TaxTMI 
TaxTMI 
2021 (6) TMI 966
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.... case. 3. That the Ld. CIT(A) has erred in considering the script from which the assessee has earned Long Term Capital Gain as "Penny Stock" a term nowhere define under the Income Tax Act as any other law for the time being in force, which is quite unjust, illegal and against the facts of the case. 4. That the Ld. CIT(A) has erred in confirming the disallowance of claim of assessee of exempted LTCG based on information/statement gathered by investigation wing of the department, without any opportunity to cross examine such persons and without providing such documents for assessee's comments, which is quite unjust, illegal and against the facts of the case. 5. That the Ld. CIT(A) has erred in confirming the disallowing of claim of exempted income based on wrong analysis of the financial and prices of the shares, which is quite unjust, illegal and against the facts of the case. 6. That the Ld. CIT(A) has erred in mentioning the fact that Learned AO has tried to conduct inquires during assessment proceedings, in confirming disallowance, whereas no such inquiries have been carried out, which is quite unjust, illegal and against the facts of the case. 7. That the Ld. CIT(A) ha....
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....ound before final date of hearing." 4. Assessee has raised following grounds of appeal in ITANo.466/Ind/2019 "1. That the order passed by Ld. CIT(A) is bad in law and on facts. 2. That the Ld. CIT(A) has erred in confirming the addition of Rs. 20,46,018/- under section 68, which is quite unjust, illegal and against the facts of the case. 3. That the Ld. CIT(A) has erred in considering the script from which the assessee has earned Long Term Capital Gain as "Penny Stock" a term nowhere define under the Income Tax Act as any other law for the time being in force, which is quite unjust, illegal and against the facts of the case. 4. That the Ld. CIT(A) has erred in confirming the disallowance of claim of assessee of exempted LTCG based on information/statement gathered by investigation wing of the department, without any opportunity to cross examine such persons and without providing such documents for assessee's comments, which is quite unjust, illegal and against the facts of the case. 5. That the Ld. CIT(A) has erred in confirming the disallowing of claim of exempted income based on wrong analysis of the financial and prices of the shares, which is quite unjust, illegal an....
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....eals were heard together at the request of all the parties and are thus being disposed of by this common order for the sake of convenience and brevity. As agreed by all the parties we will take up facts of the assessee namely Prakash Javia, HUF for adjudicating this common issue. 8. Brief facts of the case as culled out from the records are that the assessee is a Hindu Undivided Family(HUF). Return of income filed on 12.09.2014 declaring total income of Rs. 5,15,270/- and also claiming exempt income u/s 10(38) of the Act from Long Term Capital Gain from sale of listed securities at Rs. 21,11,075/-. Case selected for scrutiny through CASS followed by serving of notices u/s 143(2) & 142(1) of the Act to the assessee. Written submissions were filed. Books of accounts and other documents produced were examined on test check basis. As regards transactions of purchase and sale of equity shares of Kappac Pharma Limited, though necessary evidences were filed but the Ld. AO further issued a notice u/s 133(6) of the Act to the purchaser of the equity shares sold by the assessee. But since there was no reply, Ld. AO in the absence of evidences added the whole amount of Rs. 21,50,700/-. This....
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.... Judgment of Hon'ble Bombay High Court in the case of Uttamchand Jain [2009] 182 taxman 243 dated 02.07.2009. 14. Further reliance placed on the following decisions wherein the LTCG from sale of shares of Kappac Pharma Limited are held to be genuine: i. Aditya Mundra ITANo.632/Ind/2019 dated 13.01.2021 (I.T.A.T., Indore) ii. Sunil Agrawal HUF ITANo. 434/Kol/2020 dated 03.12.2020 (I.T.A.T., Kolkata) iii. Yogendra Dalmia ITANo.774/KOL/2018 dated 09.08.2019 (I.T.A.T., Kolkata) 15. It is also submitted that the Kappac Pharma Limited is neither included in the list of Shell Companies nor has been struck off from the Registrar of companies. Reliance placed on decision of I.T.A.T., Mumbai in the case of Shakti Hardware Collections Private Ltd. in ITANo. 6301/Mum/2014 dated 31.01.2018. 16. Referring to the ratio that no addition can be made when all documents to substantiate the transactions are submitted and the onus is discharged by the assessee, reliance placed on the following decisions: i. Achal Gupta ITANo.501/LKW/2019 dated 16.12.2020 (I.T.A.T., Lucknow) ii. Aditya Mundra ITANo.632/Ind/2019 dated 13.01.2021 (I.T.A.T., Indore) iii. Sunil Agrawal HUF ITANo. 434/Kol/....
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....ubmissions made, documents on record and judicial precedents Ld. counsel for the assessee prayed that addition made by the Ld. AO for the amount of gross sale consideration/net sale consideration/LTCG as income of the assessee deserves to be deleted and benefit u/s 10(38) of the Act for LTCG to be allowed. 20. Per contra, Ld. Departmental Representative (DR) vehemently argued supporting the finding of both the lower authorities and decisions/ judgments referred and relied by the Ld. CIT(A) and further submits that there was an abnormal increase in share prices within a short span of two year which was not commensurate with the financial growth of the company and therefore Ld. CIT(A) has rightly held that the alleged transactions are sham and bogus. 21. We have heard rival contentions and perused the records placed before us and carefully gone through the submissions, paper book and plethora of judgments referred and relied by both sides. Common issue raised in all three appeal is genuineness of claim of Long Term Capital Gain as exempt income u/s 10(38) of the Act arising out of the transactions of sale of equity shares of Kappac Pharma Limited. 22. The assessees namely Prakash....
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....ctions as bogus. There are number of incidences where the share prices of certain listed companies increased drastically but that all depends on demand and supply of the equity share, perception of its growth and the market sentiments. Unless and until the company of which the equity shares are being traded is found to be involved in malpractices the financial results are not commensurate with the prices at the NSE/BSE portal and sufficient proofs are available showing the alleged company to be a bogus/penny stock or paper company, one cannot question the genuineness of transactions carried out on the portal of NSE/BSE which are under the control of Securities and Exchange Board of India." [emphasis supplied] 25. The above finding of this Tribunal indicates that there are various other factors for the sudden rise and fall in the share prices of a listed company which are majorly linked to the market sentiments, performance of the sector, availability of shares i.e demand and supply, holding of the promoters, future prospects etc. In the instant case, nothing on record is available to show that any enquiry was conducted by department at the business premises of Kappac Pharma Ltd. ....
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....se cases equity shares were purchase from Shah & Sons Propon Private Limited. PAN No. of the seller was provided before both the lower authorities. The seller namely Shah & Sons Propon Private Limited purchased equity shares in November 2010 and was originally allotted the shares by Kappac Pharma Ltd. which is a company registered at Mumbai. Genuineness of the documents namely share certificate placed page 10 of the paper book is not doubted. For sure the details of shareholder would be available on the portal of the Registrar of Company where annual returns are filed by the Companies. Further has this certificate being bogus then how could the shares are dematerialized. Because once a share are lodged for dematerialization the original share certificate is to be deposited and the correctness of the certificate is verified through the company which has issued the share certificate. Once the details are found to be correct the shares are dematerialized. 30. Now coming to the sale part: The assessee has opened DMAT account with Kotak Securities Ltd. which is known to be a reputed company engaged in the providing services as share broker. Kotal Security is registered with Bombay Sto....
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....-ordinate bench's decision in ITA No. 1918/Kol/2018 in Smt. Sangita Jhunjhunwala vs. ITO decided on 04.01.2019 has deleted similar bogus LTCG vide following detailed discussion in para 3 to 5 as under............" Para 8 - "This tribunal's yet another decision in (2017) 60 ITR (Trib) 1 (Bang) Canara Bank vs. JCIT holds that the estopple principle does not apply in income tax proceedings. We therefore reject Revenue's arguments in support of impugned addition. We take into account all the relevant facts and circumstances to adopt the learned co-ordinate bench's above extracted detailed reasoning mutatis mutandis to delete the impugned addition forming subject-matter of the instant appeal. Commission expenditure disallowance; if any, shall automatically follow suit as a necessary corollary. No other argument has been raised before us during the course of hearing. This assessee's latter appeal ITA No. 775/Kol/2018 is allowed." [emphasis supplied] 32. Records placed before us also shows that report of the investigation wing or any enquiry conducted from 3rd persons were not made available to the assessee which thus grossly violates the principles of natural justice. As the asses....