2023 (2) TMI 1342

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.... 2. Common grounds have been raised by the Revenue in all these appeals and, therefore, grounds raised in ITA No.508/Ahd/2020 are being reproduced as under :- "1. The Ld. CIT(A) has erred in law and on facts in deleting the disallowance of Rs. 6,76,623/- made u/s. 10(38) of the I.T. Act. 2. The Ld. CIT(A) has erred in facts and in law in deleting the disallowance u/s. 10(38) of the Act holding that the Long Term Capital Gain earned by the assessee from sale of shares of penny scrip i.e. M/s. Gemstone Investment Limited (GIL) is genuine income. 3. The Ld. CIT(A) had erred in facts and in law holding that the Long Term Capital Gain earned by the assessee is genuine, totally ignoring the financial strength of the com....

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....R observed that the there was substantial increase in the high price of the same scrip despite the company regularly shown profits and poor financial health. The analysis of share price movement of Banas Finance shows a bell shape curve which indicates that the price of the shares was artificially inflated due to circular trading, even though the trade volume is low. The share of M/s. Gemstone Investment Limited were traded at Rs. 98/- in May 2009, Rs. 202/- in July 2010 and Rs. 6/- in March 2011. The sharp changes in share prices are not in consonance with the companies any actual activities or financial modulation. Thus, the assessee has booked bogus LTCG to the extent of Rs. 9,09,500/- for A.Y. 2012-13. The Assessing Officer made additio....

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....es. Thereafter, the said scrip has continuous sales and investments. The share price of M/s. Gemstone Investment Limited moved from Rs. 98/- in May 2009 to Rs. 202/- in July 2010. Thereafter, there is a sharp fall in price again to Rs. 6/- per share in the month of March 2011 and the current price scrip for A.Y. 2012-13 was Rs. 0.57 per share. Thus, there was phenomenal price rise & fall that occurred in the share of the M/s. Gemstone Investment Limited. The Assessing Officer has also quoted the investigation carried out by SEBI in respect of M/s. Gemstone Investment Limited and the order passed by the SEBI. These aspects were not considered by the Assessing Officer but has only relied upon various decisions. The CIT(A) simply stated that t....

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....hai Paltel vs. ITO (2022) 137 taxmann.com 373 (ITAT- Surat) 7) CIT vs. Pooja Agarwal (2018) 99 taxmann.com 451 (HC Rajasthan) 8) Vidhi Malhotra vs. ITO (2019) 101 taxmann.com 361 (Delhi) 9) Swati Luhtra vs. ITO (2020) 115 taxmann.com 167 (Delhi) 10) Kamla Devi vs. ITO (2017) 88 taxmann.com 773 (Bombay-Tribunal) 11) Divya Jyoti Diamonds Limited vs. ITO (2021) 128 taxmann.com 419 (HC-Gujarat) 12) Tata Capital Financial Services Limited vs. ACIT (WP No.546/2022 (HCBombay). The Ld. AR also relied upon the decision of Hon'ble Apex Court in the case of DCIT vs. Vijay Pal Singh (2021) 130 taxman.com 292 (SC) as well as O.M. F. No.279/Misc./M-93/2018-ITJ(PT) and Circular No.23 of 2019 as well....