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2021 (6) TMI 304 - AT - Income TaxBogus LTCG - purchase and sale of shares of penny stock company - HELD THAT:- As convinced with the argument of the assessee that the shares were purchased as long as back in the year 2008 and sold immediately thereafter and the assessee has incurred a loss and only such amount can be disallowed. On going through the assessment order as well as the order of the CIT (A), find that that the main reason for the disallowance is that the Rockon Fintech is a penny stock company and the assessee has invested in penny stock. None of the authorities below have verified the sources for the investment. From the details filed by the assessee before this Tribunal, it appears, that the assessee has used the sale consideration (after sale of other shares) for purchase of shares of Rockon Fintech and immediately thereafter, on sale of the said shares, the assessee has utilized the said sale consideration for purchase of other shares. The assessee has not made any gain from sale of those shares, nor has he claimed any exemption u/s 10(38) of the Act. Therefore as convinced that the intention of the assessee was not to make any gain out of purchase and sale of shares of penny stock company. No disallowance can be made, leave alone the disallowance of value of shares invested. - Assessee’s appeal is allowed.
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