ITAT Upholds Genuine LTCG Claim; Validates Taxpayer’s Documented Share Transactions

The ITAT Ahmedabad upheld CIT(A)’s ruling favoring the taxpayer, ruling that his share transactions and LTCG were genuine and properly documented. Since the AO ignored valid evidence, the Tribunal dismissed the Revenue’s appeal for AY 2016-17.

The case had been filed by the officer of the income tax department before the ITAT Ahmedabad, challenging an order passed by the National Faceless Appeal Centre (NFAC), Delhi, on August 08, 2025, in favour of a taxpayer named Jasmine Jayantibhai Sanghavi. The case was decided on December 02, 2025, and is related to the assessment year 2016-17.

The taxpayer had filed his income tax return for the assessment year 2016-17, declaring his total income at Rs. 3.74 lakh. During the relevant AY, the taxpayer had undertaken a transaction in the scrip of M/s. Nobel Polimers Limited. The trade was totally valued at Rs. 198,723. The tax officer noted that this value was not reported in the tax return. The tax officer noted that the taxpayer calculated long-term capital gain (LTCG) by selling scrip of M/s. Nobel Polimers Limited in the capital gain computation statements, but did not show the LTCG in its tax return.

When examining the records, the tax officer noted that the taxpayer had introduced unaccounted money into their bank account by taking accommodation entries, and they did not report this fake LTCG in their tax return for that AY. Therefore, the tax officer treated this amount as fake LTCG and made the addition of Rs. 198,723 to the taxpayer’s income as unexplained money under section 69A of the Income Tax Act.

The aggrieved taxpayer filed an appeal before CIT(A). The CIT(A) ruled in favour of the taxpayer and allowed the appeal. The tax officer, dissatisfied with the ruling of CIT(A), filed an appeal before ITAT Ahmedabad.

The Tribunal noted that the CIT(A) had clearly stated that the assessee submitted all necessary documents, such as capital gain statements, demat statements, bank statements, and share details, which were ignored by the tax officer. The taxpayer proved that the share transactions and long-term capital gains (LTCG) were genuine and were properly shown in his income tax return (ITR) for the assessment year 2016-17. Since the CIT(A)’s decision was correct both legally and on its merits, the Tribunal found no reason to change it. In conclusion, the tribunal dismissed the appeal of the tax officer.