TaxTMI 
TaxTMI 
2021 (12) TMI 352
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....ssessee was asked to submit the complete break-up of business loss on sale of shares, which was duly furnished by the assessee before the ld. AO. Since the assessee had claimed huge loss from sale of shares and had sought to set off the same from income from business, the ld. AO sought sought to examine in detail the veracity of the loss claimed by the assessee on sale of shares. In the course of such examination, the ld. AO found that assessee had dealt with penny stocks and had declared huge loss on those shares and had sought to set off the same with business income of the assessee. The ld. AO observed that assessee had shown loss on sale of 3 penny stock scrips i.e Cressenda Company Ltd., Pearl Electric Ltd., and Pine Animations Ltd. totaling to Rs. 4,26,63,518. The ld. AO heavily placed reliance on the findings of Investigation Wing of Kolkata Income Tax department, and even reproduced the financials of those three companies apart from statement recorded from various entry operators and explaining the entire modus operandi on how certain people were involved in manipulation of prices of shares of certain scripts as a pre-planned activity. Finally, the ld. AO proceeded to disal....
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....so many transactions thereon. These details were indeed submitted before the ld. AO also. Out of 160 scrips, the ld. AO has chosen only three scrips and proceeded to disallow the loss claimed thereon, after conducting detailed enquiries thereon. It was specifically submitted that the ld. AO had made the analysis of the scrip with respective information available with the ld. AO at the time of framing of assessment proceedings. The ld. PCIT however, disregarded all the contentions of the assessee and came to the conclusion that the loss claimed by the assessee on sale of shares of aforesaid four scrips totaling to Rs. 2,90,48,662/- are in the list of penny stocks investigated by the DIT-Investigation, Kolkata and that without proper verification, the ld. AO had allowed the same. Accordingly, the ld. PCIT set aside the order of the ld. AO treating the order of ld. AO to be erroneous and prejudicial to the interest of the Revenue. 3.2. The preliminary facts stated hereinabove are undisputed and hence the same are not reiterated herein for the sake of brevity. It is a fact that assessee had traded in 160 scrips during the year and had incurred loss. It is a fact that assessee has in....
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....10,000 6,95,89,895.22 2,00,000 65,05,350.22 (2,86,45,655.48) JAJCORP 4,97,200 3,46,29,980.00 75,000 77,91,067.60 5,72,200 4,13,81,714.35 (10,39,333.25) JAYPEE INFRATECH 2,50,000 81,48~,982.00 2,50,000 53,43,819.75 (28,05,162.25) JET AIRWAYS 3,55,000 12,96,26,151.96 20,000 45,00,966.52 3,35,000 12,45,87,943.70 (5,37,241.74) JRt INDUST. & INFRA LTD. 2,82,000 5,45,26,263.85 2,82,000 1,87,09,985.19 (3,58,16,278.66) KIRLOSKAR ELECTRIC CO LTD 2,30,425 75,90,583.00 2,30,425 62,21,104.80 (13,69,478.20) LAKSHMI VILAS BANK LTD 1,00,000 87,13,149.30 1,00,000 82,04,313.25 (5,08,836.05) LICHSGFIN 50,000 1,42,87,559.05 50,000 1,41,65,467.70 (1,22,091.35) MAIIADUSH1 INTERNATION AL 1,50,000 44,14,150.00 1,50,000 18,16,500.00 (25,97,650.00) MAN ALUMIN DM ....
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....NA KNITWEAR DM 3,64^31 1,11,78,287.28 3,64,331 26,24,379.36 (85,53,907.92) WOKHARDD DM 85,000 7,21,98,779.21 85,000 7,12,81,572.00 (9,17,207.21) ZEE MEDIA 5,00,000 1,10,47,401.15 5,00,000 95,09,181.75 (15,38,219.40) 3.3. We also find that the entire details of various shares traded by the assessee during the year which includes both profit earned by the assessee as well as the loss incurred by the assessee, were duly filed before the ld. AO during the course of assessment proceedings. This fact is confirmed and acknowledged by the ld. AO in para 5 of the assessment order. We also find from the notice issued u/s.142(1) of the Act on 04/08/2021 by the ld. AO during the course of original assessment proceedings, which is enclosed in page 1 of the paper book, that the ld. AO vide question Nos. 6 & 8 had specifically called for the copy of DEMAT account and details of share transactions. The assessee vide letter dated 22/08/2017 had duly furnished the reply which are enclosed in pages 3 & 4 of the paper book. Furthe....
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....Kaushal Enterprise Ltd.,), Pearl Agriculture Ltd., Rajlaxmi Industries Ltd., and Sunrise Asian Ltd., the assessee furnished the following documents to justify its contention:- a) Copies of contract notes for sale and purchase of the above scripts evidencing that all buying & selling transactions in the all the scripts are carried out on a recognized stock exchange through authorized brokers who are duly registered with SEBI & BSE. b) Details of Sales & Purchase of the above script with source of payments made for purchase of the above script c) Copies of Ledger A/c. of the /Assessee in the books of the share broker wherein entries for purchase and sales of the above scripts are duly reflected. d) Copies of Demat transaction statement reflecting trades in the above e) Copies of Bank Statements duly marking payment made and received from the brokers for purchase, and sales of the above scripts respectively. 3.5. The ld. PCIT does not find fault with any of the documentary evidences submitted by the assessee. He merely placed reliance on the investigation report of DIT investigation Kolkata and concludes that the loss claimed on these fo....
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....t objection has been received vide LAR No.MUM/CA/2018-19/0199 dated 21/02/2017. In the said letter dated 17/05/2019, the ld. AO says that the audit objection was raised by the audit party that losses claimed in respect of the aforesaid four scrips totaling to Rs. 2,90,48,662/- should have been disallowed based on the findings of DIT Investigation, Kolkata and that the audit objection is found to be acceptable to him and accordingly, the ld. AO had sought remedial action and necessary direction to be issued by the ld. PCIT to him. Thereafter, the ld. PCIT in pursuance to the said audit objection sought to examine the record and at the time of such examination, the audit objection given by the audit party was part of such records and thereafter proceeded to take remedial action by invoking his revision jurisdiction u/s.263 of the Act. In our considered opinion, no error could be found on the said action and the ld. PCIT as admittedly the audit objection was part of the records of the ld. PCIT at the time of his examination. From the show-cause notice issued by the ld. PCIT and from the perusal of the orders of the ld. PCIT, we find that the ld. PCIT has independently applied his mind....