TaxTMI 
TaxTMI 
2025 (12) TMI 1860
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....ssee has sold shares of Penny scrips named M/s. Lifeline Drugs and Pharma Limited "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" M/s Lifeline Drugs and Pharma Limited 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. CIT(A) 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 content and totally an artificially structured transaction entered into with the sole intent to evade taxes ?" 4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in dele....
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....hout 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?" 2. Briefly stated the facts of the case are that the Assessee filed its return of income for the year under consideration on 30.07.2016 declaring total income of Rs. 5,03,860/- u/s. 139(1) of the Income Tax Act, 1961 (In short, "the Act"). Subsequently, notice u/s. 148A dated 26.05.2022 was issued as to why his case should not be reopened for A.Y. 2016-17. In response, the assessee filed response vide letter dated 13.06.2022 in support of the alleged transaction of purchase and sale of shares of M/s. Lifeline Drugs and Pharma Limited wherein a claim of exemption u/s. 10(38) was made of Rs. 2,40,42,944/- being long term capital gain. However, the Assessing Officer was not satisfied with the response filed b....
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....re the ld. CIT(A) who allowed his appeal and deleted the aforesaid additions made u/s. 68 and 69C of the Act. 5. Before us learned Departmental Representative appearing for the Revenue submitted that the ld. CIT(A) has failed to appreciate the credible information received from the DGIT(Inv.) Kolkata that the assessee has sold shares of penny scrip namely M/s. Lifeline Drugs and Pharma Ltd. and wrongly claimed exemption u/s. 10(38) of the Act. The ld. CIT(A) has also failed to appreciate that the said penny stock has been manipulated to generate entries of bogus LTCG facilitating tax evasion by a large number of persons. The ld. DR further emphasized that in this scrip, there was a suspicious or bogus trade and therefore the onus was heavy on the assessee to establish the genuineness of the price hike and prove that the price of penny stock in which he traded was genuine and not manipulated. He further relied on the decision of Hon'ble Kolkata High Court in the case of PCIT v. Swati Bajaj [2022] 139 taxmann.com 352 (Calcutta). He also placed reliance on the decision of Hon'ble Apex Court in the case of Durga Prasad More (1971) 82 ITR 540 (SC) and Sumati Dayal (1995) 80 T....
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....d sale consideration received during the year, by furnishing all the relevant and material evidence. 6.12 In the course of assessment proceedings, the AO has merely doubted the genuineness of share transactions, and LTCG arising there from, primarily relying upon the report of the Investigation Directorate and has brushed aside the plethora of documentary evidence furnished by the appellant. The report of the Investigation Directorate relates to providing bogus accommodation entry of capital gains/losses on transactions in penny stock by certain entry providers. The AO has not pointed out the specific reference, or mention, of the impugned transactions of purchase and sale of this particular scrip undertaken by the appellant (which has resulted in LTCG in the hands of the appellant) in the said enquiry report. 6.13 The AO has merely relied upon the statements of certain entry providers recorded by the Investigation Directorate, but has failed to examine them on oath during the assessment proceedings, in relation to the impugned transactions in the scrip of M/ s Lifeline Drugs and Pharma Limited undertaken by the appellant. The AO on his part has not made any indep....
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.... use of colourable device laid down by the Hon'ble Supreme Court in the case of McDowell & Co Ltd. Vs CTO (1977) (1 SCR 914) (SC) cannot be applied on the facts of the present case. On similar facts, Hon'ble Gujrat High Court in the case of Banyan & Berry Vs CIT (1996) (222 ITR 831) (Gujarat) has distinguished the case of McDowell & Co Ltd and held as under, - "What has been deprecated as tax planning for avoidance of tax are those acts which have doubtful or questionable character as to their bona fide and righteousness. Not all legitimate acts of a taxpayer, which in the ordinary course of conducting his affairs a person does and which under law he is entitled to do, can be branded of questionable character on the anvil of Mc Dowells. One cannot read in the aforesaid decision that any act of an assessee which results in reduction of his tax liability or expectation of lax benefit in future amounts to a colourable device, a dubious method or subterfuge to avoid tax and can be ignored if the acts are unambiguous and bona fide, merely on the ground that treating those as deliberate would result in tax liability in future. While the planning adopted as a dev....
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....ins in a short period, does not mean that the transaction is bogus, as all the documents and evidences have been produced before assessing officer. The shares were sold in piecemeal on different date through recognized stock exchange at quoted price. 23. Regarding the statement of Shri Anil Khemka, alleged entry provider, which is reproduced in Assessment Order at Page 8, we note that said statement recorded neither implicate Sun & Shine Worldwide Ltd nor the broker Tradebulls Securities Put. Ltd. and nor the assessee. We note that physical delivery of shares is proved by the memorandum of transfer of shares stated in the share certificate being registered on 30-10-2012. Regarding the escalation of prices of shares of M/s. Sun & Shine Worldwide Ltd., that is, the prices have increased by 140 times over the period of 17 months. At this juncture, it is submitted by ld Counsel that prices of shares are determined by the market forces and not solely on the basis of financial statements. 8. On complete perusal of facts and material on record, it is noted that the appellant, in the course of assessment proceedings, has brought on record the necessary particulars of transactio....