Sajjan Kumar HUF vs Income Tax Officer

This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeal) Addl/JCIT(A), Thane (hereinafter referred to as 'the CIT(A)') dated 31^st December, 2025, for assessment year 2011-12.

Shri Gopal Aggarwal, appearing on behalf of the assessee submits that the assessee is a trader in shares. In the impugned assessment year, the assessee traded in about 20 scrips. One of them was of M/s Global Capital Pvt.Ltd. The assessee had purchased 3500 shares of M/s Global Capital Pvt.Ltd. for ₹1,08,611/- and the same were sold for ₹2,37,235/-. The shares were purchased through banking channel on stock exchange and were later sold during the impugned assessment year through stock exchange and entire sales proceeds were received through Banking channel. The Assessing Officer made addition of entire sale consideration i.e., ₹2,37,235/- without reducing the cost of acquisition. The learned Counsel restricted his prayer for allowing the benefit of cost of acquisition. The learned Counsel further submits that the capital gain on sale of shares of M/s Global Capital Pvt.Ltd. has already been offered to tax by the assessee. Therefore, no further addition in respect of sale of shares of M/s Global Capital Pvt.Ltd. is warranted.

Per contra, Shri Manoj Kumar, learned Senior DR representing the Department vehemently defended the impugned order and prayed for dismissing appeal of the assessee. The Id. DR submits that the assessee had sold penny stock and has claimed artificial benefit of LTCG on sale of penny stock.

Both sides heard. The orders of lower authorities examined. The short issue for consideration in the present appeal is the addition of ₹2,37,235/- made by the Assessing Officer treating the entire sale consideration of shares as unexplained credit under Section 68 of the Act. The contention of the assessee is that the assessee had furnished relevant documents to substantiate that 3500 shares of M/s Global Capital Pvt.Ltd. were purchased/sold by the assessee through banking channel on stock exchange. The assessee purportedly offered to tax capital gain on sale of shares. The Assessing Officer has alleged that shares of Global Capital Pvt. Ltd. are penny stock and thus made addition of entire receipts from sale of said shares u/s.68 of the Act. From examination of the assessment order, I find that except for explaining the concept of 'Penny Stock', the Assessing Officer has not been able to show the role of the assessee or the broker of assessee in price rigging of the share or involvement of the assessee or his broker in circular trading of shares. The findings of Assessing Officer in the assessment order are generic and not specific to the assessee. The CIT(A) has endorsed the findings of the AO without examining the transaction of sale of shares. Considering entire facts of the case, I deem it appropriate to restore this issue to the file of the Assessing Officer for limited purpose to determine 'capital gain' on sale of shares after allowing benefit of cost of acquisition of shares, in accordance with law.

In the result, appeal of the assessee is partly allowed in the terms indicated above.