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TMI BlogBogus Capital Gains and Accommodation Entries: Unraveling the Penny Stock Scam and Tax EvasionX X X X Extracts X X X X X X X X Extracts X X X X ..... ns, and the transactions were part of a larger accommodation entry scam. Arguments Presented Revenue's Arguments The revenue argued that the entire activities of the assessees were a colourable device to obtain bogus capital gains. They relied on various judicial pronouncements, including the Delhi High Court's decision in the case of UDIT KALRA Versus ITO WARD-50 (1) - 2019 (4) TMI 834 - DELHI HIGH COURT , where the astronomical growth in the value of a company's shares raised suspicions, leading the revenue to treat the receipts from the sale of shares as bogus. The revenue also cited several orders and judgements from various courts and tribunals, including the Delhi High Court's decision in COMMISSIONER OF INCOME TAX Ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditworthiness, and the genuineness of the transactions. The revenue is not required to prove that the assessee's own monies were brought back in the form of share application money. Role of Assessing Officers and Tribunals The court criticized the assessing officers for not conducting a proper enquiry and the tribunals for interfering with the orders of the CIT(A) and the Commissioner's orders u/s 263 of the Act in a perfunctory and superficial manner, without delving into the core issues. Powers of the Court u/s 260A The court emphasized its powers u/s 260A of the Act, which allows it to intervene if the Tribunal has misunderstood the statutory language, arrived at findings based on no evidence or inconsistent with evidence, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Legal Principles Discussed The court discussed the following doctrines and legal principles: Doctrine of Preponderance of Probabilities Burden of Proof u/s 68 of the Income Tax Act Powers of the Court u/s 260A of the Income Tax Act Comprehensive Summary The judgement dealt with a complex case involving alleged tax evasion through the generation of bogus long-term capital gains from trading in penny stocks. The revenue authorities contended that the entire scheme was a colourable device to obtain bogus capital gains, and the transactions were part of a larger accommodation entry scam. The court discussed various legal principles, including the doctrine of preponderance of probabilities, the burden of proof u/s 68 of the Income Tax Act, and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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