PRATAP SINGH RATHI,GHAZIABAD V. PR. CIT (CENTRAL), KANPUR

ITA 502/DEL/2021

AI Insights

The case revolves around an appeal by Sh. Pratap Singh Rathi against the order of the Principal Commissioner of Income Tax, which set aside the assessment order passed by the Assessing Officer for the assessment year 2016-17. The primary contention was regarding the long-term capital gains claimed by the assessee on the sale of shares of M/s CCL International Ltd., which were exempt under Section 10(38) of the Income Tax Act. The Principal Commissioner, influenced by audit objections, directed a fresh assessment, alleging that the original assessment was erroneous and prejudicial to the interest of the revenue. The Tribunal, however, found that the original assessment was thorough and based on substantial evidence, including the examination of relevant documents and judicial decisions favoring the assessee's claims.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 711847 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2016-2017
• Other Referred Cases: Mukta Gupta vs. ITO, Reeshu Goyal vs. ITO, Sarika Bindal Vs. ITO, Ajay Grover vs. ITO, Dharmendra Kumar Bansal vs. CIT, Shantai Exim Ltd. vs. CIT, Rajiv Arora vs. CIT, Paramjit Singh vs. PCIT, M/s Refex Industries Ltd. vs. DCIT, Sartaj Singh vs. PCIT, Jaswinder Singh vs. CIT, Vikarm Kaswan vs. CIT, Sunil Gavaskar vs. ITO, Trivikram Singh Toor vs. PCIT, Anju Rastogi Vs. ITO, Ward 1(1), Meerut, Malabar Industrial Co. Ltd. vs. CIT, Housing Projects Ltd, 74 DTR 153, DIT vs. Jyoti Foundation, CIT vs. Sunbeam Auto Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DAYAINDER SINGH SIDHU
• Assessee Lawyers: RAKESH GUPTA; SHREY JAIN; DEEPESH GARG; ADVS
• Keywords: Set aside; Opportunity of being heard; Question of law; Cost of acquisition; Capital Gains; Principle of natural justice; Earning of tax free income; Audit objection; Revision of order
• Section: 143(3); 263; 69C

Judgement Text

" INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C”: NEW DELHI BEFORE SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No. 502/DEL/2021 Assessment Year: 2016-17 Sh. Pratap Singh Rathi, C-143, Surya Nagar, Ghaziabad PIN 201 001 PAN No. AHKPR0582M Vs. Principal Commissioner of Income Tax , KNP at Meerut (Appellant)m (Respondent) O R D E R PER VIMAL KUMAR, JUDICIAL MEMBER: The assessee’s appeal is against order dated 26.03.2021 of Learned Principal Commissioner of Income Tax, Central, Meerut (hereinafter referred as “Ld. PCIT”) under Section 263 of the Income Tax Act, 1961 ( hereinafter referred as “the Act”) arising out of order dated 31.12.2018 of the Ld. DCIT, Noida (hereinafter referred as “Ld. AO\") under Section 143(3) of the Act for assessment year 2016-17. 2. Brief facts of case are that on 03.01.2016, assessee filed his return of income declaring taxable income of Rs.86,78,600/-. The case was selected for Assessee by: Dr. Rakesh Gupta, Shrey Jain & Deepesh Garg,Advs. Department by: Shri Dayainder Singh Sidhu, CIT DR Date of Hearing: 03.06.2025 Date of pronouncement: 22.07.2025 Printed from counselvise.com ITA No.502/Del/2021 2 compulsory scrutiny. Notice under Section 143(2) of the Act dated 25.09.2017 was served. Shri Praveen Kumar, CA and AR of the assessee submitted reply from time to time on ITBA Portal. Details were filed by the assessee and placed on record. On completion of assessment proceedings, Ld. AO vide order dated 31.12.2018 made additions of Rs.1,35,000/- and Rs.88,000/-. 3. After examination of record, show-cause-notice under Section 263 of the Act dated 22.03.2021, requiring assessee to explain why order dated 31.12.2018 by the DCIT, Noida should not be considered as erroneous so far as it is prejudicial to the interest of the Revenue. In response to notice, reply dated 23.03.2021 was received from assessee on email. On completion of proceedings, Ld. PCIT passed order dated 26.03.2021 setting aside order dated 31.12.2018 and directed the Ld. AO to pass fresh order after conducting proper inquiry including third party inquiries and investigations etc. into the claim of the assessee. 4. Being aggrieved, appellant/assessee preferred present appeal with the following grounds of appeal: “1. That having regard to facts & circumstances of the case, Ld. Pr.CIT has erred in law and on facts in assuming jurisdiction u/s 263 of Income Tax Act, 1961 and has erred in holding the assessment order dated 31-12- 2018 as erroneous as well as prejudicial to the interest of revenue within the meaning of section 263 read with clause (a) of explanation-2 there under and that too by recording incorrect facts and findings and in violation of principles of natural justice. Printed from counselvise.com ITA No.502/Del/2021 3 2. That having regard to facts & circumstances of the case, Ld. Pr.CIT has erred in law and on facts in setting aside the order passed by the assessing officer u/s 143(3) dated 31-12-2018 with direction to pass fresh order after conducting proper enquiries and investigations etc. into the claim of the assessee and that too by recording incorrect facts and findings and without observing the principles of natural justice and more particularly when all the details/information/evidences were available on the record at the time of assessment proceedings. 3. That having regard to facts & circumstances of the case, Ld. Pr.CIT has erred in law and on facts in passing the impugned order u/s 263 and that too without providing the opportunity of being heard and in violation of principles of natural justice. 4. That having regard to facts & circumstances of the case, Ld. Pr.CIT has erred in law and on facts in observing that there is non-application of mind on the part of assessing officer in as much the necessary verification of facts/enquiries which should have been made, have not been made. 5. That having regard to facts & circumstances of the case, Ld. Pr.CIT has erred in law and on facts in observing that the assessing officer had not raised any query on the issues which mandated selection of the case. 6. In any view of the matter and in any case, order passed under section 263 is bad in law and against the facts and circumstances of the case & is barred by limitation. 7. That the appellant craves the leave to add, amend, modify, delete any of the grounds of appeal before or at the time of hearing and all the above grounds are without prejudice to each other.” 5. Learned Authorized Representative for appellant/assessee submitted that during the impugned assessment year, assessee has sold 70,000 shares of M/s CCL International Ltd for a total consideration of Rs. 1,73,58,259/- which were purchased by him on 29.04.2013 for a consideration of Rs. 21,70,000/-, however, only Rs. 20,00,000/- has been claimed as cost of acquisition and Printed from counselvise.com ITA No.502/Del/2021 4 therefore, the long term capital gain of Rs. 1,53,58,259/- claimed by assessee as an exempt income u/s 10(38). These facts along with all relevant documentary evidences were comprehensively enquired and examined by Ld. AO during the course of assessment proceedings and thereafter, a view was taken him. Therefore, the assessment order cannot be said to be erroneous and prejudicial to the interest of revenue. These facts are evident from the following evidences: PB 1-3 is the copy of acknowledgment of return of assessee along with computation of income showing the exemption claimed by assessee u/s 10(38) on account LTCG on sale of shares of Rs. 1,53,58,259/- PB 3A-3B is the copy of questionnaire dated 09.10.2018 issued by Ld. AO wherein specific questions were raised in respect of the exemption claimed by assessee during the year. PB 4-81 is the copy of reply filed by assessee before Ld. AO dated 07.12.2018 duly explaining that exemption claimed by assessee u/s 10(38) was on account of sale of equity share of a listed company held by assessee for more than 12 months and on sale of such shares STT was duly paid and therefore, assessee was eligible to claim the said deduction. Further, the following evidences were also filed by assessee before Ld. AO: PB 69-78 is the copy of contract notes issued by M/s Destimoney Securities Pvt. Ltd. for sale of share of M/s CCL International Ltd. during the impugned year. It further shows the trading code of assessee, order no., order time, trade no., trade time, Security/contract description, sell quantity, gross rate/trade price per unit, brokerage per unit, net rate per unit and net total etc. It also shows that STT, service charges, SEBI Turnover Fee and stamp duty has also been duly paid by assessee on the said sale of shares. It also shows the registered office address, corporate office address, CIN, contact details of the compliance officer and contact details of the broker, M/s Destimoney Securities Pvt. Ltd. PB 79-81 is the copy of D-MAT account of assessee for the relevant year which shows the fact the assessee has sold his holding of 70,000 share of M/s CCL International Ltd. during the impugned year. It also shows the DP ID, client ID of assessee and contact details of the broker, M/s Destimoney Securities Pvt. Ltd. It also shows that assessee is a regular investor and has investment in various other equity securities. Printed from counselvise.com ITA No.502/Del/2021 5 PB 77-78 is the copy of transaction ledger of assessee in the books of the broker namely, M/s Destimoney Securities Pvt. Ltd. which shows the transaction of sale made by assessee and further, the consideration was transferred to assessee through proper banking channel after deduction of due charges. PB 8-10 is the copy of bank statement of assessee of relevant year showing the consideration of sale of shares has been received by assessee through proper banking channel. PB 82-83 is the copy submission made by assessee before Ld. AO on 10.12.2018 submitting the bill issued by M/s Blossom Dealcom Pvt. Ltd for sale of 70,000 share of M/s CCL International Ltd. at the rate of Rs. 31 per share to assessee on 29.04.2013. It further shows the complete address along with contact details and PAN No of M/s Blossom Dealcom Pvt. Ltd. PB 98-100 is the submissions made by assessee before Ld. AO on 16.12.2018 submitting the copy of bank statement of assessee for the AY 2013-14 which shows that the payment made by assessee for purchase of 70,000 shares of M/s. CCL International Ltd. of Rs. 20,00,000/- was made through proper banking channel. PB 101-102 is the copy of DMAT account of assessee for AY 2014-15 showing that the 70,000 share purchased by assessee from M/s Blossom Dealcom Pvt. Ltd. were credited/dematerialized to the DMAT account of assessee on 31.03.2014. It also shows the ISIN, security type of the scrip i.e., M/s CCL International Ltd, DP ID and Client ID of assessee and complete address, contact details of the broker, M/s Destimoney Securities Pvt. Ltd. PB 84-97 is the copy of decision in the case of Mukta Gupta, ITA No. 2766/del/2018 dated 26.11.2018 filed by assessee before Ld. AO wherein the same scrip i.e., M/s CCL International was involved and Hon'ble tribunal held the same to be genuine and allowed the claim u/s 10(38). 5.1 Above evidences, before Ld. AO were duly verified before assessment. Thus, the order passed u/s 263 is without any basis, material or evidences and deserves to be quashed. Printed from counselvise.com ITA No.502/Del/2021 6 5.2 The notice under Section 263 has been issued by Ld. PCIT on the basis of audit objection which is evident from the letter of Ld. AO dated 08.03.2021, the same observed as under: PB 168-172 is the copy of audit objections raised by Ld. ACIT/JCIT(Audit) raising objection is respect of action of Ld. AO in allowing the exemption claimed by assessee u/s 10(38) and further, directing Ld. AO to take remedial actions immediately while considering the fact that action u/s 263 shall be barred by 31.03.2021. PB 104-105 is the copy of the letter dated 08.03.2021 sent by Ld. AO to assessee seeking assessee's reply on the above mentioned audit objection. PB 106-132 is the copy of reply filed by assessee on 16.03.2021 in response to the Ld. AO's letter dated 08.03.2021 submitting that each and every evidence relevant to the claim of exemption u/s 10(38) was filed before Ld. AO. Further assessee also placed reliance on the decision of Hon'ble ITAT Delhi bench in the case of Reeshu Goyal, ITA No. 1691/Del/2019 dated 07.10.2019 wherein the same scrip i.e., M/s CCL International was involved and Hon'ble tribunal held the same to be genuine transaction. PB 133-137 is the copy of notice u/s 263 dated 22.03.2021 issued by Ld. PCIT on the same grounds which were raised in the audit objections. From above, it is amply clear that the Ld. PCIT has followed the audit objection rather than applying his own mind, which is not permissible in law and therefore, impugned revisionary order deserves to be quashed in view of the following judicial decisions: I) CIT vs. Sohana Woollen Mills, (2008) 296 ITR 0238, High Court of Punjab & Haryana. 2) Sh. Ajay Grover vs. ITO., ITA No. 532/2018 dated 23.11.2022 (Del) 3) Dharmendra Kumar Bansal vs. CIT, (2014) 101 DTR 377/(2015) 152 ITD 406. ITAT Jaipur Bench. 4) Shantai Exim Ltd. vs. CIT, (2016) 136 ITD 0313, ITAT Ahmadabad Bench. Printed from counselvise.com ITA No.502/Del/2021 7 5) Rajiv Arora vs. CIT, (2011) 131 ITD 0058, ITAT Jaipur Bench. 6) Paramjit Singh vs. PCIT, (2016) 48 CCH 0199, ITAT Chandigarh Bench. 7) M/s Refex Industries Ltd. vs. DCIT, ITA No. 972/Mds/2014, date of order 09.09.2014, ΙΤΑT Chennai Bench. 8) Sartaj Singh vs. PCIT, (2016) 48 ITR (Trib.) 0604/ (2016) 179 TTJ 0017, ITAT Amritsar Bench. 9) Jaswinder Singh vs. CIT, (2012) 150 TTJ 0033, ITAT Chandigarh Bench. 10) Vikarm Kaswan vs. CIT, (2016) 47 ITR (Trib.) 0322/ 46 CCH 0561, ITAT Chandigarh Bench. 11) Sunil Gavaskar vs. ITO, (2016) 47 ITR (Trib.) 0243/(2016) 134 DTR 0113, ITAT Bombay Bench. 5.3 A comprehensive reply was filed by assessee before Ld. PCIT to show that order passed by Ld. AO was neither erroneous nor prejudicial to the interest of revenue and therefore, jurisdiction under Section 263 could not have been assumed. In this regard, following submissions were made: PB 133-137 is the copy of notice u/s 263 dated 22.03.2021 issued by Ld. PCIT on the same grounds which were raised in the audit objections. PB 138-167 is the copy of reply filed by assessee before Ld. PCIT that each and every evidence relevant to the claim of exemption u/s 10(38) was filed before Ld. AO and after due verification of the same and claim of the assessee was accepted. Further reliance was also placed on the decision of Hon'ble ITAT Delhi bench in the case of Reeshu Goyal, ITA No. 1691/Del/2019 dated 07.10.2019 and also in the case of Mukta Gupta, ITA No. 2766/del/2018 dated 26.11.2018 wherein the same scrip i.e., M/s CCL International was involved and Hon'ble tribunal held the same to be genuine transaction. Therefore, view taken by Ld. AO was a plausible view and thus, the order of Ld. AO cannot be said to be erroneous or prejudicial to the interest of revenue. 5.4 Reliance is also placed on the following judicial decisions: Printed from counselvise.com ITA No.502/Del/2021 8 i) Malabar Industrial Co. Ltd. vs. CIT, (2000) 243 ITR 83(SC). ii) Housing Projects Ltd, 74 DTR 153, High Court of Delhi. iii) DIT vs. Jyoti Foundation, 357 ITR 388, High Court of Delhi. iv) CIT vs. Sunbeam Auto Ltd., (2011) 332 ITR 167, High Court of Delhi. 5.5 Further, reliance is also placed on the following decisions given by various Income Tax Appellate Tribunals wherein the claim u/s 10(38) involving the same scrip i.e., CCL International Ltd. was allowed by holding the scrip as a genuine scrip and not a penny stock. a) Reeshu Goyal vs. ITO, ITA No. 1691/Del/2019 dated 07.10.2019, ITAT Delhi Bench. b) Mukta Gupta vs. ITO, ITA No. 2766/Del/2018 dated 26.11.2018, ITAT Delhi Bench. c) Mool Chand Jagwayan vs. ITO, ITA No. 2381/Kol/2018 dated 07.06.2019, ITAT Kolkata Bench. d) Sh. Achal Gupta vs. ITO, ITA No. 501/Lkw/2019 dated 16.12.2020, ITAT Lucknow Bench. 5.6 The view taken by the Ld. AO was a plausible view which was also taken by various judicial bodies and therefore, the order of Ld. AO cannot be held as erroneous and thus, jurisdiction u/s 263 cannot be assumed in view of the following judicial decision: CIT vs. Max India Ltd., 268 ITR 128, High Court of Punjab & Haryana. Printed from counselvise.com ITA No.502/Del/2021 9 5.7 Further, reliance was also placed on the decision of Hon'ble ITAT Chandigarh Bench in the case of Sh. Trivikram Singh Toor vs. PCIT in ITA No. 110/Chd/2021 dated 21.09.2022 wherein the facts were identical with the the p facts of the case of assessee and it was held by the Hon'ble Bench that jurisdiction u/s 263 cannot be assumed by Ld. PCIT on the basis of suspicion that scrip, M/s CCL International Ltd., which is the scrip in the present case as well, is a penny stock without any concrete evidences suggesting the same. Reliance was also placed on the following judicial decisions:  Shri Tapas Kumar Mallick vs. ACIT, ITAT No. 8142/DEL/2018 dated 19.03.2021, ITAT Delhi Bench.  Narendra Aggarwal vs. PCIT, ITAT No.456/DEL/2021 dated 04.04.2022, ITAT Delhi Bench. Adverse observation of Ld. PCIT are met as under: 5.8 Ld. PCIT in para 7.1 at page 9-10 of the revisionary order has mentioned that enquiry report of Investigation Wing, Kolkata was available with the Ld. AO at the time of making assessment which was not considered by Ld. AO while framing the impugned assessment. Ld. PCIT has neither brought anything on record to show whether the said report was actually available with Ld. AO at the time of assessment nor it was specified as to whether there was anything against the assessee in the said report according to be which order of Ld. AO could be held to be erroneous and prejudicial to the interest of revenue. Therefore, the action under Section 263 of the Act is taken only on the basis of Printed from counselvise.com ITA No.502/Del/2021 10 surmises and conjectures which is not permissible in law. Said report, at best can be a basis of suspicion and it was held by Hon'ble ITAT Chandigarh Bench in the case of Sh. Trivikram Singh Toor (supra) that the jurisdiction u/s 263 cannot be assumed on the basis of suspicion and thus, nothing adverse can be read from this observation of Ld. PCIT. 5.9 Ld. PCIT in para 7.2 at page 10-11 of the revisionary order has mentioned that assessee claimed to have purchased 70,000 shares of M/s CCL International Ltd. @ Rs. 31 per share amounting to Rs. 21,70,000/-, however, payment of only Rs. 20,00,000/- has been shown to be made by assessee through banking channel and I.d. AO has not verified whether balance payment of Rs. 1,70,000/- was made or not. 5.10 In reply, it is respectfully submitted that the balance amount has not even claimed by assessee as part of the cost of acquisition. Assessee has claimed cost of acquisition of Rs. 20,00,000/- only from the sale consideration which has also been explained by us in our submissions made here and above. Therefore, when the balance payment has not even claimed by assessee as cost then in such a case, there is no question of any verification on this account and thus, this observation of Ld. PCIT also deserves to be ignored. 5.11 Ld. PCIT in para 7.2 at page 10-11 of the revisionary order has mentioned that there was huge gap between the alleged purchase of share on Printed from counselvise.com ITA No.502/Del/2021 11 29.04.2013 and payment of purchase consideration on 24.03.2014 and thus, doubted the credibility of the purchase. 5.12 In reply, it is respectfully submitted that the payment terms are decided by the mutual understanding of the parties and there is no prohibition in law for making payment at later point of time. Further, it is common business phenomenon of effecting the purchase at credit and making payment at later point of time as per the availability of funds and therefore, nothing adverse could be read from this observation of Ld. PCIT as well. 5.13 Ld. PCIT in para 7.2 at page 11 has mentioned that Ld. AO has failed to verify the status of the company M/s Blossom Dealcom Pvt. Ltd. which was struck off at the time of assessment and confront the same to assessee. 5.14 In reply, it is respectfully submitted that the status of the said company has no bearing on the case of assessee as the said company is neither related to nor in control of assessee. The purchase of shares were affected back in AY 2014-15 and thereafter, if the said company has been struck off even then nothing adverse could be read against the assessee as the transaction has already been matured. Thus, there was no requirement on the part of the Ld. AO to make any such verification. In any case, it further strengthens the case of assessee as it proves that at the time of the purchase the said company was in existence and thus establishes the identity of the seller. Printed from counselvise.com ITA No.502/Del/2021 12 6. Learned Authorized Representative for Revenue submitted that Ld. AO had failed to inquire about share transaction order of SEBI regarding Blossom & CCL. Reliance was placed on order dated 08.01.2019 in ITA No. 3809/Del/2018 titled as “Anju Rastogi Vs. ITO, Ward 1(1), Meerut and Rahal Gupta Vs. ACIT of ITAT, Raipur in ITA Nos.190 to 193(RPR) of 2018. 7. From examination of record in light of aforesaid rival contentions, it is crystal clear that Ld. PCIT assumed jurisdiction under Section 263 of the Act by alleging that order dated 31.12.2018 under Section 143(3) of the Act was erroneous in so far as it is prejudicial to the interest of the Revenue on the ground that Ld. AO failed to examine assumed claim by assessee under Section 10(38) of Rs.1,53,58,259/- on account Long Term Capital Gain (LTCG) earned by assessee on sale of shares of M/s. CCL International Ltd. The transaction of purchase and sale of CCL Ltd. giving rise to LTCG claim to be exempted under Section 10(38) of the Act is fully elaborated by documentary evidence as pointed out by the Ld. Counsel for the assessee. The shares have been credited in the Demat account both purchase and sale transactions have been carried out through the banking channel and by transferring of shares. The prima facie bona fide existence of transaction cannot be doubted. 8. Hon’ble High Court of Delhi in ITA No.173/2021 titled as “PCIT-12 Vs. Ms. Reeshu Goel held as under: Printed from counselvise.com ITA No.502/Del/2021 13 “6. In the impugned order the Tribunal has held that no enquiry had been conducted and the assessee's broker had not even been examined by the authorities below before passing the impugned orders. The ITAT also held that the scrips of M/s CCL International Ltd. were freely traded at the Bombay Stock Exchange between the years 2011 and 2014 and the assessee had purchased the shares in 2011 and sold the same in 2012. The ITAT also found that the revenue from the operation of M/s CCL International Ltd. from March, 2010 to March, 2012 was between Rs.55.25 crores to Rs.79 crores and the share price during the period 2010 to 2014 had increased from Rs.50 per share to Rs.609 per share. 7. This Court is of the view that there is no perversity in any of the findings given by the Tribunal. 8. The Supreme Court in the case of Ram Kumar Aggarwal & Anr. vs. Thawar Das (through LRs), (1999) 7 SCC 303 has reiterated that under Section 100 of the Code of Civil Procedure, the jurisdiction of the High Court to interfere with the orders passed by the Courts below is confined to hearing on substantial question of law and interference with finding of the fact is not warranted if it involves re-appreciation of evidence. The Supreme Court in Hero Vinoth (Minor) vs. Seshammal, (2006) 5 SCC 545 has also held that \"in a case where from a given set of circumstances two inferences of fact are possible, the one drawn by the lower appellate court will not be interfered by the High Court in second appeal. Adopting any other approach is not permissible.\" It has also held that there is a difference between question of law and a \"substantial question of law\". Consequently, this Court finds that there is no perversity in the findings of the ITAT. 9. Accordingly, the present appeal is dismissed.” 9. A Co-ordinate Bench of the ITAT, Delhi in ITA No.1999/Del/2020 in the case of Sarika Bindal Vs. ITO, New Delhi has held as under: “8. We have carefully considered the rival submissions and perused the material available on record. The case law cited have also been taken into account. As pointed out on behalf of the assessee, the transaction of existence of purchase and sale of CCL Ltd. giving rise to LTCG claimed to be exempt under section 10(38) of the Act is fully corroborated by the documentary evidences. The shares have been credited in the demat Printed from counselvise.com ITA No.502/Del/2021 14 account and transferred out of demat account at the time of sale. Both purchase and sale transactions are carried out through banking channel and by transfer of shares. The prima facie bona fides of existence of transaction executed cannot thus be doubted. It is not the case of the revenue that the capital gain arising to Assessee in not in the nature of LTCG. The case of revenue is that such transactions is an accommodation entry and thus sham. The abnormal increase in prices of share has led to suspicion on bonafides of transaction and was treated as accommodation entry of sham nature. 8.1 The Hon’ble Delhi High Court in the case of Karuna Garg as well as Krishna Devi has held that an astronomical increase in the share price of a company in itself is not a justifiable ground for holding the LTCG to be an accommodation entry. 8.2 As pointed out on behalf of the assessee large number of decisions pronounced by Co-ordinate benches holds the field in favour of the assessee in respect of same scrip of ‘CCL International Ltd.’. 8.3 Significantly, the Assessing Officer in another case namely ‘Parth Yadav’ has framed the reassessment order without making any additions on account of LTCG derived from sale of CCL Ltd. Shares despite reopening the assessment on such ground. Thus, the Revenue itself, in other case, broadly accepted the view point canvassed. 8.4 On the substratum of the company financials, the assessee has also demonstrated that CCL Ltd. is engaged in substantial business with significant turnover and fixed assets base. 8.5 In such backdrop, we are of the view that the addition is not justified based on conjecture and surmise and the assessee is discharged primary onus which lay upon it. The Revenue, on the other hand, could not dislodge the perception that apparent is not real. 8.6 In the light of factual matrix and case laws available on record, we see potency in the plea of the assessee that such capital gains arising on sale of shares cannot be regarded as sham profit and consequently, additions under s. 69A of the Act is not justified. The Assessing Officer has not provided anything on record to justify additions under section 69C of the Act either. The modus operandi spelt by itself is not a adequate ground to impeach the transactions. The judgment in Udit Kalra relied upon by revenue was rendered in the facts of that case and is quite distinguishable. In that case, the financial resources of the company [Kappac Pharma Ltd.] was quite meager and incurring consistent losses Printed from counselvise.com ITA No.502/Del/2021 15 as opposed to the facts of the present case. Also, there was specific information that assessee was beneficiary of accommodation entry. Such facts led to adverse conclusion in that case in the setting of facts of that case. 8.7 In the light of delineations, we set aside the order of CIT(A) and direct the AO to delete the additions in question. 9. In the result, appeal of assessee is allowed.” 10. In view of above material facts in light of well settled principles of law, it deserves to be held that the assessee has demonstrated that the capital gain arising to the assessee is in nature of LTCG. The view taken by Ld. PCIT following audit objections rather than applying his mind is not permissible in law and deserves to be set aside. Accordingly, ground of appeal nos. 1 and 2 are allowed. Adjudication of ground nos. 3 to 7 have become academic and are left open. 11. In the result, the appeal of appellant/assessee is allowed. Order pronounced in the open court on 22 July, 2025. Sd/- Sd/- (S RIFAUR RAHMAN) (VIMAL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 22/07/2025 Mohan Lal Printed from counselvise.com ITA No.502/Del/2021 16 Copy forwarded to - 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi Printed from counselvise.com "