TaxTMI 
TaxTMI 
2026 (7) TMI 1315
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....sessee has raised the following grounds of appeal: "1. On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in upholding the validity of the reassessment proceedings initiated by the Learned Assessing Officer ("Ld. AO") without appreciating that the said proceedings were based solely on information received from the Investigation Wing, without any independent application of mind or formation of belief by the Ld. AO. The Ld. CIT(A) failed to appreciate that the proceedings were based on mere borrowed satisfaction and that no direct nexus or live link was established between the information received and the alleged escapement of income. 2. On the facts and in the circumstances of the cas....
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....s thus untenable and deserves to be deleted. 5. Learned AO / Hon'ble CIT(A) has erred in law and in facts by initiating the penalty proceedings under section 271AAC of the Act. The Appellant craves leave to add, alter, amend or withdraw any of the above grounds at or before the hearing of the appeal. All the grounds of appeal stated above are without prejudice to each other." 3. The assessee is an individual and filed return of income on 11.09.2018 declaring total income of Rs. 64,28,580/-. During the year under consideration, the assessee has shown exempt income u/s 10(38) of the Income Tax Act, 1961 (in short "the Act") under the head "Long Term Capital Gains" (in short "LTCG") to the tune of Rs. 1,67,46,....
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....olely relied upon the SEBI report and has not given any independent finding. 6. The Ld. Departmental Representative (in short "Ld. DR") for the Revenue relied upon the assessment order and the order of the Ld. CIT(A). 7. We have heard both the parties and perused the material available on record. We find that the assessee has furnished demat statements, transaction reports, broker statements and bank statements evidencing that transactions were routed through recognized stock exchange mechanism and banking channels. The addition u/s 68 has been made on the basis of investigation findings relating to Kushal Group and abnormal rise in price of the scrip. We find that the issue under appeal has been well examined and adjudicated by the T....
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....d meagre resources at disposal, negligible profit, but there was unusual and very high growth in the share price which does not support the same, the transaction was held to be sham. 7.5 In the case of Sanat Kumar Vs. ACIT Delhi, Circle 36(1), Hon'ble ITAT Delhi Bench has held that the so-called sale proceeds of shares received and claimed as exempt u/s. 10(38) was held to be sham transaction because of huge price rise of shares at the time of sale despite the fact that company's profits are negligible and did not support such price rise. 7.6 In the case of Abhimanyu Soin Vs. Asst, CIT, Circle VII, Ludhiana, ITAT, Chandigarh, Bench A, in ITA No. 951/CHD/2016, the Tribunal held as under:- "On consideration of the facts....
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.... tax was created to operate in a real world and not that of make belief. ..... We accordingly set aside the order of the CIT(A)and restore that of the AO." 7.8 Further, reliance is being placed on the following orders of the Coordinate benches of the Tribunal: a) Usha Chandresh Shah ITA No. 6858/Mum/2011, Mumbai b) Zakrullah Chaudhary ITA No. 669/PN/2012, Pune c) Chandan Gupta ITA No. 7024/Mum/2010, Mumbai e) Napar Drugs Ltd. 98 ITD 265, Delhi 7.9 The Co-ordinate Bench of ITAT Chennai in the case of Rajnish Agarwal in I.T.A.No.1419/CHNY/2018 has held that the penny stock not having any financial strength of its own and the sale and purchase of these shares were held to be sham and ....