INCOME TAX OFFICER 22(3)(6), MUMBAI, MUMBAI V. SACHIN DURGESH CHHEDA, MUMBAI

ITA 3376/MUM/2025

AI Insights

The case involves the Income Tax Department appealing against the order of the CIT(A) which had deleted the addition of Rs. 7,88,133 claimed by the assessee as short-term capital loss. The revenue argued that these were accommodation entries in a penny stock, Steel Exchange India Ltd., used to create artificial gains/losses and evade taxes. The assessee, Sachin Durgesh Chheda, defended his transactions by providing substantial documentary evidence including contract notes, demat statements, and bank transactions, and argued that the additions were unjustified and violated principles of natural justice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 773498 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Appeal Filed On: 13-05-2025
• Other Referred Cases: CIT vs. Mukesh Ratilal Marolia, PCIT 31 V/S INDRAVADAN JAIN HUF, CIT vs. Pooja Agarwal, Farzad Sheriar Jehani vs. ITO, Shri Yogesh P Thakkar & others vs. DCIT CC 3(4), Farrah Marker vs. ITO, Sunita Jain vs. ITO, CIT vs Ashish International
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HARSHAD M. KARNIK
• Assessee Lawyers: SATYAPRAKASH SINGH
• Keywords: Question of law; Unexplained cash credit; Salary income; Capital Gains; Principle of natural justice; Accommodation entries; Opportunity of cross examination; Penny stocks; Bogus
• Section: 68

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER I.T.A. No. 3376/Mum/2025 A.Y: 2018-19 ITO – 22(3)(6) 213, 2nd Floor, Pirmal Chamber, Lalbaugh, Mumbai – 400012. Vs Sachin Durgesh Chheda 101, First floor, Sorab House, Senapati Marg, Dadar (W), Mumbai – 400025. AAWPC6415D (Appellant) (Respondent) Assessee by Shri Satyaprakash Singh Revenue by Shri Harshad M. Karnik, Sr. DR Date of Hearing 26.08.2025 Date of Pronouncement 22.09.2025 ORDER Per: SHRI. SANDEEP GOSAIN, J.M.: The present appeals have been filed by the revenue challenging the impugned order dt. 18.03.2025 passed under section 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre (NFAC) / CIT(A) for the assessment year 2018-19. 2. All the grounds raised by the revenue are interrelated and interconnected and relates to challenging the order of Ld. CIT(A) in deleting the additions of Rs. 7,88,133/- being accommodation entry of ‘bogus short term capital loss’. Therefore I have decided to adjudicate all the grounds through the present consolidated order. Printed from counselvise.com 2 ITA No. 3376/Mum/2025 Sachin Durgesh Chheda, Mumbai. 3. In this regard Ld. DR while relying upon the order of AO, submitted that ‘short term capital loss’ was an accommodation entry carried out by the assessee through scrip name Steel Exchange India Ltd. It was also submitted that in such penny scrip, trading transactions of purchase and sale are not effected for commercial purpose but to create artificial gain / loss and complete the cycle of circular trading with a view to evade taxes. 4. Whereas on the contrary Ld. AR while relying upon the orders passed by Ld. CIT(A) also reiterated the same arguments as were raised by him before the revenue authorities. 5. I have heard the counsels for both the parties, perused the material placed on record, judgments cited before us and also the orders passed by the revenue authorities. From the records I noticed that Ld. CIT(A) had dealt with in detail the said issue and the operative portion of order of Ld. CIT(A) is reproduced herein below: 2. Aggrieved by the above order the assessee filed further appeal before the CIT(A) raising following Statement of facts & Grounds of Appeal:- Statement of facts:- The appellant is Resident Individual deriving income from Salary, Share trading business, Income from capital gains and i n c o m e f r o m other sources. Return of Income for the Assessment Year under consideration was filed u/s 139( 1) on 27th July 2018 declaring total income of Rs.22,85,660/-.The Appellant had declared the Net Short Term Capital Gain on sale of equity shares amounting to Rs.3,18,477/- which includes short term capital loss of Rs.7,88,133/- Printed from counselvise.com 3 ITA No. 3376/Mum/2025 Sachin Durgesh Chheda, Mumbai. A. Facts related to Ground No.1 & 2 During the course of assessment proceedings I have stated that 1 made purchase and sale of shares via stock exchange of BSE & NSE and accordingly submitted contract notes along with demat statements reflecting the said transactions and payments and sell of shares done via broker through bank accounts .The assessing officer not doubted evidences of documents submitted for said transactions. I have explained the whole transactions through supporting documents then how can be it is unexplained credit ? Same can be evident that assessing officer not added the sale price i.e credit in books of accounts as well as in bank statements instead of that added debit entries i.c short term capital loss. The Provisions of section 68 applies only “where any sum found to be credited in the books of an assessee maintained for any previous year, and as’sesse offers no explanation about the nature and source thereof or the explanation offered by him is not in the opinion of Assessing officer satisfactory the sum so credited may be charged to income tax as the income of the assesse of that previous year”. Thus Assessing officer wrongly applies provisions of section 68. B. Facts related to Ground No. 3:- The assessing officer heavily relied on the statement of Naresh Jain which was taken during the course of search operation by Investigation department of income tax .1 do not know who is Naresh Jain also Assessing officer does not provided to me any documents or statements of Naresh Jain which contains my name as beneficiary. I had purchased and sale shares through broker Ventura Securities Limited from BSE and NSE exchange, contract notes of which stating timings of purchase and sale of shares therein. It was not a case of preferential allotment .Further for your good self provided the certain extract of questions & answers in his assessment order in page no 24 where in Q.39 list of scripts & broker names who had helped for running and rigging the price of scrip are given as follows:- Name of the script Broker Name: Steel exchange ltd 1. Karvy stock broking ltd, 2. Guiness fiance and leasing Pvt ltd(Kolkata), 3. Globe Capital Markets ltd, 4. Fair Intermediate Investment pvt ltd Printed from counselvise.com 4 ITA No. 3376/Mum/2025 Sachin Durgesh Chheda, Mumbai. From the above details nowhere contains my broker Name i.e Ventura Securities limited.Thus just because of few transactions in this scrip was operated by broker were accommodation entries, it does not mean all transactions done on exchange are bogus or mere accommodation entries specifically when buy & sell transactions done on exchanges only. Further the learned AO had generalize the SEBI Inquiry related to trades executed of steel exchange shares on BSE & NSE exchange done by some suspected parties to all traders. The learned AO has not consider /not objected the following documentary evidences submitted by me 1. Photocopies of broker contract notes related to purchase & sale of shares on particular exchange. 2. Photocopy of demat account. 3. Bank statement highlighting payment to and receipts entries from broker. 4. Photocopy of screenshot of money control that showing transaction are still done on Exchange as on today. 5. Copy of computation for A.Y.17-18,A.Y.19-20 showing that we are regular investors & earning Short term capital gain which is offer for tax .It is not single transactions or one time transactions of shares that we have done in A. Y. 18-19. 6. Copy of broker ledger. C. Facts related to Ground No.4:- 1. The learned AO neither provided documents upon which he relied on nor provided opportunity for cross examination of parties on whose statement AO relied upon .Thus one side action taken by AO is unlawful which violates principal of natural justice. 2. The Appellant craves leave to place further facts and evidences in support of his claims, contentions and the grounds of appeal at or before the hearing of appeal. 3. Being aggrieved the appellant had preferred the appeal before your Honour to get justice on the basis of facts of the case and law on the subject. Printed from counselvise.com 5 ITA No. 3376/Mum/2025 Sachin Durgesh Chheda, Mumbai. 4. In view of the above, it is submitted that the addition made may kindly be deleted. Grounds of appeal:- 1. The order passed by the Assessing Officer is excessive, unreasonable, arbitrary, unlawful, unjustified, against the provisions of Income Tax Act and therefore liable to be quashed. 2. On facts and circumstances of the case and in law, the Assessing Officer has erred in making addition of Rs.7,88,133/- of short term capital loss which was debited while arriving net short term capital gain treated as unexplained credit under section 68 of the Income Tax Act, 1961. 3. Assessing officer made erred in making addition of Rs.7,88,133/- on the basis of presumption of Investigation wing of Income tax department & SEBI investigation enquiry without considering our documents and arguments filed via reply to show cause notice as well as via videoconferencing and further documents submitted as asked at the time of video conferencing. 4. Principal of natural justice violated by not providing opportunity of cross examination of parties whose statement on which AO relied upon. Also no documents provided on the basis of which addition made. 5. The appellant craves to alter, add, delete, substitute, or modify and other grounds of appeal. 3. Notices u/s 250 were issued to the assessee to substantiate the grounds raised. In response, the appellant made following Submissions:- 3(a). The assessee submissions are as under:- 1. Related to Ground No.1 & 2: During the course of assessment proceedings, I have stated that I made purchase and sale of shares via stock exchange of BSE & NSE and accordingly submitted the followings documents during the course of assessment proceedings stated as below . 1. Photo copies of contract note of broker for purchase & sale of shares (Showing timings of trade executed related to buy & sale of shares) on BSE/NSE exchanges. 2. Broker ledger 3. Demat statement Printed from counselvise.com 6 ITA No. 3376/Mum/2025 Sachin Durgesh Chheda, Mumbai. 4. Photocopy of bank statements showing payments and receipts of shares from broker.The Provisions of section 68 applies only “where any sum found to be credited in the books of an assessee maintained for any previous year, and assessee offers no explanation about the nature and source thereof or the explanation offered by him is not in the opinion of Assessing officer satisfactory the sum so credited may be charged to income tax as the income of the assessee of that previous year”. The assessing officer not doubted evidences of documents submitted for said transactions. I have explained the whole transactions through supporting documents then how can be it is unexplained credit? Same can be evident that assessing officer not added the sale price i.e. credit in books of accounts as well as in bank statements instead of that added debit entries i.e. short term capital loss. Thus, assessing officer wrongly applies provisions of section 68. Supporting case laws: (Attached with Annexure V) 1. CIT vs. Mukesh Ratilal Marolia (Bombay High Court) Summary Fact that a small amount invested in \"penny\" stocks gave rise to huge capital gains in a short period does not mean that the transaction is \"bogus\" if the documentation and evidences cannot be faulted. 2. PCIT 31 V/S INDRAVADAN JAIN HUF (Bombay High Court) Summary where shares sold & purchase on exchange no addition can be made u/s 68 & also there is no substantial question of law arise. 3. CIT vs. Pooja Agarwal (Rajasthan High Court) Summary Capital Gains from Penny Stocks: If the transaction is supported by documents like contract notes, demat statements etc. and is routed through the stock exchange and if the payments are by account- payee cheques and there is no evidence that the cash has gone back to the assessee’s account, it has to be treated as a genuine transaction and cannot be assessed as unexplained credit. 4. Farzad Sheriar Jehani vs. ITO [ITA NO.2065/MUM/2023 dt 22.12.2023 Summary Hon, ITAT observed that while the financials of the company did not align with the share prices, there was no evidence linking assessee to any dubious transactions or price rigging and even in the SEBI Printed from counselvise.com 7 ITA No. 3376/Mum/2025 Sachin Durgesh Chheda, Mumbai. report there is no mention or reference to the involvement of the assessee. ITAT held that suspicion alone cannot be the basis for rejecting the taxpayer’s claims and thereby deleted the addition and allowed the assessee’s appeal. 5. Shri Yogesh p Thakkar & others v/s DCIT CC 3(4) (ITA Nos. 1605 /1612 /Mum /2021 Section 68 and 69C: Long term capital gains claimed as exempt u/s. 10(38) cannot be considered as bogus merely based on the investigation reports of SEBI or DIT. No addition can be made merely on the basis of surmise, suspicion and conjecture and without any independent verification by the AO. Analysis & Adjudication:- 3(b). I have considered facts & circumstances of the case. I have also considered the assessee’s submissions. The assessee filed demat statements, broker ledger, bank statements evidencing the genuineness and identity of the transactions and the assessee relied on various case laws which supports the assessee’s contentions. Since the assessee has already got the credit through banking channels on sale of shares, therefore, the same does not amount to unexplained credits. 3(c). I have gone through the case laws and I agree with the proposition laid won by the hon’ble higher courts in the above case laws. In the instant case, since the transaction was carried through banking channels and through recognised stock exchanges and through his broker Ventura Securities Ltd which clearly shows that it is a transaction towards sale of shares and credits are all recognised and identified. Therefore, the addition made as unexplained credits u/s. 68 of the IT Act is not correct. Accordingly, the addition made by the AO is not warranted and the same is hereby deleted. The assessee’s ground is hereby allowed. 4. Ground No. 3:- 4(a). The assessee’s submissions are as under:- Related to Ground No.3: The assessing officer heavily relied on the statement of Naresh Jain which was taken during the course of search operation by Investigation department of income tax. I do not know who is Naresh Jain also Assessing officer does not provided to me any documents or statements of Naresh Jain which contains my name as Printed from counselvise.com 8 ITA No. 3376/Mum/2025 Sachin Durgesh Chheda, Mumbai. beneficiary. I had purchased and sale shares through broker Ventura Securities Limited from BSE and NSE exchange, contract notes of which stating timings of purchase and sale of shares therein. It was not a case of preferential allotment. Further for your good self- provided the certain extract of questions & answers in his assessment order (copy attached with Annexure VI) in page no 24 where in Q.39 list of scripts & broker names who had helped for running and rigging the price of scrip are given as follows: - Name of the Script Broker Name: Steel Exchange India Ltd 1. Karvy Stock Broking Ltd., Scrip code(534748) 2. Guiness Fiance And Leasing Pvt. Ltd. (Kolkata), 3. Globe Capital Markets Ltd., 4. Fair Intermediate Investment Pvt. Ltd. From the above details no-where contains my broker Name i.e Ventura Securities Limited. Thus, just because of few transactions in this scrip was operated by broker were accommodation entries, it does not mean that all transactions done on exchange are bogus or mere accommodation entries specifically when buy & sell transactions done on exchanges only. I am attaching SEBI adjudication order dated 29/01/2021 related to Steel Exchange (SEIL) share which provides table of that 23 suspected entries have done trading on BSE & NSE and total volume of shares carried out by this suspected parties were tabulated on page 7 & 8 and it observed as follows: The summary of the trading done by the suspected entities on BSE and NSE during the Investigation period is given below: Volume at BSE – 2,68,12,6 28 Volume at NSE – 8,59,00,024 S.no Client Name GrossBuy % to MktVolu me GRO SSSE LL %to Mkt Volum e Gro ss Buy % to M k t V ol u GR OSS SEL L % to M k t V ol u Printed from counselvise.com 9 ITA No. 3376/Mum/2025 Sachin Durgesh Chheda, Mumbai. m e m e 1. Monotype India Limited 14.66 213 5 47 20.9 3,13 5 7. 8 1 21, 26 325 2. 4 8 50, 23 059 5 8 5 2. Guiness Finance Leasing Pnvate bmited 6800 0 0 25 91,6 71 0 3 4 2,5 060 0 0 2 9 10, 46 628 1 2 2 3. Kaberi Goods Pnvate Limited 6030 0 022 680, 602 2 5 4 79 350 0 0 9 2,5 2,7 48 0 2 9 4. Acuity Merchants 8013 1 03 133, 269 0. 5 10. 241 0. 0 1 3,2 3.5 21 0 3 8 Pvt Ltd 5. Coastal Fertilisers bmited 0 0 227,4 00 08 5 0 0 0 0 6. Akansha Commodit ies Pnvate bmited 0 0 200.4 44 0 75 0 0 16.35 6 00 2 7 PadmaRe wachand Advani 180 626 0 67 305.5 42 1. 14 11,39 358 1.3 3 11,89 358 1 38 8 Richhold Properties Pvt Ltd 0 0 166,5 00 06 2 0 0 0 0 9, Amodini Enclave Pnvate bmited 0 0 117,2 00 04 4 0 0 0 0 Printed from counselvise.com 10 ITA No. 3376/Mum/2025 Sachin Durgesh Chheda, Mumbai. 10. Kamlesh Bhikhabh ai Shah 1,22,93 9 0. 46 122,9 39 0. 46 8,65, 857 1.0 1 9,65, 857 1. 12 11 Ankit Jagdishb hai Pithava 2,16,81 0 0. 81 216,8 10 0. 81 3,07, 742 0.3 6 3,81, 691 0. 44 12 InvorexVi ncomPvt. Ltd 2,83,70 0 1. 06 325,7 00 12 1 0 0 2,500 0 13. Hemangin i Vinitkum ar Parikh 9,12,87 5 3. 4 871,9 10 3. 25 24,86 ,522 2.8 9 25,52 .984 2. 97 14. Divyaben Hiteshbh aiGanqan i 7,44,28 5 2. 78 744,2 85 2. 78 21,41 ,104 2.4 9 21,41 ,104 2. 49 15. Kalpesh Dineshbh ai Patel 6,74,88 0 2. 52 674,8 80 2. 52 19,57 ,147 2.2 8 19,57 ,147 2. 28 16. Nareshbh aiPappub haiParma r 6,32,00 5 2. 36 632,0 05 2. 36 19,38 ,560 2.2 6 19,38 ,560 2. 26 17. Chandhkab en Natubhai Panchal 4,7 5,8 35 1.77 475 ,83 5 1.77 17, 69, 312 2.06 17, 69, 312 2 . 0 6 18 Kirtan Gopalbhai Dhola 5,3 1,3 27 1.98 531 ,32 7 1 98 12, 52, 994 1.46 12, 52, 994 1 . 4 6 19. PranlalMah 3,4 1.28 343 1.28 9,8 1.15 9,8 1 Printed from counselvise.com 11 ITA No. 3376/Mum/2025 Sachin Durgesh Chheda, Mumbai. asukhbhai Mehta 3,6 79 ,67 9 6,5 70 6,5 70 . 1 5 20. Vijaya Parsharam Salvi 2,9 7,5 31 1.11 297 ,53 1 1.11 9,1 8,0 56 1.07 9,1 8,0 56 1 . 0 7 21. Hahshkum ar Kantilal Patel 1,7 3,9 50 0.65 173 ,95 0 0.65 5,2 0,2 10 0.61 5,2 0,2 10 0 . 6 1 22. Guiness Commoditie s Private Umited 1,2 9,2 50 0.48 5,3 00 0.02 17, 000 0.02 1,4 0,9 50 0 . 1 6 23. Deepak Parsharam Salvi 11, 38, 285 4.25 10, 76, 769 4.02 33, 48, 005 3.9 34, 01, 679 3 . 9 6 24. Godavari Commercial Services Private Umited 9,6 0,3 16 3.58 0 0 8,1 00 0.01 3,7 5,6 00 0 . 4 4 Total of Suspec ted Entitie s 94.92,937 35. 4 1,05, 08,6 8,3 39. 21 2,21, 23,0 53 25. 77 2,71, 56.8 84 316 1 Remain ingEnti ties 1,73,19,69 1 64. 6 1,63, 03,9 45 60. 79 6,37, 76,9 71 74. 23 5,87, 43,1 40 68. 39 Total Marke t 2,68.12,6 28 100 2,68 .12, 628 100 8.59 ,00, 024 100 8,59 ,00, 024 100 Printed from counselvise.com 12 ITA No. 3376/Mum/2025 Sachin Durgesh Chheda, Mumbai. j) It is observed from the table above that on BSE, the suspected entities had purchased 35.40% and sold 39.21% of the total market volume in the scrip of SEIL and on NSE suspected entities purchased 25.77% and sold 31.61% of the market volume on NSE, during the investigation period. k) It is alleged that during the period October 19, 2017 to November 28, 2017, false SMSs were being circulated among investors recommending purchase of securities of SEIL. It is, prima facie, observed from the trading pattern of the suspected entities that significant numbers of synchronised and reversal trades were executed among them prior to the period of circulation of alleged false SMSs. Accordingly, the analysis with respect to the variation in daily market volume of SEIL was done for the three patches during the Investigation Period. l) The details of the alleged synchronized trades (where the buy and sell order quantity and rate were same and orders for these transactions were placed within time gap of one minute) among suspected entities is given as below: The learned AO had Generalize the SEBI Inquiry related to trades executed of Steel Exchange India Ltd. shares on BSE & NSE exchange done by some suspected parties to all traders without going through the SEBI order. Thus, in absence of my name or my broker’s name i.e. Ventura Securities Ltd. in Income tax investigation report or SEBI order, the re-assessment proceedings initiated against me are baseless and void. Accordingly, order of re-assessment needs to be quashed. The learned AO not gone through properly my explanation and documents submitted in show cause reply filed as well as details submitted which was asked in video conferencing. Following is the explanation & details submitted with letter dated 28-02-2024. 1. The scrip/share steel exchange is still traded on BSE/NSE exchange platform as on today i.e. on 06/02/2025 at price of Rs.9.93 & 9.95 (Screen shot of both BSE/NSE exchange showing price of this shares is attached.) with volume of 6.99LAC shares on BSE and volume of 1,97,000 shares on NSE, if this scrip/share was bogus then SEBI could have banned it. When government authorities are allowing trading on this scrip on exchange as on today also how can your good selfconsider my transactions done on exchange as bogus or mere accommodation entries? Printed from counselvise.com 13 ITA No. 3376/Mum/2025 Sachin Durgesh Chheda, Mumbai. 2. Genuineness of any transactions depends upon 3 things Credit worthiness, genuineness and Identity with documentary proofs. Credit worthiness - Source of purchase explained with bank statements Genuineness - Contract notes of exchanges with timings of trades Identity - Screen short of Money control reflecting Steel Exchange of India Ltd. shares still traded in both exchanges. Further I am the regular investor and not the one-time investor. I have regularly offer net short term capital gains while filing the returns of income. For your good self-reference (same was submitted during the course of assessment in reply to details asked in video conferencing) submitting 3 years net short term capital gain figures as follows: Short Term Capital Gain A.Y.17-18 26,35,765/- Tax paid on this while filing ITR A.Y.18-19 3,18,477/- Tax paid on this while filing ITR A.Y.19-20 10,99,675/- Tax paid on this while filing ITR Computation of A.Y.17-18 & A.Y.19-20 also attached with short term capital gain working in it for your reference.” Above analysis given to justify that I am the regular investor and had not done just single transactions in Steel Exchange of India to claim short term loss benefit in A.Y.18-19. I have paid taxes on net gains of short-term capital gains every year. This shows I am a genuine trader & therefore addition made on my case need to be deleted. Analysis and Adjudication:- 4(b). I have considered facts & circumstances of the case. I have also considered the assessee’s submissions. At page no. 4 of the assessment order, the AO tabulated some of the brokers involved in manipulation of stocks of The steel exchange of India Ltd which are as under:- 1. Karvy Stock Broking Ltd., 2. Guiness Fiance And Leasing Pvt. Ltd. (Kolkata), 3. Globe Capital Markets Ltd. 4. Fair Intermediate Investment Pvt. Ltd. Printed from counselvise.com 14 ITA No. 3376/Mum/2025 Sachin Durgesh Chheda, Mumbai. However, the assessee transacted through its broker M/s. Ventura Securities Pvt. Ltd which is not figured in the above list as mentioned by the AO. Thus, there may be manipulation of accommodation entries by certain brokers but the assessee’s broker, M/s. Ventura Securities Pvt. Ltd does not figure in the list, therefore, it’s not correct to say that all the transactions and all the brokers were involved in providing accommodation entries in respect of above scrip i.e., Steel Exchange of India Ltd. Further, SEBI in its adjudication order dated 29.01.2021 related to Steel Exchange of India Ltd tabulated 23 suspected entries at page 7 & 8 of its order in which the assessee’s case was not figuring in. Thus, only few suspected brokers were involved in taking accommodation entries. Therefore, it is not correct to say that the assessee is also involved in doing these transactions. Accordingly, the addition made by the AO is not warranted and the ground raised by the assessee is hereby allowed. 5. 5( a). Ground No. 4 & 5:-The assessee’s submissions are as under:- Related to Ground No. 4: The learned AO have not given any circumstantial evidences which infers that accommodation entries executed by me with Mr. Naresh Jain. Also not provided cross examination of parties or statement or documents of Mr. Naresh Jain in which my name is found and there is not even a whisper of any direct evidence justifying the case for AO reasoning for re -opening of the case. Thus, Principal of natural justice violated by neither providing opportunity of cross examination of parties whose statement on which AO relied upon nor provided any documents on the basis of which addition made. FOLLOWING CASE LAWS SUPPORING OUR ARGUMENT i. Farrah Marker vs. ITO (ITAT Mumbai) Long-term capital gains on sale of \"penny\" stocks cannot be treated as bogus & unexplained cash credit if the documentation is in order & there is no allegation of manipulation by SEBI or the BSE. Denial of right of cross-examination is a fatal flaw which renders the assessment order a nullity. ii. Sunita Jain vs. ITO (ITAT Ahmedabad) Failure to provide a copy of the statement relied upon and of cross- examination renders the assessment order void. The claim of capital Printed from counselvise.com 15 ITA No. 3376/Mum/2025 Sachin Durgesh Chheda, Mumbai. gains from penny stocks cannot be denied on presumption and surmises by disregarding direct evidences relating to the sale/purchase transactions of shares supported by broker’s contract notes, confirmation of receipt of sale proceeds through regular banking channels and the demat account. iii. CIT vs Ashish International (Bombay high court) A statement by the alleged vendor that the transactions with the assessee are only accommodation entries and thatthere are no sales or purchases cannot be relied upon by the AO unless the assessee is given the opportunity to cross-examine the vendor. Related to Ground No. 5: I like to state that for same shares transactions i.e. Steel Exchange of India my brother (Nimit Durgesh Chheda) case was re-opened for A.Y.18-19 however in his case learned AO after considering the same arguments & explanations not made any addition and accepted the return income as assessed income. I am attaching the assessment order of Nimit Durgesh Chheda attached. Considering the above explanation’s, details and documents I plead to provide me fair justice and allow appeal in my case. Analysis and Adjudication:- 5(b). I have considered facts & circumstances of the case. I have also considered the assessee’s submissions. With regard to the above accommodation entries statement of main person Mr. Naresh Jain was recorded during the course of search which does not mention any specific details or evidence about the assessee’s involvement. There is not even any whisper about the assessee’s involvement. Thus, few of the brokers and some transactions in respect of the scrip Steel Exchange of India Ltd might have manipulated by the mediators, but it’s not correct to say that all transactions of purchase and sale was involved in these accommodation entries. Therefore, the addition made by the AO is not warranted and the same is hereby deleted. Accordingly, the assessee’s ground is hereby allowed. In the result, the assessee’s appeal is hereby allowed. 6. After having gone through the submissions made by both the parties and also having gone through the records, I found that assessee is into share trading business and Printed from counselvise.com 16 ITA No. 3376/Mum/2025 Sachin Durgesh Chheda, Mumbai. during the year under consideration had made purchase and sale of shares via stock exchange. However AO was of the view that assessee had created fictitious long term capital loss by trading in a scrip of Steel Exchange India Ltd and made additions. 7. In this regard assessee during the course of assessment proceedings and also before me had placed on record of all the documentary evidences including Dmat Statement, broker ledger, bank statements evidencing the genuineness and identity of the transactions and relied upon the case laws. I noticed that assessee had already got the credit through banking channels on the sale of shares therefore in my view the same cannot be treated as unexplained credits. It is important to mention here that at page 4 of the assessment order, the AO had tabulated some of the brokers involved in the manipulation of stocks of Steel Exchange India Ltd. However assessee had not transacted through any of the brokers tabulated in the order of the AO but had transacted through its broker M/s. Venture Securities Pvt Ltd, which is not figured in the list as mentioned by the AO. Even otherwise entire transactions of the assessee were carried through banking channels and through recognised stock exchange which clearly shows that it is a transaction towards sale of shares and credits are all recognized and identified. I have also noticed that SEBI in its adjudication order dated 24.01.2021 related to Steel Exchange of India Pvt Ltd tabulated 23 suspected Printed from counselvise.com 17 ITA No. 3376/Mum/2025 Sachin Durgesh Chheda, Mumbai. entries in which assessee’s name is not figured out. Even in the statement of main person i.e Naresh Jain recorded during the course of search does not mentioned the name of assessee or his involvements. Therefore considering all these facts I dismiss the grounds raised by the revenue and upheld the order passed by Ld. CIT(A). 8. Therefore after having considered the facts as discussed by me above and keeping in view that no new facts, circumstances or documents have been placed before me during the course of proceedings in orders to controvert or rebut the lawful findings so recorded by Ld. CIT(A). Therefore I find no reasons to interfere into or to deviate from the well reasoned finding recorded by Ld.CIT(A). Thus I dismiss the grounds raised by the revenue. 9. In the result appeal filed by the revenue stands dismissed with no order as to cost. Order pronounced in the open court on 22/09/2025 Sd/- (SANDEEP GOSAIN) (JUDICIAL MEMBER) Mumbai: Dated: 22/09/2025 KRK, Sr. PS. Printed from counselvise.com 18 ITA No. 3376/Mum/2025 Sachin Durgesh Chheda, Mumbai. Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order (Asstt. Registrar) ITAT, Mumbai Printed from counselvise.com "