TaxTMI 
TaxTMI 
2022 (10) TMI 728
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....arising from sale of shares, we dispose of all these captioned appeals by this consolidated order for the sake of convenience and brevity. 3. Briefly stated, facts are narrated hereunder for each of the ITA No. Captioned above, in seriatim: 3.1. ITA No. 2552/KOL/2018 (AY 2014-15): Assessee filed return of income on 28.07.2014 reporting total income at Rs.18,58,860/-. During the year, the assessee had earned Long-term Capital Gain of Rs.52,22,879/- and claimed it as exempt. The assessee had purchased 1,00,000 equity shares of Surabhi Chemicals & Investments Limited for Rs.2,00,000/- on 16.03.2012, 14.08.2012 and 13.04.2013, which were sold for Rs.54,22,879/- between the period 27.09.2012 to 04.12.2013 resulting into an increase of almost 2611% in a short span of 16 to 18 months. The ld. Assessing Officer treated this long-term capital gain as income from undisclosed sources denying the claim of exemption under section 10(38) of the Act. The ld. Assessing Officer also made an addition of Rs.26,114/- towards commission charged by the Operators by holding it as unexplained expenditure. 3.2. ITA No. 1122/KOL/2018 (A.Y. 2014-15): Return of income was filed on 30.03.2015 reporting tota....
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....hich gave the assessee 6,400 bonus shares. Subsequently these shares were sold through the Broker named M/s. Mehta Equities Limited for Rs.82,44,046/- resulting into a capital gain of Rs.81,64,046/-. Ld. Assessing Officer enquired all these transactions based on information received from DIT (Inv.) of the Department and added the same to the total income of the assessee as undisclosed income. 3.5. ITA No. 868/KOL/2019 (A.Y. 2014-15): Return of income was filed on 31.07.2014 reporting total income of Rs.27,98,570/-. The assessee had claimed long-term capital gain on shares for Rs.1,23,61,198/- as exempt under section 10(38) of the Act. The ld. Assessing Officer noted that there was 3,00,000 shares of Luminaire Technologies Limited purchased at Rs.1/- per share, which were sold during the year @ Rs.42.20 amounting to Rs.1,26,61,198/- resulting into long-term capital gain of Rs.1,23,61,198/-. Assessment was completed by disallowing the claim of long-term capital gain exemption of Rs.1,23,61,198/-. 3.6. ITA No. 341/KOL/2018 (A.Y. 2014-15): Return was filed on 15.07.2014 reporting total income of Rs.5,51,249/-. The assessee had claimed long-term capital gain of Rs.47,16,148/- earned f....
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.... cases were selected for scrutiny u/s. 143(3) through CASS and the issue in all of them for selection relates to 'suspicious long term capital gain on shares'. In all the above appeals, according to the ld. AO, LTCG reported by the assessee in respective return was bogus and the entire transactions were done with the objective to introduce unaccounted money of the assessee in the books by using the route of LTCG which was exempt from tax u/s 10(38) of the Act, except in one case, where the assessee has booked trading loss on transaction of shares of two Companies, which have been treated as penny stock. Thus, ld. AO held that the said LTCG/loss are fabricated/engineered transactions by the respective assessees, sale of which falls under the category of penny stocks and the same were treated as bogus which were added in the total income by treating it as unexplained cash credit u/s. 68 of the Act. Ld. AO based his decision of treating the impugned transaction of sale of shares as bogus transaction by relying on the report of Investigation Wing of the Department wherein the Investigation Wing of the Department had studied the modus operandi of rigging the prices of penny stocks and g....
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....n of the provisions of the Income-tax Act. In such a circumstance, the conclusion has to be gathered from various circumstances like the volume from trade, period of persistence in trading in the particular scrips, particulars of buy and sell orders and the volume thereof and proximity of time between the two which are relevant factors. Therefore, the methodology adopted by the revenue cannot be faulted. [para 69] d) Test of preponderance of probabilities have to be applied and while doing so, the court cannot loose sight of the fact that the shares of very little known companies with in-significant business had a steep rise in the share prices within the period of little over a year. [para 73] e) The assessee was not named in the report and when the assessee makes the claim for exemption, the onus of proof is on the assessee to prove the genuinity. [para 73] f) It is incorrect to argue that the assessees have been called upon to prove the negative in fact, it is the assessees duty to establish that the rise of the price of shares within a short period of time was a genuine move that those penny stocks companies had credit worthiness and coupled with genuinity and identity. [....