TaxTMI 
TaxTMI 
2025 (3) TMI 1858
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.... wing of Kolkatta that certain brokers are involved in manipulating the prices of small companies (called "penny stock") in order to generate bogus capital gains/losses. It was also informed that the above said company is also one of the penny stocks. The assessee had sold 2,42,819 shares for a consideration of Rs. 3,28,06,325/- and declared Long term capital gain of Rs. 3,10,22,612/-, which was claimed to be exempt u/s 10(38) of the Act. Based on the information so given by the Investigation wing, the AO took the view that the long term capital gains declared by the assessee is not genuine one. 3. The assessee had purchased 1,50,000 shares of above said company for a consideration of Rs. 18.00 lakhs in preferential allotment on 07-01-2011. During the financial year relevant to AY 2012-13, the assessee sold 20,401 shares. The remaining shares that were available with the assessee was 1,29,599 shares. During the year under consideration, the assessee initially sold 1,01,294 shares. When the assessee held the remaining quantity of shares of 28,305, it was split in the ratio of 1:5. Accordingly, the assessee got 1,41,525 shares, which were also sold during the year under considerat....
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....sessee to prove the genuineness of purchases. He further submitted that neither the assessee nor the above said broker has been subjected to any enquiry by SEBI. He submitted that the assessee is a regular investor in shares. He submitted that the demat account of the assessee would show that the assessee is having shares in many companies. The shares of the present company were purchased under preferential allotment by paying consideration through banking channels. They were dematerialised and later sold in the stock exchange. He submitted that the consideration for sales was received through banking channels. He submitted that the assessing officer did not find any defect in any of the documents furnished by the assessee to prove the factum of purchase and sale of shares. Accordingly, the ld A.R contended that there is no reason to suspect the genuineness of purchase and sale of shares merely on the basis of a generalised report given by the investigation wing. The Ld A.R also submitted that the assessing officer has not shown that the assessee was part of the group, which was manipulating the prices. He submitted that the assessee has purchased and sold shares as an ordinary inv....
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....eme Court has held in the case of Omar Salav Mohamed Sait (1989)(37 ITR 151)(SC) that no addition can be made on the basis of surmises, suspicion and conjectures. We may also refer to the some of the decisions rendered by Hon'ble jurisdictional Bombay High Court. In the case of Shyam Pawar (54 taxmann.com 108)(Bom), the Hon'ble Bombay High Court has observed as under:- "3. Mr. Sureshkumar seriously complained that such finding rendered concurrently should not have been interfered with by the Tribunal. In further Appeal, the Tribunal proceeded not by analyzing this material and concluding that findings of fact concurrently rendered by the Assessing Officer and the Commissioner are perverse. The Tribunal proceeded on the footing that onus was on the Department to nail the Assessee through a proper evidence and that there was some cash transaction through these suspected brokers, on whom there was an investigation conducted by the Department. Once the onus on the Department was discharged, according to Mr. Sureshkumr, by the Revenue-Department, then, such a finding by the Tribunal raises a substantial question of law. The Appeal, therefore, be admitted. 4. Mr. Gopal,....
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....oner observed is that the Assessee transacted through brokers at Calcutta, which itself raises doubt about the genuineness of the transactions and the financial result and performance of the Company was not such as would justify the increase in the share prices. Therefore, he reached the conclusion that certain operators and brokers devised the scheme to convert the unaccounted money of the Assessee to the accounted income and the present Assessee utilized the scheme. 6. It is in that regard that we find that Mr. Gopal's contentions are well founded. The Tribunal concluded that there was something more which was required, which would connect the present Assessee to the transactions and which are attributed to the Promoters/Directors of the two companies. The Tribunal referred to the entire material and found that the investigation stopped at a particular point and was not carried forward by the Revenue. There are 1,30,000 shares of Bolton Properties Ltd. purchased by the Assessee during the month of January 2003 and he continued to hold them till 31 March 2003. The present case related to 20,000 shares of Mantra Online Ltd for the total consideration of Rs. 25,93,150/-....
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....s substantial question of law." 10. In the case of PCIT vs. Ziauddin A Siddique (Income tax Appeal No. 2012 of 2017 dated 4th March, 2022), the Hon'ble Bombay High Court has observed as under:- "2. We have considered the impugned order with the assistance of learned counsels and we have no reason to interfere. There is a finding of fact by the Tribunal that the transaction of purchase and sale of shares of the alleged penny stock of shares of Ramkrishna Fincap Ltd ("RFL") is done through stock exchange and through the registered Stock Brokers. The payments have been made through banking channels and even Security Transaction Tax ("STT") has also been paid. The Assessing Officer also has not criticized the documentation involving the sale and purchase of shares. The Tribunal has also come to a finding that there is no allegation against the assessee that it has participated in any price rigging in the market on the shares of RFL. 3. Therefore we find nothing perverse in the order of the Tribunal. 4. Mr. Walve placed reliance on a judgement of the Apex Court in Principal Commissioner of Income tax (Central)-1 vs. NRA Iron & Steel (P) Ltd (2019)(103 taxma....