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TMI BlogSupreme Court orders about alleged bogus capital gains on alleged penny stocks and case status of pending casesX X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court orders about alleged bogus capital gains on alleged penny stocks and case status of pending cases - By: - DEVKUMAR KOTHARI - Income Tax - Dated:- 1-5-2024 - - Supreme Court orders about alleged bogus capital gains on alleged penny stocks and case status of pending cases Ongoing litigation: Due to suspicion, bias and highhandedness of tax authorities litigation is going on issue of alleged bogus capital gains on alleged penny stocks. On proper understanding of the data of stock prices it can be said that the concept of so called penny stock is a misunderstanding and misconception. We find many blue chip companies of today were at some time low quoted shares having market value less than face value. Many of blue chip companies or highly quoted companies in past have gone into liquidation or are at verge of winding up or compromises. We also find many penny stocks of today were blue chip stock in past. Therefore, the conception of penny stock is wrong, misleading and due to bias and conjecture. Bogus capital gains: As per usual practice, tax authorities have no hesitation in doubting and branding transactions as bogus. That too ignoring documentary evidences and relyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g on some irrelevant information of generalized nature. Majority view is in favor of assesses: On study of reported judgments and orders, we find that right from level of second appeals before Tribunal majority view is in favor of assesse and against revenue. On study and analysis of reported judgments and orders, of High Courts also we find that majority view is in favor of assesse and against revenue. On study and analysis of reported orders/ highlights news from Supreme Court also we find that majority view is in favor of assessee and against revenue. Only cases where case was not supported by valid documents and case was not properly represented with full preparedness, orders were rendered against assesse and in favor of revenue. This we can find from analysis of orders of the Supreme Court that in one case SLP of assessee has been dismissed for the reason that finding recorded was that there was no actual sale of shares- see the case of Suman Poddar. Search with criterion: Search S.10.38 AND S.68 PENNY STOCK / BOGUS CAPITAL GAINS SC judgments no result Search S.10.38 AND S. 68 SC PENNY STOCK / BOGUS CAPITAL GAINS SC orders / highlights We find in several cases SLP has been fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the revenue alleging long-term capital gains arising on sale of alleged penny stocks as bogus. The SLP have been dismissed without any rider as to question of law kept open. Therefore, these judgments have effect of merger of judgment of High Court in order of the Supreme Court and confirmation or approval of order / judgment of the High Court. Such cases are as follows: SLP OF REVENUE IS DISMISSED WITHOUT KEEPING QUESTION OF LAW OPEN- ( say first category): 1. PR. COMMISSIONER OF INCOME TAX 1 VERSUS KUNTALA MOHAPATRA - 2024 (3) TMI 576 - SC ORDER Sections: 010(38) , 068 , Exemption u/s 10(38) claimed in revised return - bogus LTCG on shares - revised return was filed by the Assessee claiming the above exemption which was denied - denial of an opportunity to cross examine the entry providers - HC held that [ 2023 (2) TMI 1277 - ORISSA HIGH COURT] ITAT was justified in accepting the plea of the Assessee that the failure to adhere the principles of natural justice went to the root of the matter. Also, the CBDT circular that permitted to the Assessee to file revised returns if he omitted to make a claim was also not noticed by the AO - HELD THAT:- We are not inclined to interfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with the impugned judgment and order passed by the High Court. Hence, the Special Leave Petition is dismissed. 2. THE PRINCIPAL COMMISSIONER OF INCOME TAX 1 VERSUS PARASBEN KASTURCHAND KOCHAR - 2021 (8) TMI 834 - SC ORDER Sections: 010(38) , 068 , Bogus LTCG - addition on account of LTCG claimed as exempt u/s. 10(38) allegation of revenue was that transaction was pre-arranged as well as sham and was carried out through penny scripts companies / paper companies and question was whether the assessee earned long term capital gain through transactions with bogus companies? After examination of records and documents - ITAT deleted the addition Supreme Court orders SLP dismissed. 3. C.I.T MUMBAI VERSUS MUKESH RATILAL MAROLIA - 2015 (9) TMI 854 - SC ORDER Sections: 069, Unexplained investment under section 69 - sale of the shares - penny stock - ITAT deleted the addition - order of high court (sic. Tribunal) was confirmed by HC [ THE COMMISSIONER OF INCOME TAX VERSUS SHRI MUKESH RATILAL MAROLIA - 2011 (9) TMI 919 - BOMBAY HIGH COURT ] - SC dismissed the appeal of the revenue. Observations: The case of MUKESH RATILAL MAROLIA is reported as arising under section 69 as related to unexplain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed investment. Because funds were raised on sale of shares which were doubted as penny stock and bogus capital gains and revenue considered such source as bogus while examining resources for investment in property. Therefore, it is also related to capital gains arising on sale of shares alleged as penny stock and bogus capital gains by revenue but the same were held genuine and investment made out of sale proceeds of such shares was considered as duly explained source of capital for further investment and addition made under section 69 was deleted. Therefore there are three orders of the Supreme Court in which SLP of revenue has been dismissed and question of law has not been kept open. Condonation of delay not allowed / dismissed in consequence of that SLP of revenue dismissed but Question of law kept open in the following cases ( say second category ) : PRINCIPAL COMMISSIONER OF INCOME TAX-1 VERSUS SITANSU SEKHAR MOHAPATRA - 2024 (4) TMI 507 - SC ORDER Sections: 010(38) , 068, Delay in filling appeal before SC - Claim of long-term capital gains on shares in terms of Section 10(38) - Assessee not claiming exemption u/s 10(38) at the stage of the assessment proceedings but turned a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round and make such claim of wanting to cross-examine persons - Denial of principles of natural justice - denial of an opportunity to cross examine the entry providers - As decided by HC [ 2023 (2) TMI 392 - ORISSA HIGH COURT] ITAT was justified in accepting the plea of the Assessee that the failure to adhere the principles of natural justice went to the root of the matter. Also, the CBDT circular that permitted to the Assessee to file revised returns if he omitted to make a claim was also not noticed by the AO.ITAT committed no error in concurring with the view of the CIT(A) and in dismissing the Revenue s appeals HELD THAT:- There is gross delay of 309 days in filing this special leave petition. The explanation offered is not sufficient in law to condone the delay. Hence, the application seeking condonation of delay is dismissed. Consequently, the special leave petition is also dismissed keeping open the question of law, if any. In doing so, we have also followed the earlier order of this Court passed in Dipansu Mohapatra in [ 2024 (3) TMI 217 - SC ORDER] THE PR. COMMISSIONER OF INCOME TAX-1, ORISSA VERSUS KISHORE KUMAR MOHAPATRA - 2024 (4) TMI 550 - SC ORDER Sections: 010(38), B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enefit of Section 10(38) - Assessee to file revised returns if he omitted to make a claim - denial of an opportunity to cross examine the entry providers - as decided by HC ITAT was justified in accepting the plea of the Assessee that the failure to adhere the principles of natural justice went to the root of the matter. Also, the CBDT circular that permitted to the Assessee to file revised returns if he omitted to make a claim was also not noticed by the AO, thus correctly dismissing the Revenue s appeal HELD THAT:- No case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India. The Special Leave Petition is, accordingly, dismissed. PRINCIPAL COMMISSIONER OF INCOME TAX-I VERSUS ANUPAMA MOHAPATRA - 2024 (4) TMI 209 - SC ORDER Sections: 010(38) , 068, 069, Delay in filling appeal before Supreme court - Denial of principles of natural justice - Assessee permitted to file revised returns - Claim for benefit of Section 10(38) - additions u/s 68 and 69 - Assessee not claiming exemption u/s 10(38) at the stage of the assessment proceedings Assessee turned around and make such claim of wanting to cross-examine persons make adverse state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments against the Assessee at the stage of the appeal before the ITAT - As decided by HC [ 2023 (2) TMI 392 - ORISSA HIGH COURT] ITAT was justified in accepting the plea of the Assessee that the failure to adhere the principles of natural justice went to the root of the matter. HELD THAT:- There is gross delay of 303 days in filing this special leave petition. The explanation offered is not sufficient in law to condone the delay. Hence, the application seeking condonation of delay is dismissed. Consequently, the special leave petition is also dismissed keeping open the question of law, if any. In doing so, we have also followed the earlier order of this Court in DIPANSU MOHAPATRA [ 2024 (3) TMI 217 - SC ORDER] PR. COMMISSIONER OF INCOME TAX VERSUS DEEPANSU MOHAPATRA - 2024 (3) TMI 1021 - SC ORDER Sections: 010(38) , 068, Claim of long-term capital gains on shares in terms of Section 10(38) - Assessee not claiming exemption u/s 10(38) at the stage of the assessment proceedings but turned around and make such claim of wanting to cross-examine persons - Denial of principles of natural justice - denial of an opportunity to cross examine the entry providers - HC [ 2023 (2) TMI 392 - ORI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SSA HIGH COURT] held that claim for benefit of Section 10(38) of the Act and denial of an opportunity to cross examine the entry providers, turned on facts. ITAT was justified in accepting the plea of the Assessee that the failure to adhere the principles of natural justice went to the root of the matter. Also, the CBDT circular that permitted to the Assessee to file revised returns if he omitted to make a claim was also not noticed by the AO. HELD THAT:- There is gross delay of 298 days/300 days in filing this special leave petition. The explanation offered is not sufficient in law to condone the delay. Hence, the application seeking condonation of delay is dismissed. Consequently, the special leave petition is also dismissed, keeping open the question of law, if any. PR. COMMISSIONER OF INCOME TAX - 1 VERSUS DIPANSU MOHAPATRA - 2024 (3) TMI 217 - SC ORDER Sections: 010(38) , 068 , Delay in filling appeal before Supreme court - Denial of principles of natural justice - Assessee permitted to file revised returns - Claim for benefit of Section 10(38) - additions u/s 68 and 69 - Assessee not claiming exemption u/s 10(38) at the stage of the assessment proceedings Assessee turned arou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd and make such claim of wanting to cross-examine persons make adverse statements against the Assessee at the stage of the appeal before the ITAT - As decided by HC [ 2023 (2) TMI 392 - ORISSA HIGH COURT] ITAT was justified in accepting the plea of the Assessee that the failure to adhere the principles of natural justice went to the root of the matter. HELD THAT:- There is gross delay of 273 days, 288 days and 267 days in filing the special leave petitions. The explanation offered is not sufficient in law to condone the delay. Hence, the applications seeking condonation of delay are dismissed. Consequently, the special leave petitions are also dismissed keeping open the question of law, if any . PR. COMMISSIONER OF INCOME TAX 1 VERSUS ANUPAMA MOHAPATRA - 2024 (2) TMI 1202 - SC ORDER Sections: 010(38), 068, 069 , 261 , Delay in filling appeal before SC - Denial of claim for benefit of Section 10(38) of the Act and denial of an opportunity to cross examine the entry providers by revenue - substantial question of law or facts - as decided by HC [ 2023 (2) TMI 392 - ORISSA HIGH COURT] ITAT was justified in accepting the plea of the Assessee that the failure to adhere the principles of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... natural justice went to the root of the matter. Also, the CBDT circular that permitted to the Assessee to file revised returns if he omitted to make a claim was also not noticed by the AO. HELD THAT:- There is gross delay of 272 days in filing the special leave petition. The explanation offered is not sufficient in law to condone the delay. Hence, the application seeking condonation of delay is dismissed. Consequently, the special leave petition is also dismissed keeping open the question of law, if any. Pending application(s) stand disposed of. Observations: In case of first category there is one case related with Mohapatra arising from judgment of the Orissa High Court. In this case there was no delay and the SLP has been dismissed without keeping question of law open. Whereas in second category all cases are related with Mohapatra and arising from judgment of Orissa High Court . Facts were similar in all cases of Mohapatra group of cases. In second category there was delay in filing of SLP and delay was not allowed and consequently SLP was also dismissed. Therefore, it seems that in such cases rider that Question of Law is kept open may be given as a matter of practice only. Ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herwise there seems no reason for difference in orders of the Supreme Court. (COD allowed and SLP dismissed but question of law kept open) case of Writ Petition and not appeal (say Third category ) PR. COMMISSIONER OF INCOME TAX-1 KANPUR VERSUS RENU AGGARWAL - 2023 (7) TMI 288 - SC ORDER Addition u/s 68 - penny stock purchases - As decided by HC name of the appellants were neither quoted by any of persons nor any material relating to the assessee was found at any place where investigation was done by the investigation Wing - HELD THAT:- No case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India. The Special Leave Petition is accordingly dismissed. ORDER UPON hearing the counsel the Court made the following Delay condoned. No case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India . The Special Leave Petition is accordingly dismissed. However, the question of law is kept open. Pending application, if any, also stands disposed of. Only one SLP of assessee: SLP of assesse- only one case found The SLP of assessee was dismissed because ITAT has not found evidence of actual s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale of shares. The case is as follows: SUMAN PODDAR VERSUS INCOME TAX OFFICER - 2019 (11) TMI 1237 - SC ORDER Sections: 010(38) , 068, Bogus LTCG - exemption claimed u/s 10 (38) denied - No evidence of actual sale - HELD THAT:- SLP dismissed. bservations: In cases where assessee has established actual sale of shares by way of delivery of shares from Demat account and realization of sale consideration through banking channel, the capital gains have been accepted and additions have been deleted in majority of cases before SC, HC and ITAT in case of appeal. Question of law has been kept open only in cases where COD was dismissed and in case of a Writ Petition instead of an appeal before the Supreme Court. Therefore, analysis shows that in majority of cases matter is decided in favor of assessee and question of law is not open. Pending SLP of revenue.: PRINCIPAL COMISSIONER OF INCOME TAX 12 VERSUS KRISHNA DEVI - 2022 (4) TMI 1452 - SC ORDER Additions made u/s 68 read with Section 115BBE - LTCG in penny stocks - As per HC Lower tax authorities are not able to sustain the addition without any cogent material on record - HELD THAT:- Issue notice. Dasti, in addition. O R D E R Issue notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Dasti, in addition. Tag with SLP(C) No. 419 of 2022. Citations: in 2022 (4) TMI 1452 - SC Order 1. Principal Commissioner of Income Tax -12 Versus Smt. Krishna Devi, Hardev Sahai Gupta (Garg) , Smt. Bindu Garg - 2021 (1) TMI 1008 - DELHI HIGH COURT For the case of Krishna Devi (supra) as per website of the Supreme Court the following information is found on 29 April 2024 at about 2 PM; Diary No. 4970/2022 Filed on 16-02-2022 12:00 AM [SECTION: XIV] PENDING Case No. SLP(C) No. 004068 - / 2022 Registered on 04-03-2022 (Verified On 23-03-2022) Status/Stage PENDING (Motion Hearing [SERVICE/COMPLIANCE]-BEFORE REGISTRAR(J) / [AFTER NOTICE (FOR ADMISSION) - CIVIL CASES]) List for Final Hearing/Disposal At Misc. Stage, List on fixed month (10), List On NMD (ANY)-Ord dt:10-04-2023 Tagged cases can be seen in case status tagged cases at https://main.sci.gov.in/case-status There are large number of tagged cases. The list is being sent by email and can be inserted by the editor . Learned readers and other authors are requested to share their views and information available to them - Reply By DEVKUMAR KOTHARI as = In order reported as 2024 (5) TMI 35 - SC ORDER PRINCIPAL COMMISSIONER OF INCOM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E TAX- 1 VERSUS SITANSU SEKHAR MOHAPATRA also COD petition was dismissed , consequently SLP was dismissed but question of law has been kept open. This order is dt. 29.04.24 and has been published on this website after the article was written and transmitted online for publication. Dated: 1-5-2024 - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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