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2024 (5) TMI 501 - MADHYA PRADESH HIGH COURTBogus LTCG - bogus penny stock script purchases - exemption u/s 10(38) denied - ITAT deleted addition - HELD THAT:- The shares of Sunrise Asian Ltd. are listed on Bombay Stock Exchange, shares have been purchased through D-mat Account and payment have been received through Banking Channel and Security Transaction Tax has been paid by Stock Exchange. Thus, all the conditions for availing exemption have been fulfilled. As truly contended that under Income Tax Act there is no provision which requires the Assessing Officer to investigate the genuiness of the shares because these share are listed, issued by the Company and records are maintained with the Register of Companies. Thus, these shares cannot be said to be bogus shares as have been issues and subscribed under the Companies Act. The revenue has failed to appreciate that how these shares can be termed as Bogus Shares, when these shares have been issued by the Company incorporated under the Companies Act by following the provisions and procedures prescribed under the Companies Act, 1956 Thus it is incorrect notion of the Revenue that these shares are bogus shares, on the contrary these shares are genuine and lawfully issued share by the company by following the law and procedure in this regard. The Assessing Officer has heavily relied upon report of Investigation Wing of Income Tax Department which was conducted in Kolkata in case of some of the Companies including M/s. Sunrise Asian Limited. This report has never been provided to the respondent at any stage of the proceedings nor filed by the department before ITAT or before this Court. It is settled law that no material can be used against the assessee without providing the assessee to examine it and, if required, to cross examine. Thus, there was violation of principles of natural justice. That on similar set of facts and in respect of the same share script of M/s Sunrise Asian Ltd. the Mumbai Bench of ITAT in case of (1) Narayan Ramchandra Rathi[2019 (8) TMI 1520 - ITAT MUMBAI] (2) Dipesh Ranmeshchandra Vardhan [2020 (8) TMI 405 - ITAT MUMBAI] and, (3) Anraj Hiralal Shah[2019 (9) TMI 719 - ITAT MUMBAI] has dealt with the identical issue and decided in favour of the assessees. Thus no substantial question of law arises from the order of the ITAT requiring consideration by this Court.
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