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TMI Blog2025 (3) TMI 1045X X X X Extracts X X X X X X X X Extracts X X X X ..... alt with suspicious scrips, merely on the basis of movement of share price and there is nothing on record to prove that the assessee has in no way involved in price rigging or in any irregularities. Decided against revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... and filed its return under section 139(1) of the Act. The assessment was completed under section 143(3) on 22/03/2016. Subsequently, information was received form Investigation Wing, Mumbai, wherein its is informed that the assessee is one of the beneficiaries of obtaining short term capital loss / business loss by trading in scrips of Blue Circle Services Ltd(in short "Blue Circle"), Shreenath Commercial & Finance Ltd(in short "Shreenath"), & Chirawa Cements Ltd (in short "Chirawa") and incurred capital loss amount of Rs. 3, 12, 55, 526/- by trading in these scrips. On the basis of the information from Investigation Wing, the Ld.AO reopened the assessment under section 147 of the Act and notice under section 148 was issued. Finally, the assessment was framed under section 143(3) read with section 147 of the Act and by adding this business loss amount to Rs. 3, 11, 74, 336/- with the total income of the assessee. The Ld.AO has treated this loss as a fictitious loss which was generated by manipulating the alleged shares. Aggrieved assessee filed an appeal before the Ld. CIT(A). The assessee challenged the order both on legal and merit before the Ld. CIT(A). But the Ld.CIT(A) has al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... segments. It is further contended that the appellant is whole time trader/speculator in the capital market, having traded in numerous stocks during the year, with turnover running into hundreds and thousands of crores. The action of the Ld. AO of cheery Picking specific scripts, merely because the assessee has incurred losses, is not correct. 18.3 The appellant further contended that during the course of assessment proceedings, the appellant had submitted the various documents in support of genuineness of transactions in the particular scrips in which losses have been disallowed by the Assessing Officers. The list of documents submitted by the appellant during the assessment proceedings are reproduced as under: 8. Documents in case of alleged Penny Stocks Shreenath a) Contract Notes Yes 112-151 b) Ledger Yes 152-159 c) Details of Sales and purchase Yes 160 9. Blue Circle Services Limited a) Contract Notes Yes 161-180 b) Ledger Yes 181-188 c) Details of Sales and purchase Yes 189 10. Chirawa Ceme DM d) Contract Notes Yes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee has only incurred the loss only for 3 shares whereas number of stocks sold during the year was 118. The assessee is a regular trader and speculator and the said details was depicted in the appeal order in paragraphs 20 to 20.2, which are reproduced as below:- "20. On perusal of the audit report of the appellant, it is observed that the appellant is a regular trader in the stock market. It has shown total sales of Rs. 193.58 crores, speculation profit of Rs. 1, 38, 20743, future & option trading of Rs. 66, 13, 58, 891 and dividend income of R.1, 46, 92, 267. The gist of appellants trading activity in cash segment during the year under consideration is as under:- Particular No. of shares Value of shares (in Rs. ) No. of the Stocks outstanding 01.04.2012 50 1, 783, 706, 343 No. of Stock purchased during the year 124 1, 86, 38, 81, 444 No. of Stock sold during the year 118 1, 93, 58, 89, 837 No. of Stock Sold at Profits 51 14, 03, 89, 150 No. of Stock Sold at Losss 67 49, 40, 19, 090 No. of Stock at the end of the Year 61 1, 35, 80, 68, 010 No. of Shares losses disallowed by the Ld.AO 3 3, 12, 55, 526 20.2. Apart from the cash market, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SEBI. In light of the above discussion, and particularly considering that the appellant is a regular trader in the stock market with a substantial turnover, the judgment of the Hon'ble jurisdictional ITAT, Mumbai Bench, in the case of M/s. Munish Financial (supra), directly applies to the facts of the present matter. Therefore, addition made by the AO stands deleted. Accordingly, appeal on the ground 5, 6 and7 is ALLOWED." 8. We heard the rival submissions and considered the documents available in the record. On perusal of the documents, we find that the alleged 3 scrips, viz. Blue Circle, Shreenath & Chirawa which are treated by the revenue as penny stock and it is also fact on record that these scrips are categorized as penny stock as per the investigation wing, Kolkata reports and Ld. AO has heavily relied on these reports and report of SEBI to come to the conclusion that the various scrips dealt with by the assessee are penny stock and he discussed various analysis made by the investigation wing of Kolkata and other agencies and relied on various submissions of various dealers in these scrips and proceeded to disallow the claim made by the assessee on the business loss. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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