Tribunal upholds CIT(A) decision on share sale disallowance appeal. Revenue's appeal dismissed under monetary limit. The tribunal upheld the CIT(A)'s decision to delete the disallowance on the sale of shares to M/s First Financial Services Ltd. The revenue's appeal was ...
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Tribunal upholds CIT(A) decision on share sale disallowance appeal. Revenue's appeal dismissed under monetary limit.
The tribunal upheld the CIT(A)'s decision to delete the disallowance on the sale of shares to M/s First Financial Services Ltd. The revenue's appeal was dismissed as it fell within the monetary limit specified in CBDT Circular No. 17/2019, and the exception did not apply. Additionally, the case did not fall under the office memorandum dated 16.09.2019 regarding monetary limits for filing appeals in cases involving bogus LTCG/STCL through penny stocks.
Issues: 1. Disallowance on sale of shares to M/s First Financial Services Ltd. 2. Applicability of CBDT Circular No. 17/2019 for filing appeal. 3. Interpretation of office memorandum dated 16.09.2019 regarding monetary limits for filing appeals in cases involving bogus LTCG/STCL through penny stocks.
Analysis: 1. The revenue appealed against the deletion of the addition of Rs. 6,97,000 on account of disallowance on the sale of shares to M/s First Financial Services Ltd. The assessing officer observed that the shares were part of penny stocks manipulated by brokers for offering high returns. The CIT(A) allowed the appeal, stating there was no evidence of the assessee's involvement in share manipulation.
2. The appellant argued that the CBDT Circular No. 17/2019 applied due to no long-term capital gain/short-term capital loss claimed. The tax effect involved was Rs. 2.36 lakh, below the Rs. 50 lakh monetary limit for filing appeals. The appellate tribunal noted that the appeal fell within the monetary limit specified in Circular No. 17/2019 and the exception to the limit did not apply as the assessee had not claimed any short-term capital loss.
3. The tribunal referred to the office memorandum dated 16.09.2019, which exempted cases involving bogus LTCG/STCL through penny stocks from monetary limits for filing appeals. As the assessee only showed short-term capital gain and did not claim any short-term capital loss, the tribunal concluded that the case did not fall under the memorandum's purview. Therefore, the appeal of the revenue was dismissed based on the specific circumstances of the case.
In conclusion, the tribunal upheld the CIT(A)'s decision to delete the disallowance on the sale of shares and dismissed the revenue's appeal based on the CBDT circular and the interpretation of the office memorandum regarding monetary limits for filing appeals in cases involving penny stocks.
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