TMI Blog2024 (4) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... and made addition u/s 68 holding that entire transaction was bogus and in the nature of penny stock, however, since genuineness of investment in shares by assessee was substantiated by him by producing copy of transaction statement for period from 01.06.2001 to 01.10.2010 and shares were retained for more than ten years and were sold after such long time, hence investment was not bogus therefore it cannot be treated that investment was made in penny stock. The genuineness of investment in the shares by the assessee was substantiated by him by producing contract note, transaction was through recognised broker, transaction was done through banking channel on which STT was paid. The shares were held by assessee, as an Investor. Thus we delete addition made. Addition on account of commission paid @ 5% - In the assessee's case AsO added 5% - Since, we have deleted the alleged addition hence addition made by Assessing Officer does not have leg to stand, therefore it is hereby deleted. Assessee appeal allowed,. - Shri Pawan Singh, JM And Dr. A. L. Saini, AM For the Appellant : Shri Shaunak Zaveri, CA For the Respondent : Shri Vinod Kumar, Sr. DR ORDER PER DR. A. L. SAINI, AM: Captio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. CIT(Appeals) was not justified and grossly erred in confirming the action of the A.O, in by accepting the addition of Rs. 3,75,670/- on account of ad hoc disallowance of commission, as unexplained expenditure u/s. 69C. 4.0 That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified and grossly erred confirming the initiating of penalty proceeding u/s. 271(1)(c) of the Act. 5.0 That the appellant craves leave to add, to amend, modify, rescind, supplement or alter any of the grounds stated here-in-above/ either before or at the time of hearing of this appeal. 3. Briefly stated, the relevant material facts are as follows: The assessee before us is an individual and filed its return of income for the year under consideration on 30.03.2016 declaring Nil income. The case of the assessee was selected under complete scrutiny to examine suspicious sale transaction in shares (penny scrip). Notice u/s 143(2) of the Income- tax Act dated 20.09.2016 was issued and duly served upon the assessee. Thereafter, a notice u/s 142(1) dated 16.08.2016 calling for relevant details was issued and duly served upon the assessee. A fresh notice u/s 142(1) r.w.s 129 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments by the promoters, brokers and associated persons, who have on record confirmed the involvement of M/s Mishka finance Trading Ltd. in the stock price manipulation. c. The Assesses derived income, from other sources. d. Assessee is not an avid trader in shares rather had invested in only handful of shares in his life. e. The assessee had invested in shares of the company, M/s Mishka Finance Trading Ltd., which had no worthwhile credentials on record. f. The shares have been de materialised in Sept, 2012 whereas it was purchased in April, 2012. g. The sale of shares happen through a broker (which has been categorically involved in LTCG scam as named in Kolkata Investigation Report) through online mode and STT is paid and assessee, derives exempt income u/s 10(38) of the Income-tax Act. 5. Thereafter, the Assessing Officer did the step by step conclusion from the various investigations carried by Kolkata Investigation Directorate wing for 84 penny stock companies which are mentioned in the Assessment order vide page nos. 4 to 12. Thereafter, Assessing Officer has discussed the modus operandi of penny stocks of the companies and explained the transactions. 6. In response to the no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and not a penny stock transaction cannot be accepted and hence ld CIT(A) confirmed the addition made by the assessing officer. About unexplained expenditure u/s 69C of the Income Tax Act, 1961 of Rs. 3,75,670/- being 5% of sale value of Rs. 75,13,404/-, was also confirmed by ld CIT(A). 9. Aggrieved by the order of ld. CIT(A), the assessee is in appeal before us. 10. Learned Counsel for the assessee, argued that scrip (share) under consideration is not a penny stock scrip and it is covered in favour of assessee by the judgment of the Hon'ble Jurisdictional High Courts and other High Courts, therefore addition should not be made. The Ld. Counsel for the assessee relied on the following judgements: (i) PCIT vs M/s Gokuldhan Enterprise LLP, 156 taxmann.com 152 (Gujarat) (ii) ITO vs Gokuldhan Enterprise LLP, ITA No.675/Ahd/2018 (iii) DCIT vs Prakash Chand Sharma Kalawati Sharma, ITA No.780 781/JP/2019 (iv) ITO vs Gopalbhai T Patel (HUF), 156 taxmann.com 26 (Surat Trib.) (v) Sandipkumar Parsottambhai Patel vs ITO, 137 taxmann.com 373 (Surat Trib.) (vi) Vijay Infrastructure Ltd. vs ACIT, ITA No.254/LKW/2015 (Lucknow Trib.) 11. The Ld. Counsel also submitted that the company, namely, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) copy of confirmation of accounts from stock broker (vide Pb.39), (3) Ledger copy of contract note (vide Pb.40 to 46), (4) copy of holding statement of shares as on 30.03.2015 from the books of stock broker (vide Pb.47), (5) Copy of Dena Bank statement (vide Pb.48 to 49), (6) Copy of show cause notice issued u/s 142(1) by AO dated 26.1.2017 (vide Pb.50 to 52). (6) Copy of ITR-V along with Income Tax Return in form No.ITR-2 for AY.2015-16 (vide Pb.60 to 67), (7) Balance sheet, profit loss account capital account for AY.2011-12, AY.2012-13, AY.2013-14, AY.2014-15 AY.2015-16 (vide Pb.73 to 96), (8) Copy of Arpit M Shah ledger from Roongta Rising Stock Pvt. Ltd. for AY.2013-14 (vide Pb.97), (9) Copy of Bank book of Dena Bank from Arpit Mahendra Shah for AY.2015-16 (vide Pb.98 to 101) etc. We note that when assessee has submitted so much evidences and documents, no disallowance on estimation, surmise or conjecture basis can be made. The Hon'ble Bombay High Court has held in the case of ACIT Vs. Shailesh S. Shah 63 ITR 153 (Bom.) that no addition can be made purely based on suspicion. The assessee submitted contract note before the assessing officer, bank statement and STT was paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reafter referred to as 'the Act') 3.1 The Assessing Officer made addition of the said amount. The entire transaction was treated as bogus and in the nature of penny stock. By adding Rs. 2,10,474/- under section 68 of the Act, total income was assessed at Rs. 5,21,964/-. 3.2 In appeal by the assessee before the Commissioner of Income-tax (Appeals), the issue was re-examined. According to the appellate authority the appellant assessee had furnished evidence to show that the shares were brought as genuine investment which was long back in the year 2000-01. As the shares were in the nature of old investment, they could not be treated as penny stock by any stretch of imagination. 4. The Income-tax Appellate Tribunal further examined the question in appeal preferred by the revenue and confirmed the view of the appellate authority noticing that the shares were purchased in the year 2001 and they were sold after long time in the year 2010-11. 5. The genuineness of investment in the shares by the assessee was substantiated by him by producing copy of transaction statement for the period from 1-6-2001 to 1-10-2010. The investment was made in the year 2000-01. The shares were retained ..... X X X X Extracts X X X X X X X X Extracts X X X X
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