Smt. Rachna Agarwal Vs ITO (ITAT Kolkata)
Facts- The sole/main grievance of the assessee is against the action of the Ld. CIT(A) confirming the order of the AO making the addition on account of Long Term Capital Gains (LTCG) of Rs.77,78,476/- which the assessee derived from sale of scrip known as M/s. GCM Securities Ltd.
The AO further noted that during the relevant assessment year the assessee had traded the scrip by the name of GCM Securities Ltd. which according to him was a ‘penny stock’, which has been used for generating bogus LTCG. According to AO, the unaccounted cash of beneficiaries (like assessee) is utilized to purchase shares at a low price and thereafter, in collusion the price of the scrips are artificially inflated and sold it is shown as LTCG and according to the AO, the scrip GCM Securities Ltd. is also a penny stock and, therefore, the AO was pleased to add u/s. 68 of the Act Rs.77,78,476/- as unexplained cash credit. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) who confirmed it. Aggrieved, the assessee is in appeal before us.
Conclusion- In the present case we find that the entire addition is on the basis of some investigation report, the relevant portions of which is also not cited in the show cause or the assessment order, there is nothing against the assessee and no inquiry whatsoever has been done by the AO or the Ld CIT (A). In such circumstances the assessee having discharged her onus and nothing adverse being found against her, the addition cannot be sustained.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This is an appeal preferred by the assessee against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi dated 13.08.2021 for AY 2015-16.
2. The sole/main grievance of the assessee is against the action of the Ld. CIT(A) confirming the order of the AO making the addition on account of Long Term Capital Gains (LTCG) of Rs.77,78,476/- which the assessee derived from sale of scrip known as M/s. GCM Securities Ltd. (hereinafter referred to as “GCM”). Brief facts of the case are that the AO noted that the assessee had filed her original return of income for AY 2015-16 on 28.08.2015 declaring total income of Rs.4,83,980/-. The AO noted that the case was selected for complete scrutiny as per CASS. The AO noted that the assessee had derived her income from sale of shares and commodities and income from other sources. The AO further noted that during the relevant assessment year the assessee had traded the scrip by the name of GCM Securities Ltd. which according to him was a ‘penny stock’, which has been used for generating bogus LTCG. According to AO, the unaccounted cash of beneficiaries (like assessee) is utilized to purchase shares at a low price and thereafter, in collusion the price of the scrips are artificially inflated and sold it is shown as LTCG and according to the AO, the scrip GCM Securities Ltd. is also a penny stock and, therefore, the AO was pleased to add u/s. 68 of the Act Rs.77,78,476/- as unexplained cash credit. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) who confirmed it. Aggrieved, the assessee is in appeal before us.
3. We have heard rival sub missions and gone through the facts and circumstances of the case. We note that the assessee has purchased 12,000 number of shares of GCM Securities Ltd. The assessee has purchased shares of Rs.2,40,000/- (12,000x 20) vide Cheque No. 035983 dt. 08.02.2013by Initial Public Offer by the said company made in conformity with the provisions of the Companies Act, 1956 and SEBI regulations. The payment of Rs.240,000 has been duly reflected in the assessee’s Axis Bank Account no. 9120100639. A copy of bank account for the period from 01.04.2012 to 31.03.2013 is found placed at page 5 to 11 of paper book. The shares are duly credited to the de-mat account of the assessee with Ashika Stock Broking Ltd and the copy of the demat statement is found placed at page 41 of the paper book. The said shares were subsequently split from face-value of Rs.10/- per share to Rs.1/- per share and hence the number of shares increased by 10 times and the shares available with the assessee after the split was 1,20,000 shares, this is apparent from the demat statement and the copy of the demat statement is found placed at page 45 of the paper book. We therefore note that the shares in question were acquired by the assessee by way of subscription made for equity shares, which were offered for subscription to the public at large by issue of prospectus. It was thus not a case where the shares were acquired through private purchase / off market where there could be an allegation for manipulation. The A/R of the assessee that the assessee is just an investor and as she received some suggestion for investment and she chose to investment based on these market tips/suggestions and had taken a calculated risk and had gained in the process and that she is not party to any alleged scam etc.
4. We further note that the assessee has sold the shares through stock-broker, M/s. Ashika Stock Broking Limited, a member of the Bombay Stock Exchange, SEBI Registration No. INB010833433 and Trading Code No. H408R7677. We note that the assessee has sold 1,20,000 nos. of shares of GCM Security Ltd on the Bombay Stock Exchange from 30/10/2014 to 26/02/2015. The details of shares are as under:
