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TMI Blog2025 (5) TMI 1382X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Act, 1961 (hereinafter referred to as the "Act"). Since facts are identical, grounds are common and all the appeals have been heard together, except variance in amount, we dispose of all these appeals vide this common order for the sake of convenience by taking the ITA No. 190/Kol/2024 as the lead case. ITA No. 190/Kol/2024, AY 2015-16 : 2. The assessee in this appeal is aggrieved by the action of the Ld. Lower authorities in making/confirming the addition of Rs. 20,19,000/- by treating the Long Term Capital Gain (LTCG) earned by the assessee on sale of shares as bogus and thereby denying the claim of exemption to the assessee. The assessee in this appeal has challenged the impugned addition not only on merits but also on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arketing and Manufacturing Ltd./Ejecta Marketing ltd. SCRIP CODE (538653 ) has found that the rise in prices of the scrip are totally unrelated to its financial fundamentals (profitability, EPS etc) or to any other factors (such as market news etc) that causes rise or fall in prices of shares. The rise and fall in prices of the shares exhibit a curve that is typical of rigged shares (rise and fall of prices sans reasons). In the instant case it is clear that it is a sham trade only for the purpose of laundering undisclosed out of books income. From the above it is clear that the assessee has invested in the shares/ scrips of the Appu Marketing and Manufacturing Ltd / Ejecta Marketing Ltd. SCRIP CODE (538653 ) with a pre-planned intention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, formed the view that the assessee had invested in penny stock and that the LTCG earned by the assessee were bogus. He, accordingly, formed the belief that the income of the assessee has escaped assessment and reopened the assessment. 4.1. The Ld. Counsel inviting our attention to the afore-reproduced reasons for reopening of the assessment has submitted that the aforesaid reasons were vague. That the AO did not apply his mind at all to the alleged information received from the Investigation Wing. That the satisfaction of the AO regarding escapement of the income of the assessee was a borrowed satisfaction. That there was no bona fide material that has come to the possession of the AO to form the belief that income of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itute a reliable and sufficient information to form the belief that the income of the assessee has escaped assessment. A perusal of the reasons recorded would show that there was no information to the AO that the LTCG shown by the assessee in the return of income was bogus. Even in the reasons recorded, the observations of the AO are based on preponderance of probabilities. The AO, in this case, goes on to discuss the financials of the Appu Marketing & Manufacturing Ltd. and from that he noted that there was unnatural rise in the share price. However, the said conclusion arrived at by the AO was based on his assumption only and there was no definite information available to the AO, either that the share price of the said company was rigged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a court of law. The entire law as to what would constitute "reason to believe" has been summed up by the hon'ble Supreme Court in the case of "Income Tax Officer v Lakhmani Mewaldas" (1976) 103 ITR 437. Reliance in this respect can also be placed on the decision of the Hon'ble Punjab & Haryana High Court in the case of 'CIT vs Paramjit Kaur' (2008) 311 ITR 38 (P&H), wherein, making identical observations, the Hon'ble High Court has held that in the absence of sufficient material to form satisfaction of the Assessing Officer that income of the assessee had escaped assessment, the issuance of notice u/s. 148 of the Act was not valid. 7. Reliance in this respect can also be placed on the decision of the Hon'ble Delhi High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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