TMI Blog2023 (4) TMI 801X X X X Extracts X X X X X X X X Extracts X X X X ..... ovider or involved in manipulating the prices or it is proved that assessee is one of the exit provider. It is fact on record that all the scrips in which assessee has dealt with were already proved to be a non penny stock based on the various decisions of the various Hon'ble High Courts and Tribunal benches. Assessee is a regular trader in various scrips and particularly in this year assessee has dealt with more than 150 scrips and the transactions of the assessee in trading of shares having turnover of more than ₹.528.9 crores and also having substantial dividend and speculation income during this year. This proves to show that assessee is a regular investor and may be assessee has dealt with suspected scrip merely on the basis of movement of share prices and there is nothing on record to prove that assessee has anywhere involved in any types of irregularities. No reason to interfere with the findings of the CIT(A). Accordingly, ground raised by the revenue is dismissed. - ITA NOs. 2637 & 2638/MUM/2022 - - - Dated:- 31-3-2023 - SHRI S. RIFAUR RAHMAN , HON'BLE ACCOUNTANT MEMBER AND MS KAVITHA RAJAGOPAL , HON'BLE JUDICIAL MEMBER For the Assessee : Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ps. Since assessee has dealt with buying and selling of suspected scrips as mentioned in his order at Page Nos. 2 to 5 of the Assessment Order and he issued show cause notice why the above scrips should not be treated as bogus transactions and the loss claimed by the assessee should not be entertained. In this regard assessee has filed detailed reply stating that the long term capital loss generated was genuine. 5. After considering the submissions of the assessee, Assessing Officer rejected the same and he observed that the scrips purchased by the assessee and subsequent sale by the assessee are suspected scrips and in this regard investigation made by various directorates, statements recorded during the assessment proceedings are considered and the Statement also recorded from the assessee. He further observed that from the discussion in the preceding paras in the Assessment Order clearly indicate that assessee in their books claimed long term capital gain / losses which are pre-arranged method to evade taxes and launder money. Once again Assessing Officer by merely relying on the investigations of other agencies he has disallowed claim made by the assessee as long term capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as deleted and decided the issue in favour of the respective assessee s and he further observed that assessee is regularly dealing in shares and in this year assessee has dealt with 150 scrips and out of these only few of these scrips are suspected scrips. He observed that it is fact on record that assessee has dealt with all these scrips. However, all these transactions only routed through banking channels and nothing was proved against the assessee that assessee has dealt with any suspected transactions. Therefore, he held that the transactions entered by the assessee are genuine transactions. Accordingly, he allowed the appeal filed by the assessee. Further, he deleted the commission on total suspected transactions made by the Assessing Officer u/s. 69C of the Act. 8. Aggrieved revenue is in appeal before us raising following grounds in its appeal: - 1. Whether on the facts and circumstances of the case and in law the Ld.CIT(A) has erred in deleting addition of Rs. 1,15,88,635/ without appreciating the fact that the assessee has indulged in transactions by way of colourable device to book Long Term Capital Losses which is not permitted by the Income Tax Act as enunciated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has entered into delivery trading in shares and securities in more than 65 scripts with turnover of more than Rs. 47.50 crores. Further assessee has earned income from Dividend and speculation income amounting to Rs. 41.35 Lacs and Rs. 13.38 Lacs, respectively. 3. Further during AY 2015-16, the assessee has entered into delivery trading in shares of more than 150 scripts with turnover of more than Rs. 528,9 crores. Further assessee has also earned income from Dividend and speculation income amounting to Rs. 1.12 Crores and Rs. 89.17 Crores respectively. 4. The Ld. AO received information from investigation wing, Kolkata, that penny stock companies acquired by the beneficiaries of LTCG at very low prices through the route of preferential allotment and off market transaction. It was alleged that the assessee has transacted in the penny stock companies for the purpose of claiming bogus LTCG/ STCG in AY 2014-15 2015-16. 5. The very basis of assessment by the Ld. AO right from the formation of allegation to analysis of case to conclusion of case was purely on the basis of the following major allegations w.r.t share transactions of the assessee in the alleged bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt order. However, the name of the assessee or of any of the partners of the assessee firm does not appear in any of the list provided by the Ld. AO in his order. 12. The Ld. AO purely relied on forwarded information and proceeded to make the addition. The assessee specifically requested for statement copies cross objection of parties on whose statement the Ld. AO relied to make the assessment order, but no opportunity to cross examine was given by the Ld. AO. Reliance is placed on the Hon'ble Supreme Court in the case of Kishinchand Chellaram v CIT (1980) 125 ITR 713 (SC), wherein it was held that though the proceedings under the Income-tax Act are not governed by the strict rules of evidence, the department is bound to afford an opportunity to controvert and cross examine the evidence on which the department places its reliance Opportunity of cross examination must be given. The consequence of breach of natural justice is that either the addition is void. 13. During the course of the assessment proceedings, the statement of partner of assessee firm Mr. Hemal Jhaveri was also recorded in response to summons u/s 131 of the Act. Mr. Jhaveri explained the entire bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Name of the Company Covered in the case of ITA No. 1 Global Infratech Limited (GBL) Mangilal Jain vs. Income Tax Officer, Ward-3 (3), Darjeeling 729/Kol/2018 Mukesh B Sharma Vs ITO ITA 6249/Mum/2018 (ITAT Mumbai) 2 Luminaire Technologies Limited Sri Vikash Ajhawar vs. ITO Ward-36(4), Kolkata 1445/Kol/2018 3 UNNO Industries Limited Smt. Indira Bohra vs. ITO Ward -1(1), Ujjain 660/Ind/2017 DCIT CC -2 vs. Sandeep Chhabra, Jaipur 42 to 46/JP/2020 4 Shree Shalin Textiles Ltd Nicholson Vanijya Pvt. Ltd. vs. ITO, Ward 1(2), Kolkata 1856/Kol/2018 AY 2015-16 Sr. No. Name of the Company Covered in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e penny stock and it is also fact on record that these scrips are categorized as penny stock as per the investigation wing, Kolkata reports and Assessing Officer has heavily relied on these reports and report of SEBI to come to the conclusion that the various scrips dealt with by the assessee are penny stock and he discussed various analysis made by the investigation wing of Kolkata and other agencies and relied on various submissions of various dealers in these scrips and proceeded to disallow the claim made by the assessee on the long term capital loss. We also notice from the record that assessee has submitted all the relevant documents of purchase and sale of these scrips in the recognized stock exchange and all the details were submitted before the Assessing Officer including the payments were made through banking channels only. The Assessing Officer completely overlooked the various documents and supporting evidences submitted by the assessee and he has not analysed these documents and he merely proceeded to make the addition based on the investigation carried on by the investigation agencies and he did not eventually make any investigation on the various documents submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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