2026 (5) TMI 823

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....tries Ltd. (formerly Nilchem Industries Ltd.) and, upon sale of these shares during F.Y. 2018-19 relevant to A.Y. 2019-20, reported a short-term capital loss of Rs. 6,12,692/- from Oasis Tradelink Ltd. and a long-term capital gain of Rs. 10,258/- with sale proceeds of Rs. 11,93,100/- from Padmanabh Industries Ltd. The A.O treated these transactions as accommodation entries on the basis of information received from DDIT (Inv.) Units 7(1) and 7(3), Mumbai, and DDIT (Inv.)-1(3), Ahmedabad, alleging that both scrips formed part of a wider modus operandi involving rigged penny stocks used to generate bogus LTCG or loss. Resultantly, the A.O invoked section 68 of the Income Tax Act, 1961 (for short 'the Act') to make additions of Rs. 6,12,692/- a....

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....k the appellant's specific transactions with any share-rigging activity or to show that the appellant derived any malafide benefit. The Assessing Officer also did not dispute that the shares were held in demat form and that all payments were made through verifiable banking channels. The additions made were therefore based solely on generalized suspicion regarding the nature of the scrips and on the application of the theory of human probabilities, without any supporting evidence establishing the appellant's involvement in the alleged scheme." Thereafter, the Ld. CIT(Appeals)/NFAC relied on various case laws and finally at Para 5.4 had held and observed as follows: "5.4 In view of the foregoing examination of the facts an....

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....nefit, if at all, received by the assessee through these transactions. 5. Per contra, the Ld. Sr. DR supporting the findings of the A.O submitted that there has been a detailed report through Investigation Wing of various regions i.e. Mumbai & Ahmedabad so far as this case is concerned, wherein it has been found that these scrips were used for transaction as accommodation entries and therefore, they were rigged penny stock used to generate bogus LTCG or loss, and therefore, the A.O had rightly made additions. 6. I have carefully considered the submissions of the parties herein, relevant documents and facts on record and analyzed the spectrum of the allegation made by the Department against the assessee in the background of the transac....