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TMI Blog2025 (2) TMI 819X X X X Extracts X X X X X X X X Extracts X X X X ..... materialized and sold through BSE, demonstrating the transparency of the transaction. AO's addition under Section 68 is not based on any direct evidence showing that the transactions were accommodation entries. The AO has relied only on general observations regarding penny stock manipulation, without establishing any link between the assessee and such activities. Mere stock price fluctuations, without direct evidence of price rigging or collusion, cannot justify an addition under Section 68 of the Act. Hon'ble Gujarat High Court, in the case(s) of Pr. CIT v. Himani M. Vakil [2012 (9) TMI 1099 - GUJARAT HIGH COURT] and Maheshchandra G. Vakil [2012 (9) TMI 1098 - GUJARAT HIGH COURT] has held that mere reliance on the Investigation Wing's re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee had declared total Long-Term Capital Gain (LTCG) of Rs. 1,29,20,843/- including the LTCG arising from the sale of shares of Kappac Pharma Ltd. (KPL). The assessee had purchased 53,000 shares off market from Shaswat Stockbrokers Pvt. Ltd. at the rate of Rs. 20.19 per share, which were later dematerialized and sold on the Bombay Stock Exchange (BSE) through ASE Capital Markets Ltd. at the rate of Rs. 253 to 257 per share. The sale consideration was received through banking channels, and STT was duly paid on the transactions. 3. The AO relied on various reports and investigations conducted by the Income Tax Department in Kolkata, Delhi, and Mumbai, which unearthed accommodation entry operations in penny stocks. The AO identifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as bogus and added to total income. In response, the assessee submitted a reply on 09.11.2017, contending that the shares were bought at market price as per the stock exchange, payment was made via account payee cheques, ensuring transparency, delivery of shares was done through Demat accounts, proving ownership. The assessee also submitted that the shares were held for more than 15 months, qualifying them as LTCG under Section 10(38) of the Act. Transactions were conducted via SEBI-registered brokers, and STT (Securities Transaction Tax) was paid. The assessee also stated that the AO relied on general observations about penny stock manipulation, without any direct proof against the assessee. 3.3. The AO rejected the argument that the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of shares of Kappac Pharma Ltd was non-genuine and there was no financial credentials to justify such a significant increase in price of shares in short period and the assessee had a windfall Long Term Capital Gain of Rs. 1,24,19,369/-. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 4. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent. 5. This case is covered under exception as per CBDT's Circular No.23 of 2019 dated 06.09.2019 read with Office Memorandum dated 16.09.2019 vide F.No.279/Misc./M-93/2018-ITJ(Pt.). 6. During the course of hearing before us, the Departmental Representat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the co-ordinate bench in the case of Denisha Rajendra Keshwani (wife of the Karta of HUF), where Facts and circumstances were identical and the bench dismissed the Revenue's appeal, upholding the genuineness of transactions. 8. We have considered the rival contentions and perused the material available on record. The assessee has provided all necessary documentary evidence to substantiate the purchase and sale of shares, including purchase agreements, Demat account statements, broker confirmations, bank transaction records, and STT payment proof. The broker, Shaswat Stockbrokers Pvt. Ltd., confirmed the transactions in response to a notice under Section 133(6) of the Act. The shares were purchased off-market but subsequently dematerial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cials. However, in the present case, the assessee purchased shares at a price higher than the market rate and sold them at a lower-than-peak price, indicating no price manipulation. The AO failed to establish any direct link between the assessee and entry operators or price rigging. Further, the assessee is a regular stock market investor with a history of trading activities, unlike in Swati Bajaj, where the transaction was found to be isolated and pre-arranged. Similarly, in the case of Atmiben Alipitkumar Doshi (supra), the Co-ordinate Bench treated the LTCG as bogus because the shares were purchased in cash, and the price movement was completely disproportionate to the company's financials. In contrast, in the present case, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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