2023 (8) TMI 418 - ITAT MUMBAI

Addition u/s 69 - bogus LTCG - Penny Stock purchases - long term capital gain exemption u/s. 10(38) on the scrip denied - HELD THAT:- We observe that this scrip and the manner it has behaved in the market clearly indicate that this is peculiar case of penny stock and there is no doubt that in the present case assessee has bought the shares and sold the shares through the operators who are under the scanners of the department as entry and exit operators. Even though there is no direct link was established by the tax authorities, however, the action of the assessee is clearly indicate that he has purchased those shares off-market and offloaded the same in the BSE. This transaction has contained all the ingredients of penny stock and based on the nature of the transactions, AO has treated the same as penny stock and made the addition u/s. 69 - The only issue raised by the assessee before appellate authority is that no cross examination opportunity was granted to the assessee. Since the Assessing Officer has relied heavily on the statement recorded from the exit operators. Decided in favour of assessee.

Thus overall facts on record and the nature of transaction clearly indicate that this transaction basically falls under the category of penny stock and assessee has not proved basic information why he has invested in the company which does not have any net-worth and no financial activities. Without actually satisfying the onus for such investment, merely relying on non-availing of the opportunity for cross examination which is subsequent development, the assessee cannot claim benefit. Decided against assessee.

Deemed Dividend addition u/s 2(22)(e) - Inter-corporate deposit - HELD THAT:- It is clear the MMPL has given Inter-corporate deposit to MIDL in which assessee is a common share holder along with his wife and from the record it is very clear that the ICD was given to another sister concern and the tax authorities has not brought on record how this transaction will benefit the assessee.

As decided in Jateen Madanlal Gupta [2021 (2) TMI 177 - ITAT AHMEDABAD] loans and advances were made as inter corporate deposits in ordinary course of its business which are not subject to the provisions of deemed dividend as provided u/s 2 (22) of the Act. Decided in favour of assessee.