Appellant  booked Long term capital gain (LTCG) of Rs. 73,77,806/- and sought exemption under S. 10 (38) of the Act .AO denied the exemption. AO  found transaction pertaining to purchase of shares by Appellant  of  Smartchamps IT and Infra Ltd., which was merged with Cressanda Solutions Ltd., to be bogus transaction by holding that  Cressanda Solutions Ltd. was penny stock. CIT(A) and Appellate Tribunal also confirmed the  order of AO. On appeal it was submitted that the  Appellant had made cheque payment for purchase of 1500 shares of  Smartchamps IT and Infra Ltd. in assessment year 2012-13, and that investment was accepted by department. It was  further submits that Appellant had produced all relevant materials before Assessing Officer, namely, documentation relating to opening of DMAT account; purchase of shares of  Smartchamps IT and Infra Ltd., contract notes, and other relevant documents. Dismissing the appeal of the assessee the Court held that, the analysis of balance sheet & P&L account of the Co shows that astronomical increase in share price which led to returns of 491% for assesee was completely unjustified. The EPS & other financials parameters cannot justify price at which assessee claims to have sold shares to obtain Long term capital gains. It is not explained as to why anyone would purchase said shares at such high price. Accordingly the order of Tribunal is affirmed . High Court also observed that Bombay Stock Exchange  has identified  Cresssanda Solutions Ltd   as penny stock being used  for obtaining bogus long term capital gains and no evidence of actual sale except contract notes issued by share Broker were produced . Accordingly no question of law . ( ITA 841/2019, dt. 17.09.2019) (AY. 2014 -15)

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