INCOME TAX OFFICER, NEW DELHI V. ASHWANI KUMAR, DELHI

ITA 5763/DEL/2025

AI Insights

The case involves the Income Tax Officer (ITO) appealing against the decision of the CIT(A), which had allowed the appeal of Ashwani Kumar, the respondent, by deleting the additions made by the ITO. The additions pertained to unexplained income and commission income alleged to be derived from accommodation entries. The ITO argued that the CIT(A) erred in deleting these additions without proper appreciation of the facts, particularly ignoring the involvement of Ashwani Kumar with companies engaged in providing accommodation entries. However, the Tribunal found that the respondent had not been involved in any manipulation or rigging of share prices and that the transactions were genuine, supported by evidence of trading through recognized stock exchanges and payment through banking channels.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 846913 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Delhi
• Assessment Year: misc
• Appeal Filed On: 18-09-2025
• Other Referred Cases: Sujeet Madan vs. DCIT, PCIT vs. Indravadan Jain HUF, Adamine Construction P Ltd vs. Union of India, PCIT vs. Smt Krishna Devi, CCIT (OSD) vs. Nilesh Jain (HUF)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHESH KUMAR
• Assessee Lawyers: K. SAMPATH; V. RAJA KUMAR
• Keywords: Unexplained cash credit; Unexplained expenditure; Capital Gains; Accommodation entries; Bogus
• Section: 147; 148; 143(3); 68; 69; 69C

Judgement Text

" 1 ITA NO. 5763/Del/2025 ITO Vs. Ashwani Kumar IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI BENCH ‘G’ NEW DELHI BEFORE YOGESH KUMAR U.S., JUDICIAL MEMBER AND SHRI RENU JAUHRI, ACCOUNTANT MEMBER ITA No. 5763/DEL/2025 (A.Y. 2016-17) Income Tax Officer, Room No. 413B, 4th Floor, C. R. Building, Delhi Vs Ashwani Kumar B-4/50, Paschim Vihar, New Delhi 110063, Delhi PAN: AAMPK7991G Appellant Respondent Assessee by Sh. K. Sampath, Adv and Sh. V. Rajakumar, Adv Revenue by Sh. Mahesh Kumar, CIT DR Date of Hearing 11/02/2026 Date of Pronouncement 25/03/2026 ORDER PER YOGESH KUMAR, U.S. JM: The present appeal is filed by the Revenue against the order of Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (‘Ld. CIT(A)/NFAC’ for short), New Delhi dated 28/07/2025 for the Assessment Year 2016-17. 2. The grounds of Appeal are as under:- 1. The Ld. CIT(A) has erred in deleting the addition of Rs.13,41,93,651/- towards the taxable income u/s 68 and Rs.335,481/- commission income u/s 69C of the Income Tаx Act, 1961 without appreciating the facts of the case. 2. The Ld. CIT(A) has erred in ignoring the fact that the assessee is a beneficiary of accommodation entry for amount of Rs.13,41.93,651/- from the concerns M/s Yamini Investment Company Limited which was found engaged in providing accommodation entries. Printed from counselvise.com 2 ITA NO. 5763/Del/2025 ITO Vs. Ashwani Kumar 3. The Ld. CIT(A) has erred in ignoring the fact that the group by which the said company/companies were being controlled and managed were not actually carrying out any genuine business and during the investigation various concerns were found to be non- existent.” 3. Brief facts of the case are that, Assessee being a Director of the Company M/s East Delhi Leasing Pvt. Ltd., filed original return for the year under consideration declaring total income of Rs. 6,39,41,830/-. Information has been received by the A.O. through insight portal stating that, a search and survey operation u/s 132/133 of the Income Tax Act, 1961 ('Act' for short) was conducted by the office of the DDIT (Inv.), Unit- 3(3), Delhi on Dutta and Tyagi Group on 16/05/2018 and it was established that scrip M/s Yamini Investment Company Limited ‘YICL’ was managed and controlled to benefit certain pre-decided persons. Based on the said information, the case of the Assessee was reopened u/s 147 of the Act and notice u/s 148 of the Act has been issued to the Assessee. An assessment order came to be passed on 18/05/2023 by making an addition of Rs. 13,41,93,651/- on account of unexplained u/s 68 of the Act and Rs. 3,35,484/- under unexplained expenditure u/s 69C of the Act. 4. Aggrieved by the assessment order dated 18/05/2023, Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 28/07/2025, allowed the Appeal of the Assessee by deleting the Printed from counselvise.com 3 ITA NO. 5763/Del/2025 ITO Vs. Ashwani Kumar additions made by the A.O. As against the order of the Ld. CIT(A), the Revenue preferred the captioned appeal on the grounds mentioned above. 5. The Ld. Department's Representative arguing on the Grounds of Appeal contended that the Ld. CIT(A) committed error in deleting the addition of Rs. 13,41,93,651/- made by the A.O. u/s 68 of the Act and also Rs. 3,35,481/- being a commission income added u/s 69 of the Act without appreciating the facts of the case. Further contended that though the entity concerned i.e. Yamini Investment Company Limited which was found engaged in providing accommodation entries the Learned CIT(A) erroneously deleted the deletion. The Ld. Department's Representative further contended that the Ld. CIT(A) erred in ignoring the fact that the group by which the said company/companies were being controlled and managed were not actually carrying out any genuine business and during the investigation, various concerns were found to be non-existent. Thus, the Ld. Department's Representative relying on the findings and the conclusion of the A.O. sought for allowing the Appeal. 6. The Ld. Assessee's Representative submitted that in the alleged record of Investigation Wing, neither the name of the Assessee nor the Printed from counselvise.com 4 ITA NO. 5763/Del/2025 ITO Vs. Ashwani Kumar name of share broker through which the Assessee traded were reflected in the list involved in the manipulation of script and artificial rigging of share price and who are actual beneficiary obtaining ill-gotten gains through the script of M/s Yamini Investment Company Ltd. The Ld. Counsel further submitted that Assessee was holding the share from 08/02/2012 onwards and sold through stock exchange during the period 28/05/2015 to 06/08/2015, which is more than 3 years. Further submitted that in the case of Sujeet Madan vs. DCIT in ITA No. 3436/Del/2023 for A.Y 2016-17 vide order dated 20/01/2025, the very same script has been examined by the Tribunal and found to be genuine and deleted the addition made in the hands of the Assessee therein. Thus, submitted that the Ld. CIT(A) has followed the ratio laid down by the Tribunal in the case of Sujeeet Madan (supra), thus, relying on the findings and the conclusion of the Ld. CIT(A), sought for dismissal of the Appeal filed by the Revenue. 7. We have heard both the parties and perused the material available on record. The Learned CIT(A) deleted the addition made by the AO in following manners: “6.1.4. On perusal of the details on record of the investigation wing, neither the assessee's name nor the share broker through which assessee traded are reflected in any list involved in the manipulation of the scrip and artificial rigging of share prices and who were the actual beneficiaries of obtaining ill-gotten gains through the scrip of Printed from counselvise.com 5 ITA NO. 5763/Del/2025 ITO Vs. Ashwani Kumar M/s Yamini Investment Company Limited. Nowhere the assessee's conduct falls under any of the adverse effects. There is no direct evidence against the assessee but all these entries had cast a shadow of test of genuineness of the transaction. There is absolutely no evidence brought on record by the revenue in the instant case before me that assessee had either approached the alleged tainted parties/ entry operators who were involved in artificial rigging of share price of M/s Yamini Investment Company Limited in order to receive accommodation entries in the form of exempt long term capital gains. It is pertinent to note that assessee has been holding the share from 08-02-2012 onwards and sold through stock exchange during the period 28-05-2015 to 06-08- 2015(after holding for more than 3 years). This is classic case of assessee falling in the category of gullible investor who had been hit by the declining market prices due to alleged manipulation and artificial rigging of share prices carried out by some 3rd party who are totally unconnected with the assessee. Hence, I have considered this and perused the record of both the AO and the appellant. It has been noticed that the AO has primarily placed reliance on the information received through CRIU module of Insight portal. The information relates to the FY 2015-16 relevant to the AY 2016- 17. During the investigation by DDIT(Inv), Unit 3(3), Delhi on Dutta and Tyagi Group it was found that M/s Yamini Investment Company Limited is engaged in providing accommodation entries, bogus LTCG and syndicate trading. It has been noticed that the investigation report prepared by Investigation Wing, Delhi is a generalized report with regard to the modus operandi adopted in manipulation of prices of certain shares and generation of bogus capital gains. It has been noticed that the AO has placed reliance on the said report without bringing any material on record to show that the transactions entered by the assessee were found to be a part of manipulated transactions, i.e., it was not proved that the assessee has carried out the transactions of purchase and sale of shares in connivance with the people who were involved in the alleged rigging of prices. No where it is submitted that the regulator of stock market SEBI has conducted any enquiry against the assessee nor there is any negative inference about the appellant anywhere in the report. The Ld. AR also submitted that the Printed from counselvise.com 6 ITA NO. 5763/Del/2025 ITO Vs. Ashwani Kumar regulator of stock market (SEBI) has not conducted any enquiry against the assessee. It has been noticed that the assessee has furnished reply to the notice issued by the AO and the AO could not find any adverse features from the said reply. Further, the AO also could not disprove the share transactions by bringing any material on record. It has also been noticed that the assessee has - (a) purchased and sold these shares by paying consideration through banking channels and through stock exchange platform; (b) the shares were received and issued through the Demat account of the assessee. It has been noticed that the assessee is a regular investor in shares. Further, the AO has not found any defect/deficiencies in the evidences furnished by the assessee with regard to purchase and sale of shares. Further, the AO has not brought on record any material to show that the assessee was part of the group which involved in the manipulation of prices of shares. It has been noticed that the shares were purchase in an earlier year and the said purchase has not been suspected by the AO. Hence, there is no reason to suspect the purchase and sale of shares undertaken by the assessee. It has been noticed earlier that the AO did not establish any link between the assessee and the reports of investigation wing. At this stage, I may refer to the decision rendered by the Hon’ble Supreme Court in the case of Adamine Construction P Ltd (99 taxman 45), wherein, while dismissing the appeal of Revenue, the Hon’ble Supreme Court has referred to the following observations made by Hon’ble Delhi High Court: - \"What is evident is that the AO went by only the report received and did not make the necessary further enquiries - such as into the bank accounts or other particulars available with him but rather received the entire findings on the report, which cannot be considered as primary material. The assessee had discharged the onus initially cast upon it by providing the basic details which were not suitably enquired into by the AO.\" Further, the facts available in the present case are that the shares were purchased and sold through the stock exchange platform. In the case of PCIT vs. Indravadan Jain HUF (ITA No.454 of 2018 dated 12th July, 2023), the Hon’ble Bombay High Court held as under: Printed from counselvise.com 7 ITA NO. 5763/Del/2025 ITO Vs. Ashwani Kumar - \".... The CIT(A) came to the conclusion that respondent bought 3000 shares of RFL, on the floor of Kolkatta Stock Exchange through registered share broker. In pursuance of purchase of shares the said broker had raised invoice and purchase price was paid by cheque and respondent's bank account has been debited. The shares were also transferred into respondent's Demat account where it remained for more than one year. After a period of one year the shares were sold by the said broker on various dates in the Kolkatta Stock Exchange. Pursuant to sale of shares the said broker had also issued contract notes cum bill for sale and these contract notes and bills were made available during the course of appellate proceedings. On the sale of shares respondent effected delivery of shares by way of Demat instruction slips and also received payment from Kolkatta Stock Exchage. The cheque received was deposited in respondent's bank account. In view thereof, the CIT(A) found there was no reason to add the capital gains as unexplained cash credit under section 68 of the Act. The Tribunal while dismissing the appeals filed by the Revenue also observed on facts that these shares were purchased by respondent on the floor of Stock Exchange and not from the said broker, deliveries were taken, contract notes were issued and shares were also sold on the floor of Stock Exchange. The ITAT therefore, in our view, rightly concluded that there was no merit in the appeal.\" The facts available in the instant case are similar to the above said case. It has been noticed that the lower authority brushed aside the submissions and all the documents filed during the course of the respective proceedings and merely relied upon the information received from investigation wing and failed to conduct an independent inquiry against the claim of the assessee. Absolutely, there is no direct or indirect evidence against the assessee which has been brought on record by the lower authority to justify the addition by denying the claim of exemption under Long-term capital gain (hereon refer to as LTCG) for the assessee. The lower authority had merely relied on third party information in this regard. It is Printed from counselvise.com 8 ITA NO. 5763/Del/2025 ITO Vs. Ashwani Kumar pertinent to note that the transaction of purchase of shares made by the assessee in this regard has been accepted and no doubts or adverse inference has been drawn on the same. These investments in shares were made in 06-02-2012 and were allotted on 08-02- 2012. The payments for the same had been made by account payee cheque out of the disclosed bank account by the assessee. These shares were duly purchased through the stock exchange and were held by the assessee for more than three years. The assessee decided to sell the shares in tranches on various dates during the period 28-05-2015 to 06-08-2015 (after holding for more than 3 years). These shares were admittedly sold through a recognized and registered share broker in the recognized stock exchange in the open market after duly suffering STT. Hence, there is absolutely no reason for the lower authority to doubt the transaction carried out by the assessee. Also, through his reply dated 10.07.2025 appellant submitted his reply which is reproduced below. Without prejudice to the above discussion, it is also seen that the jurisdictional ITAT, New Delhi have decided the appeal of Sujit Madan vs DCIT CC-01, New Delhi where they have discussed about the purchase and sale of M/s. Yamini Investment Company Ltd. in favour of the appellant as reproduced below: XXXXX Without prejudice to the above discussion, it is also seen that the jurisdictional ITAT, New Delhi have decided the appeal of Sujit Madan vs DCIT CC-01, New Delhi where they have discussed about the purchase and sale of M/s. Yamini Investment Company Ltd. in favour of the appellant as reproduced below- “There is absolutely no evidence brought on record by the revenue in the instant case before us that assessee had either approached the alleged tainted parties/ entry operators who were involved in artificial rigging of Page | 9 Sujit Madan share price of Yamini Investment Company ltd in order to receive accommodation entries in the form of exempt long term capital gains. It is pertinent to note that assessee has been holding the share from September 2012 onwards and the price of the very same scrip in the open market in October 2014 was ranging from Rs. 452 to 496 per share. Considering the drastic fall in the said scrip, the assessee had chosen to sell it in three Printed from counselvise.com 9 ITA NO. 5763/Del/2025 ITO Vs. Ashwani Kumar tranches at the price 61.70 per share; Rs 58.15 per share and Rs. 30.85 per share. This is classic case of assessee falling in the category of gullible investor who had been hit by the declining market prices due to alleged manipulation and artificial rigging of share prices carried out by some 3rd party who are totally unconnected with the assessee. Hence, in our considered opinion, reliance placed on the decision of the Mumbai Tribunal would not come to the rescue of the revenue. Further, we find our view is further fortified by the decision of the Hon'ble Jurisdictional High Court in the case of PCIT Vs. Smt Krishna Devi reported in 431 ITR 361 (Del); decision of the Hon'ble Allahabad High Court in the case of PCIT Vs. SmtRenu Agarwal 153 taxmman.com 578 and decision of the Hon'ble Madhya Pradesh High Court in the case of CCIT (OSD) Vs. Nilesh Jain (HUF) 163 taxmann.com 229, among others. Now we are left with a situation wherein, the Hon'ble Jurisdictional High Court has decided in favour of the assessee and some non Jurisdictional High Court had given divergent views. When there is a decision of Hon'ble Jurisdictional High Court, the same would prevail over other High Courts, Tribunal and this Tribunal need not take cognizance of the Hon'ble Non- Jurisdictional High Court or for that matter any other Tribunal decision. The law is very well settled by the decision of Hon'ble Supreme Court in the case of Union of India Vs. Kamalakshi Finance Corporation Ltd reported in 55 ELT 43 (1991) that the decision of the Hon'ble Jurisdictional High Court would have higher precedence value than the decision of the Hon'ble Non- Jurisdictional High Court or the Tribunal. Hence, we deem it follow the decision of the Hon'ble Jurisdictional High Court in the instant case before us. 14. Further, we find that in assessee's brother's case, Shri Rajiv Madan, in respect of identical facts of sale of shares of Yamini Investment Company Limited, the income tax department had accepted the claim of short-term capital gains disclosed by him to be genuine in the reopened assessment proceedings under section 143(3) read with section 147 of the Act dated 26-5-23. The learned AR placed on record the copy of the said assessment order in pages 53-56 of the synopsis. This evidence also goes against the department wherein for the same set of shares, in case of assessee's brother, the entire transactions have been accepted as genuine by the department Printed from counselvise.com 10 ITA NO. 5763/Del/2025 ITO Vs. Ashwani Kumar whereas, exactly contrary view has been taken in the case of the assessee herein. 15. In view of the aforesaid observations, we hold that there is absolutely no case made out by the revenue for justifying the denial of exemption under section 10(38) of the Act in the facts and circumstances of the instant case. Accordingly, the Ground Nos. 2, 3 and 5 raised by the assessee are hereby allowed.” As the above said scrip is covered by the order of Delhi, ITAT which is the jurisdictional ITAT and the facts of the case of Ashwani Kumar are similar with above said case, there is no reason to hold a different view than the jurisdictional ITAT. Accordingly, following above said decision, I hold that, in the facts and circumstances of the instant case and also relying on the order passed by the ITAT New Delhi while deciding the appeal of Sujit Madan Vs DCIT, CC-01, there is no reason to suspect the genuineness of purchase and sale of shares of M/s. Yamini Investment Company Ltd. Accordingly, I direct the AO to delete the addition of sale proceeds of shares made. Hence, Ground of Appeal No. 1 to 3 is allowed. 6.2. In Ground of Appeal No. 4 to 6, [As per Para 3 above] 6.2.1. Since the addition made by the Ld. AO u/s 68 of Rs.13,41,93,651/- is deleted and the appeal No. 1 to 3 are allowed, therefore commission charged by broker of Rs. 3,35,481/- which was added as commission paid to the entry operator for availing accommodation entries of Rs.13,41,93,651/- as unexplained expenditure u/s. 69C of the Income-Tax Act does not stand.” 8. As per the material, it is found that the Assessee had purchased shares of a Company called Anax Com Trade Limited on 31/12/2012 in a public offer, which has been purchased through cheque payments and were retained in a dormant account. The said Company Anax Com Trade Limited and Fidelo Power and Infrastructure Limited were under Printed from counselvise.com 11 ITA NO. 5763/Del/2025 ITO Vs. Ashwani Kumar scheme of arrangement worked out with the approval of Hon'ble High Court of Delhi in Company Petition No. 30/2024 and connected matters with effect from 01/04/2013, wherein those companies merged with Yamini Investment Company Limited in terms of the arrangement. By virtue of the order of the Hon'ble High Court, instead of shares of Anax Com Trade Limited held by the Assessee, allotted with shares of M/s Yamini Investment Company. The Assessee was holding the said share shares from 08/02/2012 onwards and sold through stock exchange between the period 28/05/2015 to 06/08/2015. Thus, the holding of shares was more than three years. Further, at nowhere the name of Assessee was figured in the SEBI orders. The A.O. has not brought any material on record to prove that the Assessee had made the transaction with any alleged tented parties/entry operators. Further, the Ld. CIT(A) while deleting the addition relied on the order of the Tribunal in the case of Sujeet Madan vs. DCIT (supra), wherein the vary same script has been examined and held to be genuine. In the absence of any contrary judicial precedent and also in view of the above discussion, we find no error or infirmity in the order of the Ld. CIT(A) in deleting the addition. Accordingly, we find no merits in the grounds of Appeal of the Revenue, hence the Grounds of Appeal of the Revenue are dismissed. Printed from counselvise.com 12 ITA NO. 5763/Del/2025 ITO Vs. Ashwani Kumar 9. In the result, Appeal of the Revenue is dismissed. Order pronounced in the open court on 25th March, 2026. Sd/- Sd/- (RENU JAUHRI) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 25.03.2026 Reshma Naheed, Sr.P.S and PK Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "