Bogus Capital Gain

Fetters on Principle of Natural Justice in Penny Stock Cases

Income Tax - Introduction: The assessee has been taking a common argument against the addition on account of penny stock. The said argument revolves around the violation of the principle of natural justice. The assessee pleads that: a) The investigation wing report and other documents which is the basis of treating the transaction as bogus by the depa...

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Judgments in Favour of Revenue in Penny Stock Cases

Income Tax - The provision for exemption of long term capital gains from shares requiring payment of securities transaction tax has been taken advantage by unscrupulous tax evaders. An organised tax evasion involving the brokers of stock exchanges, taxpayers and their consultants, entry operators and exist operators was in action for quite some time....

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Human Probability Scores over Evidence

Income Tax - It is a very well-known fact that High court only entertains question of law and Income tax Appellate Tribunal (ITAT) is the last fact-finding authority. Thus, finding of fact as given by the ITAT would be basis for deciding the matter by High Court or Supreme Court. If, however findings given by the ITAT is […]...

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Bogus long-term capital gain on sale of shares- ITAT upheld Addition

Sudha Eashwar Vs ITO (ITAT Chennai) - Sudha Eashwar Vs ITO (ITAT Chennai) The assesse is claiming exemption by way of long term capital gains claimed by it to be earned on sale and purchase of Turbotech Engineering Ltd. by invoking provisions of Section 10(38) of the 1961 Act and onus is on the assessee to prove that these gains are gen...

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In absence of evidence that transactions were bogus, LTCG declared by assessee cannot be doubted

Dipesh Ramesh Vardhan Vs. DCIT (ITAT Mumbai) - Dipesh Ramesh Vardhan Vs. DCIT (ITAT Mumbai) The perusal of record would reveal that the assessee purchased certain shares of an entity namely M/s STL as early as September, 2011. The shares were converted into demat form in assessee’s account during the month of March, 2012. The transactions took...

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LTCG cannot be considered as bogus in absence of any evidences

Dipesh Ramesh Vardhan Vs DCIT (ITAT Mumbai) - whether addition made by AO u/s 68 as Unaccounted/Unexplained Income by treating the Long Term Capital Gain as Manipulated Transaction is justified in Law?...

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No section 271(1)(c) Penalty on Income Surrendered Voluntarily during Assessment

Aravind Kumar Agarwal Vs ACIT (OSD) (ITAT Kolkata) - The issue under consideration is whether Penalty u/s 271(1)(c) can be levied in the case where the assessee surrendered the income voluntarily during the course of the assessment?...

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Bogus Capital Gain: No adverse inference could be drawn against assessee on the basis of untested statements without allowing opportunity of cross-examination

Shankar Lal Daruka Vs ITO (ITAT Kolkata) - We note that the fact that neither the statement relied on by the authorities below were provided to the assessee nor any cross examination was allowed to prove the veracity of the statement. We note that the fact that in the statement of third party, the name of the assessee was not implicated. Eve...

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Recent Posts in "Bogus Capital Gain"

Bogus long-term capital gain on sale of shares- ITAT upheld Addition

Sudha Eashwar Vs ITO (ITAT Chennai)

Sudha Eashwar Vs ITO (ITAT Chennai) The assesse is claiming exemption by way of long term capital gains claimed by it to be earned on sale and purchase of Turbotech Engineering Ltd. by invoking provisions of Section 10(38) of the 1961 Act and onus is on the assessee to prove that these gains are genuine […]...

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In absence of evidence that transactions were bogus, LTCG declared by assessee cannot be doubted

Dipesh Ramesh Vardhan Vs. DCIT (ITAT Mumbai)

Dipesh Ramesh Vardhan Vs. DCIT (ITAT Mumbai) The perusal of record would reveal that the assessee purchased certain shares of an entity namely M/s STL as early as September, 2011. The shares were converted into demat form in assessee’s account during the month of March, 2012. The transactions took place through banking channels. The inv...

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LTCG cannot be considered as bogus in absence of any evidences

Dipesh Ramesh Vardhan Vs DCIT (ITAT Mumbai)

whether addition made by AO u/s 68 as Unaccounted/Unexplained Income by treating the Long Term Capital Gain as Manipulated Transaction is justified in Law?...

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Fetters on Principle of Natural Justice in Penny Stock Cases

Introduction: The assessee has been taking a common argument against the addition on account of penny stock. The said argument revolves around the violation of the principle of natural justice. The assessee pleads that: a) The investigation wing report and other documents which is the basis of treating the transaction as bogus by the depa...

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Posted Under: Income Tax |

No section 271(1)(c) Penalty on Income Surrendered Voluntarily during Assessment

Aravind Kumar Agarwal Vs ACIT (OSD) (ITAT Kolkata)

The issue under consideration is whether Penalty u/s 271(1)(c) can be levied in the case where the assessee surrendered the income voluntarily during the course of the assessment?...

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Bogus Capital Gain: No adverse inference could be drawn against assessee on the basis of untested statements without allowing opportunity of cross-examination

Shankar Lal Daruka Vs ITO (ITAT Kolkata)

We note that the fact that neither the statement relied on by the authorities below were provided to the assessee nor any cross examination was allowed to prove the veracity of the statement. We note that the fact that in the statement of third party, the name of the assessee was not implicated. Even otherwise, according to Learned Counse...

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Section 68 addition justified for unexplained LTCG from penny stock

Bhagwatiben Vinodkumar Surani Vs ITO (ITAT Ahmedabad)

Addition of long-term capital gain against an investor who invested in a penny stock company in connection with the penny stock scam involving Rs. 36,000 Crores was upheld as additions made on account of detailed enquiries being carried out by Kolkata Investigation Directorate with regard to 84 penny stocks company as well as SEBI and no ...

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Credit worthiness cannot be doubted merely for meager income | Section 68 | Bogus share capital

PCIT Vs Ami Industries (India) P Ltd (Bombay High Court)

The assessee had furnished PAN, copies of the income tax returns of the investors as well as copy of the bank accounts in which the share application money was deposited in order to prove genuineness of the transactions. In so far credit worthiness of the creditors were concerned, the bank accounts of the investors showed that they had fu...

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Sales bogus if investee is a penny stock company, with no credentials, and the sale rates artificially hiked, with no real buyers

Bhagwatiben Vinodkumar Surani Vs ITO (ITAT Ahmedabad)

(a) The scrip is a penny stock, purchased at a low price, which is over a period of time ramped up by operators acting in benami names or name lenders. The purchases are off market purchases, and not reported on the exchange; (b) purchase/s is back dated, i.e., per a back dated contract note, paid for in cash, so that there is no trail...

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Bogus LTCG – ITAT refuses to grant Stay of Demand

Shri Anoop Jain Vs ACIT (ITAT Delhi)

Shri Anoop Jain Vs ACIT (ITAT Delhi) The learned departmental representative vehemently objected to the stay petition and stated that assessee has obtained the bogus long-term capital gain in penny stock and therefore it does not deserve stay of demand. He further submitted that there are equal numbers of judicial precedent against the as...

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Judgments in Favour of Revenue in Penny Stock Cases

The provision for exemption of long term capital gains from shares requiring payment of securities transaction tax has been taken advantage by unscrupulous tax evaders. An organised tax evasion involving the brokers of stock exchanges, taxpayers and their consultants, entry operators and exist operators was in action for quite some time....

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Posted Under: Income Tax |

ITAT upheld section 68 Addition- Big Jump in Share Price of unknown Company

Harish Kumar HUF Vs ITO (ITAT Chennai)

Assessee has not tendered cogent evidence to explain as to how the shares in an unknown company had jumped to an higher amount in no time when the fantastic sale price was not at all possible as there was no economic or financial basis to justify the price rise. Also, assessee failed to provide details of persons who purchased the shares....

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Bogus Share Capital: ITAT criticises casual approach of Department

ITO Vs M/s Citymaker Builder Pvt. Ltd. (ITAT Mumbai)

ITO Vs M/s Citymaker Builder Pvt. Ltd. (ITAT Mumbai) As two of the share applicant companies as per the information received by the A.O from the office of the DGIT(Inv), Mumbai, were the companies controlled  an infamous accommodation entry provider, therefore, it was incumbent on the part of the lower authorities to have carried out [&h...

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All transactions in penny stocks cannot be regarded as bogus for SCAM in some penny stocks

Shri Vijayrattan Balkrishan Mittal Vs DCIT (ITAT Mumbai)

Shri Vijayrattan Balkrishan Mittal Vs DCIT (ITAT Mumbai) The issue for consideration before us is whether in such cases, the legal evidence produced by the assessee has to guide our decision in the matter or the general observations based on statements, probabilities, human behavior and discovery of the modus operandi adopted in earning a...

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Addition justified for Receipt of share application money if Genuineness and creditworthiness not proved

M/s. Moira Steel Ltd Vs DCIT (ITAT Indore)

A perusal of financial statement, bank statements and income tax returns of share applicants companies clearly revealed that they had no regular means to invest in the share capital of the assessee company and, therefore, AO was justified in making addition under section 68 on the ground of lack of creditworthiness and genuineness....

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ITAT upheld addition for accommodation entry receipts as LTCG

Suman Poddar Vs ITO (ITAT Delhi)

Suman Poddar Vs ITO (ITAT Delhi) The evidences put forth by the Revenue regarding the entry operation fairly leads to a conclusion that the assessee is one of the beneficiaries of the accommodation entry receipts in the form of long-term capital gains. The assessee has failed to prove that the share transactions are genuine and […]...

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No addition u/s 68 for bogus LTCG without substantial evidence

L. K. Prahladka, HUF Vs ITO (ITAT Kolkata)

Since assessee had brought all the relevant material to substantiate its claim that transactions of the purchase and sale of shares were genuine and AO had brought nothing controverting material to deny the same, therefore, the long term capital gain (LTCG) on sale of shares of M/s. KAFL claimed as exempt by assessee could not be treated ...

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LTCG from penny stocks cannot be treated as bogus if documentation is in order and no fault found by AO

Chandra Prakash Jhunjhunwala Vs DCIT (ITAT Kolkata)

Chandra Prakash Jhunjhunwala Vs DCIT (ITAT Kolkata) FULL TEXT OF THE ITAT JUDGEMENT The captioned appeal filed by the Assessee, pertaining to assessment year 2014-15, is directed against the order passed by the Commissioner of Income Tax (Appeal)-21, Kolkata, which in turn arises out of an assessment order passed by the Assessing Officer ...

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ITAT held 282 time Capital Gains from Penny Stocks as Bogus

Shri Sanat Kumar Vs ACIT (ITAT Delhi)

No doubt assessee has meticulously completed the paper work by routing his entire investment through banking channel but the results thereof are altogether beyond human probabilities. Because neither in the past nor in the subsequent years, assessee has indulged into any such investment having huge windfall. Had the assessee been so intel...

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Bogus Share Capital | Addition upheld | Creditworthiness of shareholders not proved

M/s Royal Rich Developers Pvt. Ltd. Vs DCIT (ITAT Mumbai)

M/s. Royal Rich Developers Pvt. Ltd. Vs DCIT (ITAT Mumbai) We are of the considered view that the onus is on the assessee company to bring on record the cogent evidences to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction which in the instant case the assessee is not […]...

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No addition of bogus LTCG on penny stocks if assessee proved genuineness of transactions

Ankita Vijay Vs ITO (ITAT Delhi)

Assessee’s claim for exemption under section 10(38) on long-term capital gain on sale of shares could not be held as bogus on the ground of information from  Investigation Wing in case assessee had filed evidences like transaction statement of stock broker, contract notes transactions statement of Demat acount, statement of account fro...

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AO cannot treat LTCG as bogus without any supporting evidence

Mohit Hora (HUF) Vs ITO (ITAT Delhi)

Where sale and purchase of shares had taken place only through banking channel at Bombay Stock Exchange and were supported by contract note, income from long term capital gain (LTCG) on sale of listed equity shares after payment of STT were rightly claimed as exempt u/s 10(38) and AO was precluded in making addition of LTCG as unaccounted...

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Addition u/s sec. 69A justified for bogus LTCG from penny stocks

Pooja Ajmani Vs ITO (ITAT Delhi)

Assessee was not entitled to claim long term capital gain as exempt u/s 10(38) and the same was deemed to be income under section 69A as it was revealed that purchase and sale of shares were arranged transactions by assessee to create bogus profit in the garb of tax exempt long term capital gain by well organised network of entry provider...

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ITCG cannot be held bogus merely on human probabilities or surmises

Mahavir Jhanwar Vs ITO (ITAT Kolkata)

Mahavir Jhanwar Vs ITO (ITAT Kolkata) The sole issue that arises for my adjudication is whether the Assessing Officer was right in rejecting the claim of the assessee that he had earned Long Term Capital Gains on purchase and sale of the shares of M/s Unno Industries. The AO based on a general report and […]...

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Human Probability Scores over Evidence

It is a very well-known fact that High court only entertains question of law and Income tax Appellate Tribunal (ITAT) is the last fact-finding authority. Thus, finding of fact as given by the ITAT would be basis for deciding the matter by High Court or Supreme Court. If, however findings given by the ITAT is […]...

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Posted Under: Income Tax |

LTCG on sale of shares cannot be treated bogus merely on investigation report

Mr. Sanjiv Shroff Vs ACIT (ITAT Kolkata)

When AO has not brought any material on record to show that the assessee has paid over and above the purchase consideration as claimed and evident from the bank account then, in the absence of any evidence it cannot be held that the assessee has introduced his own unaccounted money by way of bogus long term capital gain....

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Bogus Capital Gain: Cross examination Opportunity should be allowed

Sanjay Kumar Jain Vs ITO (ITAT Chennai)

Conclusion: Claim of assessee for long term capital gains arising on transfer of shares u/s.10(38) was real or sham, required a revisit by AO by considering all the evidences produced by assessee and also, AO should allow the opportunity of cross-examination  to check the nature of transaction....

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Bogus Capital Gains from Penny Stocks- HC upheld the addition

Udit Kalra Vs ITO (Delhi High Court)

Udit Kalra Vs ITO (Delhi High Court) In the case there was a specific information that assessee has indulged in non-genuine and bogus capital gain obtained from the transactions of purchase and sale of shares of M/s Kappac Pharma Ltd., a Mumbai based company. It is noticed that the purchase transaction has been done off […]...

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Capital Gain cannot be treated as bogus on human probabilities, suspicion, conjectures and surmises

Mahavir Jhanwar Vs ITO (ITAT Kolkata)

CIT(A) has in his order relied upon circumstantial evidence and human probabilities to uphold the findings of the AO. He also relied on the so called rules of suspicious transaction...

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ITAT confirms addition for Bogus LTCG

Ms Pankaj Agarwal & Sons (HUF) Vs ITO (ITAT Chennai)

Assessee come out with the plea that they were not provided with opportunity of cross-examining the witness, the investigation report was not furnished and proper opportunity was not provided of being heard. However we find that all these arguments raised by the assessee before us was never alleged before the AO when the matter was before...

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LTCG can’t be treated as bogus for mere astronomical rise in share price

Mukta Gupta Vs ITO (ITAT Delhi)

Mukta Gupta Vs ITO (ITAT Delhi) Conclusion: Long-term capital gains on sale of shares could not be treated as bogus on the reason that the price of these shares had risen manifolds and the reason for astronomical rise was not related to any fundamentals of market. Once the transactions were duly proved by trading from […]...

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