TaxTMI 
TaxTMI 
2025 (3) TMI 2121
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....red by the assessee to obtain such accommodation entries in the form of Long Term Capital Gain which was claimed as exempt u/s. 10(38)? 03. The Appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored. 04. The appellant craves leave to amend, or alter any grounds or add a new grounds, which may be necessary. 2. The only ground raised by the revenue relates to challenging the order of Ld. CIT(A) in deleting the additions u/s 68 & 69C of the income tax Act, therefore I have decided to take up both the grounds together and adjudicate the same through the present consolidated order. 3. I have heard the counsels for both the parties, perused the material placed on record, judgements cited before me and the orders passed by the revenue authorities. As per the facts of the present case the assessee had not filed the return of income for the year under consideration. However, on the basis of information from DDIT, investigation, Mumbai, the AO reopened the assessment on the ground that VMS industries Limited is a penny stock listed on BSE and used to facilitate introduction of unaccounted income of ....
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..... is a penny stock listed on BSE and used to facilitate introduction of unaccounted income of members of beneficiaries in the form of exempt Long Term capital gain or Short Term Capital Loss in their books of Accounts. Upon receipt of such information, the DDIT (Inv.), Unit-7(1)), Mumbai, had carried out an investigation in the scrip namely M/s. VMS Industries Ltd. (SCRIPT CODE 533427) and analysed the data collected from BSE to identify the beneficiaries who had traded in the script namely M/s. VMS Industries Ltd. (SCRIPT CODE 533427) On analysis of such data, the DDIT (Inv.), Unit-7(1)), Mumbai found that appellant is one and he has transacted total amount of Rs. 59,08,861/- 1168 Rs. 59,10,029/-. To ascertain the genuineness of the transactions, share price pattern of M/s VMS Industries Ltd. which is listed on Bombay Stock Exchange (BSE)), was analyzed. It was noticed that the share price of the share moved from Rs. 10.96 on 22nd August 2011 to Rs 132.65 on 25 April 2012 and then fell to Rs 16.85 on the 13th September 2012. This is typical pattern of a penny scrip company where the per unit share price of the compony are artificially rigged so as to derive bogus long term capital....
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....tablished by the AO that the appellant has traded in the scrip of M/s. VMS Industries Ltd. over. Further, the AO had not given or furnished statement of account of VMS Industries Limited that the appellant has traded in such a stock /script. The quantum specified by the AO was different as to what was shown by the appellant's stock broker which was supported by the contract note etc. However, the AO without any evidence and merely on the basis of information has sustained the addition. No independent investigation was carried out pointing out as to how the appellant was involved in the process of taking advantage of the trading of the alleged stock, besides there is factual mistake, in the recording of reasons by the AO The total transaction values itself does not exceed Rs. 1 lakh. Therefore, the re-opening notice itself is bad in law. The AO did not examine VMS Industries Ltd. and persons who were alleged to be involved in issuing hawalas. Thus, there is no independent application of mind for investigation of the case. It is settled law that the AO is required to form prima facie opinion based on tangible material which provides the nexus or the link having reason to believe ....
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....igation Wing and the same cannot be sole basis of assessment without conducting proper enquiry and examination during the assessment proceedings itself. In our humble opinion, neither the Assessing Officer conducted any enquiry nor has brought any clinching evidence to disprove the evidences produced by the assessee. The report of the Investigation Wing is much later than the dates of purchase / sale of shares and the order of the SEBI is also much later than the date of transactions transacted and nowhere SEBI has declared the transaction at earlier dates as void. The Hon'ble High Court of India in the case of PCIT v. Parasben Kasturchand Kochar[130 taxmann.com 176 of 2020] held that : - 1. This appeal under Section 260A of the Income Tax Act, 1961 (for short 'the Act 1961") is at the instance of the Revenue and is directed against the order passed by the Income Tax Appellate Tribunal, Ahmedabad Bench dated 20-2-2020 in the ITA No.549/Ahd/2018 for the A.Y. 2014- 15. The Revenue has proposed the following question of law for the consideration of this Court: "Whether the Appellate Tribunal was right in law and on facts in deleting the addition of Rs. 9,70,4....
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....g him opportunity to meet such an allegation. In the overall view of the matter, we believe that the proposed question cannot be termed as a substantial question of law for the purpose of maintaining the appeal under Section 260A of the Act, 1961. 5. In the result, this appeal fails and is hereby dismissed. The appellant should have been allowed to cross-examine the various persons but the AO has neither granted cross examination nor has he provided any material to the appellant on the basis of which such conclusion was reached and instead made the impugned addition. The appellant has duly discharged the onus that lies on him by establishing the identity, creditworthiness and genuineness of the transactions, by way of submissions made by him during the assessment proceedings and that being so, it is for the revenue to disprove the claim of the appellant, by bringing on record the evidence to the contrary. The AO has not brought any cogent evidence on record to prove that transactions were not genuine and that the appellant is a beneficiary of accommodation entry. AO has proceeded to arrive at his conclusion that the appellant has obtained accommodation en....