|COURT:||Delhi High Court|
|CORAM:||Prateek Jalan J, Ravindra Bhat J|
|CATCH WORDS:||bogus capital gains, Penny Stocks|
|DATE:||March 8, 2019 (Date of pronouncement)|
|DATE:||April 3, 2019 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|S. 10(38) Bogus Capital Gains from Penny Stocks: It is intriguing is that the company had meagre resources and reported consistent losses. The astronomical growth of the value of company’s shares naturally excited the suspicions of the Revenue. The company was even directed to be delisted from the stock exchange. The assessee’s argument that he was denied the right to cross-examine the individuals whose statements led to the inquiry and ultimate disallowance of the long term capital gain claim is not relevant in the wake of findings of fact|
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 220/2019 & CM No. 10774/2019
UDIT KALRA ….. Appellant
Through : Mr. Rajesh Mahna, Mr. Manu
Giri, Mr. Ramanand Roy, Mr.
Rohit Sharma and Mr. Dev Raj
ITO WARD-50(1) ….. Respondent
Through : Mr. Zoheb Hossain, Sr.
Standing Counsel with
Mr.Deepak Anand, Jr. Standing
Counsel for Revenue.
HON’BLE MR. JUSTICE S. RAVINDRA BHAT
HON’BLE MR. JUSTICE PRATEEK JALAN
O R D E R
The assessee is aggrieved by the concurrent findings of the tax
authorities – including the lower appellate authorities rejecting its
claim for a long term capital gain reported by it, to the tune of
Rs.13,33,956/- and Rs.14,34,501/- in respect of 4,000 shares of M/s
Kappac Pharma Ltd. The assessee held those shares for approximately
19 months; the acquisition price was Rs.12/- per share whereas the
market price of the shares at the time of their sale, was Rs.720/-. It is
contended that the assessee was not granted fair opportunity.
Mr. Rajesh Mahna, learned counsel appearing for the assessee
relied upon the orders of the co-ordinate Bench of the tribunal, in
respect of the same company i.e. M/s Kappac Pharma Ltd., and
pointed out that the tax authority’s approach in this case was entirely
erroneous and inconsistent.
The main thrust of the assessee’s argument is that he was denied
the right to cross-examination of the two individuals whose statements
led to the inquiry and ultimate disallowance of the long term capital
gain claim in the returns which are the subject matter of the present
This court has considered the submissions of the parties. Aside
from the fact that the findings in this case are entirely concurrent –
A.O., CIT(A) and the ITAT have all consistently rendered adverse
findings – what is intriguing is that the company (M/s Kappac Pharma
Ltd.) had meagre resources and in fact reported consistent losses. In
these circumstances, the astronomical growth of the value of
company’s shares naturally excited the suspicions of the Revenue.
The company was even directed to be delisted from the stock
exchange. Having regard to these circumstances and principally on
the ground that the findings are entirely of fact, this court is of the
opinion that no substantial question of law arises in the present appeal.
This appeal is accordingly dismissed.
S. RAVINDRA BHAT, J
PRATEEK JALAN, J
MARCH 08, 2019
TO specially mark :
“…..this court is of the opinion that no substantial question of law arises in the present appeal.This appeal is accordingly dismissed.”
The ITAT being the last fact finding authotity, and being convinced / satisfied that calls for no interfrernce the Court has dismissed the appeal on the only primary ground that the issue involved no ‘substantial question of law.
As such, in one’s perspective, the assessee may have no reasonable and sound logic to try and pursue the matter any further.
On the other hand, however, the reported case law cannot be relied upon in any other pending case or future instance ; in which assessee , depending upon the factual matrix, – distinct facts and circumstances- should be able to suucessfully urge on a point of issue- which involves a ‘substantial question of law’ within its now by and large accepted legal connotation.