AI Drafter 
TaxTMI 
TaxTMI 
2025 (11) TMI 34
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....n the orders passed by the AO and submitted that the setting off of the short term capital loss from trading in M/s JMD Telefilms shares against the short term capital gain earned by the assessee from other transactions during the year could not have been passed by the Ld. CIT(A) as the trading in M/s. JMD Telefilms shares were dubious affairs and the claim of STCL was wrongful. It was further submitted that Ld. CIT(A) has fail to appreciate that the provisions of Sec. 70(2) of the Act clearly stipulates that short term capital loss can only be set off against short term capital loss in the same year subject to genuineness and creditworthiness of the transactions. As per the Ld. DR in the present case the STCL claim M/s. JMD Telefilms shares were based on dubious and unsubstantiated transactions therefore should not have been allowed to be set off. It was further submitted that Ld. CIT(A) failed to appreciate that merely because the transactions were executed online through the stock exchange and reflected in the bank statement and books of account does not automatically establish the genuineness of the transactions, more particularly when there are doubts regarding the authenticit....
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....unquoted which are mentioned in schedule 4 of the balance sheet enclosed at Page No. 31 of the PB-I. Further, the Assessee has also earned a profit on trading in F&O of Rs. 5,37,27,222. 8. We also noted during the year, Assessee company has purchased 4,37,900 shares of Avtar Fin (Name of this company was later changed to M/s JMD Telefilms Ltd., during the period 15-07-2010 to 18-02-2011 and sold these shares during the same period on various dates and thereby Assessee company has incurred short term capital loss of Rs. 2,94,99,567. The Assessee company has provided complete details of STCG and STCL on sale of shares of various companies including shares of M/s JMD Telefilms Ltd on which STCL is incurred and set off against short term capital gain of Rs. 1,11,00,090. And in this way balance short term capital loss of Rs. 1,83,99,477 is Carried Forward. The Assessee company has also provided complete details of short-term capital gain and short-term capital loss on sale of shares of various companies, including shares of M/s JMD Telefilms Ltd, on which short-term capital loss is incurred. 9. From the above facts it is very clear that the Assessee company is regularly doing Inve....
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....d and sold these shares through recognized stock exchange and authorised brokers and nowhere it is brought on record that assessee is one of the party involved in the entry provider or involved in manipulating the prices or it is proved that assessee is one of the exit provider. It is fact on record that all the scrips in which assessee has dealt with were already proved to be a non penny stock based on the various decisions of the various Hon'ble High Courts and Tribunal benches. Apart from that, we observe that assessee is a regular trader in various scrips and particularly in this year assessee has dealt with more than 150 scrips and the transactions of the assessee in trading of shares having turnover of more than Rs..528.9 crores and also having substantial dividend and speculation income during this year. This proves to show that assessee is a regular investor and may be assessee has dealt with suspected scrip merely on the basis of movement of share prices and there is nothing on record to prove that assessee has anywhere involved in any types of irregularities. Therefore, we do not find any reason to interfere with the findings of the Ld.CIT(A). Accordingly, ground rais....
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.... Assessee qua rigging of the shares has not been assigned or established by any person including SEBI. Further, no allegations have been leveled by any persons, on whose statement the AO has relied on. Further, even otherwise, no investigation/action has been carried out or taken against the Assessee. Even otherwise the authorities below have not doubted the documents produced by the Assessee. And therefore, on the aforesaid analyzations and in our considered view, the Assessee cannot be fastened with the liability, simply on the findings of the investigation wing, allegations qua rigging of the share prices, unusual rise in the prices of the share, financial analysis of the penny stock company and mode of acquisition etc. as alleged. 5.2 The Jurisdictional High Court in various cases including in the case of Pr. CIT-3 vs. Ziauddin A Siddique in Income Tax Appeal No.2012 of 2017 decided on 04.03.2022 has also dealt with the identical issue as involved in the instant case, where the AO though considered the documents submitted by the Assessee in support of its claim qua sale and purchase of shares however, not criticized the same and there was no allegation against the Asse....
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....urther observe that the Hon'ble Apex Court in the case of Pr. CIT vs. Renu Agarwal (2023) 456 ITR 249(SC) has dismissed the SLP against the judgment passed in ITA No.44 of 2022 on 06.07.2022 by the Hon'ble Allahabad High Court, wherein the Hon'ble High Court has also dealt with the identical issue as involved in the instant case and ultimately affirmed the deletion of identical addition allegedly made on penny stock, by holding as under: "Judgment Heard Sri Krishna Agarawal, learned counsel for the appellant. This appeal under section 260A of the Income-tax Act, 1961 has been filed challenging the order dated January 17, 2022, passed by the Income- tax Appellate Tribunal, Lucknow Bench 'SMC' Lucknow in I. T. A No. 205 of 2020 (assessment year 2014-15). The basic question involved in the present appeal is with regard to deletion of some amount which was added by the Assessing Off icer on the allegation of penny stock. The appeal of the respondent-assessee was allowed against the assessment order. The appeal filed by the assessee was allowed by the Commissioner (Appeals) Against the appellate order the Revenue had filed the afor....
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....re of the considered view that de hors any cogent material made available on record by the department which would prove to the hilt that the assessee had not carried out any genuine transaction of purchase/sale of shares of JMD Telefilms Industries Ltd. and, in the garb of bogus entry of a tax exempt LTCG u/s 10(38) of the Act, laundered his unaccounted money, the assessee's duly substantiated claim of having carried out genuine transaction of purchase/sale of shares of JMD Telefilms Industries Ltd. which is duly supported by him on the basis of documentary evidence, could not have been dislodged. Accordingly, for the reasons discussed at length by hereinabove, not finding favour with the view taken by the lower authorities, we herein set-aside the orders of the lower authorities qua treating the transaction of purchase/sale of shares of JMD Telefilms Industries Ltd. by the assessee as a bogus transaction and, consequently vacate the addition made by the A.O under Sec. 68 of Rs. 6,06,49,780/-. The Grounds of appeal Nos. 2 & 3 are allowed in terms of our aforesaid observations. 14. As we have held the transaction of purchase/sale of shares of JMD Telefilms Industries Ltd by....