The assessee, an NBFC, claimed loss of \u20b951,33,870\/- in trading of shares of Radford Global Ltd. and Shreenath Commercial for AY 2014-15, set off against interest income. The AO, based on investigation reports and SEBI\/SAT findings, held the transactions to be sham, pre-arranged circular trades in penny stocks involving cartel operators, and disallowed the loss applying the test of human probabilities\u00a0 Sumati Dayal v. CIT (1995)214 ITR 801 (SC)). CIT(A) confirmed the addition, holding no violation of natural justice since material was disclosed and cross-examination was not a vested right (CIT v. Swati Bajaj (2022) 446 ITR 56 (Cal))(HC) . The Tribunal, however, without examining facts, allowed the appeal merely by relying on Namokar Builders Pvt .Ltd\u00a0 v. PCIT \u00a0)(ITA 762\/Kol\/2022 dt. 9-5-2024 )( Kol) ( Trib) \u00a0\u00a0\u00a0. On appeal, the High Court held that the Tribunal committed a serious error of law by not examining facts and blindly following a coordinate bench order. It restored the additions, holding that the assessee\u2019s transactions were sham and covered under organized tax evasion through penny stocks, thus falling within Exception (h) of CBDT Circular No. 5\/2024 dated 15.03.2024. Reliance placed by assessee on PCIT v. \u00a0Krishna Devi(Smt ) \u00a0(2021) 279 Taxman 148 (Delhi)( HC) ,PCIT v. Dipansu Mohapatra ((2024) 463 ITR 678 \u00a0(Orissa.)( HC)) \u00a0and CIT v. Nilesh Jain (HUF ) (2024) 163 taxmann.com 229 (MP)( HC) \u00a0was distinguished. Appeal of the Revenue allowed, questions answered in its favour. (AY .2014-15 )<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 68 : Cash credits – Penny Stock – Loss \u2013 Bogus claim of loss on trading of shares \u2013 Principles of natural justice \u2013 Tribunal erred in relying on coordinate bench decision without examining facts \u2013 Organized tax evasion -Exception to CBDT Circular No. 5 of 2024 dt .15 -3 -2024, para 3.1 (h) (2024) 462 ITR 273 (St), applies- Monitory limits is not applicable – Order of the Tribunal was set aside \u2013 Substantial question of law was answered in favour of revenue . [S. 143(2), 142(1), 143(3), 254(1) 260A, 268A ]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-56125","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-eBf","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/56125","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=56125"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/56125\/revisions"}],"predecessor-version":[{"id":56126,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/56125\/revisions\/56126"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=56125"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=56125"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=56125"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}