TaxTMI 
TaxTMI 
2025 (3) TMI 1045
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....ther in the circumstances of the case and in law, the Ld CIT(A) had erred in not taking into consideration the findings of the information emanating from the search action conducted by the Investigation Wing on such penny stock companies and their operators; 2. Whether in the circumstances of the case and in law, the Ld CIT(A) had erred in not appreciating that all the three entities viz Blue Circle Services Ltd, Shreenath Commercial & Finance Ltd and Chirawa Cements Ltd were merely penny stock companies which were being used to generate fictitious Long Term Capital Gain and Short Term Capital Loss. 3. Whether in the circumstances of the case and in law, the Ld CIT(A) had erred in not considering the statement on oath of the Shri Jagdish Purohit who had admitted on oath in statement recorded on 21/01/2015 that he alongwith his family members were dummy directors in as many as 229 such penny stock entities which were engaged in the activity of providing accommodation entries to beneficiaries so that they can claim bogus Long Term Capital Gain or Short Term Capital Loss; 4. Whether in the circumstances of the case and in law, the Ld CIT(A) had erred in not ....
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.... assessee filed an appeal before the Ld. CIT(A). The assessee challenged the order both on legal and merit before the Ld. CIT(A). But the Ld.CIT(A) has allowed the appeal of the assessee on merit and the legal issue was not dealt with. Being aggrieved on the appeal order, the revenue has challenged the merit of the case before us. On the other hand, the assessee has challenged the legality and the jurisdiction of the Ld.AO for passing the impugned assessment order under section 147 / 143(3) of the Act. 4. The Ld.DR vehemently argued and stated that the entire loss is related to the 3 scrips, i.e. Blue Circle, Shreenath & Chirawa and the entire loss is the fictitious loss as all the stocks are treated as penny stock. She further argued that the assessee is a matured business person and has experience in the share market since long; so such loss cannot be expected from the assessee's end. She prayed for upholding the order of the Ld.AO. 5. The Ld.AR, on the other hand, argued and stated that the assessee has not claimed any short term or long term capital gain related to sale of these scrips. He further argued that the assessee had made the profit in trading of shares amount to....
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....ted a) Contract Notes Yes 161-180 b) Ledger Yes 181-188 c) Details of Sales and purchase Yes 189 10. Chirawa Ceme DM d) Contract Notes Yes 190-195 e) Ledger Yes 196-203 f) Details of Sales and purchase Yes 204 11. Bank Statement of Jainam Investment for the FY 2012-13 Yes 205-230 18.4 The appellant has also contended that each transaction in shares is supported by copies of contract notes of stock broker evidencing transactions through BSE & NSE with payment of Securities Transaction Tax (STT) and margin money as per rules of Stock Exchange and SEBI. All the transactions in delivery based shares were received in the Demat account and transferred through the Demat account of the Appellant and all payments/receipts with the brokers are through proper banking channels and are reflected in the bank statements of the Appellant. Each contract cum bill of the Appellant has a unique contract number, settlement number, trade date, pay in date and pay out date. Further, each trade of the Appellant has a u....
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.... No. of Stock sold during the year 118 1, 93, 58, 89, 837 No. of Stock Sold at Profits 51 14, 03, 89, 150 No. of Stock Sold at Losss 67 49, 40, 19, 090 No. of Stock at the end of the Year 61 1, 35, 80, 68, 010 No. of Shares losses disallowed by the Ld.AO 3 3, 12, 55, 526 20.2. Apart from the cash market, the assessee had also done the trading in Futures and options and currency market. The details are as under:- Sr.No. Nature of Trading Amount in crores 1. F&O Sale 559.77 1. F&O Purchase 493.62 1. Currency Derivatives - Purchase 269.22 1. Currency Derivatives - Sale 268.96 1. Commodity Derivatives-Purchase 13.28 1. Commodity Derives - Sale 114.96 7. The Ld.AR further argued that all the relevant documents are duly placed before the Ld.AO and before the Ld.CIT(A), related to this transaction which is already mentioned by the Ld.CIT(A). The same issue was agitated before the ITAT and the ITAT has taken a view in favour of the assessee. The Ld.CIT(A) has relied on the order of the co-ordinate bench of ITAT, Mumbai in the case of M/s Munshi Financials bearing ITA No.263....
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.... that these scrips are categorized as penny stock as per the investigation wing, Kolkata reports and Ld. AO has heavily relied on these reports and report of SEBI to come to the conclusion that the various scrips dealt with by the assessee are penny stock and he discussed various analysis made by the investigation wing of Kolkata and other agencies and relied on various submissions of various dealers in these scrips and proceeded to disallow the claim made by the assessee on the business loss. In the impugned assessment order Ld. AO discussed various analysis made by the investigating wing of Kolkata and SEBI. In none of the statements or reports of Investigation Wing or orders of SEBI the name of the assessee was mentioned for manipulation. We also notice from the record that assessee has submitted all the relevant documents of purchase and sale of these scrips in the recognized stock exchange and all the details were submitted before the Ld. AO including the payments were made through banking channels only. The assessee has incurred trading loss related to 67 stocks amount to Rs. 49, 40, 19, 090/- out of that the assessee incurred loss on 3 alleged shares only amount to Rs. 3, 12....