Shah Sandeep Anantkumar HUF Vs ITO (ITAT Mumbai)
ITAT Mumbai held that confirmation of addition u/s. 69A and 68 of the Income Tax Act without finding any fault with the evidence submitted justifying the transaction is totally unlawful and accordingly liable to be set aside.
Facts- The assessee is a Hindu Undivided Family. On the basis of the information received from the DDIT(Investigation), Unit 3(2), Kolkata, that an organised racket of generating bogus entries of long term capital gains in penny stock has been unearthed as a result of investigation carried out, and the assessee has sold shares of M/s Regency Trust Ltd for a consideration of Rs.31,56,000 during the year under consideration, proceedings u/s. 147 of the Act were initiated.
AO vide order passed u/s. 143(3) r.w.s 147 of the Act took into consideration the findings of the Investigation Wing, wherein it was found that M/s Regency Trust Ltd. is one of the penny stock company which has provided bogus entries to the large no. of beneficiaries. The AO also took into consideration the modus operandi adopted by penny stock companies for rigging the price of the shares though circular trading. Accordingly, the AO came to the conclusion that the shares traded value of Rs.31,56,000 in the scrip of M/s Regency Trust Ltd was a pre-arranged method employed by the assessee in connivance with operators to evade taxes. Accordingly, the AO added the investment amount of Rs.4,17,980 u/s. 69A of the Act, and added the long term capital gains of Rs.27,28,020, claimed as exempt, u/s. 68 of the Act.
