2023 (2) TMI 56

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....Long Term Capital Gain [LTCG] on sale of shares of Kappac Pharma Limited merely on surmises and conjectures based on various allegations/observations made by the AO in the assessment order which are not case specific and subject matter of the show-cause, contrary to the facts of the case and thus highly irrelevant and not applicable to the appellant's case. 1.1 The learned CIT (A) has grievously erred in not appreciating the fact that the AO though relied upon the finding of the investigation report of the DIT - Kolkata made the addition while treating the purchase of shares as non genuine and thereby sale of shares as non genuine. The learned CIT (A) has accordingly grievously erred in failing to appreciate the fact that if th....

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....e been held for approx. 24 months prior to the date of sale and have been duly reflected in demat account, the delivery of shares is through demat A/c., the existence of the party from whom the appellant has purchased or the broker through whom the shares are sold has not been disputed, the STT and other Govt. levies on sale of shares have been duly paid and thus all the conditions laid down under the provisions of law for claiming exemption u/s 10(38) of the Act have been duly fulfilled. The impugned addition of Rs.13,47,989/- thus being based on mere surmises and conjectures is wholly unjustified and bad in law. 1.5 The learned CIT(A) has failed to appreciate the fact that the AO has miserably failed to bring on record any cogent....

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....urnish certain documents/ details /evidences/ clarification to finalise the assessment proceedings. The assessee did not appear before the Assessing Officer. The Assessing Officer observed that the assessee derived income from salary, tuition income, agricultural income, interest income and also business income related to share trading therein the LTCG was claimed and exempted under Section 10(38) of the Act. The Assessing Officer observed that the assessee derived Rs.13,47,989/- as LTCG from the sale of the only one scrip i.e. Kappac Pharma Limited and the assessee purchased 5000 shares on 02.04.2012 at Rs.20/- per share and sold 2000 shares through brokers. The payment of Rs.1 Lakh for these shares were made in cash while purchasing the s....

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....ained income of the assessee does not arise, more particularly in absence of even an iota of concrete material or evidence brought on record by the Assessing Officer is only on surmises and assumption basis. The Ld. AR further submitted that merely because the said company i.e. Kappac Pharma Limited has been treated as a penny stock company does not in any way make the genuine investment of the assessee as non-genuine/bogus investment. The Assessing Officer failed to bring on record any material evidences so as to arrive at the conclusion that the assessee is involved in the alleged activity of rigging of price of Kappac Pharma Limited in connivance with the Stock Exchange and Brokers so as to conclude that the share price of the company in....

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....nt order & the order of CIT(A). 7. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee has purchased the shares in the scrip from Kappac Pharma Limited on 02.04.2012 being 5000 shares at Rs.20/- per share. The said purchase was in cash originally. This fact was undisputed. The assessee, thereafter, submitted before us that on 21.11.2014 the assessee sold 5000 shares in Bombay Stock Exchange at different dates and gained Rs.675 per share within 24 months. Thus, there was exorbitant scrip increase from 20.04.2012 to 27.12.2014. The Assessing Officer also made observations in the Assessment Order that the assessee bought shares at Rs.20./- when the market price was of R....