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TMI Blog2020 (2) TMI 313X X X X Extracts X X X X X X X X Extracts X X X X ..... ence to explain how the shares in an unknown company worth ₹ 5 had jumped to ₹ 485 in no time. The fantastic sale price was not at all possible as there was no economic or financial basis to justify the price rise. It was held that the assessee had indulged in a dubious share transaction meant to account for the undisclosed income in the garb of long term capital gain. The gain was accordingly held to be rightly assessed as undisclosed income. - Decided against assessee. - ITA No.1168/PUN/2019 (Assessment Year : 2015-16) - - - Dated:- 16-1-2020 - SHRI R.S. SYAL, VICE PRESIDENT Appellant by Shri Nikhil Pathak Respondent by Shri S. P. Walimbe ORDER PER R.S. SYAL, VP : This appeal by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ratio of 1:10. The assessee sold 16000 converted shares in the year under consideration, namely, 7500 shares on 21-05-2014 @ ₹ 94.11 per share; 5000 shares on 09-06-2014 at ₹ 93.51 per share and 3500 shares on 10-06-2014 at ₹ 93.81 per share. The AO reproduced extract of Balance sheet and Profit and loss account of the company from March 2011 to March 2015 for demonstrating that there was negligible profit earned by PAL, which did not justify such a huge increase in the share price. He also took note of the fact that the scrip was listed on Bombay Stock Exchange on 25-03-1994 which was subsequently suspended from trading w.e.f. 09-11-1998. Such suspension was revoked only on 22-06-2012. The AO did not accept the genui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the test of human probabilities and declared the long term capital gain shown by the assessee as non-genuine. Considering the judgment of Hon ble Bombay High Court in Sanjay Bimalchand Jain, L/H of Shantidevi Bimalchand Jain vs. The Pr. CIT, the AO made addition of ₹ 14,89,662/-. The ld. CIT(A) confirmed the action of the AO. The assessee is in appeal against the confirmation of the addition. 4. I have heard the rival submissions and gone through the relevant material on record. It is found as an admitted position that the assessee purchased 1600 shares of PAL at ₹ 6.25 per share on 20-02-2013 and after conversion in the ratio of 1:10, sold such shares in the year under consideration at a price of more than ₹ 90/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not his and produced conveyance executed in his favour and the deed of settlement executed by his wife, nearly about a year after the conveyance, however, when the ITO asked the assessee about the source from which his wife got the amount, apart from saying that it was sthridhan property, he failed to disclose any source from which his wife could have got the amount for purchasing the premises. In this backdrop of facts, the Hon'ble Supreme Court held that although the apparent must be considered as real, but, if there are reasons to believe that the apparent is not real, as is the case under consideration as well, then the apparent should be ignored to unearth the harsh reality. 6. Similar view has been canvassed in Sumati Day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tual and legal position discussed above, it is crystal clear that PAL is a penny stock company and the assessee obtained only accommodation entries in the garb of long term capital gain from transfer of its shares, for which an appropriate addition has rightly been made and upheld by the authorities below. My view is fortified by the judgment dated 10.4.2017 of the Hon ble jurisdictional Bombay High Court in Sanjay Bimalchand Jain vs. Pr. CIT in ITA 18/2017, which has been briefly referred to by the AO. The Hon ble High Court in that case has held that the assessee did not tender cogent evidence to explain how the shares in an unknown company worth ₹ 5 had jumped to ₹ 485 in no time. The fantastic sale price was not at all pos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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