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2022 (5) TMI 1000 - AT - Income TaxAddition u/s 68 - Penny stock purchases - addition on account of Long Term Capital Gains (LTCG) which the assessee derived from sale of scrip - exemption u/s 10(38) denied - HELD THAT:- D.R. except relying heavily on the orders of the lower authorities could not bring to our attention any material to show that the documents placed before us were sham, bogus or there was any factual infirmity therein. The Ld. D.R. also could not controvert the Ld. A.R’s submissions that the disallowance was made solely on the basis of the report of the Investigation Wing in the shares of M/s GCM. D.R. could not bring to our attention any material or evidence from which one could infer that the transactions in shares of M/s GCM Securities Limited were either manipulated or sham or that any enquiry was conducted either by the Investigation Wing or by the AO in respect of assessee’s transactions in shares of M/s GCM Securities Limited. We may gainfully refer to the decision in the case of CIT Vs Odeon Builders Pvt Ltd [2014 (9) TMI 100 - ITAT DELHI] wherein the Hon’ble Court upheld the deletion of the disallowance in this case is based on third party information gathered by the Investigation Wing of the Department, which have not been independently subjected to further verification by the AO. In the present case we find that the entire addition is on the basis of some investigation report, the relevant portions of which is also not cited in the show cause or the assessment order, there is nothing against the assessee and no inquiry whatsoever has been done by the AO or the Ld CIT (A). In such circumstances the assessee having discharged her onus and nothing adverse being found against her, the addition cannot be sustained. We hold that both the lower authorities were not justified in not allowing the appellant’s claim for exemption u/s 10(38) in respect of the profit derived by the appellant on sale of 120,000 shares of M/s GCM Securities Limited. We accordingly set aside the order of Ld. CIT(A) and direct the AO not to treat the long term capital gain as bogus and delete the consequential addition and the AO is directed to allow the exemption u/s 10(38) of the Act as claimed by the assessee. - Decided in favour of assessee.
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