TaxTMI 
TaxTMI 
2026 (3) TMI 1170
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....s. For the assessment year under dispute, the assessee had filed her return of income on 16.10.2016, declaring income of Rs. 9,15,160/-. Subsequently, the Assessing Officer received information from the Investigation Wing of the department that the LTCG and Short Term Capital Gain (STCG for short) offered by the assessee from sale of shares M/s Goenka Business and Finance Ltd. are non-genuine as M/s Goenka Business and Finance Ltd. is in the nature of penny stock scrip utilized for providing accommodation entries. Based on such information, the A.O. reopened the assessment u/s. 147 of the Act. In course of the reassessment proceeding, the A.O. called upon the assessee to explain as to why the capital gain offered of Rs. 80,23,019/-, being non genuine, should not be treated as unexplained cash credit u/s. 68 of the Act. In response to the show cause notice, the assessee furnished supporting documentary evidences to establish her claim that the share transaction was genuine and she had not availed accommodation entries. 4. However, the A.O. apparently was not convinced with the submissions of the assessee. He took note of the management structure of M/s Goenka Business and Finance....
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....short period, which is not commensurate with the financial position and reputation of the company. He submitted, in course of assessment proceeding, the assessee was unable to furnish any valid reason for such astronomical increase in the price of shares. He submitted, the A.O. has reached his conclusion after a thorough analysis and study of the pattern of share transactions of this particular scrip and the parties involved in such transaction. He submitted, the A.O. has discussed in detail the suspicious nature of the transaction. Thus, he submitted, the addition made by the A.O., being based on sound reasoning, should be upheld. 8. Per contra, ld. Counsel appearing for the assessee strongly supported the reasoning of ld. first appellate authority. He submitted, the assessee is a regular investor in shares and it is not the case of the department that the assessee had only invested in the scrip of M/s Goenka Business and Finance Ltd. He submitted, since the assessee is a qualified person and has fair bit of experience in share market, she takes investment decisions based on her personal knowledge. He submitted, the assessee has invested in the scrip of many companies including....
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....sions and perused the materials on record. We have also taken note of the judicial precedent cited before us. Undoubtedly, the dispute between the assessee and the A.O. was in relation to the capital gain offered on account of sale of shares of M/s Goenka Business and Finance Ltd. On 31.03.2014, 21000 preferential shares of M/s Goenka Business and Finance Ltd. were allotted to the assessee having face value of Rs. 10/- with premium of Rs. 15/- per share. In other words, the assessee acquired the shares at Rs. 25/- per share. The shares were acquired through a broker namely M/s Master Capital Services Limited. While buying the shares, the assessee paid an amount of Rs. 5,25,000/- through banking channel and shares were duly credited in demat account. Subsequently, in the assessment year under dispute, the assessee sold the shares for a total consideration of Rs. 80,23,019/- and claimed LTCG to be exempt u/s. 10(38) of the Act. A reading of the assessment order would reveal that based on a report of the Investigation Wing that the scrip of M/s Goenka Business and Finance Ltd. are penny stock and meant for providing accommodation entry, the A.O. reopened the assessment and ultimately ....
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....pproach by treating the share transaction of M/s Goenka Business and Finance Ltd. as bogus merely due to increase in price, whereas, he has accepted the capital gain arising out of sale of shares of Mapro Industries Ltd., which experience 31 times increase in the price. Notably in case of Dilipkumar Hazarimal Ahuja (supra), the co-ordinate bench, while dealing with identical nature of dispute involving the sale of shares of the very same company has held as under: 6. We note that transactions were undertaken through the SEBI registered broker Joindre Capital Services Ltd. on the stock exchange platform on which STT was levied and the consideration was routed through normal banking channel. The entire flow of these transactions is corroborated by relevant documentary evidences placed on record. While making the addition, there are no discrepancies pointed out by the Assessing Officer in the documents and the details furnished by the assessee. Ld. AO has not bothered to discuss or point out any defect or deficiency in the documents furnished by the assessee. These evidences furnished have been neither controverted by the Ld. AO during the assessment proceedings nor anything ....
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....sessing Officer to disbelieve the capital gain declared by the assessee, viz. astronomical increase in the price of shares, weak fundamentals of the relevant companies are based on mere conjectures. 8. Reliance placed by the ld. Assessing Officer on the report of investigation wing without further corroboration based on cogent material does not justify the conclusion that the impugned transaction is bogus, sham and part of racket of accommodation entries. It does not prove that the assessee has carried out the impugned transactions of purchase and sale of shares in connivance with the people who were involved in the alleged rigging of share prices. In absence of any such material, enquiry and examination, the addition made pertaining to receipt of sale consideration of the impugned transaction cannot be sustained. In our considered view, ld. Assessing Officer has not established that the assessee was involved in price rigging. 8.1 For our observations and to arrive at the findings, we find force of binding nature from the decisions of Hon'ble High Court of Bombay being a jurisdictional High Court: i) Pr. CIT v. Ziauddin A Siddique [Income-tax Appeal N....