2026 (2) TMI 811

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....ideration declaring total income of Rs.1,72,590/-. The assessee claimed exemption u/s 10(38) amounting to Rs.19,41,621/- representing long-term capital gains arising from sale of shares. The case was selected for complete scrutiny and notice u/s 143(2) along with u/s 142(1) of the Act was issued to the assessee. In response to the statutory notices, the assessee furnished the requisite details as called for. The Ld. AO noted that the assessee purchased shares of Rosette Resorts Ltd. at Rs.10/- per share for a total consideration of Rs.50,000/- on 19/11/2011. It was observed that on 02/02/2013 the company subdivided its shares from face value of Rs.10/- each to Rs.2/- each. Thereafter, the company changed its name from Rosette Resorts Ltd. t....

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.... sale transactions were duly recorded in the assessee's demat account and were supported by contract notes, sale bills, and confirmations from the stock broker. It was contended that there is no allegation of any direct involvement of the assessee or his stock broker in any manipulation. The Ld. AR submitted that the Ld. AO has not brought any cogent evidence on record to discredit the documentary evidence maintained in the books of the assessee and merely proceeded on the investigation reports without carrying out any independent enquiry. The Ld.AR emphasised that, the entire investment made by assessee upon purchase and sale of shares of Radford Global Ltd., is carried out through registered broker at the prevailing market-price and the p....

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....hare price. 5.2. Considering the totality of the facts and circumstances of the case, we find that the addition made by the Ld. AO is primarily based on general observations contained in the Investigation Wing report and the suspicion surrounding transactions in penny stock scrips, without bringing any specific material on record to establish direct nexus between the assessee and any alleged accommodation entry operators. The documentary evidence furnished by the assessee, including Demat statements, contract notes, bank statements, and broker confirmations, has not been found to be false or fabricated by the Revenue. It is a settled principle of law that suspicion, however strong, cannot take the place of evidence. 5.3. In the presen....