LATE SMT. SHASHI MITTAL THROUGH LH VISHNU MITTAL ,GHAZIABAD V. WARD-2(3), GHAZIABAD

ITA 2276/DEL/2025

AI Insights

The case involves an appeal by Vishnu Mittal, the legal heir of Late Smt. Shashi Mittal, against the order of the National Faceless Appeal Centre/Commissioner of Income Tax (Appeals), which confirmed the disallowance of exemption claimed under section 10(38) for long-term capital gains on the sale of shares of CCL International Ltd. The Assessing Officer had initially treated these shares as penny stocks and the transactions as sham, leading to the addition of Rs. 1,69,01,437 to the assessee's income. The Tribunal, referencing a similar case (Gaurav Goyal vs. ITA No.369/Del/2019), found that CCL International Ltd. is not a penny stock and that the transactions were genuine, thus reversing the decision of the lower authorities.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 841642 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 07-04-2025
• Other Referred Cases: Gaurav Goyal vs. ITA No.369/Del/2019, Reeshu Goel vs ITO in ITA No. 1691/Del/2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JITENDER SINGH
• Assessee Lawyers: AKHILESH KUMAR
• Keywords: Capital Gains; Sham transactions
• Section: 143(3); 69

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘A’: NEW DELHI BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI AMITABH SHUKLA, ACCOUNTNAT MEMBER ITA No.2276/DEL/2025 [Assessment Year: 2015-16] Late Smt. Shashi Mittal, Through L/H Vishnu Mittal, 419, Competent House, F-14, Inner Middle Circle, Connaught Place, New Delhi-110001 Vs Assessing Officer, Ward-2(3), CGO Complex-II, Purani Hapur Chungi, Ghaziabad, Uttar Pradesh-201002 PAN-AKIPM0939Q Assessee Revenue Assessee by Shri Akhilesh Kumar, Adv. Shri Vipin Garg, Adv. & Shri Rahul Narula, Adv. Revenue by Shri Jitender Singh, CIT-DR Date of Hearing 05.01.2026 Date of Pronouncement 25.02.2026 ORDER PER AMITABH SHUKLA, AM, The captioned appeal has been preferred by the assessee against order dated 11.09.2023 of National Faceless Appeal Centre/learned Commissioner of Income Tax(Appeals), New Delhi, [hereinafter referred to as ‘ld. CIT(A)] arising out of assessment order dated 28.12.2017 passed u/s 143(3) of the Income Tax Act, 1961, pertaining to Assessment Year 2015-16. The word ‘Act’ herein this order would mean Income Tax Act, 1961. Printed from counselvise.com 2 ITA No.2276/Del/2025 2. The assessee has raised following grounds of appeal:- 1. Because, the order passed by the Ld. CIT(A) NFAC is bad in law & against the facts and circumstances of the case and hence is unsustainable. 2. Because, Ld. CIT(A) NFAC has erred in confirming the disallowance of exemption claimed u/s. 10(38) for Rs. 1,69,01,437/-, being long-term capital gain earned on sale of listed equity shares in demat a/c sold through recognized stock exchange which is further supported with Brokers bill/statement, payment of STT, Contract note, proof of banking transaction, and none of the evidences are found wrong/ rejected. 3. Because, the Ld. CIT(A) NFAC also misdirected himself in sustaining disallowance of claim even after accepting purchase of shares, credit of which is duly allowed and the AO failed to discharge the onus laid upon, with at least some genuine material and basis against the transaction as per the settled law. 4. Because the Ld, CIT(A) NFAC has failed to appreciate the fact that the scrip of CCL International Limited is held genuine and not a penny stock by the Hon'ble ITAT and the Revenue itself accepted LTGC claim u/s 10(38) in various cases under same scrip thus accepting the dealing in the scrip as bonafide and hence the addition of Rs. 1,69,01,437/- made on the issue that the shares of the listed company are held to be penny stock is grossly misleading and addition is contrary to the settled position of law. 5. Because, the Id. CIT (A) NFAC failed to appreciate that the AO did not entertain the specific request to provide material against the assessee/ material for general observation or even to conduct direct enquiries and thereby grossly erred in upholding the rejection of transaction without conducting any enquity and on mere suspicion on the sole basis of substantial increase in share prices but without a single evidence against the assessee which is grossly illegal and against the settled law on the issue. Therefore, total addition of Rs. 1,69,01,437/- is prayed to be quashed in TOTO. 3. In this case, Registry has identified a delay of 494 days. The ld. Counsel for the assessee vividly explained the reasons for delay. Having satisfied with the reasons putforth by the assessee, we are convinced that the assessee had justified grounds for the delay. We are also conscious of the fact that no litigant Printed from counselvise.com 3 ITA No.2276/Del/2025 benefits by delaying its matters. We, therefore, condone the delay and proceed to adjudicate this appeal. 4. The principal issue emanating from the impugned ground of appeal of the assessee are regarding an addition of Rs.1,69,01,437/- made by the ld. AO by denying assessee’s claim of Long Term Capital Gains exemption under section 10(38) of the Act and its confirmation by the ld. CIT(A). As per brief facts of the case, the assessee had reportedly sold shares of accompany called CCL International Ltd. (hereinafter referred to as ‘CCL”) for Rs.1,69,67,437/-. The assessee has bought these shares for Rs.66,000/- and had accordingly declared Long Term Capital Gains under section 10(38) of the Act amounting to Rs.1,69,01,437/-. The ld. AO held the view that the impugned company CCL was a peny stock company and that the assessee had not entered into any real transactions but had merely indulged in sham transactions. The view and arguments taken by the ld. AO were concurred by the ld. First Appellate Authority, who confirmed the addition made by the ld. AO. 5. We have heard the rival submissions in the light of material placed on record. The ld. Counsel for the assessee argued in favour of genuineness of the transactions. It was submitted that the shares were purchased through valid share transfer deed and duly reflected in the DeMat count of the company. It was submitted that the shares were sold @Rs.254 per share as per prevailing BSE rates. It is the case of the assessee that no action was by SEBI against M/s Printed from counselvise.com 4 ITA No.2276/Del/2025 CCL nor its name figures shell companies available on SEBI website. The addition was made by merely placing reliance upon the statement of Director of Stock Broker Company which had little or no connection with the facts of the present case. In support of its contentions, the ld. Counsel placed reliance upon the decision of the Co-ordinate Bench of this Tribunal in the case of Gaurav Goyal as at ITA No.369/Del/2019 holding that CCL is not a penny stock company and by allowing claim of exemption under section 10(38). The ld. DR placed reliance upon the order of the lower authorities. 6. We have noted that the Co-ordinate Bench of this Tribunal in the case of Gaurav Goyal as at ITA No.369/Del/2019 has held as under “……3.6. The ld. AO did not heed to the aforesaid contentions of the assessee and the documentary evidences placed on record by the assessee and proceeded to deny the claim of exemption u/s 10(38) of the Act by classifying the scrip of CCL International Ltd as a penny scrip not capable of justification of the price rise in the market. The ld. AO accordingly added the sale consideration received on sale of shares of CCL International Ltd as income of the assessee u/s 69 of the Act. In this regard, the ld. AR before us placed on record the annual report of CCL International Ltd in page 96 of the Paper Book which stated that the said company was established in the year 1995 , is fastest growing infra-technology focused Mid Size Contracting Company in Highways Sector, fully equipped with latest German and American Road Infra Machineries with offices in Guwahati, Shillong, Tura, Aizawl and other seven sister states. The said company serves complete 360 degree requirements of Geo Survey, Soil Analysis, Engineering, Procurement & Construction need of our valuable clients and end users. The ld. AR also placed on record the Certificate of Accreditation of New / Alternative Materials / techniques technologies / equipments for adoption in the Highway Sector namely “Evocrete ST” issued to the said company by Indian Roads Congress vide letter dated 12.4.2016. The ld. AR also placed on record an award given by CSIR department, Government of India Printed from counselvise.com 5 ITA No.2276/Del/2025 to CCL International Ltd. This goes to prove that the said company i.e CCL International Ltd is duly recognised by the Government of India. The ld. AR also placed on record the scrutiny assessment orders of CCL International Ltd of various assessment years as under:- xxxxxxxxxxx 3.7. The aforesaid scrutiny income tax assessment orders clearly go to prove that the said company i.e. CCL International Ltd cannot be construed as a shell company or a penny stock company as alleged by the lower authorities. On the contrary, the said company is regularly carrying on its business deriving income thereon regularly from both Government and Private Sector. Hence the entire allegations leveled by the revenue qua this company falls flat. We find that the ld. AO had not found any material against this company CCL International Ltd. There is no allegation / statement of any party regarding the said company giving any adverse remarks on the ground that the said company’s share prices were artificially manipulated in the stock market. No action has been taken by Securities Exchange Board of India (SEBI). Instead the ld. AO had merely adopted the cut paste modus operandi of some other scrips and had made vague allegations of some investigation by department and SEBI which are totally unconnected to the assessee and the scrip dealt by the assessee herein. In our considered opinion, the entire issue has been looked into by the ld. AO from the angle of suspicion by ignoring the aforesaid factual details placed on record proving the credentials of CCL International Ltd. It is trite law that suspicion howsoever strong cannot partake the character of a legal evidence. This is a classic case of the revenue ignoring their own officers scrutiny assessment orders framed on the said company CCL International Ltd duly accepting the fact that the said company is engaged in various businesses and had reported huge incomes year after year. Hence it cannot be classified as a penny stock company at all. Once it is held that this company is not a penny stock, none of the allegations leveled by the ld. AO and upheld by the ld. CIT(A) in their orders would be applicable to the said company. The ld. AR also stated that the said company is still listed in the stock exchange and is priced at Rs 30 approximately per share. Further we find that the coordinate bench of Delhi Tribunal in the case of Reeshu Goel vs ITO in ITA No. 1691/Del/2019 for Asst Year 2013-14 dated 7.10.2019 had categorically given a finding that the said company CCL International Ltd cannot be held to be a paper entity . 3.8. In view of the aforesaid observations and respectfully following the judicial precedent relied upon hereinabove, we hold that the capital gains earned by the assessee on sale of shares of CCL International Ltd is genuine and accordingly the assessee would be Printed from counselvise.com 6 ITA No.2276/Del/2025 entitled for exemption u/s 10(38) of the Act thereon. Hence the addition made u/s 69 of the Act by the ld. AO is hereby deleted. The Ground Nos. 2 to 4 raised by the assessee are allowed…..” 7. We have noted that the Co-ordinate Bench in its above cited decision clearly held that CCL is not a penny stock company and has accordingly allowed assessee’s claim of exemption. We have noted that the facts of the present case are identical to those in the case of Gaurav Goyal (supra). Accordingly, for the purposes of consistency and in respectful compliance to the decision of Co-ordinate Bench (supra), we set-aside the order of the lower authorities and direct the ld. AO to delete the impugned addition and allow the assessee its claim of Long Term Capital Gain under section 10(38) of the Act. 8. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 25TH February, 2026. Sd/- Sd/- Sd/- Sd/- [MAHAVIR SINGH] [AMITABH SHUKLA] VICE PRESIDENT ACCOUNTANT MEMBER Dated: 25.02.2026 Shekhar Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi, Printed from counselvise.com "