TaxTMI 
TaxTMI 
TaxTMI 
2024 (3) TMI 1464
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....ng facts of the case submitted that assessee is a Private Limited Company engaged in trading of shares and securities The assessment for Assessment Year 2012-13 in the case of assessee was reopened vide notice u/s. 148 of the Income Tax Act, 1961 [in short 'the Act'] dated 31/03/2019. As per the reasons provided to the assessee, the assessment was reopened on account of assessee's alleged obtaining of bogus gain/loss from trading in following penny stocks: (i) Nivyah Infrastructure & Telecom Ltd. (ii) Exelon Infrastructure & Telecom Ltd. (iii)Banas Finance Ltd. (iv)Gemstone Investments Ltd. (v) Divine Multimedia India Ltd. (vi) Scan Steel Ltd. (vii) VMS Industries Ltd. The ld.Counsel for the assessee submits that in gr....
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....t Regulations Act, 1956 banning trading of shares. However, the said ban was during the period 2008 to 2010, outside the period of consideration for Assessment Year 2012-13. Likewise, he pointed discrepancies in the findings of the Assessing Officer in respect of other penny stocks. He finally submitted that in entire assessment order the Assessing Officer has been mentioning about bogus long term capital gain/short term capital loss from trading in penny stocks. In para 5.1 of the assessment order the Assessing Officer held that the assessee has booked long term capital loss in the penny stocks. The Assessing Officer in penultimate para of the assessment order refers to the modus operandi of obtaining long term capital gain from trading in....
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....he said confirmation is at page 70 to 77 of the paper book. The ld.Counsel for the assessee has also placed on record extracts of assessee's Demat Account to substantiate that alleged penny stocks were credited and debited to assessee's Demat account on purchase and sale. Thus, trading of shares was delivery based and the payments were actually made by the assessee for purchase and sale of shares. To substantiate payment of shares at the time of purchase he submitted that the assessee is having running account with its broker. The broker made the payment at the time of purchase from the running account of the assessee and in similar manner on sale of shares the amount was added in the running account of the assessee maintained by the broker....
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....ital loss. The Assessing Officer lost sight of the fact that he is dealing with assessee's assessment where the assessee has claimed business loss from sale of shares alleged to be penny stocks. 5. The assessee in order to substantiate that the assessee has indeed purchased and sold penny stocks and in the process has suffered loss, furnished details of trading in shares during the Financial Year 2011-12, relevant to the Assessment Year 2012-13, at page 30 to 69 of the paper book. A perusal of the statement shows that the assessee has not only traded in seven penny stocks as identified by the Assessing Officer but has traded in various other shares which has ultimately resulted in net loss of Rs.9,65,37,048/- in shares trading and the said....
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....loss in trading of alleged penny stocks is Rs.1.98 cores. Thus, the assessee has not only suffered loss in trading of penny stock alone. 7. The CIT(A) while examining the issue has given a finding on the business loss of the assessee from trading in penny stocks by primarily placing reliance on the decision in the case of PCIT vs. Swati Bajaj, 139 taxmann.com 352 (Cal). The CIT(A) has failed to examine documents on record and peculiar facts of the case. Here it would be apposite to add that each case has to be decided on its facts. Merely for the reason that the assessee has traded in penny stocks would not mean that the assessee has indulged in bogus transactions. Indeed trading in penny stock scrips raises a red flag and such cases have ....