TaxTMI 
TaxTMI 
2025 (8) TMI 1035
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....ts of the case 1. The assessee is an HUF which earns income from business, income from capital gain and income from other sources. Enclosing: - Copy of Financial Statements (Refer Paper Book Page No. 4-6) 2. The assessee is a regular investor. The same can be verified from the D-MAT holding statement. The assessee has sizable portfolio. The assessee has not only invested in scrips but also in funds. Enclosing: - Copy of D-MAT Account showing holding as on 31.03.2015 (Refer Paper Book Page No. 44-47) 3. The assessee has filed return of income for AY. 2016-17 on 02.08.2016 declaring total income at Rs. 8,79,320/- Enclosing: - Copy of ITR Acknowledgement and Computation of Income for AY 2016-17 (Refer Paper Book Page No. 1-3). 4. The case was reopened u/s 147 by issuance of notice u/s 148 of the IT Acton mere information which was received from DDIT (Inv.) Unit in respect of alleged bogus LTCG claimed by the assessee on sale of penny stock script. 5. The Appellant had submitted to Ld. AO all documents pertaining to sale and purchase of shares of Yamini Investment Ltd. like D-mat ac....
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.... CIT (A) failed to appreciate the fact that the appellants transactions of sale of shares of Yamini had been executed on the BSE, a recognized stock exchange, on which Security Transaction tax (STT) had been duly paid. 7. The Ld. CIT (A) erred in making the addition of sale proceeds on the sale of shares of Yamini us 69A on the basis of mere suspicion and surmises of the Ld. AO, and not based on facts and evidence as he failed to bring any evidence on record supporting the conclusions or controverting the evidence submitted by the appellant. 8. The Ld. CIT (A) erred in findings and conclusions stated in para 8 of the assessment order without any evidence on record, either direct or otherwise. The conclusions are based on presumptions and surmises. 9. The Ld. CIT (A) has denied natural justice to the appellant by not giving opportunity to cross examine the persons on whose statements the Ld. AO has relied. 10. The appellant craves leave to add to, ament, or delete any of the above grounds, if and when required. The appellant beyond any doubt proves the identity, genuineness and credit worthiness of the transactions. A. WHY AO MADE ADDITION i. T....
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....amini due to the said court order after many months of purchases of M/s Anax Com Trade Ltd equity shares. 6. The mergerorder of Bombay High Court was followed by approval of SEBI & other government agencies for trading at Bombay Stock Exchange. 7. It was the management of Anax Com Trade Limited who had dealt with Yamini Investment Company Limited. The assessee being as small shareholder had no control over the management of the Anax Com Trade Limited Anax or that of Yamini Investment Company Limited. The assessee is not related to the promoters of the either of the company. 8. In response to the above High Court order of merger of Hon. Justice Shri Gautam Patel the assessee got entitled for 1,60,000 equity shares of Yamini Investments Company Limited, which was lesser than the acquired 2,00,000 shares of Anax Com Trade Limited. 9. Later looking at market volatility & better returns the assessee sold these equity shares at Recognized Bombay Stock Exchange through Brokers namely IIFL Securities Limited and Arcadia Share & Stock Brokers Pvt. Ltdat various rates for total value of Rs. 91,89,500/- after STT paid. SN Date of Sale Trade Rate ....
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....t account and payment is made through banking channel vide account payee cheque, thus no question of raising doubt about the purchase of shares by the assessee is sustainable. ii. After the merger of Anax Com Trade Limited and Yamini Investments Company Limited, shares of Anax Com Trade Limited converted into shares of Yamini Investments Company Limited in Demat account as per the scheme of merger. iii. Transactions are being carried out through SEBI registered stockbrokers and Members of BSE, a recognized stock exchange of India and through Scheduled Commercial Banks. iv. Payment is received through banking channels from registered broker. v. Complied all the terms and conditions of section 10 (38) i.e. shares are held by the assessee for more than 12 months (approx. 28 Months), paid STT of Rs. 9,191/- at the time of sale, transaction is being carried out through recognized stock exchange in India. vi. Where transactions are carried out at the floor of stock exchange where no one knows each other vis-a-vis purchaser, seller, company, broker and depository etc, and the transactions is being carried out as per laid down procedure by SEBI ....
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....statement * Copy of D-mat account * Copy of contract notes xi. However, one point to be noted that the finding of the Ld. AO is wrong and shows that the Ld. AO& the Ld. CIT (A) have no knowledge about the share transactions. They have relied on mere information by Investigation Directorate wing. xii. It is pertinent to mention that the Appellant sold the shares during the months of June 2015 and July 2015 in the FY. 2015-16 from a price range of Rs. 49.20/- to 58.90/- per share and the price of the share was fluctuating in the same range for next 12-20 months even after the shares were sold by the Appellant. xiii. The Appellant had purchased the shares directly from the Company under Private Placement and sold at Bombay Stock Exchange through its share brokers. The shares were received directly from the company and then dematerialized and on sale, the D-mat shares were delivered to the clearing corporation of BSE through its share broker. xiv. The Ld. AO denied the claim of long-term capital gain on sale of shares under section 10 (38) and made addition of LTCG under section 68. The shares had been directly allotted by the compa....
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....learly bringing on record that the said order does not either directly or indirectly implicate the assessee in any manner whatsoever and all the allegations levelled in the said SEBI order does not apply factually to the assessee be it with regard of stock split or the period of enquiry carried out by SEBI etc. The SEBI order is for the enquiry conducted from September 2013 to Jan 2014 with regard to behavior of the said scrip in the stock market whereas the assessee had sold the share in June 2015 and February 2016. Even if the scrip is to be construed as tainted scrip, the assessee cannot be implicated or linked with the alleged tainted persons merely because certain tainted persons were involved in the artificial rigging in the share price. Further, even in the Mumbai Tribunal relied upon by the ld DR vehemently, there is an observation that people who had approached the tainted parties in order to get accommodation entries in the form the exempt long-term capital gains. There is absolutely no evidence brought on record by the revenue in the instant case before us that assessee had either approached the alleged tainted parties/ entry operators who were involved in artificial rig....
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....sale of shares of Yamini Investment Company Limited, the income tax department had accepted the claim of short term capital gains disclosed by him to be genuine in the reopened assessment proceedings under section 143 (3) read with section 147 of the Act dated 26-5-23. The learned AR placed on record the copy of the said assessment order in pages 53-56 of the synopsis. This evidence also goes against the department wherein for the same set of shares, in case of assessee's brother, the entire transactions have been accepted as genuine by the department whereas, exactly contrary view has been taken in the case of the assessee herein. 15. In view of the aforesaid observations, we hold that there is absolutely no case made out by the revenue for justifying the denial of exemption under section 10 (38) of the Act in the facts and circumstances of the instant case . Accordingly, the Ground Nos. 2, 3 and 5 raised by the assessee are hereby allowed. 16. The Ground No. 7 raised by the assessee is general in nature and does not require any specific adjudication. 17. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 20/01/2025. ....
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.... of opinion. In this regard, while passing the impugned order, Learned CIT (A) relied on decisions in ACIT vs Infinity.com Financial Securities Ltd. [2022] 145taxmann.com 212 (SC) decided on 17-10- 2022, Hans Raj Agarwal whereby SLP failed against decision by Hon'ble Bombay High Court in Writ Petition No. 3497 of 2019 was dismissed. Therein, reference was also made to the decision in the case of Calcutta Discount Co. Ltd, 41 ITR 191 and Gemini Leather Stores vs ITO, [1975] 100 ITR, and CIT vs Kelvinator of India Ltd. 320 ITR 561 (SC). 37. In view of the above discussion, we find that NFAC vide impugned order dated 14- 08-2024 was fully justified in allowing Ground No. 7 raised by the assessee in the appeal challenging assessment order dated 17-05- 2023 while concluding that reopening in subsequent reassessment u/s 147 read with Section 144B of the Act was not valid. Conclusion 38. In view of the above findings and discussion, the appeal filed by the department deserves to bed is missed. Result 39. In view of the above discussion and findings, memorandum of cross objections No 1/JP/2025 filed by the assessee is allowed. Hans Raj Agarwal the appeal-ITA No. 12....
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....been held as genuine, the addition of Rs. 1,74,124/-for AY 2017-18 and Rs 45,000/- for AY 2016-17 on account of corresponding commission are also deleted. In the result, the appeal is "Allowed" for AYs. 2016-17 & 2017-18 From the above Case Laws involving Yamini Investments Company Ltd. let us analyze the assessees case and compare the same with each case law: 1. The appellant has relied upon the fact that order was recently passed by the Hon'ble ITAT Mumbai in the case of the Abhishek Rajendra Kumar Mundra, relative of the assessee, wherein no addition on the same issue of LTCG on the script of M/s Yamini Investment Company Ltd. 2. There is absolutely no evidence brought on record by the revenue in the instant case that assessee had either approached the alleged tainted parties/ entry operators who were involved in artificial rigging of share price of Yamini Investment Company ltd in order to receive accommodation entries in the form of exempt long-term capital gains. 3. In the instant case the assessment has been reopened on the basis of the information received through insight portal from DDIT (Inv) and without independent application of mi....
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....ble High Court of Bombay in the case of Commissioner of Income-Tax-13 Vs. Shyam R. Pawar. (Judgement dated 10.12.2014) Hon'ble High Court of Bombay in the case of Commissioner of Income-Tax Vs. Shri Mukesh Ratilal Marolia (Judgement dated 07.09.2011) Hon'ble High Court of Bombay in the case Reynold Shirtings Vs. ACIT, CC 6 (3) Mumbai. (Judgement dated 14.12.2021) Hon'ble ITAT, 'E' Bench Mumbai in the matter of Manish Mahipatrai Shah Vs. CIT (A)/NFAC, Mumbai (Order dated 08.02.2024) Hon'ble ITAT, 'F' Bench Mumbai in the matter of Udayan Grover Vs. National Faceless Appeal Centre Delhi (Order dated 07.02.2024) Hon'ble ITAT, 'F' Bench Mumbai in the matter of Jitendra Udayal Jain Vs. National Faceless Appeal Centre Delhi. (Order dated 24.11.2023) Hon'ble ITAT, 'A' Bench Mumbai in the matter of Shri Abhishek Doshi Vs. Asstt. Commissioner of Income Tax, Mumbai. (Order dated 31.05.2023) Appellate Order passed u/s. 250 on 30.03.2023 By Hon'ble Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi in the matter of Yogesh Harish Bulchandani. (Order dated 30.03.2023) FURTHER MORE RELIANCE IS ALSO PL....
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....e being routed through floor of a recognized stock exchange did not arise - It was also apparent that assessee having purchased shares in question, converted them in D-mat form and thereupon sale of those shares was carried out through CSE after paying Securities Transaction Tax - Whether on facts, transactions of purchase and sale of shares were to be regarded as genuine in nature and, therefore, assessees claim was rightly allowed - Held, yes [Para 23] [In favor of assessee] 3. [2017] 77 taxmann.com 260 (Ahmedabad - Trib.) IN THE ITAT AHMEDABAD BENCH 'B' Pratik Suryakant Shah v. Income-tax Officer, Ward- 10 (3), Ahmedabad* OCTOBER 21, 2016 Section 10 (38), read with section 147, of the Income-tax Act, 1961 - Capital gains - Income arising from transfer of long-term securities (Bogus transactions) - AY 2006-07 - Assessee purchased 3000 shares of company 'T' through a stock broker - These shares were transferred to assessees demat account - However, said stock broker submitted before authorities that he was providing accommodation entries for taking profit or loss by showing purchase or sales of shares and securities commission from beneficiary parties and ....
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....o. 4862/MUM/2014 Assessment Year: 2005-06 Where assessees broker share transaction was bone fide in all respect, merely because share broker was tainted violating SEBI regulations, would not make assessees share transactions bogus. 9 Kamla Devi S. Doshi V/s. The Income Tax Officer Ward 16 (3) (1), I.T.A. No. 1957/Mum/2015 Assessment Year: 2006-07 Bogus penny stocks capital gain: The s. 131 statement implicating the assessee is not sufficient to draw an adverse inference against the assessee when the documentary evidence in the form of contract notes, bank statements, STT payments etc prove genuine purchase and sale of the penny stock. Failure to provide cross-examination is a fatal error 10 Shri Sunil Prakash V/s. ACIT -15 (2) I.T.A./6494/Mum/2014, Assessment Year: 2005-06 S. 68 bogus gains from penny stocks: If the AO relies upon the statement of a third party to make the addition, he is duty bound to provide a copy of the statement to the assessee and afford the opportunity of cross-examination. Failure to do so vitiates the assessment proceedings. A transaction evidenced by payment/receipt of share transaction value through banking channels, transfer of shar....
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....so placed on following case laws where such purchase and sale were allowed. 1. C.I.T Vs. Mukesh Marolia ITA 456 of 2007-Bombay HC 2. Muksh R Morolia V/s Add CIT (2006) 6 SOT 247 3. ITO V/s. Mrs. Rasila N Gala ITA No. 1773/Mum/2010 4. CIT V/s Kan Singh Rathore ITA 192 of 2014 (Rajasthan HC) 5. M/s SBD Estate Private Limited V/s. ITO 584/Mum/2015 6. Ms Farrah Marker V/s ITO ITA No. 3801/Mum/2015 order dated 27/04/2016 7. Mr. Arvind Asmal Mehta V/s ITO ITA No. 2799/Mum/2015 order dated 29/02/2016 8. Smt Jyoti D Shah V/s ITO ITA No. 1843/Mum/2012 9. ITO V/s Deep Darshan Properties Pvt Ltd.2117 & 2118/Mum/2014 10. CIT-13 V/s ShyamR.Pawar (2015) -54 Taxmaan.com 108- Bombay High Court 11. JafferaliK.Rattonsey vs DCIT ITA No. 5068 Mum 2009 12. Kamla Devi S. Doshi ITA No. 1957/Mum/2015 13. Pratik Suryakant Shah (2017)-77 Taxmann.com 260 Ahmedabad Tribunal 14. Aarti Mittal (2014) 41 Taxmann.com 118 (Hyderabad Tribunal) 15. CIT Appeal order in case of Umang D Soni 16. C.I.T Mumbai Vs. Mukesh Ratilal Marolia Supreme Court - 2015 (9) TMI 854 - SUPREME C....
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.... Sadhana Rastogi, Ajay Kumar Rastogi vs ITO wd1 (1) wd-2 (3), Meerut ITA No. 2128/2129/2131/2132/Del/2018 [Delhi-Tribunal] 42. Smt Shikha Dhawan vs ITO, Wd-4 (2) ITA No. 3035/Del/2018 [DelhiTribunal] 43. Shamim Imtiaz Hingora, Parvez Hingora, Shabeena Irfan Hingora, Arif Abdul RazakHingora vs ITO Wd-I Jalna, ITA No. 1875,1876,1877,1878/Pun/2018 [Pune-Tribunal] 44. CIT (A)-45, MUMBAI order in case of Parul Hemant Patel 45. Mukesh B Sharma Vs ITO 11 (3) (2) ITA No. 6249/Mum/2018 46. Deepak Nagar Vs The ACIT-17 ITA No. 3212/Del/2019 47. Kaushalya Agarwal Vs ITO 35 (3) ITA No. 194/Kol/2018 48. VijayrattanBalkrrishan Mittal Vs DCIT ITA No. 3427, 3428, 3429/Mum/2019 49. Amit Mafatlal Shah vs ACIT ITA No. 5793/MUM/2019 50. Dipesh Ramesh Vardhan and others vs DCIT CC 2 (2) ITA No. 7648, 7662, 7651, 7650 and 7649/MUM/2019 51. Nishant Kantilal Patel and Others vs. ITO ITA No 05,06,07 and 10/SRT/2019 WITHOUT PREJUDICE TO ABOVE RELIANCE IS PLACED ON VARIOUS JUDGMENT WHERE ADDITION MADE ON THE BASIS OF THIRD PARTY STATEMENTS HAVE BEEN DELETED:- A. The Hon'ble Supreme Court in....
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....itnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected 2. Lalchand Bhagat AmbicaDav V/s CIT (37 ITR 28) (SC) Assessment made without disclosing to the assessee the information supplied by the department and without giving any opportunity to the assessee to rebate the information is violation of fundamental rules of justice. 3. DHAKESWARI COTTON MILLS LTD. v. CIT [1954] 26 ITR 777 An assessment so made without disclosing to the assessee the information supplied by the departmental representative and without giving any opportunity to the assessee to rebut the information so supplied and declining to take into consideration all materials which the assessee wanted to produce in support of case constituted a violation of the fundamental rules of justice and called for interference on our part. 4. SETH GURUMUKH SINGH v. CIT [1944] 12 ITR 393 The Tribunal violated certain fundamental rules of justice in reaching its conclusions.....
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....TR 61 (GUJ)- 4. SARASWATHI OIL TRADERS V. CIT [2000] 254 ITR 259 (SC) Income cannot be assessed on mere statement basis. For assessment there has to be some evidence. Income cannot be assessed on mere retracted statement If not material to prove 1. Meghraj Jain V. UOI (Bombay High Court) 2. KailashbenManharlalChokshi v. CIT [2008] 174 Taxman 466 (Guj.) 3. M. Narayanan & Bros. v. Asstt. CIT [2011] 201 Taxman 207 (Mag.) 4. Bansal High Carbons (P)Ltd. 2009) 223 CTR 179 (Del). 5. Sanjeev Kumar Jain (2009) 310 ITR 178 (P&H) 6. CIT vs. K. Bhuvanendra and others (2008) 303 ITR 235 (Mad.) 7. Abid Malik Vs UOI, (2009 TIOL 272 HC Del-FEMA) 8. CIT vs. Uttamchand Jain 320 ITR 554 (Bom), 9. Srinivas Naik (2009)117 ITD 201 (Bang) Addition cannot be made on assumption basis. There must be some material on record as evidence for addition. Addition made on the basis of presumption cannot be sustained in law. 1. CIT v. Roman & Co., (1968) : 67 ITR 11 (SC) 2. CIT v. Calcutta Discount Co. Ltd. (1973) 91 ITR 8 (SC) 3. Omar Salay Mohamed Sait V/s CIT 1959 37 ITR 151 (SC) 4. Dhirajll Girdharilal V/s CIT (26 ITR 734) (SC) 5. Dr. Anita Sa....
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.... M/s Anax Com Trade Ltd was merged with Yamini Investments Company Ltd., which are at paper book page No. 51 to 95. 6. However looking at the market volatility and better returns, the assessee sold equity shares at recognized Bombay Stock Exchange (BSE) through broker IIFL securities Ltd and Arcadia Share & Stock Broker Pvt Ltd at various rates after paying STT, the details of which are contained herein below: SN Date of Sale Trade Rate Quantity Amount STT 1 24-07-15 50.75 10,000 5,06,993 508 2 14-06-15 56.25 20,000 11,23,875 1,125 3 25-06-15 58.60 10,000 5,85,414 586 4 26-06-15 58.75 20,000 11,73,824 1,173 5 29-06-15 58.90 15,000 8,82,616 884 6 30-06-15 49.20 25,000 14,71,027 1,473 7 01-07-15 58.90 20,000 11,76,822 1,178 8 13-07-15 57.60 10,000 5,75,424 576 9 16-07-15 56.20 30,000 16,84,314 1686 160,000 91,80,309 9,191 7. In order to prove the said contention the assessee had already placed on record the copy of sale bills issued by the broker and copy of brok....
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.... assessee for more than 12 months (approx. 28 Months), paid STT of Rs. 9,191/- at the time of sale, transaction is being carried out through recognized stock exchange in India as per procedure by SEBI and even the rates are not decided by any of the parties, but by open market on demand and supply basis. Thus it cannot be said that the above transactions are a bogus transaction ignoring the facts and documentary evidences available on record. 12. It is also hereby important to note that the transactions were carried out in an open market and in a recognized stock exchange hence prices of shares are not controlled / managed by the assessee. Similar view has also been taken by the Coordinate Bench of ITAT in the case of ITO- (24) (3) (1), Mumbai V/s M/s Indravardan Jain HUF. It was noticed by the bench that the investigations into penny stocks cannot necessarily mean that all transactions are bogus. The nature of the transaction does not change just because there is an investigation or because it is a penny stock. 13. Further, the AO has not been able to place on record any evidence about the mutual connivance of the assessee and the operators. There is absolutely no evidences ....
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.... directly allotted by the company and the payment had been made through account payee cheques duly disclosed by assessee in the earlier year and said purchase of shares was evidenced not only from the bank statement but also by the allotment of shares. Thus, possession of the shares were not in doubt at all because the same were also reflected in the D-mat account. Hence, the nature of the transaction was clearly purchase and sale of shares and the source of the credit. From the material facts on there was no evidence or any whisper on record that some unaccounted money had been routed. Thus, in our view there is absolutely no case made out by the revenue for justifying the denial of exemption u/s 10 (38) of the Act in the case of the assessee. 17. The Coordinate Benches of the Tribunal in number of cases have already dealt with identical cases, where the same script i.e Yamini Investments company ltd is involved and after considering the totality of facts had deleted the additions in respect cases, the details of which are given herein below: SN CITATION OBSERVATION 1 IN THE INCOME-TAX APPELLATE TRIBUNAL "A" BENCH, MUMBAI ITA No. 3929/MUM/2024 Assessment Year :20....
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..... It is pertinent to note that assessee has been holding the share from September 2012 onwards and the price of the very same scrip in the open market in October 2014 was ranging from Rs. 452 to 496 per share. Considering the drastic fall in the said scrip, the assessee had chosen to sell it in three tranches at the price 61.70 per share; Rs 58.15 per share and Rs. 30.85 per share. This is classic case of assessee falling in the category of gullible investor who had been hit by the declining market prices due to alleged manipulation and artificial rigging of share prices carried out by some 3rd party who are totally unconnected with the assessee. Hence, in our considered opinion, reliance placed on the decision of the Mumbai Tribunal would not come to the rescue of the revenue. Further, we find our view is further fortified by the decision of the Hon'ble Jurisdictional High Court in the case of PCIT Vs. Smt Krishna Devi reported in 431 ITR 361 (Del); decision of the Hon'ble Allahabad High Court in the case of PCIT Vs. Smt Renu Agarwal 153 taxmman.com 578 and decision of the Hon'ble Madhya Pradesh High Court in the case of CCIT (OSD) Vs. Nilesh Jain (HUF) 163 taxmann.com....
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.... Ward-1, Jalna Date of pronouncement: 27-02- 2025 41. The various decisions relied on by the Ld. Counsel for the assessee on the issue of reopening on the basis of report of the Investigation wing and non-application of independent mind by the Assessing Officer which amounts to borrowed satisfaction supports his case to the proposition that the reopening of the assessment merely on the basis of report of Investigation Wing and without independent application of mind by the Assessing Officer is void ab initio. Since admittedly in the instant case the assessment has been reopened on the basis of the information received through insight portal from DDIT (Inv), Delhi and without independent application of mind by the Assessing Officer, therefore, such re- assessment proceedings being not in accordance with law, have to be quashed. We, accordingly, quash the re-assessment proceedings and the ground raised by the assessee on this issue is allowed. Since the assessee succeeds on this legal ground, the other grounds challenging the addition on merit are not being adjudicated being academic in nature. 42. In the result, the appeal filed by the assessee is allowed. 4 INCOME TAX A....
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....Delhi in the matter of Dalip Nagar (Refer Legal Volume - page No. 205-239) 5.1.9 It is important to understand that the fluctuation in price of the shares is the normal phenomenon of the share market. There are instances when share price is manipulated by the certain group of persons commonly known as operators. These operators have different modus operandi. One such modus operandi is to jack up the price of a share to a very high level and then sell them off to common persons and come out from this equity share. Once they stop jacking up, prices of share start falling and many innocent investors get trapped. However, there are some persons who sale off their shares when prices are moving up and make good profit without being part of the operator group or even knowing them. Other such modus operandi is to manipulate the share prices to provide definite long/short term gain/loss to targeted persons in doing so. Generally, the operator has total control over the purchases and sales of these shares. Investor is not allowed to independently purchase/sale the shares. Transactions are male through the designated share brokers as identified by the operators Once sale of Shares take pla....
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....mini due to the said court order after many months of purchases of M/s. Anax Com Trade Ltd. equity shares. We also notice that the merger order of the Hon'ble Bombay High Court was followed by approval of the Securities and Exchange Board of India (SEBI) and government agencies for trading at the Bombay Stock Exchange (BSE). Later on, in response to the Hon'ble High Court order of merger, the assessee got entitled to 1,00,000 equity shares of Yamini Investments Company Ltd., which was lesser than the acquired 1,25,000 shares of M/s. Anax Com Trade Company Ltd. Later on, looking at market volatility and better returns, the assessee sold these equity shares at Recognized Bombay Stock Exchange through Brokers viz. Angel Broking Pvt. Ltd., IL & FS Securities Services Limited and Arcadia Share & Stock Brokers Pvt. Ltd from a price range of Rs. 49 to Rs. 62 per share. The shares of Anax Com Trade Limited were purchased and were received in the Demat account and payment is made through banking channel vide account payee cheque, thus no question of raising doubt about the purchase of shares by the assessee is sustainable. STT has also been paid on all the Sales Transactions. The sa....
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....in our considered opinion, reliance placed on the decision of the Mumbai Tribunal would not come to the rescue of the revenue. 14. Further, we find that in assessee's brother's case, Shri Rajiv Madan, in respect of identical facts of sale of shares of Yamini Investment Company Limited, the income tax department had accepted the claim of short term capital gains disclosed by him to be genuine in the reopened assessment proceedings under section 143 (3) read with section 147 of the Act dated 265-23. The learned AR placed on record the copy of the said assessment order in pages 53-56 of the synopsis. This evidence also goes against the department wherein for the same set of shares, in case of assessee's brother, the entire transactions have been accepted as genuine by the department whereas, exactly contrary view has been taken in the case of the assessee herein. 15. In view of the aforesaid observations, we hold that there is absolutely no case made out by the revenue for justifying the denial of exemption under section 10 (38) of the Act in the facts and circumstances of the instant case. Accordingly, the Ground Nos. 2, 3 and 5 raised by the assessee ar....
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....T HYDERABAD BENCH 'A' Income-tax Officer, Ward 2, Nizamabad v. Smt. Aarti Mittal* NOVEMBER 6, 2013 Section 10 (38) of the Income-tax Act, 1961 - Capital gains - Exemption of, on transfer of securities [Genuineness of transactions] - Assessment year 2006- 07 - Assessee filed its return declaring long term capital gains on shares traded in Calcutta Stock Exchange - Since sale transactions took place through authorized stock exchange and securities transaction tax was paid, assessee claimed entire sale proceeds arising out of transaction as long term capital gain exempt from tax under section 10 (38) - Assessing Officer did not believe transactions in question as genuine and treated entire sale proceeds as 'Income from Other Sources' - Commissioner (Appeals) opined that in absence of any positive evidence, merely on basis of suspicion, transactions could not be held to be not genuine - Commissioner (Appeals) thus set aside addition made by Assessing Officer - It was noted that even though enquiry with Chennai Stock Exchange (CSE) revealed that no purchase had taken place through it, since transactions were in physical form and done through off market, question of sa....
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....ed exempt u/s 10 (38) cannot be treated as bogus unexplained income if the paper work is in order. The fact that the Company whose shares were sold has violated SEBI norms and is not traceable does not mean that the assessee is at fault 6 CIT vs. Mukesh Ratilal Marolia (Bombay High Court) INCOME TAX APPEAL No. 456 OF 200 7 7th September 2011 S. 10 (38)/ 68: Long-term capital gains on sale of "penny" stocks cannot be treated as bogus & unexplained cash credit if the documentation is in order & there is no allegation of manipulation by SEBI or the BSE. Denial of right of cross-examination is a fatal flaw which renders the assessment order a nullity 7 Smt. Sunita Jain, V/s. Income Tax Officer, Ward10 (3), Ahmedabad ITA. Nos: 501 & 502/AHD/2016 Assessment Year: 2008-09 The claim of the assessee cannot be denied on the basis of presumption and surmises in respect of penny stock by disregarding the direct evidences on record relating to the sale/purchase transactions in shares supported by broker's contract notes, confirmation of receipt of sale proceeds through regular banking channels and the demat account 8 ITO-24 (3) (1) V/s M/s Arvind Kumar Jain HUF ITA No. 4....
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.... should be established. The Dept cannot rely on alleged modus operandi & human behavior and disregard the evidence produced by the assessee. All imp judgements referred 13 ACIT vs. Vineet Sureshchandra Agarwal (ITAT Ahmedabad) Bogus capital gains from penny stocks: The fact that the Stock Exchanges disclaimed the transaction is irrelevant because purchase and sale of shares outside the floor of Stock Exchange is not an unlawful activity. Off-market transactions are not illegal. It is always possible for the parties to enter into transactions even without the help of brokers. Therefore, it is not possible to hold that the transactions reported by the assessee were sham or bogus 14 Meenu Goel vs. ITO (ITAT Delhi) Bogus Capital gains from penny stocks: Capital gains from penny stocks cannot be assessed as unexplained cash credit u/s 68 if the assessee has produced documentary evidence to prove the source, identity and genuineness of the transaction and the AO has not found any fault with it. The fact that the investigation dept has alleged that there is a modus operandi of bogus LTCG scheme is not relevant if the same is not substantiated 20. Considering the total....