Tax Appeals Dismissed for Bogus Gains: Tribunal Upholds Assessing Officer's Additions

The appeals challenged the disallowance of exemption claims under section 10(38) of the Act for long-term capital gains and bogus losses from the sale of equity shares. The Tribunal, following the High Court's judgments, upheld the additions made by the Assessing Officer in all cases, dismissing the appeals and affirming the decisions of the CIT(Appeals). The Tribunal found that the assessees had engaged in obtaining accommodation entries for bogus gains and losses through penny stock companies, aligning with the High Court's findings in similar cases.

---

---

Issues involved:
1. Disallowance of claim of exemption under section 10(38) of the Act for long-term capital gain from sale of equity shares.
2. Disallowance of bogus loss from sale of equity shares.

Analysis:
1. The appeals were against the orders of the Commissioner of Income Tax related to assessment years 2013-14 and 2014-15. The issue in ITA Nos. 513/KOL/2019 and 514/KOL/2019 pertained to the disallowance of assessees' claim of exemption under section 10(38) of the Act for long-term capital gain from sale of equity shares. The judgment of the Hon'ble Calcutta High Court in a batch of appeals established that the assessees had procured accommodation entries in the form of bogus long-term capital gain from sale of equity shares. Both the counsel for the assessees and the Departmental Representative acknowledged that the issues were against the assessees based on the High Court judgment. The Tribunal found the facts similar to the High Court case and confirmed the additions made by the Assessing Officer, dismissing all grounds of appeal.

2. In the case of M/s. Enkay Trafin Pvt. Limited (ITA No. 384/KOL/2022), the issue was the disallowance of a claimed bogus loss from the sale of equity shares. The Assessing Officer noted that the company had prearranged the loss by purchasing shares at their peak prices from alleged penny stock companies. The Tribunal, after examining the facts, concurred that the claimed loss was through accommodation/bogus entries via penny stock companies. Following the High Court's precedent, the Tribunal upheld the additions made by the Assessing Officer, affirming the decision of the CIT(Appeals) and dismissing all grounds of appeal.

3. The Tribunal concluded that the issues raised in the appeals were similar to those addressed by the Hon'ble Jurisdictional High Court in the case of Swati Bajaj. The facts of the cases involving long-term capital gain claims and bogus losses from equity shares were found to align with the High Court's findings. Therefore, the Tribunal confirmed the Assessing Officer's additions and upheld the decisions of the CIT(Appeals), resulting in the dismissal of all three appeals filed by the different assessees.

---