TaxTMI 
TaxTMI 
2026 (5) TMI 1420
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.... cash credit u/s. 68 of the Act and un-explained commission expenditure u/s 69C of the Act respectively made by the AO, ignoring the fact that the addition was made on the basis of credible information received from DGIT (Inv.) Kolkata, that the assessee has sold shares of Penny scrips named "Shree Shaieen Textiles Ltd" and claimed exemption u/s 10(38) of the Act? 2. Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in directing to delete the addition made by AO in spite of the fact that the scrip "Shree Shaleen Textiles Ltd" is penny stock and the said penny stock has been manipulated to generate entries of bogus LTCG facilitating tax evasion by a large number of persons? 3. Whether on the facts and in the circumstances of the case and in law the Ld. CIA) has erred in deleting the addition made on account of penny stock transaction without appreciating the facts that the action of the AO was based on analysis of information received from investigation Wing Kolkata that the assessee has entered into penny stock transaction, which was arranged transaction involved the series of preconceived steps and lack of commercial co....
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....ich has been confirmed by the Hon'ble Supreme Court by dismissing SLP in SLP(C) of 21636/2024 dated 20.09.2024? 8. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is right in deleting the addition without appreciating the decision of the Hon'ble Delhi High Court in the case of Suman Poddar Vs ITO (ITA 841/2019), wherein exemption claim u/s 10(38) on account of LTCG has been, denied and further the SLP filed by Suman Poddar vide appeal (c) No. 26864/2019 (arising out of impugned final judgment and order dated 17.09.2019 in ITA No. 841/2019 passed by the High Court of Delhi at New Delhi) was dismissed by the Hon'ble Supreme Court of India vide order dated 22.11.2019." 3. The relevant facts in brief are that the Assessee is an individual who filed his return of income for Assessment Year 2014-15 on declaring the total income of Rs. 32,87,100/-. The case of the Assessee was selected for scrutiny Summons under Section 131 of the Act was issued and the statement of the Assessee was recorded under Section 131 of the Act on 08/12/2016. The Assessee vide letter dated 13/12/2016 replied to the summons issued under Section 131 of the Act (....
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.... 68 of the Act to the total income of the Assessee and INR.18,95,445/- was added as commission computed at the rate of 2% on the total sale proceeds. 7. Being aggrieved, the Assessee preferred appeal before the Learned CIT(A). The Learned CIT(A) vide Order, dated 12/04/2025, deleted the addition of INR.9,30,22,279/- made by the Assessing Officer under Section 68 of the Act and allowed LTCG exemption claimed by the Assessee under Section 10(38) of the Act. The Learned CIT(A) also deleted the addition of INR.18,95,445/- made by the Assessing Officer on account of commission paid. 8. Being aggrieved, the Revenue has preferred the present appeal on the grounds reproduced in Paragraph 2 above. 9. We have heard both the sides and have perused the material on record. 10. We note that the Learned CIT(A) has granted relief to the Assessee holding that a. The Assessee was a regular investor in stock market and had made investment in other scrips also. (para 4.3.3) b. The Assessing Officer brought on record the name of buyers against sales of shares made by the appellant in the months of January and February 2014. He had issued notices u/s 133(6) to all 23 buyers....
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....has returned the findings that the Assessee was a regular investor and had not invested in just one scrip during the relevant previous year. However, no reason was provided by the Assessee for making the investment in shares of Shree Shaleen Textiles an unlisted company in off market transactions by the way of preferential allotment of the shares. Further, on perusal of Paragraph 4.3.14 to 4.3.17 of the order impugned, it is apparent that the Learned CIT(A) had relied upon the judgments of the Hon'ble Bombay High Court and decision of the Coordinate Bench of the Tribunal wherein the purchase as well as sales of the shares had taken place through stock exchange or on the floor of the stock exchange. The aforesaid decisions do not deal with the situation where the purchases were made through off market transactions by the way of preferential allotment of share. Thus, the reliance by the Learned CIT(A) on the aforesaid judicial precedents in clearly misplaced. Further, we find that the Learned CIT(A) has returned the findings that the Assessing Officer has failed to confront the Assessee with the response, if any, given by the Assessing Officer from the 23 buyers (who had purcha....