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2020 (2) TMI 313 - AT - Income TaxBogus LTCG - Penny stock purchases - disallowance of exemption claimed u/s.10(38) - long term capital gain earned on sale of equity shares of Pine Animation Limited (PAL) - HELD THAT:- PAL is a penny stock company and the assessee obtained only accommodation entries in the garb of long term capital gain from transfer of its shares, for which an appropriate addition has rightly been made and upheld by the authorities below. Above view is fortified by the judgment in Sanjay Bimalchand Jain vs. Pr. CIT [2017 (5) TMI 983 - BOMBAY HIGH COURT] which has been briefly referred to by the AO as held that the assessee did not tender cogent evidence to explain how the shares in an unknown company worth ₹ 5 had jumped to ₹ 485 in no time. The fantastic sale price was not at all possible as there was no economic or financial basis to justify the price rise. It was held that the assessee had indulged in a dubious share transaction meant to account for the undisclosed income in the garb of long term capital gain. The gain was accordingly held to be rightly assessed as undisclosed income. - Decided against assessee.
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