SANJAY SINGAL,NEW DELHI V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, CHANDIGARH, CHANDIGARH

ITA 220/CHANDI/2025

AI Insights

The case involves multiple appeals by Aarti Singal, Aniket Singal, Sanjay Singal, and Sanjay Singal (HUF) against the orders of the CIT(A), which upheld the additions made by the Assessing Officer regarding alleged bogus long-term capital gains and unaccounted commission expenses. The Tribunal examined whether the transactions leading to LTCG were genuine and if the additions under sections 68 and 69C were justified. The Tribunal's decision was influenced by the lack of tangible evidence linking the assessees to any fraudulent activities and the procedural compliance demonstrated in the transactions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 774298 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 11-02-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUSUM BA NSAL
• Assessee Lawyers: ASHWANI KUMAR; C.A
• Keywords: Document seized; Documents seized; Onus to prove; Capital Gains; Sham transactions; Search and seizure; Accommodation entries; Earning of tax free income; Assessment record; Tangible material; Bogus
• Section: 142(1); 132; 68; 69C; 133A

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “बी” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH HEARING THROUGH: HYBRID MODE ŵी राजपाल यादव, उपाȯƗ एवं ŵी क ृणवȶ सहाय, लेखा सद˟ BEFORE: SHRI. RAJPAL YADAV, VP & SHRI. KRINWANT SAHAY, AM आयकर अपील सं./ ITA Nos. 217 & 218/Chd/ 2025 िनधाŊरण वषŊ / Assessment Years : 2015-16 & 2016-17 Aarti Singal 53, Jor Bagh, New Delhi बनाम The DCIT Central Circle-1 Chandigarh ˕ायी लेखा सं./PAN NO: AEFPS6299L अपीलाथŎ/Appellant ŮȑथŎ/Respondent आयकर अपील सं./ ITA Nos. 219 /Chd/ 2025 िनधाŊरण वषŊ / Assessment Years : 2015-16 Aniket Singal 4, Amritashergil Marg, New Delhi बनाम The DCIT Central Circle-1 Chandigarh ˕ायी लेखा सं./PAN NO: CZCPS6126E अपीलाथŎ/Appellant ŮȑथŎ/Respondent आयकर अपील सं./ ITA Nos. 220 /Chd/ 2025 िनधाŊरण वषŊ / Assessment Years : 2016-17 Sanjay Singal 53, Jor Bagh, New Delhi बनाम The DCIT Central Circle-1 Chandigarh ˕ायी लेखा सं./PAN NO: ANRPS7985C अपीलाथŎ/Appellant ŮȑथŎ/Respondent आयकर अपील सं./ ITA Nos. 221 /Chd/ 2025 िनधाŊरण वषŊ / Assessment Years : 2016-17 Sanjay Singal (HUF) 53, Jor Bagh, New Delhi बनाम The DCIT Central Circle-1 Chandigarh ˕ायी लेखा सं./PAN NO: AAMHS8301N अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Ashwani Kumar, C.A and Ms. Deepali Aggarwal, C.A राजˢ की ओर से/ Revenue by : Smt. Kusum Bansal, CIT, DR (Virtual Mode) सुनवाई की तारीख/Date of Hearing : 11/08/2025 उदघोषणा की तारीख/Date of Pronouncement : 09/09/2025 Printed from counselvise.com 2 आदेश/Order PER KRINWANT SAHAY, AM: The above appeals have been filed against separate orders dated 16.12.2024 and 18.12.2014 passed by the CIT(A), Gurgaon for A/Ys 2015-16 and 2016-17 in the following case: (a) Smt Aarti Singal (ITA Nos 217 & 218/Chd/2025 for A/Ys 2015-16 and 2016-17); (b) Shri Aniket Singal (ITA No. 219/Chd/2025 for A/Y 2015-16); (c) Shri Sanjay Singal (ITA No. 220/Chd/2025 for A/Y 2016-17); and (d) Sanjay Singal (HUF) (ITA No. 221/Chd/2025 for A/Y 2016-17). 2. The grounds in all the appeals being common, the appeals were heard together and are being disposed off by common order for the sake of convenience. ITA No. 217/Chandi/2025 for A/Y 2015-16 in the case of Smt Aarti Singal 3. In this appeal, the assessee has raised the following grounds of appeal:- 1. That order passed u/s 250(6) of the Income Tax Act, 1961 by the Learned Commissioner of Income Tax (Appeals)-3, Gurgaon is against law and facts on the file in as much as he was not justified to uphold the addition of Rs. 36,67,21,029/- representing sale proceeds of equity shares held by the appellant for more than 12 months by invoking the provisions of section 68 of the Income Tax Act, 1961 and denying claim of exemption u/s 10(38). 2. That the Learned Commissioner of Income Tax (Appeals)-3 was further not justified to arbitrarily uphold the addition of Rs. 2,34,34,280/- on account of alleged commission expenses alleged paid by the appellant for arranging alleged entries in respect of long term capital gain invoking the provisions of Section 69C of the Income Tax Act, 1961. Printed from counselvise.com 3 3. That the Learned Commissioner of Income Tax (Appeals) further gravely erred in upholding the observation of the Learned Assessing Officer that the transactions relating to purchase and sale of equity shares were sham transactions. 4. The facts are that the assessee in her Income Tax Return, has claimed exempt income in the form of Long Term Capital Gain (\"LTCG\") of Rs. 36,67,21,029/- from sale of shares of M/s Maa Jagdambe Trade Link Ltd (\"MJTLL\") and M/s PS Infrastructure and Services Ltd (\"PSISL\"). From the assessment record of the assessee and her family members for AYs 2011-12 to 2014-15, it was observed by the Assessing Officer that the appellant/her family members have indulged in taking accommodation entries in the shape of bogus \"LTCG\" against cash consideration through accommodation entry providers. 4.1 The details of the long-term capital gains arising to the Appellant in the period covered under the appeal are as follows:- Scrip Purchases Sale Profit/ (Loss) AY of Purchas e No of shares Amount Rate Corporate Action No of shares post Corporate action AY of sale No of shares Amount Rate Maa- Jagdambe Trade Links Ltd (previously Parasamp uria Credit & Investment 3 Ltd) 2013-14 375000 3750000 10 Split in the ratio 10:2 1875000 2015-16 1875000 183801377 98.03 180051377 Crescent Digital Tech Pvt Ltd (merged with Parag Shilpa Investment s Ltd) Present Name -PSIT Infrastructu re Services Ltd 2013-14 635000 6350000 10 Split in the ratio 10:1 6350000 2015-16 2443638 182919651 74.86 180476013 Total 360527390 Printed from counselvise.com 4 4.2 A Search under Section 132 of the Income Tax Act was carried out in the case of the appellant/her family members and group concerns on 21.02.2014. Search proceedings under Section 132 of the Act were also carried out in the case of Shri Shrish Chandrakant Shah on 09.04.2013 by the Directorate of Income- Tax (Investigation), Ahmedabad, and in the case of Shri R.K. Kedia and Shri Manish Arora on 13.06.2014 by the Directorate of Income Tax (Investigation), Delhi. 4.3 Shri Shrish Chandrakant Shah, in his statement recorded under Section 132(4) of the Act admitted that he was engaged in providing accommodation entries to various beneficiaries including the assessee /her family members through Long Term Capital Gain. 4.4 Shri R.K. Kedia, in his statement recorded under oath u/s 132(4) of the Act on 13.06.2014 admitted that he had arranged accommodation entries for the appellant and her family members against commission in the shape of LTCG. He further admitted that such companies, through which LTCG was arranged, were paper companies, controlled and managed by various accommodation entry providers and such companies were not doing any actual work, but were being used to provide LTCG to various beneficiaries through such accommodation entries. 4.5 The Assessing Officer has reproduced the relevant extracts of the statement of Shri R.K. Kedia at pages 4-6 of the assessment order. In the said statement, he has explained the modus operandi through which accommodation entries were provided Printed from counselvise.com 5 and has specifically mentioned that the appellant and her family members as having taken accommodation entries through him. He also revealed the names of various accommodation entry providers used for this purpose and has also detailed the modus- operandi followed by them including how the rates of such shares were rigged, unaccounted cash taken from the beneficiaries and routed back to their bank accounts as long-term capital gains. 4.6 For this purpose, commission at the rate of 5% to 6% was taken from the beneficiaries by such operators. Such statements of Shri Shrish Chandrakant Shah and Shri R.K. Kedia recorded under Section 132(4) of the Act were evidently supported by seizure of a large number of incriminating documents, during the course of search proceedings carried out in their cases on 09.04.2013 and 13.06.2014 respectively, including cash books reflecting flow of unaccounted cash from such beneficiaries, including the appellant, to such accommodation entry providers. 4.7 On the basis of these facts, accommodation entries taken by the appellant and her family members for AY 2014-15 and earlier years have been held by the Assessing Officer as bogus credits taken into their bank accounts in the garb of bogus long term capital gain from sale of listed securities of the paper companies. 4.8 During the year under consideration, the assessee had sold shares of \"MJTLL\" between 07.10.2014 to 05.01.2015. The same were purchased off market on 12.03.2013 through preferential allotment. The assessee had claimed the resultant LTCG of Rs. 18,00,51,378/- earned from sale of such shares during the year under consideration as exempt u/s 10(38) of the Act. Similarly, the Printed from counselvise.com 6 Appellant has sold shares of \"PSISL\" between 18.11.2014 and 27.03.2015 which were purchased on 11.06.2012 and earned exempt \"LTCG\" of Rs. 18,04,76,013/-. The total long-term capital gains accruing to the Appellant were Rs. 36,05,27,391/- and the aggregate sale proceeds from the sale of shares was Rs. 36,67,21,029/- ( Details of the calculation of Long Term Capital Gains are at Pages 28 -29 of the PB). 4.9 During the course of the assessment proceeding the Assessing Officer vide notice u/s 142(1) dated 13.10.2017 (Page 214 -15 of the PB) asked the Assessee to give details of the exempt Long-term Capital Gains and, among other things to provide reasons/justification for purchase with documentary evidence and also to produce the broker through whom shares transactions were undertaken on the stock exchange, parties who purchased the shares and the Directors of the said companies to prove their identity, creditworthiness and genuineness of the transaction. He also asked Assessee to provide copies of contract note, bank account in which the said exempt income is deposited, DEMAT Account etc. 4.10 The Assessee vide reply dated 14.11.2017 (Pages 216 - 217 of the PB) furnished the following details:- (i) Details of exempt income of Rs. 36,11,98,913/- earned (Pages 28-29 of the PB); (ii) Copies of allotment advice for allotment of shares (Pages 30 - 49 of the PB); (iii) Copies of contract notes evidencing sale of shares (Pages 50-195 of the PB); (iv) Copies of bank statement from whom payment for purchase of shares was made (Pages 196-197 of the PB) (v) Copies of bank statement where consideration for sale of shares were reflected (Pages 198-202 of the PB) Printed from counselvise.com 7 (vi) Copy of ledger account of the appellant in the books of stock broker (Pages 203- 207 of the PB) (vii) Copy of DEMAT statement (pages 208-213 of the PB) 4.11 It was also submitted that the said investment was made for deriving long-term capital appreciation based on the perception that the company had huge expansion plans and the share price by being low it seemed a low risk investment in a company with high growth potential. 4.12 The assessee expressed her inability to produce the broker since it was only a customer and did not have any control over them. As regards the purchase of shares it was submitted that the shares having been sold through online trading platform using \"BOLT\" (\"Bombay Stock Exchange Online Trading\") and delivery of the shares was completed through DEMAT a/c and the identity of the purchaser was not known/described. Further, since the Assessee was just an investor and not in contact with the Directors of the Company it expressed its inability to produce them but simultaneously requested the Assessing Officer to use his good offices to issue letters to the said/Directors asking them to appear for which it was ready to deposit the diet money. 4.13 It was also emphasized that all the conditions laid down in section 10(38) of the Act viz. period of holding, securities being listed, sale being subject to STT were fulfilled and accordingly the said LTCG was rightly treated as exempt income. 4.14 However, apparently the Assessing Officer was not in agreement with the explanations and evidences furnished on behalf of the Assessee. In particular, he has held that the Printed from counselvise.com 8 submission filed while being duly considered were not acceptable for the following reasons (Page 2 to 4 of the assessment order):- \"(a) The assessee has not been able to produce the parties who purchased the shares of company sold by the assessee (b) The assessee has not been able to produce the directors of the company whose shares were sold by the assessee to prove their identity, genuineness and creditworthiness. (c) The assessee has not given the details of mode of payment received or paid to the broker. (d) The assessee is not having any knowledge about the business of the company whose shares were sold by him. (e) The assessee has not been able to know how he came to know about the company whose shares were purchased/sold by him. (f) The assessee is not having any knowledge about the director/CEO of the company. (g) The assessee has not been able to explain as to how he came to know about the broker through whom the shares were sold and contact person who told about the broker. (h) The most important and crucial evidence against the assessee is that the assessee alongwith other family members is indulged in arranging One Time (OT) accommodation entries and LTCG in lieu of cash. The nexus of the assessee with entry provider proves from the incriminating nature of data seized by the department during the course of search and seizure operation on 03.03.2010 and 21.02.2014 at the residential and business premises of the assessee and his group Bhushan Power and Steel Limited and survey u/s 133A of the I.T. Act, 1961 on the BPSL Group on 27.12.2012. A search & Seizure operation u/s 132 of the I.T. Act, 1961 was also conducted by the Dl(lnvestigation), Ahemedabad in the case ofSh. Shrish Chandrakant Shah(SCS) on 09.04.2013. Another search and seizure operation u/s 132(1) of the I.T. Act, 1961 was also conducted on Sh. R.K. Kedia and his key employee (Accountant) Sh. Manish Arora by the Dl(lnvestigation) Wing, New Delhi alongwith Bhushan Group on 13.06.2014. During the course of search statement of Sh. Shrish Chandrakant Shah (SCS) was recorded u/s 132(4) of the I.T. Act, 1961. During his Printed from counselvise.com 9 statements u/s 132(4) of the I.T. Act, 1961 Sh. Shrish Chandrakant Shah admitted and accepted that he is engaged in providing various types of accommodation entries including exempt long term capital gain. The statement of Sh. R.K. Kedia was also recorded during the course of search and in his statement recorded on 13.06.2014 on oath he admitted that he provided accommodation entries to the assessee group against which he earned commission. In his statement recorded u/s 132(4) of the I.T Act 1961 he stated that most of the companies were paper companies controlled and managed by various accommodation entry providers. These companies are not doing any actual work but they were used for provided long term capital gain entries to various beneficiaries.\" 4.15 The Assessing Officer has also relied upon the findings of A/Y 2014-15 and earlier years and the orders passed for A/Y 2014-15 and earlier years wherein it has been held that the Assessee along with family members were involved in getting one time (OT) entries and exempt LTCG. 4.16 He has also sought support, with respect to both \"MJTLL\" and \"PSISL\", by the fact that as per the financials both these companies are not doing any business, have Nil fixed assets, Nil dividend. They are not doing any meaningful business, have either negative or Nil profits and exist only on paper. He has also sought to derive support from an analysis of the share trade data to conclude that these factors raise suspicion on the motive of investment in the shares of these companies. He has also sought support from the data relating to share trade of these companies on the basis of which it was concluded that certain brokers were engaged in providing bogus accommodation entries in the form of LTCG. 4.17 Following the same logic and findings, the Assessing Officer has relied upon the said statements of Shri Shrish Chandrakant Printed from counselvise.com 10 Shah, Sh Manish Arora Shri R.K. Kedia and documentary evidence seized in the search proceedings to hold that the long-term capital gains of Rs. 36,05,27,391/- arising to the Appellant on sale of shares of \"MJTLL\" and \"PSISL\" are also bogus. The Assessing Officer in his concluding paragraph at page 25 of the assessment order has held as follows:- \"In view of the considering details discussion in the assessment order for A.Y. 2014-15, it is established that the assessee indulged in \"sham transactions\" to received back his unaccounted money in the grab of exempt LTCG. Therefore, the total receipt credit in various bank accounts of the assessee against these bogus/sham transactions have to be treated as unexplained income of the assessee u/s 68 of the I T Act, 1961 alongwith the unaccounted commission expenditure @ 6.5% of the total LTCG of the year for arranging these entn'es during the F.Y. 2014-15 relevant to A.Y. 2015-16\". 5. Against the said action of the Assessing Officer, the Assessee filed an appeal before the Commissioner of Income Tax (Appeals)-3, Gurgaon. During the first appellate proceedings details submission dated 23.05.2019 were filed before the CIT(A) which is placed on record, wherein it was emphasized that the LTCG earned by the Assessee was fully compliant with the provisions of section 10(38) of the Act and was duly liable to be treated as exempt income. 5.1 The submissions made on behalf of the Assessee were forwarded by the CIT(A) to the Assessing Officer who has furnished his remand report vide letter dated 26.05.2023 which is placed on record, wherein he has reinforced and supported the action of treating the \"LTCG\" as bogus. A copy of the remand report was forwarded to the Assessee who has furnished a rejoinder vide Printed from counselvise.com 11 letter dated 04.07.2023 which is also placed on record wherein the submissions made earlier have been reiterated. 5.2 The CIT(A) has vide order dated 18.12.2024 held that the Appellant has failed to discharge its burden of proof, that each case is to be decided on the facts and circumstances of that case, relevant factors are to be considered are surrounding circumstances objective facts, evidences adduced, presumptions of facts based on common human experience and held that there is overwhelming evidence that the transaction on which adverse view has been taken are sham transactions. 5.3 On the basis of the said arguments and relying upon certain case laws the CIT(A) has upheld the action of the Assessing Officer and confirmed the additions. The relevant paras of the order of the CIT(A) are as follows:- 6.11 In the present case, I find the appellant has failed to discharge its burden of proof and the AO, on the other hand, has proved that the claim of the appellant was not genuine. Each case has got to be decided on the facts and circumstances of that case. The relevant factors to be considered are surrounding circumstances, objective facts, evidences adduced, presumption of facts based on common human experience in life and reasonable conclusions. In the present case, as discussed above, there is overwhelming evidences as discussed in details in the order that the transactions on which adverse views have been taken are sham transactions. 7.11 According to section 68 if any sum is found credited in the books of assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not in the opinion of the AO satisfactory, the sum so credited may be Printed from counselvise.com 12 charged to income tax as income of the assessee of that previous year. In this case, also the appellant could not explain the receipt of alleged share profits credited in his bank account. The explanation given by the appellant is not at all satisfactory as can be seen from the AO order. It is proved beyond doubt that the share transactions entered into by the appellant are sham transactions and own money has been introduced as profits from share transactions, which has been claimed exempt u/s 10(38). 7.12 Analysis of transactions: Facts revealed that such trading transactions of purchase and sale of shares are done with a mala fide intention to evade taxes, for the following reasons : — i. Transactions of shares were not governed by market factors prevalent at relevant time in such trade, but the same were the product of design and mutual connivance on the part of appellant and the dubious operators; ii. The appellant and other family members of M/s Bhushan Power group resorted to a preconceived scheme to procure long-term capital gains by way of price difference in share transactions not supported by market factors; iii. Cumulative events in such transactions of shares revealed that same were devoid of any commercial nature and thereby fell in realm of not being bona fide and, hence, the impugned exemption u/s 10(38) on alleged long-term capital gain is not allowable; iv. Failure of the appellant to discharge his onus: The appellant has not been able to prove the unusual rise and fall of share prices to be natural and based on the market forces. It is evident that such share transactions were closed circuit transactions and clearly a structured one; v. Ignorance of the appellant about shares and penny stock companies: Appellant has failed to show that he is having knowledge about the shares traded and having any knowledge about the fundamentals of the penny stock companies; vi. Financial analysis of the penny stock companies: The net worth of the penny stock company is negligible. Even though the net worth of the company and the business activity of the Printed from counselvise.com 13 company is negligible, the share prices have been artificially rigged to unusual high; Many a times, it is difficult to get direct information or evidence in respect of manipulative activities of price rigging and accommodation entry which happens with prior meeting of minds between the beneficiary and the stock broker. A holistic approach is required to be made and the test of preponderance of probabilities have to be applied and while doing so, one cannot lose sight of the fact that the shares of very little-known companies with insignificant business had a steep rise in the share prices within the period of little over a year. The surrounding circumstances has to be taken into account and the matter can't be decided only on the basis of documentary evidences brought on record by the appellant. The facts and circumstances of the case, as recorded above, clearly suggest that the AO cannot take or accept such make-believe transactions, as presented by the appellant. Truth or genuineness of such transactions must prevail over the smokescreen, created by way of premeditated series of steps taken by the appellant, either directly or indirectly, with a view to imparting a colour of genuineness and character of commercial nature, to such share transactions. Needless to say that, one has to look at the whole transactions and series of steps taken to accomplish such share transactions, in an integrated manner, with a view to ascertaining the true nature and character of such purchase and sale of shares. The onus was squarely on the appellant to prove the genuineness of the credit entry appearing in the form ofLTCG in their books of account. 7.13 The thrust of the appellant's argument is that the sale consideration was received by cheque on which STT was paid and, therefore, the LTCG earned was genuine. This cannot be accepted in view of multiple adverse evidences collected by the revenue and the appellant cannot be treated as a passive beneficiary of the transactions. The Supreme Court held in the case of Rakhi Traders (P.) Ltd. (supra) that in trade transactions with huge price variations of the transactions, it will be too naive to hold that the transactions were through screen based trading and hence anonymous. According to the Apex Court, such conclusion would be overlooking the prior meeting of minds involving synchronization of buy and sale order and that such transactions were manipulative/deceptive device to create a desired loss and/or profit. Printed from counselvise.com 14 In view of the detailed discussion as above and based on data obtained from various sources and made available on record, the exemption u/s 10(38) claimed on account of said LTCG by the appellant is held to be a sham transaction only to bring its own unaccounted money in the guise of exempted LTCG and only paper work was done to give a color of authenticity to the transactions by creating a facade of legitimate transactions. 8.11 Further, the documents submitted as above to prove the genuineness of transaction, are themselves found to serve as smoke screen to cover up the true nature of the transactions, in the facts and circumstances of the case as it is revealed that purchase and sale of shares are arranged transactions to create bogus profit in the garb of tax exempt LTCG. It is relevant to mention here that the prices have increased many fold times as soon as the period of one year has expired so as to avail the benefit of exempt longterm gain u/s 10(38] of the Act. There is no justifiable indicator such as some significant business transaction in these scrips substantiate such abnormal rise in its scrips during the period under consideration. The onus was on the appellant to explain the source and nature of the amount credited in his bank account on this account. The appellant however could not discharge the onus as the explanation furnished by him has been found to be unsatisfactory. The AO has confronted the adverse findings/material to the appellant as discussed above. The Investigation Wing and the AO has brought on record sufficient material to support the findings that appellant has introduced unaccounted money by camouflaging the sharetransactions with good paper work. The appellant has not discharged the initial onus of proving the genuineness of share transaction as despite being specifically asked details of share transactions vide notice u/s 142(1) alongwith questionnaire, the appellant failed to produce the parties who purchased the shares of such dummy companies lacking any fundamentals. Similarly, the appellant also failed to give details of mode of payment received/ paid to the brokers. The findings stated by the AO co-relates with the statement of accommodation entry providers in a separate search action by the Investigation Wing in the case ofShri Shrish Chandrakant Shah, Shri R.K. Kedia and Shri Manish Arora. It is clearly held that on the requirement of beneficiaries to infuse their unaccounted cash into their business without having to pay any tax on the same, accommodation entries were provided to them. Shri R.K. Kedia has admitted that the accommodation entries of LTCG might appear to be genuine Printed from counselvise.com 15 prima facie, as the payment of cheques while investing in shares or selling of shares is through stock exchange and brokers, but these entities are minutely managed, supervised and controlled by entry/ exit operators for earning commission income. The seized record as per Annexure A-23 and copy of cloned seized documents from the premises D-45, Saraswati garden, New Delhi of LTCG accommodation entries given to the Singals of M/s Bhushan Power and Steel Group using the scrips detailed above. Thus, it is not necessary that having contract notes, demat accounts and bank statements, the transactions carried out on stock exchange cannot be manipulated as admitted by the entry operator. Thus, it is seen that the appellant failed to explain the nature and source of credits in the bank account. The commission rates charged have been admitted by various entry providers in their statements and have even admitted this additional income during their proceedings before the department. 8.2 In view of the above discussion, I am of the considered view that share transactions leading to LTCG by the appellant are sham transaction entered into for the purpose of evading tax. Accordingly, it is held that the AO has rightly disallowed the claim and added the said amount ofRs. 36,05,27,391/- u/s 68 of the Act income of the appellant and charged commission @ 6.5% at Rs. 2,34,34,280/- as unaccounted commission expenditure u/s 69C of the Act on net bogus pre arranged LTCG provided to the appellant beneficiary. The same are hereby confirmed. Thus, grounds of appeal Nos. 1-5 are dismissed. 6. Against the order of the Ld. CIT(A) the assessee preferred an appeal before us. 7. During the proceedings before us the submissions made before the CIT(A) were reiterated and it was emphasized by the AR on behalf of the Assessee that:- (i) The entire payment for purchase of shares has been made through banking channels; (ii) The shares were held in demat form for a considerably long period (i.e. almost 18 months) and much beyond the statutory time period mandated for them to be treated as exempt \"LTCG\" u/s 10(38) of the Act; Printed from counselvise.com 16 (iii) Sale of shares was undertaken the online platform of a recognised stock exchange after due payment of STT and is evidenced by copies of contract notes issued by brokers (pages 50- 195 of the paper book); (iv) All transactions for sale of shares were consummated through regular banking channels; (v) The transactions giving rise to the \"LTCG\" were genuine and carried out in accordance with the prescribed procedures and were duly compliant with the relevant regulatory laws and procedures; (vi) The companies of which shares have been transacted are existing companies and all the transactions have taken place through stock exchange at the prevailing market price; (vii) The addition is solely based on the ex-parte statements of brokers which were relevant, if at all, only upto A/Y 2014-15 (all the transactions for sale were entered into after the dates of any of the searches referred); (viii) While no opportunity for cross examination has been provided even copies of the complete statements on which reliance has been placed, were not provided; (ix) The Assessing Officer has simply levelled bald allegations on the basis of presumptions without any tangible material on record; (x) The transaction for shares were entered into the ordinary course and were at an arms length; (xi) There is no evidence specific to the year under appeal as to the transactions being allegedly bogus and the \"LTCG\" being an accommodation entry; (xii) The transactions were entered into as a stock market investor on the basis of information available and anticipation as to future price movements and performance of the Company; (xiii) In the online system prevalent on the Stock Exchanges a buyer/seller of shares could not be aware of the counter-party whereby he cannot have any control over the price movement; Printed from counselvise.com 17 (xiv) The Assessing Officer has just reproduced generally the findings in respect of various brokers/agencies without in any manner stating/proving as to how the Assessee was involved therein. (xv) The act of questioning a transaction as sham has to be based on substantial, concrete and tangible evidence and not just hearsay or surmises. 7.1 The AR has also emphasized the fact that the entire case of the Assessing Officer is based on the findings and conclusions in the assessment proceedings for earlier years with no specific evidence or finding for the year under appeal which action is not sustainable given the fact that each year is a separate unit of assessment and the findings/conclusions cannot by themselves and ipso-facto be extrapolated to another year. Before us it has also been argued with respect to the addition u/s 69C that no addition can be made for any assumed/notional expenditure u/s 69C since that section can be invoked only when an expenditure is found to have been incurred and of which the source has not been substantially explained. 7.2 The AR has also emphasized that there is nothing adverse with respect to both the legs of the transactions i.e. purchase/allotment and sale if shares which can lead to any doubts as regards the legal validity, procedural compliance and genuineness thereof. In that view of the matter since there is no doubt with respect to any of the components giving rise to \"LTCG\", the legality and acceptability thereof can also not be doubted. 7.3 The AR has accordingly stated that the share transactions were genuine entitling the Assessee to exemption u/s 10(38) of the Printed from counselvise.com 18 Act on long-term capital gains arising on sale of shares. He has also relied upon the decisions of the coordinate Benches of the Chandigarh Benches and Delhi Bench in the case of the Appellant and her family members viz. Shri Bhushan Singal, Smt Uma Singal, Smt Ritu Singal, Sh Neeraj Singal, Aniket Singal and Sangay Singal for earlier assessment years. 8. Per contra, the Ld. DR has strongly relied upon the findings of the Assessing Officer as confirmed by the CIT (A) leading to the conclusion that the Long-term capital gains earned by the Assessee on sale of shares was non genuine. 9. We have heard the rival contentions of both the parties and perused the material available on the record. The issue is as to whether the CIT(A) was justified in concurring with the findings of Assessing Officer, that the transactions of the assessee in shares leading to gross receipts of Rs. 36,67,21,029/- are sham transactions, required to be added back under Section 68 and that as to whether the authorities below are justified in making addition of an amount of Rs.2,34,34,280/- under Section 69C of the Act, on account of alleged unaccounted commission paid by the assessee at the rate of 6.5% for the purpose of earning Long Term Capital Gains. 9.1 We find from the record that the entire addition has been made by the Assessing Officer on the basis of the same arguments, information, evidence including findings of search u/s 132 on the basis of which assessment have been completed in the Printed from counselvise.com 19 case of the Appellant and her family members for the earlier assessment years 2008-09 to 2015-16. During the appellate proceedings the additions made were deleted by the coordinate Benches of the Chandigarh Bench of the Tribunal in the following cases:- A/Y ITA No. Order Date Assessee 2015-16 655/CHD/2023 08.10.2024 Sanjay Singal 2015-16 610/CHD/2023 08.10.2024 Sanjay Singal, HUF 2008-09, 210-11 & 2012- 13 706, 707 & 709/Chd/2018 07.02.2020 Sanjay Singal 2008-09, 210-11 & 2012- 13 712, 713 & 715/Chd/2018 07.02.2020 Smt Aarti Singal 2011-12, 2013-14 and 2014-15 708,710,711/Chd/2018 20.09.2021 Sanjay Singal 2011-12, 2013-14 and 2014-15 714, 716 and 717/Chd/2018 20.09.2021 Smt Aarti Singal 2013-14 and 2014-15 718 and 719/Chd/2018 20.09.2021 Aniket Singal 9.2 In particular, while reviewing the facts of the particular appeal in the backdrop of the findings of the Coordinate Benches we observe that the Assessee made investments in the various companies as a prudent investor at a reasonable price, which were held for a substantial period and thereafter sold off on a recognised Stock Exchange as soon as the price reached, what the Assessee felt, was the optimal level. 9.3 Moreover, the fact that the Assessee made the investments in the said companies as a prudent investor at a reasonable price, 2014-15 705/Chd/2018 20.09.2021 Shri Sanjay Singal, HUF 2010-11, 2011-12 and 2012-13 1412, 1413 and 1414/Del/2018 31.10.2018 Shri Brij Bhushan Singal 2010-11, 2011-12 and 2012-13 1476, 1477 and 1478/Del/2018 31.10.2018 Smt Ritu Singal 2010-11 1482/Del/2018 31.10.2018 Smt Uma Singal 2010-11, 2011-12 and 2012-13 1485, 1486 and 1487/Del/2018 31.10.2018 Shri Neeraj Singal Printed from counselvise.com 20 which were held for a substantial period and were thereafter sold on a recognized stock exchange and on which STT has been paid stands duly supported by the following contemporaneous/ unrebutted documents/material placed on record:- - Shares were allotted by way of preferential allotment directly by the company and the shares were allotted and always held in Demat form by the assessee; - Transaction of sale was undertaken through broker(s), who was a member of the recognized stock exchange; - Copies of documents in support of allotment of shares by way of preferential allotment directly by the Company; - Copies of contract notes in support of sale of shares; - All transaction of purchase and sale of shares were made through normal banking channels. 9.4 In so far as reliance has been placed on the statement of Sh R.K. Kedia, it remains undisputed that Sh R.K. Kedia is totally unconnected to the assessee insofar as no financial transactions were undertaken with this party so much so, the assessee does not have any financial relationship with the said individual. Thus, the statement of Sh. R.K. Kedia, who is completely unconnected with the impugned transaction must be ignored from consideration. The search and the statement dated 13.06.2014 of Shri R.K. Kedia, was recorded much before the shares were sold by the assessee on the recognized stock exchange for the period of period(s) covered by this appeal. 9.5 Merely because information is received by the Assessing Officer that someone is alleged to be an entry-provider, this Printed from counselvise.com 21 cannot lead to a conclusion that the transaction of the assessee is not genuine, when there is nothing on record to even suggest, let alone establish, a link between the so-called entry provider and the transaction of the assessee. 9.6 As regards the allegation of the Assessing Officer with regard to the so-called circumstantial evidences to draw the inference that the share transactions undertaken by the assessee were sham and a colourable device to evade taxes and introduce unaccounted money in her books, the Assessing Officer has failed to appreciate that the market price of any share/scrip on the stock exchange is not simply based on the financial results in any particular year(s), rather it is based on numerous complex factors, like the nature of business and the product dealt in, the prevailing competitive environment, the future potential of the sector in which the company operates, the positioning of the company in the sector it operators, Government and statutory regulations, international markets and sentiment, the future potential of investment by PE/lnvestment funds, the perception in the market, the future expected cash flows, etc. Thus, the adverse inference drawn by the Assessing Officer on the ill-founded assumption that the share prices had increased manifold, is totally unfounded and without any valid basis. 9.7 The CIT(A), in particular, has also relied upon the doctrine of preponderance of probabilities and normal human conduct to allege that the transactions undertaken by the Assessee were not genuine and that the apparent is not real. It is a settled position in Printed from counselvise.com 22 law, and as also held by the Coordinate Benches, that the onus of proving that the apparent is not real is on the person who alleges it to be so. It is not open to the Revenue to simply allege that the transactions is not real in a given case, without bringing on record any tangible material to establish the same. 9.8 In this regard the following paras of the order dated 08.10.2024 passed by Coordinate Bench in ITANo. 655/CHD/2023 and 610/CHD/2023 merit attention:- 31. It is not possible to comprehend as to how the transactions under consideration can be said to be against human conduct. As a matter of fact, it is quite normal for an investor to invest in shares and exit after holding the shares for considerable period, as and when favourable market conditions exist. In fact, the movement in the share market is totally outside the control of the assessee/investor and therefore, it is not possible for the investor/appellant to plan the exit price. 32. The Assessing Officer entirely failed to appreciate as to how and on what basis the shares of an investee company are categorized as \"penny stock']. In fact the investee company herein is an existing company and, therefore, there is not warrant to doubt the transaction undertaken by the appellant. 32.1 The concept of preponderance of probabilities does not connote that the decision itself can be based thereupon, without bringing on record any material/evidence in support of such allegation. Any assessment of income in the hands of the assessee has to be made on the basis of material/evidence and not merely on basis of mere suspicions and surmise [refer: Lalchand Bhagat Ambica Ram vs. CIT: 37ITR 288(SC); Dhakeshwari Cotton: 26ITR 775(SC)] 32.2 It is also settled law that suspicion, howsoever strong, cannot take the place of hard proof and that assessment under the Act has to be made on the basis of mere material/evidence and not on the basis of assumptions/presumptions [refer J.J. Enterprises vs CIT254 ITR 216 (SC), Assam Tea Co. vs ITO: 92 ITD 85 (Asr)(SB), Faqir Chand Chaman Lai vs ACIT : (2004) 1 SOT 914(Asr.) (Appeal dismissed Printed from counselvise.com 23 by P&H High Court in 262 ITR 295and SLP dismissed by SC in 268 ITR), CIT vs Paras Cotton Co: 288 ITR 211 (Raj.)] 33. In the present case, the entire case of the Assessing Officer is based on merely conjectures and surmises, without any tangible material being brought on record to controvert the cogent documentary, contemporaneous material/ evidences placed on record by the appellant. The Assessing Officer has proceeded solely on assumptions and presumptions, and has neither controverted the comprehensive direct/corroborative documentary evidence filed in support of the genuineness of the transaction, nor has attempted to bring on record any independent corroborative material/ evidence to establish that the transactions were bogus. 9.9 To summarise, in the case of the Assessee the shares were acquired by way of preferential allotment directly by the Company for which payment made through banking channels, and which stands duly evidenced by allotment letters issued by the Company sold through the online platform of the Stock Exchange for which payment was received through banking channels after holding them for more than one year and \"STT\" was duly paid thereon, deliveries for shares were taken/given from the DEMAT A/c and transactions for sale duly evidenced by contract notes. Give these facts and the compliance of legal provisions and regulatory compliance, there is no cause or reason to treat the entire scenario as bogus and the transactions as sham. 9.10 In this connection, reference may be made to the following extract (para 44 and 45 of the PB) from the order dated 08.10.2024 passed by our coordinate Bench \"B\" Chandigarh in ITA No. 655/CHD/2023 and 610/Chd/2023 which reads as follows:- \"44. The principle of law thus is that the Assessing Officer cannot treat a transaction as bogus only on the basis of suspicion or surmise. The Assessing Officer has to bring material Printed from counselvise.com 24 on record tangible material to support his finding that there has been collusion or connivance between the broker and the assessee for the introduction of its unaccounted money. A transaction of purchase and sale of shares, supported by contract notes and demat statements and account payee cheques cannot be treated as bogus. 44.1 In the case of the appellant, shares were acquired by way of preferential allotment directly by the Company and not from any broker. Payment was made through banking channels. Deliveries were taken in the DEMAT account, where shares remained for more than one year. Contract notes were issued and shares were also sold on a recognized stock exchange. The SEBI has nowhere held the investee company to be a bogus or sham company.\" 9.11 The CIT(A) as well as the Assessing Officer have referred to the past history of the case and investigation made in earlier years which by themselves cannot support the case of the Department. It is a trite and uncontroverted principle of law that the Assessing Officer cannot treat a transaction as bogus only on the basis of suspicion or surmise. The Assessing Officer has to bring material on record tangible material to support his finding that there has been collusion or connivance between the broker and the assessee for the introduction of its unaccounted money. A transaction of purchase and sale of shares, supported by contract notes and demat statements and account payee cheques cannot be treated as bogus. 9.12 It is observed that the Department has not brought on record any fresh facts for the year under appeal and has simply relied upon the findings and arguments of the earlier years. Each year being an independent year of assessment, specific evidence or facts have to be brought on record to sustain any adverse action against an assessee. Moreover, the transactions for the sale Printed from counselvise.com 25 of shares giving rise to \"LTCG\" have actually taken place after any of the searches during which the various statements which form the pivot of the case of the Assessing Officer took place. 9.13 In view of the same and the following the orders of the coordinate Chandigarh Bench of the ITAT in earlier years the grounds raised by the Assessee are allowed and we hold that the CIT (A) erred in upholding the action of the Assessing Officer- (i) in making an addition of Rs. 36,67,21,029/- representing sale proceeds of shares u/s 68 of the Act; (ii) in making an addition of Rs. 2,34,34,280/- u/s 69C of the Act on account of alleged unaccounted commission paid @ 6.5% for earning long-term capital gains; (iii) in holding the transaction of purchase and sale of equity shares as sham. 10. Consequently, grounds of appeal raised are accepted, the appeal is allowed and the order under appeal is reversed. ITA No. 218/CHANDI/2025-AY 2016-17 in the case of Aarti Singal 11. In this appeal the Assessee has challenged the action of the Assessing Officer in treating the transaction in shares leading to income from long-term capital gains of Rs. 18,92,32,161/- as sham transaction and the addition of Rs. 1,15,44,969/- u/s 69C on account of alleged unaccounted commission paid @ 6.5% for the purpose of earning capital gains. During the year the details of the long term capital gains arising to the Assessee are as follows:- Purchases Sale Profit/ (Loss) AY of purchas e No of shares Amount Rate Corporate Action No of shares post Corpo- rate AY of sale No of shares Amount Rate Printed from counselvise.com 26 action Crescent Digital Tech Pvt Ltd (merged with Parag Shilpa Investments Ltd) Present Name PSIT Infrastructure Services Ltd 2013-14 485000 4850000 10 Split in the ratio 10:1 4850000 2016-17 56102 3029357 54.00 2973255 Grandma Trading & Agencies Ltd 2012-13 750000 7500000 10 Split in the ratio 10:1 7500000 2016-17 5317410 133646108 25.13 128328698 Greencrest Financial Services Ltd (Previously Marigold Glass Ind Ltd) 2013-14 975000 11700000 12 Split in the ratio 10:1 9750000 2016-17 140000 9301918 66.44 9133918 12. The facts and grounds in this appeal filed by the assessee are, mutatis mutandis, identical to those in ITA No. 217/Chandi/2025 in the case of the assessee. Accordingly, our above observations, findings and conclusion made in ITA No. 217/Chd/2025 shall, mutatis-mutandis, apply in this appeal also. 12.1 Accordingly, herein also the grounds of appeal raised are allowed and the order under appeal is reversed. ITA No. 219/CHANDI/2025 - AY 2015-16 in the case of Aniket Singal 13. In this appeal the Assessee has challenged the action of the Assessing Officer in treating the transaction in shares leading to income from long-term capital gains of Rs. 43,28,70,126/- as sham transaction and the addition of Rs. 2,76,66,587/- u/s 69C on account of alleged unaccounted commission paid @ 6.5% for the Sunstar Realty Development Ltd 2014-15 175000 8750000 50 Split in the ratio 10:1 1750000 2016-17 1116000 38663507 34.64 33083507 Goenka Business & Finance Ltd 2014-15 120000 3000000 25 120000 2016-17 19830 4591270 231.5 3 4095520 Total 177614898 Printed from counselvise.com 27 purpose of earning capital gains. During the year the details of the long term capital gains arising to the Assessee are as follows:- Scrip Purchases Sale Profit/ (Loss) AY of purchas e No of shares Amount Rate Corporate Action No of shares post Corporate action AY of sale No of shares Amount Rate Maa- Jagdambe Trade Links Ltd (previously Parasampuria Credit & Investments Ltd) 2013-14 375000 3750000 10 Split in the ratio 10:2 1875000 2015-16 1875000 180776816 96.41 177026816 Crescent Digital Tech Pvt Ltd (merged with Parag Shilpa Investments Ltd) Present Name - PSIT Infrastructure Services Ltd 2013-14 150000 1500000 10 Split in the ratio 10:1 1500000 2015-16 1070000 92443324 86.40 91373324 Ram Mineral & Chemicals Ltd (Previously ICVL Chemicals Ltd) 2014-15 110000 0 3691914 3.36 1100000 2015-16 640129 141360529 220.8 3 139214209 Surbhi Chemicals Investments 2013-14 100000 0 15000000 15 Split in the ratio 10:1 10000000 2015-16 176000 18289455 103.9 2 18025455 Total 425639804 14. The facts and grounds in this appeal filed by the assessee are, mutatis mutandis, identical to those in ITA No. 217/Chandi/2025 in the case of the assessee. Accordingly, our above observations, findings and conclusion made in ITA No. 217/Chd/2025 shall, mutatis-mutandis, apply in this appeal also. 15. Accordingly, herein also the grounds of appeal raised are allowed and the order under appeal is reversed. ITA No. 220/CHANDI/2025 - AY 2016-17 in the case of Sanjay Singal Printed from counselvise.com 28 16. In this appeal the Assessee has challenged the action of the Assessing Officer in treating the transaction in shares leading to income from long-term capital gains of Rs. 57,64,15,447/- as sham transaction and the addition of Rs. 3,62,35,694/- u/s 69C on account of alleged unaccounted commission paid @ 6.5% for the purpose of earning capital gains. During the year the details of the long term capital gains arising to the Assessee are as follows:- Scrip Purchases Sale Profit/ (Loss) AY of purchase No of shares Amount Rate Corporate Action No of shares post Corporate action AY of sale No of shares Amount Rate Grandma Trading & Agencies Ltd 2012-13 750000 7500000 10 Split in the ratio 10:1 7500000 2016-17 7500000 192313610 25.64 184813610 Ram Mineral & Chemicals Ltd (Previously ICVL Chemicals Limited) 2014-15 1200000 4023544 3.35 1200000 2016-17 1200000 274965731 229.14 270942187 Goenka Business & Finance Ltd 2014-15 120000 3000000 25 120000 2016-17 120000 25516973 212.64 22516973 Shantanu Sheorey Acquakult Ltd 2013-14 1500100 15001000 10 1500100 2016-17 441969 83619133 189.20 79199443 Total 557472213 17. The facts and grounds in this appeal filed by the assessee are, mutatis mutandis, identical to those in ITA No. 217/Chandi/2025 in the case of the assessee. Accordingly, our above observations, findings and conclusion made in ITA No. 217/Chd/2025 shall, mutatis-mutandis, apply in this appeal also. 18. Accordingly, herein also the grounds of appeal raised are allowed and the order under appeal is reversed. Printed from counselvise.com 29 ITA No. 221/CHANDI/2025 - AY 2016-17 in the case of Sanjay Singal, HUF 19. In this appeal the Assessee has challenged the action of the Assessing Officer in treating the transaction in shares leading to income from long-term capital gains of Rs. 31,82,35,411/- as sham transaction and the addition of Rs. 1,99,93,647/- u/s 69C on account of alleged unaccounted commission paid @ 6.5% for the purpose of earning capital gains. During the year the details of the long term capital gains arising to the Assessee are as follows:- Scrip Purchases Sale Profit/ (Loss) AY of purchase No of shares Amount Rate Corporate Action No of shares post Corporate action AY of sale No of shares Amount Rate Grandma Trading & Agencies Ltd 2012-13 550000 5500000 10 Split in the ratio 10:1 5500000 2016-17 3617300 102257327 28.27 98640027 Goenka Business & Finance Ltd 2014-15 120000 3000000 25 120000 2016-17 120000 24521465 204.35 21521465 Ram Mineral & Chemicals Ltd (Previously ICVL Chemicals Limited) 2014-15 1200000 4023548 3.35 1200000 2016-17 1200000 191456619 159.55 187433071 Total 307594563 20. The facts and grounds in this appeal filed by the assessee are, mutatis mutandis, identical to those in ITA No. 217/Chandi/2025 in the case of the assessee. Accordingly, our above observations, findings and conclusion made in ITA No. 217/Chd/2025 shall, mutatis-mutandis, apply in this appeal also. 21. Accordingly, herein also the grounds of appeal raised are allowed and the order under appeal is reversed. 22. To sum up, as discussed above, respectfully following the ratio decided by the Coordinate Bench of ITAT, Chandigarh on Printed from counselvise.com 30 similar issues in assessee’s own case in earlier Assessment Year, additions made by the AO and confirmed by the Ld. CIT(A) are reversed. 23. In the result, assessee’s appeals are allowed. Order pronounced in the open Court on 09/09/2025. Sd/- Sd/- राजपाल यादव क ृणवȶ सहाय (RAJPAL YADAV) (KRINWANT SAHAY) उपाȯƗ/VICE PRESIDENT लेखा सद˟/ ACCOUNTANT MEMBER AG आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com "