TaxTMI 
TaxTMI 
2023 (1) TMI 31
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....through e-mail but none appeared. We, therefore, decide to hear these appeals with the assistance of ld. D/R, and the available records. 3. The assessees are in appeal before this Tribunal raising the following grounds: I.T.A. No.: 49/Gty/2020 "1. That the order of the CIT-Appeals in so far as it is against the assessee is opposed to law, facts, circumstances, natural justice, equity all other known principles of law. 2. The AO erred in not providing sufficient and adequate opportunity to the appellant as required under law, thereby violating the principles of natural justice, hence the order requires to be cancelled. 3. That learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in confirming the addition of Rs. 71,39,620/-being sale consideration on sale of shares listed on recognized stock exchange as unexplained credit u/s 68 of the Act. 4. The authorities below erred in not providing sufficient and adequate opportunity to the appellant as required under law, thereby violating the principles of natural justice, hence the order requires to be cancelled. 5. That the Learned Assessing Officer erred in....
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....18. For the above and other grounds and reasons which may be submitted during the course of hearing of the appeal, the assessee requests that the appeal be allowed as prayed and justice be rendered." I.T.A. No.: 51/Gty/2020 "1. That the order of the CIT-Appeals in so far as it is against the assessee is opposed to law, facts, circumstances, natural justice, equity all other known principles of law. 2. The AO erred in not providing sufficient and adequate opportunity to the appellant as required under law, thereby violating the principles of natural justice, hence the order requires to be cancelled. 3. That learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in confirming the addition of Rs. 50,40,340/- being sale consideration on sale of shares listed on recognized stock exchange as unexplained credit u/s 68 of the Act. 4. The authorities below erred in not providing sufficient and adequate opportunity to the appellant as required under law, thereby violating the principles of natural justice, hence the order requires to be cancelled. 5. That the Learned Assessing Officer erred in relying on material/i....
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....records suggests that in the case of Inderchand Sand 4,000 shares of M/s. Jackson Investments Ltd. purchased @ Rs. 10/- per share were sold @ Rs. 31.10 per share during the year and similarly, 64,000 shares of M/s. Pine Animations Ltd. purchased @ Rs. 0.40/- per share were sold @ 93.13 per share. Similar was the case of another assessee i.e. Saroj Devi Sand wherein 4,000 equity shares of M/s. Jackson Investments Ltd. and 57,500 shares of M/s. Pine Animations Ltd. were sold during the year @ Rs. 31.10/- & Rs. 73.68/- respectively and the same were purchased @ Rs. 10/- & Rs. 4.05 respectively. Exemption u/s 10(38) of the Act has been claimed on the long term capital gain arising from the said share transactions. The said claim of the assessees was rejected by ld. AO on the ground that M/s. Jackson Investments Ltd. and M/s. Pine Animations Ltd. are penny stock companies, the prices of which are artificially inflated with the help of entry operators, brokers as well as the promoters of these companies for providing bogus capital gain to the beneficiaries. 6. Aggrieved, the assessee preferred appeal before ld. CIT(A) but failed to get relief. 7. Aggrieved, the assessee is now in a....
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....sion of the Hon'ble Calcutta High Court coupled with various orders of the ITAT, we are of the view that Revenue Authorities have rightly rejected the claim of the assessee and made the additions. We do not find any merit in this appeal. It is dismissed." 11. Similar view is also taken by ITAT Kolkata Bench in the case of Sri kailash Prasad Agarwal & Others vs. ITO in ITA Nos. 509 & 1365/Kol/2019 dated 31.10.2022. Relevant finding of this decision is reproduced below: "3.1. ITA No. 509/KOL/2019 (AY 2013-14): Brief facts of the case are that the assessee is an individual and filed e-return of income on 01.10.2013 declaring total income of Rs.11,93,400/-. The assessee has claimed exempt income under section 10(38) of the Income Tax Act at Rs.2,26,86,516/- from sale of equity shares of CCL International Limited. The case of the assessee was selected for scrutiny assessment under CASS. Thereafter, the ld. Assessing Officer based on the information received from the Directorate of Income Tax (Investigation), Kolkata, which has submitted a report on 27.04.2015, wherein after undertaking the investigation, 84 listed companies were found to be the penny stock companies thro....
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....term capital gain of Rs.52,83,100/- from sale of equity shares of Parag Shilpa Investments Limited and exemption under section 10(38) was claimed. The ld. Assessing Officer based on the information received by it from Directorate of Income Tax (Investigation), Kolkata found that M/s. Parag Shilpa Investments Limited is part of the list of 84 listed companies, which were found to be the penny stock companies and are managed as dummy companies involved in the price rigging by the promoters and entry operators for providing bogus long-term capital gain to various beneficiaries. The assessee primarily purchased 10,000 equity shares of M/s. Swift IT Infrastructure & Services Pvt. Limited from off-market, which was subsequently merged with M/s. Parag Shilpa Investments Limited. The market prices of the scrip and market capitalization of the company in the month of May, 2012 were Rs.0.20/- and Rs.1.20 lakhs respectively. Thereafter within three years, the market price of the scrip and the market capitalization of the company had been rallied to Rs.90.50 and Rs.4865.28 crores respectively on 17.12.2014. Therefore, within twenty months, the price jumped nearly 381 times. The assessee failed....
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....e 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 generation of capital gain /trading loss there from. On appeal, ld. CIT(A) confirmed the action of the ld. AO. Aggrieved, assessees are in appeal before the Tribunal. 5. Recently on 14.06.2022, the Hon'ble jurisdictional High Court of Calcutta passed a judgment in the case of Swati Bajaj and others [2022] 139 taxmann.com 352 (Cal) dealing with set of cases with similar fact patterns as narrated above for the present appeals under consideration before us. Hon'ble ju....
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....reponderance 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. [para 73] g) The assessee cannot escape from the burden cast upon him and unfortunately in these cases the burden is heavy as the facts establish that the shares which were traded by the assessees had phenomenal and fanciful rise in price in a short span of time. [para 75] h) The exercise that was required to be done by the Tribunal is to consider the totality of the circumstances because the trans....
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....peals before us narrated above, the position of law as enunciated by the Hon'ble jurisdictional High Court of Calcutta in Swati Bajaj (supra) carrying force of binding nature on the issue under consideration for us, was confronted to the respective ld. Counsels of the assessee who appeared before us. Ld. Counsels were fair enough to state that issue involved in these appeals is squarely covered against the assessee by the said decision as the fact involved are identical to that which were before the Hon'ble High Court. For cases where none appeared before us on behalf of the assessee, the relevant factual matrix was captured with the assistance of Ld. Sr. DR / CIT DR (already narrated above). Since the matter is squarely covered by the decision of Hon'ble jurisdictional High Court of Calcutta in the case of Swati Bajaj & others (supra), we have taken up these also for adjudication ex parte, qua the assessee. 7. After hearing both the sides and taking into consideration the factual matrix of the cases before us vis-à-vis the decision of Hon'ble jurisdictional High Court of Calcutta in Swati Bajaj & others (supra), we respectfully following the said decision carrying ....