AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2026 (2) TMI 876
X X X X Extracts X X X X
X X X X Extracts X X X X
....y alleging that the share transactions are not genuine and has confirmed the action of the AO by taxing the same u/s. 68 of the Act." 2. The brief facts of the case are that the assessee e-filed return of income for the assessment year 2015-16 declaring income of Rs. 3,80,350/- The case was selected for scrutiny and notices u/s. 143(2) and 142(1) were issued from time to time and the assessee had furnished the required information. During the course of assessment proceedings, the AO noticed that the assessee had declared LTCG of Rs. 1,16,65,248/- and claimed exemption u/s. 10(38) of the Act. The AO completed the assessment by disallowing the exemption u/s. 10(38) of the Act amounting to Rs. 1,16,65,248/- and also making an addition of Rs. 3,49,957/- being 3% commission on LTCG, by treating the share transactions as bogus. Against the above, assessee preferred the appeal before the Ld. CIT(A), who vide his order dated 31.1.2024 has partly allowed the appeal of the assessee. Aggrieved, assessee is in appeal before the Tribunal. 3. Ld. AR for the assessee submitted that Ld. NFAC has erred in confirming the action of the AO in denying the exemption claimed u/s. 10(38) amounting t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s carried out the transactions of sale of Shares of M/s HPC Bio Sciences Ltd. through M/s Pace Stock Broking Pvt. Ltd. which is a renowned broker of India and also the name of the aforesaid broker has not been mentioned in the Investigation Report of the Income Tax Department. He further submitted that the lower authorities have not appreciated the fact that the shares were duly purchased by way of account payee cheque by the assessee in December 2012/ January, 2013 and the public issue of shares took place in March, 2013 and the capital appreciation in shares price after public issue is very common and therefore, the transaction carried out by the assessee cannot be considerd as non-genuine. In view of the aforesaid discussions, it is submitted that the transaction of investment and disinvestment of shares M/s HPC Biosciences Ltd. has been duly accepted by the tribunal and therefore, allowed consequential exemption of Long Term Capital Gain u/s. 10(38) of the Act in ITA No. 752/Del/2024 dated 20.12.2024 in the case of Reena Kumari vs. ITO, a copy of decision has been placed at page no. 171-179 of the APB, which may kindly be followed in the instant case and accordingly, appeal of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sold shares of 19200 M/s HPC Bioscience Limited as evident from demat transaction statement as well as from contract notes dated 21.04.2014, copy thereof placed at page 37-APB and dated 29.04.2014 at page no. 38-APB and claimed exemption u/s 10(38) of the Act amounting to Rs. 1,16,65,248. With regard to the said addition of Rs. 1,16,65,248/- which representing gain on sale of equity shares through recognized stock exchange on account of credits in the bank and taxed u/s 68 of the Act consequently denying the exemption of long-term capital gain claimed as exempt u/s 10(38) of the Act is concerned, it is noted that during the instant year the assessee has earned long term capital gain of Rs. 1,16,65,248/- on sale of 19200 shares of M/s HPC Biosciences Ltd. and by virtue of section 10(38) of the Act, the same has been claimed as exempt income by the assessee. We noted that the assessment order is based on the report of investigation wing and nowhere name of the assessee is reflected therein. 5.1 It is further noticed that during the instant year the assessee has sold 19200 shares of M/s HPC Biosciences Ltd.at Rs. 1,17,61,248/- on which assessee had earned long term capital gain of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... bogus merely on the basis of increase in price of share. It is observed that disinvestment of shares was duly supported by official quotation of Bombay Stock Exchange and the fact that the transaction were through demat account is in itself evidence to prove the genuineness of share transaction. It is settled law that merely because the sale of shares fetched a handsome price, which price is supported by official quotation cannot be any reason to doubt the genuineness of the sale transaction of the shares, where assessee has clearly established genuineness of the share transaction and has sufficiently discharged the onus cast upon him, no addition is thus warranted. We note that Assessing Officer has referred and relied on the list of penny stocks of income tax department and the admissions of entry operators in the sworn statement recorded during the course of search and seizure operations., which were neither referred in the assessment order nor confronted or supplied to assessee during assessment proceedings and even the assessee was not given any opportunity to cross examine the said persons who have given their statements, which is against the spirit of settled law. 5.2 We....
X X X X Extracts X X X X
X X X X Extracts X X X X
....00 (One Lakh) Pre IPO Equity Shares of HPC Biosciences Limited @10/- per share for Rs. 10,00,000/-(Rupees Ten Lakh Only) on 04.02.2013 from AMS Powertronics Private Limited vide account payee Cheque No. 540577 dated 04.02.2013 drawn on Punjab National Bank and got the shares transferred in her name on 16.02.2013. The said shares were lodged for dematerialization and were dematerialized on 16.03.2014 with NSDL. The company's IPO was listed on BSESME Segment on 19.03.2013 at an issue price of Rs. 35/- which opened at Rs. 37.25/- and closed at 39.10/-. The assessee sold these shares starting from 27.03.2014 to 11.07.2014 at around Rs. 540 to Rs. 569 however, the price even went up to Rs. 735.90/- 8.1 The claim of assessee is that she invested in these shares owing to the luring future plans of the company which was in the sector of Organic farming and horticulture activities. The assessee was guided by her son, Jagat Singh and sub broker, Mr. Subodh Kumar Jain that growing consumer's concerns on food safety, health and environment in recent decade has resulted increased demand for organic food across the world. Awareness and knowledge has become a crucial factor in ch....
X X X X Extracts X X X X
X X X X Extracts X X X X
....08.2016 [Page No. 261-367 of PB], is the confirmatory order against the remaining 107entities. However, vide SEBI Order dated 06.09.2017 [Page No. 48 to 58 of PB; Relevant Para 3 & 4 at Page Number 53 of PB], the directions passed against the assessee vide Order dated 29.06.2015 and confirmed vide Order dated 17.02.2016 were revoked after a detailed investigation by the SEBI. assessee's name is at serial number 31, Page number 54. Relevant Para is reproduced herein below: 3. The directions issued vide the ad interim ex parte order dated June 29, 2015 read with CorrigendumOrder dated January 04, 2016 were confirmed vide orders dated February 17,2016. June 14,2016, August25,2016, October 27,2016 and June 15, 2017 except for certain specific reliefs provided to certain entities. 4. Subsequent to the interim orders, an Investigation was carried out to look into the role of debarred entities in price manipulation and IPO manipulation of the scrips. Upon completion of investigation, violation of provisions of SEB1 Act. 1992 (SEBI Act) and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (PFUTP Regulations) a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es of Sunstar Realty Development Limited from 10.04.2014 to 08.07.2014 [Refer Page Number 18 of the Paper book], Therefore, virtually there is no finding, direct or indirect, by the SEBI against the assessee. 13. After taking into consideration the orders of the Id. tax authorities below, we are of the considered view that the Id. AO has primarily gone on the broad parameters of analyzing transactions of bogus LTCG claims. The conclusions were more outcome of the Investigation Wing report and the SEBI orders then anything specific discovered by any independent investigation or enquiry of the AO, except for recording statements of assessee u/s 131 of the Act and of one Shri Sumit Kumar, the director of AMS Power Tronics Ltd. The assessee has been faulted by questioning the reasons for investments which is not an appropriate manner to discharge the burden on the AO for establishing that the assessee has taken recourse to invest only for generating an exempt LTCG. The statement of Shri Sumit Kumar, the director of AMS Power Tronics Ltd. from whom the assessee has bought the shares was relied heavily without the assessee being given an opportunity to cross-examine. Pertinent t....