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2021 (8) TMI 324 - AT - Income TaxAssessment u/s 153A - Addition u/s 68 - penny stock purchases - unabated assessment year - incriminating material found in search or not? - HELD THAT:- The undisputed facts are that the return of income was filed by the assessee for the instant year on 06.09.2010 declaring an income - Search and seizure action was conducted on 09.04.2015 and thus on the date of search, the assessment has attained finality and is an unabated assessment on the date of search. We find merit in the arguments of the Ld. A.R. that in the case of unabated assessment year, addition can only be made on the basis of incriminating material found during the course of search and not otherwise. In the present case, we have noted that no incriminating material was found during the course of search in relation to the purchase and sale of penny stocks and the authorities below have relied on the general investigation that assessee has made purchase and sale in penny stocks on the basis of documents which are already on records and made huge addition of bogus long term capital gain. AO had discussed the modus operandi of the penny stock companies and operators involved in carrying out the purchase and sale of shares. However, nowhere the AO has referred to incriminating material found during the course of search in relation to purchase and sale of shares. We have also examined the documents found during the course of search by the search team as furnished by the ld DR in the form of paper book but find that these documents only contained the details of sale of shares only - The case of the assessee is squarely covered by the decision of the co-ordinate bench of the Tribunal Smt. Kalpana Mukesh Ruia [2021 (1) TMI 93 - ITAT MUMBAI] - Decided in favour of assessee. Addition u/s 68 - unexplained cash credit by treating the sale proceeds yielding long term capital gain on sale of shares as non genuine - HELD THAT:- Long term capital gain on the sale of shares of M/s. Splash Media & Infra Ltd. is not a bogus capital gain as the AO has solely relied on the report of investigation/search team and has not carried out any further verification on the basis of documents furnished by the assessee. Similarly, the position of long term capital gain earned on the sale of shares of M/s. Comfort Intech Ltd. is same as the assessee has filed all the necessary evidences before the AO and AO has failed to carry out any further investigation to prove that the long term capital gain earned by the assessee is bogus and fictitious. - Decided in favour of assessee.
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