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2020 (2) TMI 1088 - AT - Income TaxUndisclosed income - Addition u/s 68 - action of AO in charging tax at special rate u/s. 115BBE whereas the same should have been charged at the normal rates - Penny stock company - order/warning or penalty visited upon bogus company by SEBI/Regulatory Authority Specific company in the specific period has been held to be a bogus/sham company by the appropriate Regulatory Authority or not? - There is no reference whatsoever to the fact that SEBI, the concerned Regulatory Authority has held the said company to be a bogus/sham company for its activities during the period. It is a fact that issues of irregular prices/malpractices and bogus companies etc. are to be looked into by SEBI who is authorized to issue warnings, direct orders for delisting etc. and penalize the errant companies by resorting to take action in terms of the powers vested on it. I find no reference has been made to any order of SEBI or any other Regulatory Authority either delisting or threatening delisting/warning etc. issued in the name of M/s. UNNO Industries Ltd. To my understanding, this power vested in the Regulatory Authority cannot be usurped by any other Authority. The power to hold, penalize and act against a company in the event the company is a sham company floated against the laws of the land vests with the Ministry of Corporate Affairs, SEBI and SFIO who can recommend the removal of its name from the Registrar of Companies. For want of any relevant discussion thereon, the order at best proceeds only on presumptions and suspicions. It is seen that this aspect has not been considered in the case of Shri Abhimanyu Soin [2018 (4) TMI 1620 - ITAT CHANDIGARH] relied upon by Id. CIT-DR. Accordingly, adjournment application of the Id. AR was rejected and it was deemed appropriate to restore the file back to the CIT(A) with the direction to bring out necessary facts as to whether the specific company in the specific period has been held to be a bogus/sham company by the appropriate Regulatory Authority or not. I am of the view that the facts, evidences and deficiencies noticed are sufficient to justify re-assessment or re-opening in cases where other statutory formalities in regard to re-opening etc. have been fulfilled as suspicions of stock manipulation etc. are damaging facts and are sufficient in certain circumstances to arouse suspicion and justify a greater scrutiny. However, ultimately whether a specific company is a bogus company or a sham company, is an order which has to be passed by the Appropriate Regulatory Authority. No such order has been referred to by the parties. The impugned order is set aside and the matter is restored back to the file of the CIT(A) with the direction to pass a speaking order in accordance with law
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