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2023 (1) TMI 913 - ITAT MUMBAIDisallowing the bogus loss incurred by the assessee in trading of penny stocks - information received from the Investigation Wing, Kolkata - Necessity of independent application of mind by AO - HELD THAT:- In the present case, it is evident that the assessee is engaged in the business of shares and stocks broking. Profit and loss account, wherein the assessee has duly credited the consideration from the sale of shares and speculation gain. Assessee has also debited the Demat charges, Securities Transaction Tax, loss on future shares, purchase of shares, and other charges. During the year, the assessee traded in shares of NCL Research and M/s Shreenath, on which the assessee incurred a loss - On the basis of information received from Investigation Wing, Kolkata, the shares of the aforesaid companies were treated as penny stocks by the Revenue and therefore the loss was disallowed. As per the assessee, he has been trading regularly in recognised stock exchanges through the brokers registered under the SEBI. As per the assessee, the aforesaid transaction was also done through a SEBI register broker, and in support of his claim, the assessee furnished contract notes, broker notes, and Demat account before lower authorities. AO made the impugned addition merely on the basis of information received from the Investigation Wing, Kolkata without conducting any independent inquiry or doubting the evidence furnished by the assessee in support of its claim. It is also evident that the AO has not examined or issued summons or notice under section 133(6) of the Act to the broker through whom the assessee has traded in shares of aforesaid companies From the perusal of statements of persons, who are alleged to be the promoter of NCL Research and M/s Shreenath, we find no mention of the name of the aforesaid companies or the assessee. Further, there is no evidence on record that the assessee has engaged in any manipulative activities with respect to the purchase and sale of shares of aforesaid two companies. The lack of enquiry on the part of the AO and non-appreciation of facts on record is also evident from the fact that the loss incurred by the assessee as a trader of shares has been considered to be the short-term capital loss when such shares were not even held as an investment by the assessee. No infirmity in the impugned order deleting the addition made by the AO. As a result, both the grounds raised by the Revenue are dismissed.
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