TaxTMI 
TaxTMI 
2026 (10) TMI 154
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....ation findings, abnormal price movement of the penny stock and the surrounding circumstances clearly indicating a pre-arranged accommodation entry. 2) Whether on the facts and circumstances of the case and in law, the learned CIT A erred in law and on facts in holding the Long Term Capital Gain claimed by assessee as genuine merely on the basis of documentary evidences, without applying the test of human probabilities and without appreciating that ld. Assessing Officer had established the IPO process to be a pre-accommodation strategy and the established modus operandi of bogus Long Term Capital Gain transactions 3) Whether on the facts and circumstances of the case and in law, the learned CIT A is justified in deleting the addition of Rs.2,93,27,014 made by the Assessing Officer under Section 68 of the Income Tax Act, 1961 by ignoring the judicial ruling pronounced by the Honourable High Court of Calcutta in the case of Pr. Commissioner of Income tax vs. Swati Bajaja reported in 2022 139 taxmann.com, 352 288 Taxman 403 446 ITR 56 Calcutta dated 14.06.2022 wherein the Honourable High Court has held that WHERE assessee filed to establish genuineness of rise of pric....
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....ommission paid to brokers/operators for arranging the alleged accommodation entry, added u/s 69C of the Act. 3.2. Aggrieved, assessee went in appeal before the ld. CIT(A). Before the ld. CIT(A), assessee reiterated that the transaction was genuine, duly supported by documentary evidence which remained un-rebutted, that the material relied upon by ld. Assessing Officer was never confronted to assessee despite a specific request, that no opportunity of cross examination was granted, and that neither assessee nor her broker, Mansi Share and Stock Advisors Pvt. Ltd., was named in any of the statements recorded during investigation or in the SEBI orders concerning CNEL. 3.3. Reliance was placed on a series of decisions of the Hon'ble Jurisdictional High Court and Coordinate Benches of the Tribunal, including CIT v. Mukesh Ratilal Marolia [ITA No. 456/2007] (Bom.), CIT v. Shyam R. Pawar [2015] 54 taxmann.com 108 (Bom.), PCIT v. Ziauddin A. Siddique [ITA No. 2012/2017] (Bom.), PCIT v. Indravadan Jain (HUF) [2023] 156 taxmann.com 605 (Bom.), Rachna Gupta v. ACIT [ITA No. 5418/Del/2018] (Delhi ITAT - concerning the very same scrip, CNEL) and Ramprasad Agarwal v. ITO [ITA No. 4843/....
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..... It was submitted that ld. CIT(A) had failed to apply the test of human probabilities laid down by the Hon'ble Supreme Court in Sumati Dayal v. CIT [1995] 214 ITR 801 (SC) and CIT v. Durga Prasad More [1971] 82 ITR 540 (SC); that the astronomical rise in the price of CNEL shares, unsupported by any corresponding improvement in its fundamentals, was itself sufficient circumstantial evidence to hold the transaction bogus; and that the Ld. CIT(A) ought to have followed the ratio of the Hon'ble Calcutta High Court in PCIT v. Swati Bajaj [2022] 139 taxmann.com 352 (Cal.), which, being a decision rendered in a batch of penny stock/bogus LTCG matters, squarely covered the issue and mandated confirmation of the addition. 5. Per contra, ld. Counsel for assessee supported the order of the ld. CIT(A) and submitted that the addition was made by ld. AO purely on surmise and suspicion, without a shred of material specifically implicating assessee or her broker; that the entire transaction was routed through recognised stock exchange, a SEBI registered broker, and was supported by contemporaneous documentary evidence in the form of contract notes, DMAT statement and bank statements ev....
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....essee been specifically named by any person whose statement was recorded during the investigation, nor has assessee's broker, Mansi Share and Stock Advisors Pvt. Ltd., been named amongst the brokers/sub-brokers identified as being involved in rigging the scrip of CNEL, including in the statement of Shri Soumen Choudhary reproduced in the assessment order itself. There is no whisper in the assessment order of any cash trail traced to assessee, nor of any statement recorded of an operator or entry provider naming assessee as a beneficiary. 6.2. We also find merit in assessee's contention, accepted by ld. CIT(A), regarding the SEBI orders concerning CNEL. The interim order dated 29.06.2015 restrained certain named promoters, directors, preferential allottees and trading/funding group entities from dealing in securities pending investigation; assessee does not figure in that list. By its subsequent order dated 06.09.2017, SEBI itself revoked the restraint qua 216 out of the 254 restrained entities, recording that no violation of the SEBI Act, 1992 or the PFUTP Regulations, 2003 was found against them. This materially undermines ld. Assessing Officer's premise that mere t....
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....on'ble Bombay High Court itself - Mukesh Ratilal Marolia, Shyam R. Pawar, Ziauddin A. Siddique and Indravadan Jain (HUF) (supra) - all of which have taken the consistent view that documented share transactions, routed through recognised stock exchanges and registered brokers and evidenced by demat and bank records, cannot be treated as bogus in the absence of material specifically implicating assessee. Being a Bench functioning within the jurisdiction of the Hon'ble Bombay High Court, we are bound to follow the above decisions of the Jurisdictional High Court in preference to the decision of the Hon'ble Calcutta High Court relied upon by the Revenue. 7.1. Secondly, even otherwise, Swati Bajaj (supra) is factually distinguishable. That was a batch of appeals in which the Hon'ble Calcutta High Court, on an appreciation of the specific facts before it, found that assessee therein had failed to discharge the onus of establishing the genuineness of the price rise and had not been able to explain, with cogent material, the circumstances of acquisition and price movement of the shares in question. In the present case, as noted above, assessee has produced complete, unim....