TaxTMI 
TaxTMI 
2026 (2) TMI 1376
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....d the sustenance of addition made by the Assessing Officer by treating the long term capital gains arising out of transaction in the scrip of Yamini Investment Company Ltd. which Assessing officer has alleged to be a penny stock and thereby disallowing benefit of exemption u/s 10(38) of the Act and making addition u/s 68 r.w.s 115BBE of the Act as unexplained cash credit. Further, additions have been made @ 6% on account of alleged commission paid u/s 69C of the Act. The relevant part of the impugned order for AY: 2016-17 from the order of ld. First Appellate Authority is reproduced below which captures the claim of assessee: "18. During the course of appellate proceedings, the main arguments of the appellant areas under:- "The appellant got 1,50,000 equity shares of Rs. 10 each of M/s Anax Com Trade Ltd. on 31.10.2012 in the F.Y 2012-13 and were duly disclosed in the audited balance sheet of F.Y2012-13, F.Y 2013-14, 2014-15, 2015-16 and payment of which was made through banking channel from the current bank account. These shares were spitted into face value of Rs. 1/- on26.11.2013. The said company M/s Anax Com Trade Ltd. was merged into M/s Yamini Investment Com....
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....eration." 3. Ld. CIT(A) was not satisfied with explanation and in para 20 to 41 has held as follow: "20. It is seen that apart from investment in Anax Com Trade Limited (Anax) the appellant has not made any investment in other companies except for listed companies and group companies. 21. The trading in shares of Yamini Investment was suspended by the SEBI vide circular dated 29.05.2012 further the trading was resumed in T Group. The Assessing Officer has noted that as at 31.03.2012 the fair market value, book value and EPS of Yamini Investment was Rs. 10.93 and Rs. 0.01 per share, Thus, It was a penny stock. 22. M/s Yamini Investment or M/s Anax Com trade was not doing any business activity and existed only on paper aimed at manipulating the share market price and converting black money into white through capital gains transactions. The share price was manipulated by way of transactions carried out through various operators some of which have been penalized by the SEBI also. 23. The Assessing Officer in his order has discussed the trading pattern in the shares as a result of manipulation of share price. After amalgamation of Anax with the Yam....
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....prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner, for two years. 29. The SEBI carried out investigation in the price manipulation of Yamini Investments.The investigation period was divided into two segments - the pre-stock split period (10 September 2013 to 18 February 2015) and the post-stock split period (19 February 2015 to 30 September 2015), SEBI investigated the scrip to determine whether the price movement was due to normal trades or any act of price manipulation. 30. The investigation carried out by the regulator found that from 10 September 2013 to 30 September 2015, there were unusual fluctuations in the price and volume of YaminiInvestment. From an analysis of the trading in the scrip on BSE during the Investigation period, SEBI found that certain entities trading in the scrip were allegedly connected based on know-your customer (KYC), off-market transfers, fund transfers and common directors. 31. As per the order of SEBI, "The connections have been sought to be established between the noticees and either Yamini Investment itself or with Madh....
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....dhur group trades were mostly on the buy side, and sell volumes were negligible when compared to the total market volume. It was also noted that during the price rise phase, 31,391 shares, representing 50.46% of the market volume, were traded between the 102 entities forming the Madhur group," 35. The SCalso explained the alleged modus operandi in the price manipulation of Yamini Investment scrip. It says," The connected entities of the Madhur group (102 entities)traded in the scrip during the investigation and provided exit at an inflated price to certain shareholders of the company. These shareholders had received shares of Yamini Investment pursuant to a preferential allotment made as part of a scheme of amalgamation sanctioned by the Bombay High Court (HC)." 36. In terms of the scheme of amalgamation, 2,455 shareholders of the two unlisted companies-Anax and Fidelo Power and Infrastructure Ltd (Fidelo) that merged with Yamini Investment-were allotted eight shares of Yamini for every 10 shares held by them in the respective unlisted companies. 37. Out of these 2,455 entities, SEBI observed that 1,112 entities had sold allotted shares during the investi....
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....capital gain using the SEBI route. The SEBI has also confirmed that the impugned shares were manipulated. The case of the appellant fails the test of preponderance of human probability also. 41. In view of the above, the addition made by the Assessing Officer is upheld. GroundNo.5 and 6 are dismissed." 4. The contention of ld. AR is that all the relevant documents were filed in support of all the claim of assessee showing genuineness of transaction which have not been considered and ld. AR has relied Coordinate Bench decision wherein the scrip of Yamini Investment Company Ltd. has been held to be not a penny stock. 5. Ld. DR on the contrary has relied the impugned orders of ld. tax authorities below and has submitted that the facts and surrounded circumstances indicate that assessee had acquired shares of M/s AnaxCon Trade Ltd. as part of modus operandi to claim bogus long term capital gain. 6. After taking into consideration the contentions we find that in regard to Ground Nos. 4, 5 & 6, the addition of Rs. 1,42,87,050/- was made along with amount of Rs. 8,57,223/- @6% of Rs. 1,42,87,050/- on the ground that Long Term Capital Gain shown by the assessee was not ge....