INCOME TAX OFFICER, MUMBAI V. TEJAS BHARATKUMAR SAGLANI, MUMBAI

ITA 4312/MUM/2025

AI Insights

The case involves an appeal by the Revenue against the order of the Learned CIT(A) which had deleted the addition made by the Assessing Officer on account of alleged Long Term Capital Gain (LTCG) from the sale of shares of M/s Comfort Inftech Ltd., identified as a penny stock. The Revenue contended that the transactions were stage-managed to facilitate the assessee in converting unaccounted income into legitimate LTCG. The CIT(A) had deleted the addition primarily due to lack of direct evidence linking the appellant's transactions with any manipulation or bogus LTCG generation. The Tribunal found that the CIT(A) had not adequately verified the transactions and directed a de novo assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717245 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2025
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: misc
• Appeal Filed On: 30-06-2025
• Other Referred Cases: Prasad More (1971) 82 ITR 540 (SC), Sumati Dayal [1995] 80 Taxmann. 89(SC), Pr. CIT Vs Swati Bajaj (I. A. No. GA/2/2022) in ITAT No 6 of 2022, Manoj Jain (HUF) in ITA No.1782/KOL/2018
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESH D. SAKHARDANDE
• Assessee Lawyers: RASIK TANNA
• Keywords: Set aside; Opportunity of being heard; Additional evidence; Income from undisclosed sources; Tax effect; Capital Gains; Accommodation entries; Penny stocks; Bogus
• Section: 147; 148; 144; 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “SMC” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAJ KUMAR CHAUHAN (JUDICIAL MEMBER) ITA No. 4312/MUM/2025 Assessment Year: 2011-12 ITO, 4th floor, Room No. 405, Piramal Chambers, Lal Baug, Parel, Mumbai-400012. Vs. Tejas Bharatkumar Saglani, Shop No. 22/23, Santoshi Mata CHS, Below Reliance Super, Lamington Road, Mumbai-400008. PAN NO. AZJPS 8276 Q Appellant Respondent Assessee by : Mr. Rasik Tanna Revenue by : Mr. Rajesh D. Sakhardande, Sr. DR Date of Hearing : 11/08/2025 Date of pronouncement : 12/08/2025 ORDER PER OM PRAKASH KANT, AM This appeal by the Revenue is directed against order dated 04.04.2025, passed by the Ld. Additional/Joint Commissioner of Income-tax, Panchkula [hereinafter shall be referred as ‘the Ld. CIT(A)’] for assessment year 2011-12, raising following grounds: 1. \"Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of the Long Term Capital Gain of Rs. 2,89,668/- overlooking the fact that the entire transactions were stage managed with the object to facilitate the assessee to plough back its unaccounted income in Printed from counselvise.com the form of fictitious Long Term Capital Gain of Rs. 2,89,668/ sale of penny stock scrip\" M/s. Comfort inftech Ltd ?\" 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of Rs. 2,89,668/- claimed as LTCG, without appreciating the fact that the assessee's case was re received from DGIT(Investigation), Mumbai that assessee was one of the beneficiaries of the scheme, which hatched by promoter/brokers/operators, all have in collusion rigged the prices of Comfort Infotech Ltd.\" for commission and that the capital gains arisen on sale of this scrip was an arranged transaction and was executed to obtain accommodation entries of bogus LTCG to the beneficiary after routing unaccounted money?\" 3. *Whether on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in deleting the disallowance claimed, as exemption of LTCG, wi assessee has entered into penny stock transaction, which was arranged transaction, which involve the series of preconceived steps and lack of commercial content and totally an artificially structured transaction entere taxes ?\" 4. ⁠4. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in deleting the disallowance claimed, as exemption of LTCG without appreciating the nature of the transactions by assessee at face value, without adequately considering the underlying fraudulent intent and the orchestrated steps taken to present these transactions as genuine. The assessment of the true character and intent has been overlooked?\" 5. \"Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the fact that the direct and circumstantial evidences in view of the decision of Prasad More (1971) 82 ITR 540 (SC) and Sumati Dayal [1995] 80 Taxmann. 89(SC) [1995] 2014 ITR 801 (SC)/ [1995] 125 CTR 124(SC), rendered by the Supreme Court, where it was held that Hon'ble Court and Tribunal have to judge the evidences before it by applying the test of probabilities, the surrounding circumstances which exercise had been done by the Assessing Officer?\" 6. \"Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the entire disallowance Tejas Bharatkumar Saglani ITA No. 4312/MUM/2025 the form of fictitious Long Term Capital Gain of Rs. 2,89,668/ sale of penny stock scrip\" M/s. Comfort inftech Ltd ?\" 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of Rs. claimed as LTCG, without appreciating the fact that the assessee's case was re-opened, on the basis of the information received from DGIT(Investigation), Mumbai that assessee was one of the beneficiaries of the scheme, which hatched by promoter/brokers/operators, all have in collusion rigged the prices of Comfort Infotech Ltd.\" for commission and that the capital gains arisen on sale of this scrip was an arranged transaction and was ecuted to obtain accommodation entries of bogus LTCG to the beneficiary after routing unaccounted money?\" 3. *Whether on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in deleting the disallowance claimed, as exemption of LTCG, without appreciating the facts that the assessee has entered into penny stock transaction, which was arranged transaction, which involve the series of preconceived steps and lack of commercial content and totally an artificially structured transaction entered into with the sole intent to evade . Whether on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in deleting the disallowance claimed, as exemption of LTCG without appreciating the nature of the transactions by accepting the documentation presented by the assessee at face value, without adequately considering the underlying fraudulent intent and the orchestrated steps taken to present these transactions as genuine. The assessment of the true character and intent behind these transactions was crucial and has been overlooked?\" 5. \"Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the fact that the direct and circumstantial evidences in view of the decision of Prasad More (1971) 82 ITR 540 (SC) and Sumati Dayal [1995] 80 Taxmann. 89(SC) [1995] 2014 ITR 801 (SC)/ [1995] 125 CTR 124(SC), rendered by the Supreme Court, where it was held that Hon'ble Court and Tribunal have to judge the evidences before it applying the test of probabilities, the surrounding circumstances which exercise had been done by the Assessing 6. \"Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the entire disallowance Tejas Bharatkumar Saglani 2 ITA No. 4312/MUM/2025 the form of fictitious Long Term Capital Gain of Rs. 2,89,668/- on 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of Rs. claimed as LTCG, without appreciating the fact that the opened, on the basis of the information received from DGIT(Investigation), Mumbai that assessee was one of the beneficiaries of the scheme, which hatched by promoter/brokers/operators, all have in collusion rigged the prices of Comfort Infotech Ltd.\" for commission and that the capital gains arisen on sale of this scrip was an arranged transaction and was ecuted to obtain accommodation entries of bogus LTCG to the 3. *Whether on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in deleting the disallowance claimed, as thout appreciating the facts that the assessee has entered into penny stock transaction, which was arranged transaction, which involve the series of preconceived steps and lack of commercial content and totally an artificially d into with the sole intent to evade . Whether on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in deleting the disallowance claimed, as exemption of LTCG without appreciating the nature of the accepting the documentation presented by the assessee at face value, without adequately considering the underlying fraudulent intent and the orchestrated steps taken to present these transactions as genuine. The assessment of the true behind these transactions was crucial and 5. \"Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the fact that the direct and circumstantial evidences in view of the decision of Durga Prasad More (1971) 82 ITR 540 (SC) and Sumati Dayal [1995] 80 Taxmann. 89(SC) [1995] 2014 ITR 801 (SC)/ [1995] 125 CTR 124(SC), rendered by the Supreme Court, where it was held that Hon'ble Court and Tribunal have to judge the evidences before it applying the test of probabilities, the surrounding circumstances which exercise had been done by the Assessing 6. \"Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the entire disallowance Printed from counselvise.com claimed as exemption of LTCG, by ignoring the fact that in such cases, where there was a suspicious or bogus trade, the onus is on the assessee to establish the genuineness of price hike and also to prove that the price of penny stock which was traded to claimed LTCG/STCG or loses was not manipulated. The reliance is placed on judgment of Hon'ble Culcutta High Court's decision in the case of Pr. CIT Vs Swati Bajaj (I. A. No. GA/2/2022) in ITAT No 6 of 2022, Dated. 14.06.2022 ?\" 7. \"Whether on the facts and circum Ld. CIT(A) has erred in deleting disallowance claimed, as exemption of LTCG, without appreciating the facts that on the similar issue of LTCG, the Hon'ble ITAT, Kolkata in the case of Manoj Jain (HUF) in ITA No.1782/KOL/2018 stock transaction as income from other sources instead of LTCG, and the same was upheld by the Hon'ble High Court Calcutta (2024) 164 taxmann.com 133 (Calcutta), which has been confirmed by the Hon'ble Supreme Court by dismissing SLP in (c) of 21636/2024 Dated. 20.09.2024?\" 8. The tax effect involved in this case is Rs. 60,880/ below the prescribed limit mentioned in the CBDT's Circular F.No.279/Misc.142/2007 dated. 17.09.2024 and this case exceptions specified in the of the CBDT's Circular No.05/2024 Dated. 15.03.2024, wherein it is stated that in cases involving \"Organized Tax Evasion\" including cases of accommodation entry of penny stocks, the decision to file merit without regard to the tax effect and the 2. Briefly stated, facts of the case are that in the assessment order passed u/s 144 r.w.s. 147 of the Income short ‘the Act’), the Assessing Offi Rs.2,89,668/- to the total income of the assessee on account of sale proceeds of shares of M/s Comfort Inftech Ltd. i.e. a company indentified as a penny stock Before the Assessing Officer no complia the assessee and therefore, the Assessing Officer passed the assessment as best judgment assessment. Tejas Bharatkumar Saglani ITA No. 4312/MUM/2025 d as exemption of LTCG, by ignoring the fact that in such cases, where there was a suspicious or bogus trade, the onus is on the assessee to establish the genuineness of price hike and also to prove that the price of penny stock which was traded to LTCG/STCG or loses was not manipulated. The reliance is placed on judgment of Hon'ble Culcutta High Court's decision in the case of Pr. CIT Vs Swati Bajaj (I. A. No. GA/2/2022) in ITAT No 6 of 2022, Dated. 14.06.2022 ?\" 7. \"Whether on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in deleting disallowance claimed, as exemption of LTCG, without appreciating the facts that on the similar issue of LTCG, the Hon'ble ITAT, Kolkata in the case of Manoj Jain (HUF) in ITA No.1782/KOL/2018, treated the penny stock transaction as income from other sources instead of LTCG, and the same was upheld by the Hon'ble High Court Calcutta (2024) 164 taxmann.com 133 (Calcutta), which has been confirmed by the Hon'ble Supreme Court by dismissing SLP in (c) of 21636/2024 Dated. 20.09.2024?\" 8. The tax effect involved in this case is Rs. 60,880/ below the prescribed limit mentioned in the CBDT's Circular F.No.279/Misc.142/2007-ITJ(Pt) amended vide No. 09/2024 dated. 17.09.2024 and this case also falls under one of the exceptions specified in the of the CBDT's Circular No.05/2024 Dated. 15.03.2024, wherein it is stated that in cases involving \"Organized Tax Evasion\" including cases of accommodation entry of penny stocks, the decision to file appeal/SLP shall be taken on merit without regard to the tax effect and the monetary Briefly stated, facts of the case are that in the assessment order passed u/s 144 r.w.s. 147 of the Income-tax Act, 1961 (in short ‘the Act’), the Assessing Officer made addition of to the total income of the assessee on account of sale proceeds of shares of M/s Comfort Inftech Ltd. i.e. a company indentified as a penny stock, in terms of section 68 of the Act. Before the Assessing Officer no compliance was made on the part of the assessee and therefore, the Assessing Officer passed the assessment as best judgment assessment. Tejas Bharatkumar Saglani 3 ITA No. 4312/MUM/2025 d as exemption of LTCG, by ignoring the fact that in such cases, where there was a suspicious or bogus trade, the onus is on the assessee to establish the genuineness of price hike and also to prove that the price of penny stock which was traded to LTCG/STCG or loses was not manipulated. The reliance is placed on judgment of Hon'ble Culcutta High Court's decision in the case of Pr. CIT Vs Swati Bajaj (I. A. No. GA/2/2022) in ITAT No stances of the case and in law, Ld. CIT(A) has erred in deleting disallowance claimed, as exemption of LTCG, without appreciating the facts that on the similar issue of LTCG, the Hon'ble ITAT, Kolkata in the case of , treated the penny stock transaction as income from other sources instead of LTCG, and the same was upheld by the Hon'ble High Court Calcutta (2024) 164 taxmann.com 133 (Calcutta), which has been confirmed by the Hon'ble Supreme Court by dismissing SLP in SLP 8. The tax effect involved in this case is Rs. 60,880/-, which is below the prescribed limit mentioned in the CBDT's Circular ITJ(Pt) amended vide No. 09/2024 also falls under one of the exceptions specified in the of the CBDT's Circular No.05/2024 Dated. 15.03.2024, wherein it is stated that in cases involving \"Organized Tax Evasion\" including cases of accommodation entry appeal/SLP shall be taken on monetary limit. Briefly stated, facts of the case are that in the assessment tax Act, 1961 (in cer made addition of to the total income of the assessee on account of sale proceeds of shares of M/s Comfort Inftech Ltd. i.e. a company in terms of section 68 of the Act. nce was made on the part of the assessee and therefore, the Assessing Officer passed the Printed from counselvise.com 3. On further appeal, the Ld. CIT(A) deleted the addition observing as under: “6.2 It is important to note that the Assessing provided sufficient evidence to directly link the appellant's transactions with the alleged manipulation of unaccounted income or the generation of bogus LTCG. While the scrip of M/s Comfort Intech Ltd. may have been identified as a penny s of being a penny stock, nothing has been brought on record by the AO as per assessment order), there is no direct evidence to establish that the appellant was involved in any pre transactions with brokers or operators. Based on th circumstances of the case, I find that the addition of Rs. 2,89,668/- is primarily based on the assumption that the appellant was involved in bogus transactions due to the trading in a penny stock, without any concrete evidence to prove such involvement. Further, the Assessing Officer has not even brought on record any evidence which prove that M/s Comfort Intech Ltd. was a penny stock as no information/evidence has been discussed in the assessment order. Therefore, the addition of Rs. 2,89,668/- on account of sale of shares of M/s Comfort Intech Ltd. is not sustainable and is 4. We have carefully considered the rival submissions and perused the material on record. It is not in dispute that no details or explanations were filed by the assessee before the Assessing Officer in support of the impugned share transaction. It is also not in dispute that the addition was made by the Assessing Officer primarily on the basis of general findings in respect of M/s Comfort Intech Ltd., without discussing in detail any specific link between the assessee and any price rigging or pre our opinion, when the assessee did not file any information before the Assessing Officer, the onus was on the Ld. CIT(A) to either forward all the documents filed by the assessee to the file of the Assessing Officer calling for a remand report Tejas Bharatkumar Saglani ITA No. 4312/MUM/2025 On further appeal, the Ld. CIT(A) deleted the addition 6.2 It is important to note that the Assessing Officer has not provided sufficient evidence to directly link the appellant's transactions with the alleged manipulation of unaccounted income or the generation of bogus LTCG. While the scrip of M/s Comfort Intech Ltd. may have been identified as a penny stock( in support of being a penny stock, nothing has been brought on record by the AO as per assessment order), there is no direct evidence to establish that the appellant was involved in any pre transactions with brokers or operators. Based on th circumstances of the case, I find that the addition of Rs. is primarily based on the assumption that the appellant was involved in bogus transactions due to the trading in a penny stock, without any concrete evidence to prove such volvement. Further, the Assessing Officer has not even brought on record any evidence which prove that M/s Comfort Intech Ltd. was a penny stock as no information/evidence has been discussed in the assessment order. Therefore, the addition of Rs. on account of sale of shares of M/s Comfort Intech Ltd. is not sustainable and is hereby deleted.” We have carefully considered the rival submissions and perused the material on record. It is not in dispute that no details or explanations were filed by the assessee before the Assessing Officer in support of the impugned share transaction. It is also not in dispute that the addition was made by the Assessing Officer primarily on the basis of general findings in respect of M/s Comfort Intech Ltd., without discussing in detail any specific link between the assessee and any price rigging or pre-arranged arra our opinion, when the assessee did not file any information before the Assessing Officer, the onus was on the Ld. CIT(A) to either forward all the documents filed by the assessee to the file of the Assessing Officer calling for a remand report or he himself could Tejas Bharatkumar Saglani 4 ITA No. 4312/MUM/2025 On further appeal, the Ld. CIT(A) deleted the addition Officer has not provided sufficient evidence to directly link the appellant's transactions with the alleged manipulation of unaccounted income or the generation of bogus LTCG. While the scrip of M/s Comfort tock( in support of being a penny stock, nothing has been brought on record by the AO as per assessment order), there is no direct evidence to establish that the appellant was involved in any pre-arranged transactions with brokers or operators. Based on the facts and circumstances of the case, I find that the addition of Rs. is primarily based on the assumption that the appellant was involved in bogus transactions due to the trading in a penny stock, without any concrete evidence to prove such volvement. Further, the Assessing Officer has not even brought on record any evidence which prove that M/s Comfort Intech Ltd. was a penny stock as no information/evidence has been discussed in the assessment order. Therefore, the addition of Rs. on account of sale of shares of M/s Comfort Intech Ltd. We have carefully considered the rival submissions and perused the material on record. It is not in dispute that no details or explanations were filed by the assessee before the Assessing Officer in support of the impugned share transaction. It is also not in dispute that the addition was made by the Assessing Officer primarily on the basis of general findings in respect of M/s Comfort Intech Ltd., without discussing in detail any specific link between arranged arrangement. In our opinion, when the assessee did not file any information before the Assessing Officer, the onus was on the Ld. CIT(A) to either forward all the documents filed by the assessee to the file of the or he himself could Printed from counselvise.com have carried out inquiries, which required in the facts and circumstances of the case, rather than, the Ld. CIT(A) has simplicitor deleted the addition which he was not justified. 5. In our considered opinion, in such circumstances whe assessee did not cooperate at the assessment stage, the Learned CIT(A), before deleting the addition, was required either to: o forward all submissions and documentary evidence filed before him to the Assessing Officer for verification and obtain a re Income-tax Rules, 1962, or o carry out necessary independent inquiries to verify the genuineness of the transactions. 6. As far as forwarding submission to the AO is concerned, the procedure of calling for a remand re Income-tax Rules, 1962 on additional evidences filed before the ld CIT(A) is a settled requirement as per the principles laid down in CIT v. Manish Buildwell (P) Ltd. where it was held that fresh authority must be subjected to AO’s verification. 7. In the present case, the Learned CIT(A) has deleted the addition solely on the basis that there was no direct evidence of the assessee’s involvement in price manipu was brought on record to establish M/s Comfort Intech Ltd. as a Tejas Bharatkumar Saglani ITA No. 4312/MUM/2025 have carried out inquiries, which required in the facts and circumstances of the case, rather than, the Ld. CIT(A) has deleted the addition which he was not justified. n our considered opinion, in such circumstances whe assessee did not cooperate at the assessment stage, the Learned CIT(A), before deleting the addition, was required either to: forward all submissions and documentary evidence filed before him to the Assessing Officer for verification and obtain a remand report in terms of Rule 46A of the tax Rules, 1962, or carry out necessary independent inquiries to verify the genuineness of the transactions. As far as forwarding submission to the AO is concerned, the of calling for a remand report in terms of Rule 46A of tax Rules, 1962 on additional evidences filed before the ld is a settled requirement as per the principles laid down in CIT v. Manish Buildwell (P) Ltd. [(2012) 204 Taxman 106 (Del)], where it was held that fresh evidence produced before the appellate authority must be subjected to AO’s verification. In the present case, the Learned CIT(A) has deleted the addition solely on the basis that there was no direct evidence of the assessee’s involvement in price manipulation and that no material was brought on record to establish M/s Comfort Intech Ltd. as a Tejas Bharatkumar Saglani 5 ITA No. 4312/MUM/2025 have carried out inquiries, which required in the facts and circumstances of the case, rather than, the Ld. CIT(A) has deleted the addition which he was not justified. n our considered opinion, in such circumstances where the assessee did not cooperate at the assessment stage, the Learned CIT(A), before deleting the addition, was required either to: forward all submissions and documentary evidence filed before him to the Assessing Officer for verification and mand report in terms of Rule 46A of the carry out necessary independent inquiries to verify the As far as forwarding submission to the AO is concerned, the port in terms of Rule 46A of tax Rules, 1962 on additional evidences filed before the ld is a settled requirement as per the principles laid down in [(2012) 204 Taxman 106 (Del)], evidence produced before the appellate In the present case, the Learned CIT(A) has deleted the addition solely on the basis that there was no direct evidence of the lation and that no material was brought on record to establish M/s Comfort Intech Ltd. as a Printed from counselvise.com penny stock. While these observations may have some merit, the fact remains that the primary onus under section 68 lies on the assessee to explain the nature and so absence of such explanation at the assessment stage, it was incumbent upon the CIT(A) to follow the due out necessary enquiries before granting relief as held by Delhi High Court in the case of marketing P Ltd in in carrying out the enquiries which are required in the matter, then the Ld. CIT(A) is under obligation to carry out such enquires and he cannot sit ideal and allo part of decision is reproduced as under: “42. The AO here may have failed to discharge his obligation to conduct a proper inquiry to take the matter to logical conclusion. But CIT (Appeals), having noticed want simply by allowing the appeal and deleting the additions made. It was also the obligation of the first appellate authority, as indeed of ITAT, to have ensured that effective inquiry was carried out, par face of the allegations of the Revenue that the account statements reveal a uniform pattern of cash deposits of equal amounts in the respective accounts preceding the transactions in question. This necessitated a detailed scrutiny of the m the notice under Section 148 submitted at the stage of appeals, if deemed proper by way of making or causing to be made a \"further inquiry\" in exercise of the power under Section 250(4) Tejas Bharatkumar Saglani ITA No. 4312/MUM/2025 penny stock. While these observations may have some merit, the fact remains that the primary onus under section 68 lies on the assessee to explain the nature and source of the credit, and in absence of such explanation at the assessment stage, it was incumbent upon the CIT(A) to follow the due process for carrying out necessary enquiries before granting relief as held by Delhi High Court in the case of Jansampark Advertising marketing P Ltd in ITA 525/2014 that if the assessing officer fails in carrying out the enquiries which are required in the matter, then the Ld. CIT(A) is under obligation to carry out such enquires and he cannot sit ideal and allow relief to the either of party. The relevant part of decision is reproduced as under: 42. The AO here may have failed to discharge his obligation to conduct a proper inquiry to take the matter to logical conclusion. But CIT (Appeals), having noticed want of proper inquiry, could not have closed the chapter simply by allowing the appeal and deleting the additions made. It was also the obligation of the first appellate authority, as indeed of ITAT, to have ensured that effective inquiry was carried out, par face of the allegations of the Revenue that the account statements reveal a uniform pattern of cash deposits of equal amounts in the respective accounts preceding the transactions in question. This necessitated a detailed scrutiny of the material submitted by the assessee in response to Section 148 issued by the AO, as also the material submitted at the stage of appeals, if deemed proper by way of making or ade a \"further inquiry\" in exercise of the power Section 250(4). This approach not having been adopted, the Tejas Bharatkumar Saglani 6 ITA No. 4312/MUM/2025 penny stock. While these observations may have some merit, the fact remains that the primary onus under section 68 lies on the urce of the credit, and in absence of such explanation at the assessment stage, it was process for carrying out necessary enquiries before granting relief as held by Hon’ble ampark Advertising and ITA 525/2014 that if the assessing officer fails in carrying out the enquiries which are required in the matter, then the Ld. CIT(A) is under obligation to carry out such enquires and he w relief to the either of party. The relevant 42. The AO here may have failed to discharge his obligation to conduct a proper inquiry to take the matter to logical conclusion. But CIT (Appeals), of proper inquiry, could not have closed the chapter simply by allowing the appeal and deleting the additions made. It was also the obligation of the first appellate authority, as indeed of ITAT, to have ensured that effective inquiry was carried out, particularly in the face of the allegations of the Revenue that the account statements reveal a uniform pattern of cash deposits of equal amounts in the respective accounts preceding the transactions in question. This necessitated a aterial submitted by the assessee in response to issued by the AO, as also the material submitted at the stage of appeals, if deemed proper by way of making or ade a \"further inquiry\" in exercise of the power . This approach not having been adopted, the Printed from counselvise.com impugned order of ITAT, and consequently that of CIT (Appeals), cannot be approved or uphe 8. In view of the aforesaid discussion the Learned CIT(A) and restore the matter to the file of the Assessing Officer for de novo adjudication. The assessee is directed to file all necessary documentary evidence in support transaction, including contract notes, demat statements, bank statements, and any other relevant material to substantiate its claim. The Assessing Officer shall verify the same and decide the matter afresh in accordance with law. Assessing Officer shall grant adequate opportunity of being heard to the assessee and decide the issue uninfluenced by any observations in this order. 9. In the result, grounds No. 1 to 7 of the Revenue are allowed for statistical purposes. Gr CBDT Circular on low tax effect, is allowed as not being in dispute. 10. In the result, the appeal of the Revenue is allowed for statistical purposes. Order pronounced in the open Court on Sd/ (RAJ KUMAR CHAUHAN JUDICIAL MEMBER Mumbai; Dated: 12/08/2025 Rahul Sharma, Sr. P.S. Tejas Bharatkumar Saglani ITA No. 4312/MUM/2025 impugned order of ITAT, and consequently that of CIT (Appeals), cannot be approved or upheld.” aforesaid discussion, we set aside the order of the Learned CIT(A) and restore the matter to the file of the Assessing Officer for de novo adjudication. The assessee is directed to file all necessary documentary evidence in support transaction, including contract notes, demat statements, bank statements, and any other relevant material to substantiate its claim. The Assessing Officer shall verify the same and decide the matter afresh in accordance with law. We make it cl Assessing Officer shall grant adequate opportunity of being heard to the assessee and decide the issue uninfluenced by any observations In the result, grounds No. 1 to 7 of the Revenue are allowed for statistical purposes. Ground No. 8, relating to the exception to the CBDT Circular on low tax effect, is allowed as not being in dispute. In the result, the appeal of the Revenue is allowed for statistical purposes. nounced in the open Court on 12/08/2025. Sd/- J KUMAR CHAUHAN) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Tejas Bharatkumar Saglani 7 ITA No. 4312/MUM/2025 impugned order of ITAT, and consequently that of CIT (Appeals), cannot , we set aside the order of the Learned CIT(A) and restore the matter to the file of the Assessing Officer for de novo adjudication. The assessee is directed to file all necessary documentary evidence in support of the share transaction, including contract notes, demat statements, bank statements, and any other relevant material to substantiate its claim. The Assessing Officer shall verify the same and decide the We make it clear that the Assessing Officer shall grant adequate opportunity of being heard to the assessee and decide the issue uninfluenced by any observations In the result, grounds No. 1 to 7 of the Revenue are allowed for ound No. 8, relating to the exception to the CBDT Circular on low tax effect, is allowed as not being in dispute. In the result, the appeal of the Revenue is allowed for /08/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER Printed from counselvise.com Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Tejas Bharatkumar Saglani ITA No. 4312/MUM/2025 Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Tejas Bharatkumar Saglani 8 ITA No. 4312/MUM/2025 BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "