TaxTMI 
TaxTMI 
2025 (2) TMI 1072
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....of SRK Industries Ltd under the head income from business in case it is held that the provisions of sec.68 are not applicable. 2. In the facts and circumstances of the case and in law the learned CIT(A) erred ignoring the basic facts in the written submissions made before him and without bringing any material on record to show that the transaction of the appellant was collusive to conclude that the transaction of the appellant is collusive. 3. In the facts and circumstances of the case and in law the learned CIT(A) erred ignoring the fact that the share market does not behave rationally and the volatility in the market is caused by the fancies of the investors. 4. In the facts and circumstances of the case and in law the learned CIT(A) erred in passing the orders relying merely on presumptions, suspicions and surmises in respect of alleged penny stocks disregarding direct evidences placed on record and furnished by assessee. 5. The appellant craves leave to add to, amend, alter any of the above grounds of appeal" 3. The brief facts of the case are that the assessee filed the return of income U/s 139 of the Act. During the impugned assessment y....
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....l of the assessee and upheld the assessment order. Being aggrieved on the appeal order, the assessee filed an appeal before us. 4. The Ld.AR filed a written submission containing pages 1 - 41 which is kept in the record. The Ld.AR argued that in assessment proceedings, the assessee submitted the details of purchase & sales i.e. purchased the shares through banking channels, after the split, the assessee was allotted 44,400 share, part of the shares were duly sold through BSE and the payment was also received through banking channel. The details of transactions, contract note, demat account, bank statements were duly submitted before the revenue authorities which were also annexed in the paper book of the assessee which is reproduced as below: - 1. Capital Gain Working for the FY 2013-14 1-2 2. Copy of Purchase Invoice of eq.shares of Transcend Commerce Limited 3 3. Copy of Bank Statement reflecting payment of purchase price of shares 4-5 4. Holding statement as on 31.03.2013 reflecting Eq.shares of Transcend Commerce Limited 6-11 5. Copy of BSE announcements in case of amalgamation of Transcend Commerce Limited 12 6. Holding sta....
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....06 34,000.00 (28,455.60) 10. 11.12.13 Persistern System 20 880.80 17,616.00 61,62 17,554.38 7.4.2010 6,200.00 121,354.38 11. 11.12.13 Prism Cement 100 27.95 2,795.00 9.80 2,785 4.9.2007 2,300.00 485 12. 11.12.13 Sunflag Iron 125 15.00 1,875.00 65.98 1,809.02 9.10.2005 2,600.00 (790.98) 13 13.01.14 SRK Industries FV 5 12000 173.80 2,085,600.00 8,172.21 2,077,427.79 25.5.2012 27,026.40 2,050,401.39 14 13.01.14 SRK Industries FV 5 24400 169.80 4,143,120.00 16,220.76 4,126,899.24 25.5.2012 54,953.68 4,071,945.56 6. The Ld.AR placed that the issue is squarely covered by the order of the co-ordinate bench of ITAT, Mumbai in the case of Dipika Jitesh Palrecha in ITA No.4895/Mum/2024, date of order 26/11/2024. The relevant paragraph No.5 is duly reproduced as below:- "5. The Ld.AR submitted that the assessee initially purchased shares of M/s. Transcend Commerce Ltd., from off market in physical mode by paying purchase consideration through banking channel on 24-05-2012. Immediately, the same was dematerialized....
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.... as below:- "7.1. The said preposition has been upheld by the Hon' Bombay High Court in the case of Bimalchand Jain (89 taxmann.com 196) (2018) wherein under the similar facts and circumstances the Hon' Court has upheld the taxability of profit on penny stock as income from business." 9. We heard the rival submission and considered the documents available in the record. We find that the assessee has submitted all the relevant documents related to the transactions of LTCG. The entire transaction of sale was through BSE and the payment was received through banking channel. We notice that the investigation report prepared by the Investigation Wing, Kolkata is a disclosed report with modus adopted for manipulation of prices of certain shares and generation of bogus capital gains. We note that the Ld.AO has placed reliance on the said report without bringing any material on record to show that the transactions entered into by the assessee were found to be a bogus and manipulated transaction. It was not proved that the assessee has carried out this transaction of purchase and sale of shares in connivances with the people who were in the alleged rigging of price. Findi....