker advice, or absence of SEBI action do not dilute the assessee’s statutory burden. Investment decisions in high-risk penny stocks demand explanation grounded in commercial logic. Where such l absent and gains appear fantastical, the inference of a sham transaction is legally sustainable. The disallowance made by the Assessing Officer is not founded merely on statements of third parties but is based on a cumulative consideration of the investigation findings, abnormal price movements, illiquid trading patterns, financial fundamentals of the company and the failure of the assessee to offer a credible explanation consistent with ordinary human conduct. Applying the well-settled doctrine of human probabilities and preponderance of probabilities, we are that the transactions in question do not represent genuine investment activity. In the present case, the assessee has failed to satisfactorily explain the role of the promoter of the company in the process of price manipulation, as well as the commercial justification for acquiring the shares through preferential allotment by way of a private arrangement. No credible explanation has been offered as to how the assessee identified the scrip as a potential investment ITA No. 3725/Mum/2025 44 Santosh Vimlesh Mehta enquiries, especially in matters involving public revenue and Finally, the judgment of Hon’ble High Court clarifies that claims of being a “small investor,” reliance on broker advice, or absence of SEBI action do not dilute the assessee’s statutory risk penny stocks demand explanation grounded in commercial logic. Where such logic is absent and gains appear fantastical, the inference of a sham The disallowance made by the Assessing Officer in present is not founded merely on statements of third parties but is onsideration of the investigation findings, abnormal price movements, illiquid trading patterns, financial fundamentals of the company and the failure of the assessee to offer a credible explanation consistent with ordinary human settled doctrine of human probabilities and preponderance of probabilities, we are of prime- that the transactions in question do not represent In the present case, the assessee has failed to satisfactorily explain the role of the promoter of the company in the process of price manipulation, as well as the commercial justification for acquiring the shares through preferential allotment by way of a private arrangement. No credible explanation has been offered as to how the assessee identified the scrip as a potential investment Printed from counselvise.com opportunity in the absence of any cogent financial fundamentals of the company. Unlike certain technology enterprises, where elevated valuations may be supported by identifiable growth drivers or future prospects, no such justification has been demonstrated in the case of M/s Banas Finance Ltd. 4.23 In the facts and circumstances of the case, prayer of the assessee and in the interest of justice, we feel it appropriate to restore the mater back to the file of the AO for providing one more opportunity to the assessee to produce the promoter(s) of the BFL including Shri Giriraj Agrawal or through whom the assessee purchased share allotment route, for justification of i purchase transaction. The ld AO is at liberty to carry out enquiry form the exit providers in the case of assessee but in cas observation adverse to the assessee, then assessee shall be provided due opportunity to rebut those observations. Assessing officer shall decide the issue in dispute in accordance with. 5. In view of the aforesaid discussion, we set aside of the Ld. CIT(A) on the issue in dispute and back to the file of the ld Assessing officer. Revenue’s appeal are accordingly ITA No. opportunity in the absence of any cogent financial fundamentals of the company. Unlike certain technology-driven or start enterprises, where elevated valuations may be supported by identifiable growth drivers or future prospects, no such justification has been demonstrated in the case of M/s Banas In the facts and circumstances of the case, prayer of the ssessee and in the interest of justice, we feel it appropriate to restore the mater back to the file of the AO for providing one more opportunity to the assessee to produce the promoter(s) of including Shri Giriraj Agrawal or Shri Pradeep Dhanuka through whom the assessee purchased share under for justification of its claim of genuineness of the ransaction. The ld AO is at liberty to carry out enquiry form the exit providers in the case of assessee but in cas observation adverse to the assessee, then assessee shall be provided due opportunity to rebut those observations. Assessing officer shall decide the issue in dispute in accordance view of the aforesaid discussion, we set aside of the Ld. CIT(A) on the issue in dispute and restore the matter back to the file of the ld Assessing officer. The ground are accordingly allowed for statistical purpose ITA No. 3725/Mum/2025 45 Santosh Vimlesh Mehta opportunity in the absence of any cogent financial fundamentals driven or start-up enterprises, where elevated valuations may be supported by identifiable growth drivers or future prospects, no such justification has been demonstrated in the case of M/s Banas In the facts and circumstances of the case, prayer of the ssessee and in the interest of justice, we feel it appropriate to restore the mater back to the file of the AO for providing one more opportunity to the assessee to produce the promoter(s) of Shri Pradeep Dhanuka, under preferential ts claim of genuineness of the ransaction. The ld AO is at liberty to carry out enquiry form the exit providers in the case of assessee but in case of any observation adverse to the assessee, then assessee shall be provided due opportunity to rebut those observations. The Assessing officer shall decide the issue in dispute in accordance view of the aforesaid discussion, we set aside the finding restore the matter The grounds of the for statistical purpose. Printed from counselvise.com 6. In the result, the appeal of the statistical purposes. Order pronounced in the open Court on Sd/- (ANIKESH BANERJEE JUDICIAL MEMBER Mumbai; Dated: 09/01/2026 Disha Raut, Stenographer Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// ITA No. In the result, the appeal of the Revenue is allowed nounced in the open Court on 09/01/2026. Sd/ (ANIKESH BANERJEE) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai ITA No. 3725/Mum/2025 46 Santosh Vimlesh Mehta is allowed for /01/2026. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "