DCIT CIRCLE 49(1), NEW DELHI V. BAL KISHAN ARORA, NEW DELHI

ITA 1814/DEL/2023

AI Insights

The case involves an appeal by the Deputy Commissioner of Income Tax against Sh. Bal Kishan Arora concerning the assessment year 2015-16. The primary issue was the deletion of an addition of Rs. 1,99,42,030/- by the Ld. CIT(A), which was initially made by the Ld. AO under Section 68 of the Income Tax Act. The addition was based on the suspicion that the transactions involving shares of M/s Gold Line Finvest International Ltd. were sham transactions aimed at obtaining undue tax benefits. The Tribunal, referencing a similar case (Smt. Krishna Devi), found that the shares were legitimately purchased and sold through public offers and stock exchanges, and thus, the transactions were not subject to the additions made by the Ld. AO.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471797 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Other Referred Cases: Smt. Krishna Devi (ITA No. \\u2013 125/2020)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHISH TRIPATHI
• Assessee Lawyers: VK SABHARWAL; A K BABBAR
• Keywords: Capital Gains
• Section: 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: ‘A’: NEW DELHI) BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER ITA No:- 1814/Del/2023 (Assessment Year- 2015-16) Dy. Commissioner of Income Tax, Circle 49(1), Delhi. Vs. Sh. Bal Kishan Arora, B-25, Ground Floor, Naraina Vihar, Delhi-28. PAN No: AAAPA2127Q APPELLANT RESPONDENT Revenue by : Shri Ashish Tripathi, Sr. DR Assessee by : Shri VK Sabharwal, Adv. & Shri AK Babbar, Adv. Date of Hearing : 10.03.2025 Date of Pronouncement : 12.03.2025 ORDER PER AMITABH SHUKLA, AM: This appeal by Revenue is directed against the order of National Faceless Appeal Centre, Delhi [for short hereinafter referred to as the “(Ld. CIT(A)”] dated 17.04.2023 for Assessment Year 2015-16. ITA- 1814/Del/2023 Bal Kishan Arora. Page 2 of 6 2. The only issue raised by the Revenue in the appeal is regarding the action of the Ld. CIT(A) in deleting an addition of Rs. 1,99,42,030/- U/s 68 of the Act made by the Ld. AO. 3. The Ld. AO has discussed the issue in pages 2 to 45 of his order. The Ld. DR submitted that the assessee had purchased 50,000/- shares of a company called M/s Gold Line Finvest International Ltd., on 15.01.2013, for Rs. 5 lakhs @ Rs. 10 per shares. It was submitted that, the impugned shares were bought by way of a public issue offer. The Ld. DR submitted that the said shares were sold by the assessee after one year, between the period on 29.04.2014 to 07.05.2014 for total consideration of Rs. 1,99,42,030/-, through Bombay Stock Exchange. The assessee had offered long term capital gains of Rs. 1,94,02,145/- on the said shares. The Ld. AO conducted an analysis of the share transactions showing around 4000% returns accruing to the assessee and concluded that it was a case of sham transactions. The Ld. AO held that M/s Gold Line Finvest International Ltd. was a company having negligible financial strength to justify above hike in its share price. The Ld. DR submitted that the Ld. AO rightly subscribed to the view of an artificial increase in ITA- 1814/Del/2023 Bal Kishan Arora. Page 3 of 6 the share prices alluding towards a pre-determined collusive action on the part of a cartel. The Ld. AO also placed reliance on inquires in penny stock company conducted by Investigation Directorate of Calcutta, as well as statements of some local Calcutta based parties adverting that large scales manipulations had taken place in various companies including the Gold Line Finvest International Ltd. The Ld. AO also placed reliance upon decisions of Hon’ble ITAT, Nagpur Bench, Mumbai Bench, Chandigarh Bench and of Hon’ble Apex Court in support of his conclusions. The Ld. DR rejected the arguments of the assessee that it had purchased and sold stocks through stock exchanges and is not privy and party to any manipulations and therefore cannot be denied the benefit of long- term capital gains. The Ld. DR argued that M/s Gold Line Finvest International Ltd., is a penny stock company and that the action of the AO and the Ld. CIT(A) is correct. The Ld. Counsel for the assessee argued in favour of the order of the Ld. CIT(A) inter alia including his reliance upon the decision of Hon’ble Delhi High Court in the case of Smt. Krishna Devi (ITA No. – 125/2020) where nearly identical facts were found to be existing. ITA- 1814/Del/2023 Bal Kishan Arora. Page 4 of 6 4. We have heard rival submissions in the light of the material available on record. It is undisputed fact of the case that the shares of M/s Gold Line Finvest International Ltd., were purchased by the assessee through a public offer and sold through Bombay Stock Exchange. Thus, both the sales as well as purchase were made using public platforms. It is not a case where shares were purchased off the stock exchange, by way of a private placement. Similarly, the sale has also taken place on the Bombay Stock Exchange platforms leaving no scope for any artificial rigging or manipulation. It would be too far-fetched to presume any manipulation in these transactions which were happening in public scrutiny. We have also noted that the Hon’ble Delhi High Court in the case of Smt. Krishna Devi (supra), had an occasion to deal a situation of capital gains arising from purchase and sales of shares belonging to M/s Gold Line Finvest International Lt. In the said case of Smt. Krishna Devi (supra), also, the Ld. AO had made addition u/s 68 of the Act, which was over- ruled by the Hon’ble High Court. Their lordship had held that finding of the Ld. AO were purely an estimation based on conjectures. It was concluded therein that the AO ‘s findings were not based upon any cogent evidences and that reliance of the revenue in the case of ITA- 1814/Del/2023 Bal Kishan Arora. Page 5 of 6 Suman Poddar and Sumati Dayal was of no assistance. We find force in the sufficient arguments of the Ld. CIT(A) that the ratio laid down in the case of Smt. Krishna Devi (supra) is squarely applicable as the facts of the present case are nearly identical. The revenue on its part has also not able to adduce any argument to indicate that the facts of the present case are distinguished qua those available in the case of Smt. Krishna Devi (supra). Accordingly, we are of the considered view that there is no case for any interference with the order of Ld. CIT(A) at this stage. The order of Ld. CIT(A) is therefore confirmed and all the grounds raised by the Revenue are dismissed. 5. In the result, appeal of the Revenue is dismissed. Order pronounced in the Open Court on 12.03.2025 Sd/- Sd/- (VIKAS AWASTHY) (AMITABH SHUKLA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 12/03/2025. Pooja/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) ITA- 1814/Del/2023 Bal Kishan Arora. Page 6 of 6 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 1. Date of dictaƟon of Tribunal order 10.3.25 2. Date on which the typed draŌ Tribunal Order is placed before the DictaƟng Member 10.3.25 3. Date on which the typed draŌ Tribunal order is placed before the other Member 4. Date on which the approved draŌ Tribunal order comes to the Sr. PS/PS 5. Date on which the fair Tribunal order is placed before the DictaƟng Member for pronouncement 6. Date on which the signed order comes back to the Sr.PS/PS 7. Date on which the final Tribunal order is uploaded by the Sr.PS/PS on official website 8. Date on which the file goes to the Bench Clerk alongwith Tribunal order 9 Date of killing off the disposed of files on the judisis Portal of ITAT by the Bench Clerks 10. Date on which the file goes to the Supervisor (Judicial) 11. The date on which the file goes to the Assistant Registrar for endorsement of the order 12. Date of Despatch of the order "