TaxTMI 
TaxTMI 
2025 (12) TMI 264
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.... of Rs. 2,61,060/-, which was subsequently revised on 11.02.2019. Information was received from the Investigation Wing, Ahmedabad, based on which the Assessing Officer recorded reasons to believe that the assessee had availed accommodation entries in the form of fictitious short-term capital loss of Rs. 14,31,925/- by trading in the scrip of Kushal Tradelink Ltd., allegedly used for creating artificial losses through price rigging and pre-arranged trades. The AO issued notice under section 148 of the Act on 30.03.2022, after complying with the procedure prescribed under section 148A, and passed the reassessment order on 24.03.2023, assessing total income at Rs. 16,75,500/-. 2.2 In the assessment order, the AO observed that the scrip of Kushal Tradelink Ltd. was one of the penny stocks manipulated by a known syndicate for providing bogus long-term and short-term capital gains/losses. It was further stated that data from the search action in the Kushal Group revealed synchronized trades, rotation of funds, and lack of genuine business activity. The AO thus, based on the detailed report of SEBI and information received from Investigation wing, held that the short-term capital loss ....
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..... Kushal Tradelink Limited and incorrectly correlating such analysis with the trading price of the stock on the exchange. Such irrelevant considerations cannot, and ought not to, form the basis for determining the genuineness of Appellant's individual transactions. Each transaction must be examined on its own merits, supported by tangible and verifiable evidence. Therefore, the disallowance based on extraneous and irrelevant analysis is erroneous, unjustified, and deserves to be set aside. 5. The Ld. AO further erred by passing the order dated 29.03.2022 under Section 148A(d) of the Act solely based on an alleged non-receipt of a reply from the Appellant. It is respectfully submitted that the mere absence of a response from the Appellant does not empower the Ld. AO to initiate reopening proceedings under Section 148 of the Act. The Ld. AO was obligated to independently evaluate the material and available records, and to explicitly set forth cogent and valid reasons justifying such reopening, which has not been done. 6. The impugned order passed by the Ld. AO is cryptic, vague, and lacks reasoned justification, clearly violating established judicial precedents ....
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....respectfully craves leave of this Hon'ble Tribunal to rely upon such other additional grounds, judicial precedents, and legal arguments as may be necessary during the course of hearing, and to further add, alter, or amend the Grounds of Appeal in the interest of substantial justice. 4. During the course of hearing before us the Authorised Representative (AR) of the assessee submitted that the assessee is a regular and independent investor in the capital market. The transactions in the scrip of Kushal Tradelink Ltd. were carried out through SEBI-registered broker ICICI Direct, executed on the platform of a recognised stock exchange (BSE), and all payments were made through verifiable banking channels. The purchase and sale transactions were backed by demat account statements, purchase and sale contract notes, and bank account statements, all of which were furnished before the Assessing Officer. The AR pointed out the said documents form the paper book. The further submitted that the assessee purchased 19,600 shares of Kushal Tradelink Ltd. in November- December 2016 for Rs. 33.5 lakh, received bonus shares in 1:1 ratio on 24.03.2017, and sold the entire 39,200 shares on 21.04....
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....a direct linkage or nexus between the assessee and the alleged price manipulation in the scrip of Kushal Tradelink Ltd. The impugned addition has been made solely on the basis of general findings contained in the SEBI order and the alleged modus operandi concerning the Kushal Group, without bringing on record any cogent or incriminating material to specifically implicate the assessee. 6.1 In this context, it is pertinent to refer to the binding ratio laid down by the Co-ordinate Bench in the case of Bao Value Fund [ITA No. 947/Mum/2024, order dated 27.02.2025], wherein the Mumbai Bench has dealt with identical facts and circumstances. The relevant observations in paragraph 5 of the said order are extracted below for ready reference: "Though the AO has recorded a detailed finding with regard to the SEBI order, we notice that the assessee's name has not been linked to the SEBI report and the entire finding is with regard to the modus operandi as to how the share prices have been rigged in the case of Kushal Ltd. We further notice that the statement recorded and the seized material relied on by the AO to make the addition do not contain anything connecting the assessee....