Case Law Details
DCIT Vs S.J. Infratech Pvt. Ltd. (ITAT Ahmedabad)
ITAT Ahmedabad held that mere modus of operandi cannot the basis of making the addition or treating the transaction carried out in any share/scrip as bogus until and unless it is supported by the material documents.
Facts-
The only issue raised by the Revenue is that the learned CIT (A) erred in deleting the disallowances of bogus trading loss of Rs. 36,29,308/- in penny stock as well as commission expenses of Rs. 72,586/- only.
The AO found that the company i.e. Regency Trust Ltd, incorporated in 1988 and registered as NBFC, was not having any significant business activity. The Regency Trust Ltd as on 19-01-20 10 came with preferential allotment of shares. At the time of preferential allotment the scrip of Regency Trust was trading between 28 to 31 per share. Thereafter, the price of the impugned scrip suddenly sky rocketed and reached as high as to Rs. 111.5 per share as on 06-05-2011. Thereafter, the price of the impugned shares sharply decreased to the level of price before the preferential allotment. During the FY 2011-12, the time when price was sky rocketing, the assessee purchased large volume of shares of impugned scrip.
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