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TMI Blog2024 (8) TMI 1296X X X X Extracts X X X X X X X X Extracts X X X X ..... the orders passed by the ITAT on the issue of penny stock on facts by saying that there is no substantial question of law is involved. Thus, we also hold that transactions of share scrip of VAS infrastructure Ltd. cannot be termed as fictitious in the absence of any evidence of manipulation of that scrip. The orders of the Ld. AO and the Ld. CIT (A) are found to be based only on the modus operandi given in the Investigation report and not based on any independent enquiry. Decided in favour of assessee. - Ms Kavitha Rajagopal, Judicial Member And Shri Ratnesh Nandan Sahay, Accountant Member For the Assessee : Shri Subodh Ratnaparkhi, C. A. For the Revenue : Shri R. R. Makwana- SR. D.R. ORDER PER: RATNESH NANDAN SAHAY, ACCOUNTANT MEMBER: 1. This appeal has been filed by the appellant against the Order of the Ld. CIT (Appeals) passed u/s. 250 of the Income Tax Act [the Act in short] vide DIN Order No. ITBA/NFAC/S/250/2023-24/1054070135(1) Dated 30/06/2023 for the Assessment Year 2011-12. 2. Following grounds of appeal have been raised by the appellant: 1. Learned CIT (A) /A.O has erred in making addition of Rs. 26,02,810/- against the principle of equity natural justice Learned CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Act as unexplained cash credit u/s. 68 of the Act on the basis of the information received from the Investigation Wing wherein the modus operandi adopted by the penny stock dealers was given in detail. The AO has discussed this in the body of the assessment order and is not being reproduced to avoid repetition. 5. Aggrieved by the order of the Ld. AO, the assessee filed appeal before the Ld. CIT(A) who dismissed the appeal of the assessee by holding as under: - 6.5 From the above, it is clear that the Assessing Officer had brought out the modus operandi as to how bogus Long Term Capital Gain/Long Term Capital Loss is claimed in respect of sale of penny scrips. In respect of the scrip, M/s. VAS Infrastructure Ltd. the Assessing Officer had clearly analyzed the financials of the company. Also, the appellant does not explain as to how purchase of 2500 shares was made by the appellant when the company, M/s VAS Infrastructure Ltd had no proven financial results This issue was not addressed by the appellant in her reply. The Assessing Officer also analyzed the variation in share price and commented that the share price in the captioned case displayed a short rise in FY 2010-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order the Assessing Officer. Accordingly, these grounds of appeal No 1, 2, 3, 4, 5, 6 7 are required to be dismissed. 6. Aggrieved by the order of the Ld. CIT (A), the present appeal has been filed. During the appellate proceedings before us, the appellant, besides making oral submissions, also submitted Paper Books both on facts of the case as well as on the judicial decisions given by various courts/tribunals on the issue of the penny stock. The extracts of the submissions are given as under: - 1) The appellant is an individual having income from capital gains, both long term as well as short term. The return of income for the year under appeal was filed on 28.09.2011 declaring total income of Rs. 37,590/- 2) The appellant regularly purchases and sells listed securities. During the year under appeal, the appellant has sold equity shares of Rs. 1,30,308/- and earned long-term capital gains of Rs. 28,461/-, Similarly, on sale of equity shares of Rs. 3,58,77,933, the appellant has incurred loss of Rs. 2,11,458/- which is declared as short-term capital loss and carried forward to subsequent asst. year. The total list of equity shares held and dealt with by the appellant is given a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion made in her hands u/s 68 is uncalled for. The appellant also draws attention to the following specific aspects of the transaction. i. Firstly, the appellant points out that she has dealt with a large number of other scrips also and is undisputedly a regular investor in the stock market. This is not in dispute ii. Secondly, it is also to be noted that apart from the disputed 24000 equity shares of M/s. VAS Infrastructure Ltd, the appellant has also purchased further 10337 shares of the said company and sold 2270 shares in the year under appeal itself. The other transactions of the appellant of purchase and sale of shares of VAS Infrastructure Ltd carried out in the year under appeal itself are not disputed. No addition is made in respect of such other transactions of purchase and sale of shares of the same scrip. iii. Apart from the above, it is to be appreciated that the appellant has first invested Rs. 22,97,760/- in purchase of 24000 equity shares of M/s. VAS Infrastructure Ltd and on sale of such shares received credit of Rs. 26,02,910/-, thereby the net credit in the year under appeal in the books of the appellant is of Rs. 3,05,150/- only. Thus, when the benefit to the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al loss of Rs. 51.279/-, in our view, cannot be a case of doubtful investment in penny stock. The A.O. has also not made any enquiry as to the payments made by the assessee to the recognized broker nor has the A.O. brought on record any material evidence to show that it was a mere bogus transaction except for the information received from DDIT (Investigation) that M/s. Vas Infrastructure Ltd. was a penny stock. Even otherwise, if it is assumed that M/s. Vas Infrastructure Ltd. was a penny stock, we find no reason to hold the assessee liable for having invested in the said share in the absence of any corroborative evidence. The Id. AR has placed reliance on the decision of the Tribunal where similar additions have been deleted in case of investment made in M/s. Vas Infrastructure Ltd. We are not in agreement with this submission of the Id. AR for the reason that the decision in other cases of penny stock cannot be a binding precedent in this case, as the facts of each case has to be considered in isolation with regard to the evidences available in that particular case. We are also conscious of the fact that mere suspicion that the assessee has invested in alleged penny stock scrip c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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