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TMI Blog2024 (6) TMI 1200X X X X Extracts X X X X X X X X Extracts X X X X ..... hose shares were manipulated by certain share brokers for granting undue benefit to the investors either in the shape of gain or loss whenever it is required to an investor. Therefore, the very credential of this company where investment was made is unreliable. The genuineness of an investee company is not dependent on the magnitude of profit earned by an investor. The assessee might have made investment when the shares of the company were already managed to a particular level and he sold his investment very early, but that small profit is earned by the assessee would not result into automatic genuineness of the transaction. It is an incorrect conception conceptualized by the assessee to segregate himself from the treatment of other such in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y assessment and a notice under section 143(2) was issued and served upon the assessee. During the course of scrutiny assessment, it revealed to the ld. Assessing Officer that the assessee has purchased 6,000 of equity shares of Sulabh Engineers Services Ltd. through the broker, namely Motilal Oswal Securities Limited @ Rs.74.30 only per share on 09.05.2013. These shares were sold by the assessee in two parts, namely 2,000 shares on 22.07.2014 @ Rs.242.28 per share and 4,000 shares @ Rs.243.02 per share on 04.08.2014 and in this way, the assessee has claimed total sale consideration of Rs.9,72,080/- and claimed long-term capital gain as exempt under section 10(38) of the Income Tax Act. The ld. Assessing Officer disallowed this claim and he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT 6. Sanjay Kumar Agarwal (HUF) vs ITO - Kolkata ITAT 7. Uma Shanker Dhandhania vs ITO - Lucknow ITAT In a recent decision rendered by Hon'ble Calcutta High Court in the case of Pr.CIT vs Swati Bajaj fl39 taxmann.com 3521, the claim of LTCG earned on sale of shares of penny stock companies have been denied by the AO and such additions have been upheld by Hon'ble High Court mainly due to the reason that such a steep rise in share prices, that too when the general market trend was recessive is contrary to the principle of preponderance of probabilities. In the facts before the Hon'ble Calcutta High Court it has been specifically observed by the Hon'ble High Court as under:- That assessee purchased shares of Surabhi Chemica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the share prices of Sublabh Engineers and Services Limited have risen from Rs. 60 in the month of April, 2013 to Rs. 240 in the month of November, 2014. A chart showing the month-wise share prices of the said company starting from April, 2013 to November, 2014 are enclosed in our earlier paper book filed on 20-09-2023 [Pg. 132-136]. It is significant to note that the share prices have remained in the range of around Rs. 240 for a period of 8 Months (April, 2014 to November, 2014). Thus it is submitted that the case Pr.CIT vs Swati Bajaj) 139 taxmann.com 352 of Hon'ble Calcutta High Court is distinguishable on facts. It is important and relevant to mention here that after the rendition of the decision of Swati Baiaj (Supra). by Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngineers and Services Limited as an innocent and gullible investor. And there is no evidence and/or allegation of the assessee's involvement in the price manipulation of the scrip. Also, there is no evidence and/or allegation of any involvement of the assessee s broker i.e. M/s. Motilal Oswal Securities Ltd., in the price manipulation of the scrip. Further it is submitted that the report prepared by the Directorate of Investigation Kolkata dt. 27-04-2015 mentions the brokers who were involved in price riging of the said scrip. It is important to note that the broker M/s. Motilal Oswal Securities Ltd. is not among the list of brokers who were involved in the price riging. Similarly, it is also important to note, that, as per the report o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmal profit. He purchased the shares @Rs.74/- per share and sold them around Rs.240 to Rs.243/- per share. The average value enhanced in stock exchange on shares in this period of eight months for which assessee retained his investment is more than the assessee got while investing in the Sulabh Engineers Services Limited. Therefore, operative force of the argument of the ld. Counsel for the assessee is that since the assessee has earned a very normal profit on this investment. His investment should be considered as an innocent investment. 7. On the other hand, the revenue relied upon the order of the Hon ble Jurisdictional High Court in the case of Swati Bajaj Others (2022) 139 taxmann.com 352(Cal.) and submitted that there is no distinguis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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