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Mukta Gupta vs. ITO (ITAT Delhi)

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DATE: November 26, 2018 (Date of pronouncement)
DATE: February 22, 2019 (Date of publication)
AY: 2014-15
FILE: Click here to view full post with file download link
CITATION:
S. 10(38) Bogus LTCG from Penny Stocks: Capital gains cannot be treated as bogus solely on the basis that the price of the shares has risen manifold and the reason for astronomical rise is not related to any fundamentals of market. If the transactions are duly proved by trading from stock exchange and the documentation is proper, the gains cannot be assessed as unexplained credit or as unexplained money

Nowhere it has been found that assessee was in any manner found to be beneficiary of any accommodation entry under any inquiry or investigation. Once all these transactions are duly proved by trading from stock exchange, then to hold the sale of shares as unexplained credit or as unexplained money cannot be upheld

Cenveo Publisher Services India Ltd vs. UOI (Bombay High Court)

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DATE: February 1, 2019 (Date of pronouncement)
DATE: February 16, 2019 (Date of publication)
AY: 2011-12
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CITATION:
S. 147 Reopening: If the assessee delays filing objections to the reasons and leaves the AO with little time to dispose of the objections and pass the assessment order before it gets time barred, it destroys the formula provided in Asian Paints 296 ITR 90 (Bom) that the AO should not pass the assessment order for 4 weeks. A writ petition to challenge the reopening will not be entertained

Asian Paints Ltd. Vs. Dy. Comm. Of Income Tax & Ors. reported in 296 ITR 90 Bom has provided that if the Assessing Officer does not accept the objections of the assessee, he shall not proceed further in the matter within a period of four weeks from the date of receipt of said order of objections. The petitioner by its conduct destroyed this formula provided by the Court in the case of Asian Paints (supra), making it impossible for the assessing officer to wait for four weeks after disposal of objections without running the risk of allowing the assessment to be time barred

Mahavir Jhanwar vs. ITO (ITAT Kolkata)

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DATE: February 1, 2019 (Date of pronouncement)
DATE: February 16, 2019 (Date of publication)
AY: 2014-15
FILE: Click here to view full post with file download link
CITATION:
S. 10(38) Bogus long-term capital gains from penny stocks: If the assessee has filed evidences for (a) purchase of shares, (b) payment by account payee cheque, (c) balance sheet disclosing investments, (d) demat statement (e) evidence of sale of shares through stock exchange, (e) bank statement reflecting sale receipts, (f) brokers ledger, (g) Contract Notes etc, the gains cannot be treated as bogus on human probabilities, suspicion, conjectures and surmises (All contra judgements distinguished)

The proposition of law laid down in these case laws by the Jurisdictional High Court as well as by the ITAT Kolkata on these issues are in favour of the assessee. These are squarely applicable to the facts of the case. The ld. Departmental Representative, though not leaving his ground, could not controvert the claim of the ld. Counsel for the assessee that the issue in question is covered by the above cited decisions of the Hon’ble Jurisdictional Calcutta High Court and the ITAT. I am bound to follow the same

Ram Siromani Tripathi vs. State of U.P. (Supreme Court)

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DATE: February 7, 2019 (Date of pronouncement)
DATE: February 14, 2019 (Date of publication)
AY: -
FILE: Click here to view full post with file download link
CITATION:
An adjournment cannot be sought on the ground that Counsel is out of station. The appeal has to be dismissed for non-prosecution. Under no circumstances, application for restoration shall be entertained

The appeals are dismissed for non-prosecution in terms of the signed order. We make it clear that since we have not found it to be a good ground for adjournment, under no circumstances, application for restoration shall be entertained

ITO vs. Yadu Steels & Power Pvt. Ltd (ITAT Delhi)

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DATE: February 12, 2019 (Date of pronouncement)
DATE: February 14, 2019 (Date of publication)
AY: 2009-10
FILE: Click here to view full post with file download link
CITATION:
S. 68 Bogus share capital: In the case of a private company, Onus is on assessee to prove identity, creditworthiness of subscribers and most importantly genuineness of transactions. Even if AO does not make inquiry, CIT(A) should do so. Relief cannot be given merely on basis of Ration Card, Share Application forms, Voter ID etc of the subscribers

Under Section 68 onus is upon assessee to prove three ingredients, i.e., identity and creditworthiness of credit entries. As to how onus can be discharged would depend on facts and circumstances of each case. It is expected of both sides – assessee and Ld.AO, to adopt reasonable approach. Assessee before us is a private limited company. It cannot issue shares in manner in which a public limited company does. It generally depend on persons known to its directors or shareholders directly or indirectly to buy its shares. Once monies are received and shares are issued, it is not as if share-subscribers and assessee lose touch with each other and become incommunicado. Onus thus is upon assessee to prove identity, creditworthiness of subscribers and most importantly genuineness of transactions under section 68

PCIT vs. NDR Promoters Pvt. Ltd (Delhi High Court)

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DATE: January 17, 2019 (Date of pronouncement)
DATE: February 9, 2019 (Date of publication)
AY: 2008-09
FILE: Click here to view full post with file download link
CITATION:
S. 68 Bogus share capital in form of accommodation entries: The transactions are clearly sham and make-believe with excellent paper work to camouflage their bogus nature. The reasoning is contrary to human probabilities. In the normal course of conduct, no one will make investment of such huge amounts without being concerned about the return and safety of such investment. The Tribunal's order is clearly superficial and adopts a perfunctory approach and ignores evidence and material referred to in the assessment order

The transactions in question were clearly sham and make-believe with excellent paper work to camouflage their bogus nature. Accordingly, the order passed by the Tribunal is clearly superficial and adopts a perfunctory approach and ignores evidence and material referred to in the assessment order. The reasoning given is contrary to human probabilities, for in the normal course of conduct, no one will make investment of such huge amounts without being concerned about the return and safety of such investment

PCIT vs. Hardik Bharat Patel (Bombay High Court)

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DATE: November 19, 2019 (Date of pronouncement)
DATE: February 9, 2019 (Date of publication)
AY: 2008-09
FILE: Click here to view full post with file download link
CITATION:
Capital Gains vs. Business Profits: As per CBDT Circular No. 6 of 2016 dated 29.2.2016 gains on shares held for more than 12 months are treated as long-term capital gains and not as business profits. The fact that the amount invested in shares were out of borrowed funds and there were frequent and voluminous transactions is irrelevant

our attention is drawn to Circular No. 6 of 2016 dated 29.2.2016 issued by the Central Board of Direct Taxes (CBDT). This circular issued with regard to the issue of taxability of surplus on sale of shares and securities, – whether as capital gain or business income in case of long term holdings of shares and securities i.e in excess of 12 months. It has clarified therein that with a view to reduce litigation and uncertainty in the matter of taxibility, as long term capital gains or business income – the assess has an option to treat the income from sale of listed shares and securities as income arising under the head ‘Long Term Capital Gains’, them the same shall be accepted by the assessing officer

Rajkumar B. Agarwal vs. DCIT (ITAT Pune)

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DATE: February 4, 2019 (Date of pronouncement)
DATE: February 2, 2019 (Date of publication)
AY: 2004-05, 2005-06 & 2006-07
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CITATION:
Bogus Capital Gains From Penny Stocks: The assessee completed paper-trail by producing contract notes for purchase and sale of shares. of PIL. Mere furnishing of contract notes etc does not inspire any confidence in the light of facts. Test of human probability should be applied and apparent should be ignored to unearth the harsh reality (Sumati Dayal 214 ITR 801 (SC) & Durga Prasad More 82 ITR 540 (SC) applied)



The entire position which thus emerges is that PIL is a penny stock company, which fact got established from enquiries conducted by BSE and SEBI. Not only the DSP shares and Securities Ltd. and Galaxy Broking Ltd. were fined for manipulating the prices of shares of PIL, even the broker from whom the assessee allegedly purchased the shares was suspended and debarred from acting as a broker by SEBI and further the broker to whom such shares were sold, was also warned by SEBI for manipulating the prices of different shares during the relevant period. There is doubt that the assessee completed paper-trail by producing contract notes for the purchase and sale of shares of PIL. In our considered opinion, mere furnishing of contract notes etc. and more specifically when seen in the background of the above noted facts, does not inspire any confidence and cannot be a ground to delete an addition, which is otherwise made on the solid bedrock of detailed enquiries

Pankaj Agarwal & Sons (HUF) vs. ITO (ITAT Chennai)

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DATE: December 6, 2018 (Date of pronouncement)
DATE: February 2, 2019 (Date of publication)
AY: 2014-15
FILE: Click here to view full post with file download link
CITATION:
Bogus Capital Gains From Penny Stocks: Plea that opportunity to cross-examine the witness was not given & investigation report was not furnished is not relevant if assessee unable to successfully controvert findings of the AO and such argument was never made before the lower authorities

The company in which the assessees had purchased the equity shares had no creditability and no prudent investor would make such investment. The motive of the price manipulation is only to bring out their black money as legitimately earned Long Term Capital Gain for which exemption U/s.10(38) of the Act is available

M/s. Deekay Gears vs. ACIT (ITAT Mumbai)

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DATE: January 16, 2019 (Date of pronouncement)
DATE: February 2, 2019 (Date of publication)
AY: 2009-10
FILE: Click here to view full post with file download link
CITATION:
S. 251(1)(a): The CIT(A) has no jurisdiction to permit an assessee to withdraw an appeal and to dismiss it in limine. Notwithstanding the request seeking withdrawal of the appeal, the CIT(A) is obliged and duty bound under the Act to decide the appeal on merits

This is amply clear from the Section 251(1)(a) and (b) and Explanation to Section 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act

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