AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (6) TMI 744
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....d bogus long term capital gains. . , (3) On the facts and circumstances the ld. CIT(A) ought to have upheld the order u/s 143(3) of the Act passed by the Assessing Officer. (4) It is therefore prayed that the order of the Ld. CIT(A) may be set aside and that of the order of the Assessing Officer be restored to the above extent. (5) It is further prayed that the present appeal comprises the issue of organized tax evasion scam involving claim of bogus long term capital gain through penny stocks for which the CBDT vide Circular No. 23 of 2019 dated 6.9.2019 read with OM dated 16th September, 2019 exempted such cases from monetary limit for filing appeal, hence the appeal be decided oh merits. 3. At the outset, we note that there is a delay of 5 days in filing of appeal by the Revenue. However, considering the fact that period of delay in filing of appeal is very trivial i.e. there is only a 5 day delay in filing of appeal by the Revenue, in the interests of justice, we are hereby condoning the delay in filing the appeal. 4. On merits, the brief facts of the case are that the assessee had purchased shares of M/s Conart Traders Ltd. from M/s SantoshimaTrade Links through M/s San....
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....T(1995) 214 ITR 801 (SC) wherein the apex court, in declaring the transaction as non-genuine, discarded a host of documentary evidences filed or relied upon by your appellant. That documentary evidences are not by themselves conclusive, and the truth of the matter or the documents could be determined on the basis of or on the anvil of the surrounding facts and circumstances of the case is well settled and reliance is placed on the decision in the case of Durga Prasad More 82 ITR 540 (SC). Having regard to the facts and circumstances of the case and in law, it is clear the assessee has not been able to conclusively prove the purchases of penny stock share of Conart Traders (later amalgamated in Sunrise Asian) and the enquiry made by the investigation wing and, have established that the assessee had arranged purchases of .artificial long term capital Gain by obtaining bogus purchase bills. As a beneficiary, the assessee was given physical shares at a very low price. Considering the above facts and in the circumstances of the case and in law, sec.68 is squarely applicable in this case. Therefore, the total sale proceeds of Rs.18,54,800/-, from the bogus transaction as discussed abov....
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....on and has claimed a Long-Term Capital Gains on sale of penny stocks and hence the exemption claimed is bogus and hence liable to be disallowed. The Ld. Counsel for the assessee in response has placed reliance on the observations of the Ld. CIT(A) in his order and argued that Ld. CIT(A) has given a clear finding on facts in favour of the assessee. Ld. Counsel for the assessee argued that Ld. CIT(A) has clearly observed that no opportunity of cross-examination was provided to the assessee despite a specific request made before the Ld. Assessing Officer to cross examine the person on the basis of whose statement, the additions were made. The counsel for the assessee further argued that just because some stock has been held to be a penny stock, it does not mean that all investments made by even genuine investors in shares of the said company are liable to be held as bogus/sham transactions, without any evidence to prove that the assessee had entered into bogus/sham transaction. In the instant facts, the assessee had held the share for over 3 years and had only sold a part of his shareholding held in M/s Sunrise Asian Ltd. and was still continuing to hold shares of the company. Therefo....
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.... that the assessee converted unaccounted money into fictitious exempt LTCG to evade taxes. The finding is unsupported by material on record & is purely an assumption based on conjecture. The relevant extract of the judgment is reproduced for ready reference: 12. Mr. Hossain's submissions relating to the startling spike in the share price and other factors may be enough to show circumstances that might create suspicion; however the Court has to decide an issue on the basis of evidence and proof, and not on suspicion alone. The theory of human behavior and preponderance of probabilities cannot be cited as a basis to turn a blind eye to the evidence produced by the Respondent. ....... 13. The learned ITAT, being the last fact-finding authority, on the basis of the evidence brought on record, has rightly come to the conclusion that the lower tax authorities are not able to sustain the addition without any cogent material on record. We thus find no perversity in the Impugned Order. (ii) The Lucknow ITAT in the case of Achal Gupta vs. ITO (ITAT Lucknow) I.T.A. No.501/Lkw/2019 held that the documents demonstrates that the assessee had purchased shares through Brokers for which the....
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.... he paid cash and in return received exempt LTCG gains. 7.1 Notably in the case of Anjana Sandeep Rathi Vs ACIT (ITAT Mumbai) in ITA. No. 4369/MUM/2018, the ITAT Mumbai held that LTCG on sale of shares of M/s Sunrise Asian Limited was not bogus/ sham transaction. While adjudicating in favour of the assessee, observed as under: 5. We have heard the submissions made by rival sides and have perused the orders of authorities below. The assessee in appeal has assailed the findings of CIT (A) in disallowing benefit of section 10(38) of the Act on long term capital gain arising from sale of shares. The assessee during the relevant period had sold shares of M/s. Sunrise Asian Ltd. for a consideration of Rs.14,99,917/-. The authorities below held the sale transaction in aforementioned scripts as bogus and thus, made addition under section 68 of the Act. We find that similar disallowance was made in the case of Narayan R. Rathi (father-in-law of the present assesse/appellant) for the assessment year 2014-15. Narayan R. Rathi had also sold the shares of same company i.e. M/s. Sunrise Asian Ltd. The issue travelled to the Tribunal. The Co-ordinate Bench of the Tribunal in ITA No. 4811/Mum/2....