The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has deleted a ₹85.35 lakh addition made against a taxpayer who claimed long-term capital gains (LTCG) from shares of Sunrise Asian Ltd., formerly known as Santoshima Tradelinks Ltd. According to reports from Mint, the ruling came in the case of Amita Rambilas Agarwal v. Income Tax Officer – Piramal Chambers, Mumbai (ITA No. 1216/Mum/2026) for assessment year 2014-15, with the order pronounced on 21 July 2026.
Agarwal had reported LTCG of ₹85.35 lakh from the share sale and claimed exemption under Section 10(38) of the Income-tax Act, 1961. As reported by Mint, the Assessing Officer (AO) treated the transaction as a bogus penny-stock transaction and rejected the exemption, adding ₹85.35 lakh as unexplained cash credit under Section 68 of the Income-tax Act. The first appellate authority, the Commissioner of Income Tax (Appeals), upheld these additions, prompting Agarwal to approach the ITAT.
Before the Tribunal, the taxpayer produced evidence showing that the shares had been purchased through banking channels, reflected as investments and credited to her demat account before being sold through a recognised stock exchange. According to Mint, the Tribunal noted that the Revenue had not pointed out any defect in the documentary evidence furnished by the taxpayer and had not brought material on record establishing that Agarwal herself was involved in price manipulation or had obtained an accommodation entry. The ITAT therefore held that the LTCG claim could not be rejected merely on the basis of general allegations concerning the scrip.
The ITAT relied on earlier decisions involving the same stock, including Anraj Hiralal Shah (HUF) v. ITO, Dipesh Ramesh Vardhan v. DCIT and Rambilas S. Agarwal v. DCIT, as reported by Mint. It also referred to the Gujarat High Court ruling in PCIT v. Divyaben Prafulchandra Parmar. With the principal addition deleted, the consequential addition relating to alleged commission became infructuous. The ruling underscores that every LTCG claim involving a penny stock must be evaluated on its merits rather than general allegations about the stock.
The decision emphasizes that preserving contemporaneous records, including purchase documents, bank statements, demat statements and evidence of exchange-traded sales is crucial for taxpayers facing scrutiny over share transactions. As noted by Mint, the ruling highlights that while a particular stock may be viewed as suspicious, the Revenue still needs to establish a direct connection between the taxpayer and alleged manipulation arrangements. The case demonstrates that taxpayers can successfully defend legitimate LTCG claims when they maintain proper documentation and can demonstrate genuine transaction trails.
