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TMI Blog2025 (4) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... d was actually from so called sale of stock are genuine and out of real transactions? 2. Whether on the facts and circumstances of the case and in law, the Ld. CIMA) is erred in deleting the entre addition of Rs. 84,50,000/-which was made on account of unexplained cash u/s. 68 of the LT Act, by ignoring the fact that the action of the Assessing offer was based on the report of the Principal Director Investigation Wing Culcutta, in respect of transactions of share of some penny stock companies carried out at NSS and BSS, which was found to be controlled by some hawala Traders used either for giving artificial gain in the form of LTCG/STCU or STCL to the beneficiaries as per their requirements to evade tax and assessee was found to be one of such beneficiaries, who has treated in the penny script Ms. Virtual Global Education Lad / Scrip Code 534741), used to bring her unaccounted money, into her books in the guise of Capital Gain. 3. "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) is erred in deleting the entire addition of Rs. 84,50,000/- which was made on account of unexplained cash u/s. 55 of the Income Tax Act 1961, without considering the fact t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/- which was made on account of unexplained cash u/s. 68 of the 17. Act, without appreciating the fact that in such cases where there was a suspicious or bogus trade, the onus is on the assessee to establish the genuineness of price hike and to prove that the price of penny stock in which he was traded to claimed LTCG/STCG or loses was not manipulated, as reliance is placed on Hon'ble Calcutta High Court in the decision in the case of Pr. CIT Vs. Swati Bajaj (L.A.No. GA/2/2022 in ITAT No. 6 of 2022, Dated. 14.06.2022 wherein the it was held that merely demonstrating the financials of the company, volume of trade, transactions though banking channels inter alia will not suffice. The assessee has to prove that the price of the share or penny stock was not manipulated?" 8. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the entire addition of Rs. 84,50,000/- which was made on account of unexplained cash u/s, 68 of the IT Act, by ignoring the direct and circumstantial evidences in view of the decision in Durga Prasad More (1971) 82 ITR 540 decision in Durga Prasad More (1971) 82 ITR 540 (SC) and Sumati Dalal (1995) 80 ABxCBD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), New Delhi on the Insight portal of the Department, ld. Assessing Officer observed that Virtual Global Education Ltd. (scrip code 534741) is a paper entity with no genuine business and its scrip is a penny stock which has been used to provide bogus profit/loss to the beneficiaries. According to ld. Assessing Officer, based on the said information, assessee was identified as one of the beneficiaries who has traded in the said scrip in the year under consideration, for which assessee had entered into transaction with total trade value of Rs. 26,90,891/-. Ld. Assessing Officer took note of the modus operandi as discussed in the investigation report to note that this scrip was used to facilitate introduction of unaccounted income of beneficiaries in the form of exempt long term capital gain or short term capital loss in their books of accounts. Based on this information, reopening proceedings were initiated by issuing a notice u/s. 148 on 18.06.2021. 3.1. On facts relating to trading in scrip of Virtual Global Education Ltd., it is noted in the impugned assessment order that during the Assessment Year 2015-16, assessee had purchased 11 lakh shares of this scrip for a total value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchased 11,00,000 shares of Virtual Global Education Ltd for a total value of Rs. 1,06,70,000/- and sold 5.00.000 shares for a total value of Rs. 69,18,000/-. Thereafter, during the F. Y. 2015-16 the assessee sold the remaining 6,00,000 shares for a total value of Rs. 84,50,000/-thereby earning Short Term Capital Gain of Rs. 26,90,891/-. The assessee has not furnished any explanation regarding the source of investment in share. Hence, It is clear that, it is the assessee's unaccounted money which she has brought into her books in the guise of capital gain. Here it is pertinent to mention that the assessee did not opt for LTCG or STCL for the reasons that if she would wait for 1 year the price of the scrip would fall and it would result in Loss. As having no business income there was no option to adjust the loss hence, she opted for STCG." 4.1. Admittedly, it is a fact on record that assessee had earned short term capital gain on the trading of scrips of Virtual Global Education Ltd. which was duly accounted and reported in the return filed by her in the year under consideration which was subjected to tax. The conclusion drawn is like throwing mud in the air so that some part o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her STCG was genuine, and taxes on this income were duly paid. Judicial precedents, including the Hon'ble Bombay High Court's decision in CIT v. Shri Mukesh Ratilal Marolia [2011-TIOL-138-HC-MUM-IT], have held that if an assessee provides sufficient documentary evidence to substantiate the genuineness of transactions, the burden shifts to the revenue to prove otherwise. In the present case, the AO has failed to provide any evidence discrediting the appellant's transactions, thus confirming their legitimacy. Addition under Section 68 The AD made an addition of Rs. 84,50,000 under Section 68 of the Income Tax Act, treating the entire sale proceeds from Virtual Global shares as unexplained cash credits. This addition is based on the AO's assumption that the entire transaction was bogus. However, the appellant has already declared STCG on the sale of these shares in her return and has paid applicable taxes on this income. The AO's decision to tax the entire sale proceeds without considering the already taxed STCG is against the established principles of taxation. Section 68 requires that for an amount to be treated as unexplained credit, there must be no explana ..... X X X X Extracts X X X X X X X X Extracts X X X X
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