TaxTMI 
TaxTMI 
2023 (9) TMI 102
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....e said loss on account of share transactions in penny scrips named Ravinay Trading, Swarnsarita, Turbo Tech Engg. And Kapil Cotex, to avoid tax on long term capital gain and short term capital gains earned during the year on sale of immovable properties. (ii) On the facts and circumstances of the case and in aw, the Ld. CIT(A), has erred in allowing the claim of assessee ignoring the fact that the stock prices of the said penny stock companies are manipulated to provide the short term capital loss. (iii) On the facts and circumstances of the case and in law, the ld. CIT(A) has further erred in ignoring judicial pronouncement by the Hon'ble Supreme Court in the case of McDoweell vs. CTO (1986 AIR 649,1985 SCR (3) 91) wherein it was held that "Colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by resorting to dubious methods. It is the obligation of every citizen to pay the taxes honestly without resorting to subterfuges." (iv) On the basis of the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the Assess....
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....00 crores in penny stocks and incurred loss of Rs. 25.44 lakhs. The statement of assessee was recorded under section 131 on 09.12.2016. In his statement he stated that he heard about scrips from his friends and relatives, when he was confronted how the broker and scrips were chosen or any fundamental analysis made before making such investment. The assessee answered that he heard about these companies from his friend circle and one of his friend told him to open a demat account first as it is required for share trading. As per his friend advice, assessee opened a demat account and on his recommendation made investment of Rs. 1.00 crore without doubt. The Assessing Officer recorded that investment was made with pre-determined manner to show short term capital loss in order to set off Capital gains, by knowingly that assessee has sold immovable properties and earned capital gains. It was made to avoid tax of capital gains. The assessee deliberately chose to trade in penny stocks and booked the loss. 3. On the basis of such observation, the Assessing Officer issued detailed show cause notice dated 09.12.2016. The contents of show cause are recorded in para-4.7 of assessment order. ....
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....nized Stock Exchange through Bombay Stock Exchange in electronic mode, the whole set of transactions involved in miracle stock entry. The Assessing Officer recorded the modus operandi of entry provider and held that short term capital loss was obtained to set off capital gains. The assessee entered into share transaction for availing loss and accordingly disallowed the loss to the extent of capital gains thereby making addition of Rs. 18,83,934/- and remaining short term capital loss of Rs. 6,60,471/- was not allowed to be carry forward in the assessment order dated 29/12/2016 passed under section 143(3). 5. Aggrieved by the addition/ disallowance of short term capital loss in the assessment order, the assessee filed appeal before Ld. CIT(A). Before Ld. CIT(A) assessee filed detailed written submission. In the written submissions the assessee explained the date of acquisition of immovable properties and date of sale with sale consideration, profit earned on sale of such immovable properties in the form of capital gain either long term or short term. On the issue of STCL on alleged penny stock, the assessee reiterated his all submission as explained before assessing officer. All ....
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....h are available in the public domain. The Ld. CIT(A) has not followed the decision of Hon'ble Calcutta High Court in the case of PCIT vs. Swati Bajaj, IA No.GA/2/2022 dated 14.06.2022. The assessee is a beneficiary of penny stock for STCL, which is obtained only with the sole motive for setting of short term capital loss against short term capital gain & long term capital gain earned by assessee, during currant assessment year. The Ld. Sr-DR for the Revenue submits that sale of share by way of colourable device, cannot be a part of tax planning and was made only to avoid payment of tax. 8. The Ld. Sr-DR for the Revenue submits that though the tax effect involved in the present appeal is less than monetary limit prescribed by Central Board of Direct Tax (CBDT) in its Circular No.17/2019 dated 08.08.2019. However, the present case falls in exception clause of monetary limits for filing appeal as per CBDT Circular No.23/2019 dated 06.09.2019. Considering such fact, the appeal is filed before Tribunal, being falls under exception clause to tax effect of monetary limit. 9. On the other hand, Ld. AR for the assessee supported the order of Ld. CIT(A). The ld AR for the assessee ....
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....UF) ITA No. 454 of 2018 (Bombay High Court) and • ITO Vs Indravadan Jain (HUF) in ITA No. 4861 & 5168/Mum/2018 dated 27.95.2016. 10. I have considered the submission of both the parties and perused the orders of lower authorities carefully. I also gone through various documents filed by the assessee and deliberated on the various case law relied by ld representatives of the parties. The assessing officer made addition by disallowing the set off of short term capital loss on sale of shares scrips against the short term & long term capital gain by taking view that the assessee managed the loss of sale of share scrips to avoid the payment of tax on capital gain earned on sale of immovable properties. I find that the Assessing Officer doubted the transaction of assessee on the basis of report of Investigation Wing Kolkata. No independent investigation was carried out the assessing officer to disprove the fact and evidence brought on record by the assessee. I find that merely because there was allegation and investigation was done, the transactions of assessee were through recognised broker of stock exchange cannot be doubted, unless there is allegation against the broke....