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2021 (6) TMI 363 - ITAT MUMBAIAssessment u/s 153A - Addition u/s 68 - Search and seizure - incriminating material - penny stock companies - purchase and sale of shares - HELD THAT:- Search and seizure action was conducted on 06.10.2017 and thus on the date of search, the assessment has attained finality and is an unabated assessment on the date of search. We find merit in the arguments of the Ld. A.R. that in the case of unabated assessment year, addition can only be made on the basis of incriminating material found during the course of search and not on the otherwise. In the present case, we have noted that no incriminating material was found during the course of search in relation to the purchase and sale of penny stocks and the authorities below have relied on the general investigation that assessee has made purchase and sale in penny stocks on the basis of documents which are already on records and made huge addition of bogus long term capital gain. AO had discussed the modus operandi of the penny stock companies and operators involved in carrying out the purchase and sale of shares. However, nowhere the AO has referred to incriminating material found during the course of search in relation to purchase and sale of shares. The case of the assessee is squarely covered by the decision of the co-ordinate bench of the Tribunal Smt. Kalpana Mukesh Ruia [2021 (1) TMI 93 - ITAT MUMBAI] wherein an identical issue has been decided by the co-ordinate bench of the Tribunal in favour of the assessee. We, therefore, respectfully following the decision of the coordinate bench of the Tribunal which has been passed after following the decision of the jurisdictional High Court in the case of CIT vs. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015 (5) TMI 656 - BOMBAY HIGH COURT] and various other decisions, hold that the addition made by the AO under section 68 & 69 are without jurisdiction and are directed to be deleted on the jurisdictional issue. Addition u/s 68 - unexplained cash credit by treating the long term capital gain on sale of shares as non genuine - HELD THAT:- We hold that the long term capital gain on the sale of shares of M/s. Blue Circle Services Ltd. is not a bogus capital gain as the AO has solely relied on the report of investigation/survey team and has not carried out any further verification on the basis of documents furnished by the assessee. Similarly, the position of long term capital gain earned on the sale of shares of M/s. Gemstone Investment Ltd. is same as the assessee has filed all the necessary evidences before the AO and AO has failed to carry out any further investigation to prove that the long term capital gain earned by the assessee is bogus and fictitious. Appeal of the assessee is allowed.
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