S. 68 : Cash Credits-Penny Stock-Capital gains-Shares with increased value of about 2823%-Genuineness of price hike to be established-Onus on the assessee-Order of Tribunal is reversed- Addition as cash credit is affirmed-Revision is held to be valid. [S. S.10(38), 45, 263]
The assessee had purchased 50,000 shares of the Surabhi Chemicals and Investment Ltd for Rs.1,00,000/- on 16.03.2012 and 14.08.2012. Soon after the expiry of the period to become eligible for long term capital gains, the assessee sold those shares for Rs. 29,23,500/- Sales were effected during the period from 04.12.2013 to 07.12.2013 and the long term capital gains (LTCG) was computed for Rs. 28,23,500/-. The assessee claimed the capital gains as exempt u/s. 10(38) of the Act. The Assessing officer held that within a short span to time of 17 to 21 months, the Assessee managed to sell the shares with increased value of about 2823% that to when the general market trend was recessive. Relying on the report of investigation wing the Assessing Officer denied the exemption and assessed the receipt u/s. 68 of the Act. The CIT(A) dismissed the appeal of the Assessee. On appeal the Income-tax Appellate Tribunal passed a common order in 90 appeals pertaining to penny stocks favouring the assessees. Revenue has filed appeals before the High Court .Honourable High Court held that the onus is on the assessee to establish the genuineness of the price hike. Merely demonstrating the financials of the company, volume of trade, transactions through banking channels, inter alia, will not suffice. The Assessee has to prove that the price of the share was not manipulated. Honourable High Court also held that the Tribunal committed a serious error in setting aside the orders of the CIT(A) who had affirmed the orders of the Assessing Officer and equally the Tribunal committed a serious error both on law and fact in interfering with the assumption of jurisdiction by the Commissioner under Section 263 of the Act. (Arising out of ITA No. 2623/ Kol/2018 dt. 20-6-2019 (SMC) (AY. 2014-15) (ITA No. 6 of 2022 dated June 14, 2022).
PCIT v. Swati Bajaj and Ors. (Cal.)(HC) www.itatonline.org
Editorial : Refer Udit Kalrav ITO (Delhi)(HC) (2019) 176 DTR 249 / 308 CTR 50 (Delhi)(HC)
[Coram : The Hon’ble Mr. Justice T.S. Sivagnanam And The Hon’ble Mr. Justice Hiranmay Bhattacharyy]