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2022 (12) TMI 1506 - AT - Income TaxValidity of reopening of assessment - Bogus LTCG claimed - addition u/s 68 - penny stock transaction - HELD THAT:- From the reasons recorded by AO, it is vivid that there is merit in the arguments advanced by ld DR for the Revenue. We note that assessing officer had received the information from the DDIT (Investigation) unit3(2) Kolkata in respect of the BSE listed Penny stock companies. After getting such information, assessing officer has applied his mind and then framed the reasons for reopening the assessment, therefore it is not a borrowed satisfaction. The assessing officer has also mentioned in the reasons recorded the quantity of shares sold, name of the scrip, and amount received on sale of such shares etc. Thus, we note that reasons recorded by the assessing officer are in accordance with the provisions of law. Therefore, based on these facts and applicable precedents to these facts, we dismiss the additional grounds raised by the assessee. Addition u/s 68 - We note that findings of the Hon`ble Jurisdictional High Court of Gujarat in the case of Jagat Pravinbhai Sarabhai (2023 (1) TMI 44 - GUJARAT HIGH COURT] is squarely applicable to the assessee`s facts under consideration. The genuineness of investment in the shares by the assessee was substantiated by him by producing contract note, Transaction was through recognised Broker, transaction was done through banking channel on which STT was paid. The shares were held by assessee, as an Investor for a period of seven/ eight years. The investment was made in the year 2003 and sold in 2010-11. The shares were retained for more than seven years and were sold after such long time. These circumstances suggest that the investment was not bogus. The shares were purchased in order to invest and not for the purpose of earning exempted income by frequent trading in short time. We note that Judgment of Hon`ble Calcutta High Court in the case of Swati Bajaj and others [2022 (6) TMI 670 - CALCUTTA HIGH COURT] should not be applicable to the assessee as it is outside the territorial jurisdiction of Gujarat. However, the Judgment of Hon`ble Jurisdictional High Court of Gujarat in the case of Jagat Pravinbhai Sarabhai(supra) should be applicable to the assessee`s case, as it is the judgment of Jurisdictional High Court. Addition u/s 69C on account of commission paid @ 2% or 3% of bogus long term capital gain - Since, we have deleted the alleged addition of bogus LTCG, hence addition made by AO does not have leg to stand, therefore it is hereby deleted.
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