TaxTMI 
TaxTMI 
2012 (8) TMI 452
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.... tax an amount of 5% as commission for arranging capital gains in penny stocks. 3. Briefly stated, assessee is a proprietor of various consultancy firms and export firms and also major share holder of Shree Raj Exports (P) Ltd. Assessee is also carrying on different business in different entities including trading in Pan Masala, Perfumes, consultancy in manufacturing etc. Assessee disclosed long term capital gain of Rs.19,66,911/- on sale of 4,90,000 shares of Prraneta Industries Ltd. AO asked for the details of the purchase and sale of the above share transactions, which assessee furnished. AO considered the modus operandi, as discussed by him in Para-4 onwards, as found out by the investigating team in number of cases and further on the ....
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..../s DPS Shares & Securities Pvt. Ltd vide Para 2.3.4. The CIT (A) recorded that the learned AR has cross examined one Shri Narendra Shah of M/s T.H. Vakil Shares & Securities Pvt. Ltd, who is also involved in issuance of bogus bills and on that basis since assessee was informed and there was lot of knowledge was in public domain, he vide his detailed order upheld the action of AO. 5. Before us, it was the submission of the learned Counsel that nothing was brought on record against assessee and AO and the CIT (A) relied on the general investigations carried out in number of cases and the modus operandi as explained by them in the order and contended that as far as assessee is concerned, the detailed submissions made by him were not considere....
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....ed 30.6.2009 filed before the CIT (A), in which specific request for opportunity to cross examine the parties relied upon by AO which was not provided. The learned DR however, relied on the orders of AO and the CIT (A), explained the modus operandi and supported the orders. 6. We have considered the issue. We are unable to agree with the opinion of AO and the CIT (A) on the issue of treating the sale consideration as bogus cash credits. There may be investigation in sale of penny stocks and booking of capital gains by certain parties who might have indulged in obtaining capital gains for commission or consideration. However, it is to be established in each case that the transactions shown by assessee do pertain to one such bogus capital ga....