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TMI Blog2024 (5) TMI 1561X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. AO of Rs. 9,72,958/- on account of alleged commission. " 3. Brief facts of the case are that the assessee is a private Limited company doing the business of Real Estate, Share and Securities. The return of income was filed by the assessee on 25.11.2014 declaring loss of Rs. 1,849/ -. The case was selected for scrutiny through CASS. Accordingly, a notice u/s 143(2) was issued on 18.09.2015 fixing hearing for 24.09.2025, which was duly served on the assessee. Notice u/s 142(1) along with questionnaire were issued on various dates the ld. AR of the assessee, attended the proceedings, and filed written replies and documents which have been placed on record; produced supporting details in respect of ROI filed which are test checked and the facts of the case were discussed by the ld. AO. 3.1 On account of the searches conducted on account of the searches conducted by the Investigation Wing of the Department at various places throughout the country. During the searches & as per the information made public by the SEBI, it is discovered that various syndicates have arranged accommodation entry of bogus LTCG, Bogus STCG, Bogus Long/short term Capital Loss through trading of shares of P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of investigation by the Wing that the beneficiaries have paid commission @ 6% or more on acquiring accommodation entries for bogus short term loss. Therefore, 6% commission paid i.e. Rs. 9,72,958/- (6% of Rs. 1,62,15,971/-) is treated as undisclosed expenditure for acquiring accommodation entry as discussed above. 4. Aggrieved from the order of the assessing officer, assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds of the appeal so raised by the assessee, the relevant finding of the ld. CIT(A) is reiterated here in below :- "4.5 I have considered the submission of Ld. A/R and carefully gone through the material available on record. The Assessing Officer disallowed the bogus loss claimed of Rs. 1,62,15,971/- by the appellant and also made addition of commission of Rs. 9,72,958/- paid for acquiring accommodation entry. The AO mentioned following reasons for making the addition- a. The investigation wing of income tax department conducted searches and it is found that there is syndicate operating to provide accommodation entry of bogus gain and Bogus loss. Detailed findings of investigation made by the Department are given by the AO in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies by these operators. k. The appellant failed to justify purchase and sale of these shares. l. The appellant has not given name of the person who recommended purchase of these shares to the appellant m. The appellant is not even aware about the person after talking with whom the order to purchase these shares were placed. n. These transactions undertaken by the appellant are sham transactions and colorable device to evade tax. o. The AO has applied test of human probabilities and genuineness and relying on the judgment of Hon'ble Supreme Court in the case of Sumati Dayal Vs CIT (214 ITR 801) and other decisions the AO held that transactions undertaken by the appellant are not genuine. p. The appellant failed to prove that there was no such scheme as identified by the Income Tax Department, q. The appellant failed to prove that no benefit derived by it from such scheme. Per contra the appellant argued that the above referred transaction of sale & Purchase are genuine as all transactions of sale and purchase are as per norms. The assessing officer has not pointed out any defect in the evidences fumished in support of these transactions. It is argued that they do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as to how he was prejudiced by not providing of cross examination. Unless and until the appellant shows and proves that she/he was prejudiced on account of such report/statement mere mentioning that non- furnishing of the report or non-availability of the person for cross examination cannot vitiate the proceedings. The assessees have miserably failed to prove the test of prejudice or that the test of fair hearing has not been satisfied in their individual cases. It is well settled principle of law as declared by the Hon'ble Supreme Court in the case of Sumati Dayal Vs. CIT (214 ITR 801) (SC) that the true nature of transaction have to be ascertained in the light of surrounding circumstances. It needs to be emphasized that standard of proof beyond reasonable doubt has no applicability in determination of matters under taxing statutes. In the present case, it is clear that apparent is not the real as evidenced from the investigation done by the department. Further, the Hon'ble Supreme Court, in the case of Chuhar Mal Vs CIT (1988) 172 ITR 250, highlighted the fact that the principle of evidence law are not to be ignored by the authorities, but at the same time, human prob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions: " ..... It is, no doubt, true that in all cases in which a receipt is sought to be taxed as income, the burden lies on the department to prove that it is within the taxing provision and if a receipt is in the nature of income, the burden of proving that it is not taxable because it falls within exemption provided by the Act lies upon the assessee, But in view of section 68, where any sum is found credited in the books of the assessee for any previous year, the same may be charged to income-tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory. In such case there is prima facie eYid-lice against the assessee, vtz, the receipt of money, and if he falls to rebut the same, the said evidence being un- rebutted, can be used against him by holding that il' is a receipt of an income nature. While considering the explanation of the assessee, the department cannot, however, act unreasonably. Having regard to the conduct of the appellant as disclosed in her swom statement as well as other material on the record, an inference could reasonab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drawn from the evidence or materials available or lacking, circumstantial evidence has its place to assist the process of arriving at the truth. It will also be worthwhile to consider the nature of burden of proof on the AO for proving a fact or circumstances in the income tax proceedings. The questions raised about the tax liability by the AO are to be answered by the assessee by furnishing reasonable and plausible explanations. If assessee is not forthcoming with proper or complete facts or his statement or explanation is contradictory, drawing of suitable inferences and estimation of facts is inevitable. In view of the above discussion, the arguments raised by the appellant are found to be not acceptable and the addition made by AO with regard to disallowance of bogus loss and unexplained expenditure on commission paid for procuring these entries of loss is found to be justified. Therefore, the order of the AO is confirmed. This ground of appeal is treated as dismissed." 5. Feeling dissatisfied with finding so recorded in the order of the ld. CIT(A) the assessee has preferred this appeal on the grounds as reiterated here in above. Apropos to the grounds so raised the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies a/w evidences the assessee may analyzed that how & in which reference the assessee company's name was found in the above enquiry. The assessee also made the request to provide the details in reference to assessee Company. B. UNACCOUNTED CASH IS UTILIZED TO PURCHASE SHARE AT A VERY ARTIFICIALLY INFLATE PRICE The Ld. AO mentioned that large scale manipulations has been done in the market price of share of certain companies listed in the BSE. It was also stated that the unaccounted cash of such persons (beneficiaries) is utilized to purchase share of such companies at a very artificially inflate price. The assessee submitted the response that the BSE controls the manipulations in the prices of shires and take stern action on such companies. Even trading is stopped in such shares. Kindly let us know about any such action from the BSE on the companies in which the assessee company dealt with, if this is so the assessee can take legal action against the Company and against the BSC because the assessee Company has increased huge losses in the transactions. It is further submitted that in this case assessee has made the payment of purchases through banking channel and it Is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reflected in J&K bank a/c of the assessee co. 6) The assessee purchased shares of all companies having high net worth of more than Rs. 25 crore and listed on BSE. Therefore, these companies cannot be called penny stock companies. 7) All shares are purchased in expectation of earning profit at the market price. 8) The assessee have to sold shares at low price because the share index was going down continuously and to save further loss. 9) The assessee have no control over the fluctuating prices of shares. Price of shares fluctuate on demand and supply. There are so many shares of which prices are very fluctuating time to time. 10) Reliance was also placed by the assessee on the decision of the Hon'ble Supreme Court of India in the case of Andaman Timber industries v/s CCE,Kolkata II (Civil Appeal No. 4228 of 2006 vide order dated 02/09/2015), wherein the Hon'ble Lordship has held the order to be illegal in absence of allowing opportunity of cross examination to the assessee. The assessee also rely on various case laws as detailed as under :- 1) Mahesh Mundra Mumbai vs ITO 21(1) ITA No. 1176/Mum/2012. 2) ITO ward 20(1) vs Naveen Gupta in ITA No. 696 (Delhi) SOT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Turbotech, Global Infratech, Indian Infotech and SRK Ind. Whereas the assessee clearly stated that the all above transactions of sale and purchase of shares are done through online in Bombay Stock Exchange which is a Govt. Controlled Agency. 6) Without considering the submission made by the assessee he Ld. AO with predetermined mind the Ld. AO stated that on the basis of above analysis, documentary evidences, circumstantial evidences human conduct and preponderance of probabilities, the Ld. AO hold, without bringing any evidence, that what is apparent in this case is not real, that these financial transactions were sham ones and that this entire edifice was only a colourable device used to evade tax. 7) The Ld. AO without bringing any evidence hold with imagination that the assessee sold the shares when the prices of shares have been reduced to an optimal levelorso, with the connivance of various entities in a very short period. 8) The Ld. AO stated a general observation that the shares in which the assessee has claimed to have made a deal, are identified as Penny Shares by the investigation wing of the department because rates of these shares are not based on business resu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(24) of the Act was amended with effect from April 1,1972 by the Finance Act, 1972 so as to include within its ambit, winnings from lotteries, cross word puzzles, races including horse races, card games and other games of any sort or from, gambling or betting of any form or nature whatsoever. The reason underlying the said amendment was that exemption from tax that was enjoyed in respect of such winnings had provided scope for conversion of "black' money into 'white' income.' The apex court concluded that 'There is no dispute that the amounts were received by the appellant from various race clubs on the basis of winning tickets presented by her. What is disputed is that they were really the winnings of the appellant from the races. This raises the question whether the apparent can be considered as real. As laid down by this Court, apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real and that the taxing authorities are entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probabilities.' Reliance is also pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an appeal before the Ld. CIT (Appeals) and submitted as appearing in Ld. CIT (Appeals) Order page no. 04-14. The relevant portion is as under :- 1) Your honour the assessee is a Pvt. Ltd. company doing the business of Real Estate & Share & securities. During the year under consideration the assessee incurred losses of Rs. 1,62,15,971/- from the business of Shares and Securities The assesses made following transaction of purchase and sale in shares - S. No. Scrip Name Buy Sell Loss (in Rs.) Qty Trade Qty Value 1 Turbotech 15000 70,29,898 15000 3,02,000 67,27,898 2 GBL Infra 20000 13,88,160 20000 8,04,162 5,83,998 3 Indian Infotech 157000 69,08,121 157000 9,78,272 59,29,849 4 SRK Ind 22400 38,06,081 22400 8,31,855 29,74,226 Total 1,62,15,971 2) To prove that the sales and purchase of these transaction the assessee the assessee furnished complete details of sales and purchase along with the audited set of books of accounts and financial results before Ld. CIT (Appeals). 3) Apart from these the assessee submitted following evidences and documents before Ld. CIT (Appeals). 1. Copies of the contract note of sales and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he accepted that he allowed Sh. Deepak Patwari, Sh. Parvesh Beriya and others to trade without any verification due to old relationship. 6) The assessee submitted before Ld. CIT (Appeals) that the assessee company does not know either Sh. Sankay Vora or Sh. Deepak Patwari or Sh. Parvesh Beriya and have relation with M/s Anand rathi Shares & Stock Brokers limited. Moreover in the entire statement of Sh. Sanjay Vora the name of the assessee company has not been stated by him. The transaction made by the assessee has also not been discussed In his statement. Assessee has not made any transaction with M/s Anand Rathi Shares & Stock Brokers limited. Moreover no opportunity of cross examination was provided to the assessee. Date of statement is after the end of F. Y. 7) In this respect the assessee submitted before Ld. CIT (Appeals) that the assessee is not related at all with Shy Jai Kishan Poddar or with the companies managed by him. The assessee does not know Sh. Jai Kishan Poddar and has not done any business or sale or purchase with him. The name of assessee or the transaction made by the assessee has not been mentioned in the statements given by him. Therefore it is totally ir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BenchMumbai. 9) In this respect the assessee submitted before Ld. CIT (Appeals) that On the date of transaction the trading in the shares of Turbotech engineers Pvt. Ltd, Global Infratech Ltd, SRK Ind Ltd and Indian infotech Ltd were active. Ld Assessing Officer has not stated the date of suspension of trading in the shares of above refereed companies Ld A.O. has not mentioned that how these companies are penny stock companies. Penny stock companies have not been defined in the Act. It is also submitted that these companies whether penny stock company or not were permitted for trading in the stock exchanges by SEBI. The transaction made by the assessee is genuine. 10) In this respect the assessee submitted before Ld. CIT (Appeals) that the assessee company does not know either Sh. Sanjay Vora or Sh. Deepak Patwari or Sh. Parvesh Beriya and have no relation with M/s Anand Rathi Shares & Stock Brokers limited. Moreover, in the entire statement of Sh. Sanjay Vora the name of the assessee company has not been stated by him. The transaction made by the assessee has also not been discussed in his statements. Assessee has not made any transaction with M/s Anand Rathi Shares & Stock B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken at the back of assessee. Assessee is not aware what was stated and in which respect it was stated. Assessee Company again humbly submit that the transactions of sale and purchase of shares made by them are genuine transactions. The transactions made by them may or may not be wrong or illegal but the assessee has made genuine transactions on the portal through member of stock exchange. No enquiry was made by Ld A.O. from the member through which transactions were made by the assessee company. All the contract notes have been submitted before Ld A.O. No defect in the contract notes were brought on the record by Ld A.O. No defect in the 'D'Mat a/c was pointed out. Payments of purchases were made through banking channel. Payments of sales were received through banking channel. Books of accounts of the assessee company are duly audited and all the transactions are duly recorded therein. No defect whatsoever was pointed out by Ld A.O. No ingenuineness of transaction was proved. Simply on the assumptions, presumption, surmises & conjectures loss claimed by the assessee company has been disallowed. 13) The assessee submitted before Ld. CIT (Appeals) that Penny Stock Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odation entries, there is no basis of these assumptions. Assessee Company has made genuine transactions and without bringing any single material against the assessee, the addition has been made unlawfully. It is also surprising that Ld A.O. has not discussed even a single transaction in above four companies, which is ingenuine. 18) Yourhonur the another assumption of Ld A.O. was that since some of the brokers have stated in their statements that they were involved in providing accommodations entries in above referred companies and all the transactions made by the brokers are accommodations entries. In this respect it is submitted that the assessee has not made any transaction of sales and purchases in the shares of above referred companies with the help of above referred alleged brokers. Even those brokers in their statements have not stated the name of Assessee Company as a beneficiary receiving accommodation entries. The assesseee company has made purchase and sale on the portal, they have paid Security Transaction Tax, Service Tax, Turnover Tax etc on the transactions made by them. Therefore the transactions made by the assessee company are genuine transactions. 19) The thir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . No opportunity of cross examination to the alleged brokers/persons was given to the assessee. It was not at all a colourable device. Therefore above decisions quoted by Ld A.O. are not applicable on the facts of case of the assessee. Rather, LD A.O. has not discharged his burden to prove the transactions made by the assessee not real and not genuine. We place our reliance on the following case laws :- 1. Hon'ble IT AT Mumbai Bench Mumbai in the case of ITO v/s Arvind Kumar Jain HUF ITA No. 4862/Mum/2014. 2. Hon'ble Raj. High Court in the case of CIT v/s Smt. Pooja Agarwal, Jaipur. 3. Smt. Bharti Arvind Jain v/s ITO (ITA No 6102/Mum/2016)- ITAT SMC Bench, Mumbai. 4. ITO v/s M/s Indravadan Jain HUF (ITA No. 4861/Mum/2014)- ITAT 'I' Bench, Mumbai 5. Chandrakant babulal Shah v/s The Assessing Officer, ward-16 (2)(4) (ITA No. 6108/Mum/2009)- ITAT 'C' Bench, Mumbai 6. Mayur M. Shah (HUF) v/s ITO (ITA No. 2390/Mum/2013)-ITAT 'SMC' Bench, Mumbai. 7. Asst.Commissioner of I.T. 14(3) vs Shri Ravindrakumar Toshniwal (ITA No. 5302/Mum/2008) - ITAT 'D' Bench, Mumbai. 8. Smt. Durgadevi Mundra vs. ITO (ITA No. 1175/Mum/2012)- ITAT 'SMC& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of hon'ble High Court of Calcutta in the case of Commissioner of Income Tax Vs Swati Bajaj (2022) 446 ITR 56 (Calcutta) is applicable. Hon'ble High Court held as under. "The report submitted by the Investigation department could not be thrown out on the grounds urged on behalf of the assessees. The assessees have not been shown to be prejudiced on account of non-furnishing of the investigation report or non-production of the persons for cross examination as the assessee has not specifically indicated as to how he was prejudiced, coupled with the fact as admitted by the revenue, the statements do not indict the assessee. That apart, the investigation has commenced targeting the individuals who dealt withthe penny stocks and after examining the modus seeing the cash trail the report has been submitted recommending the same to be placed before the DGIT (investigation) of all the States of the country. It is thereafter the concerned Assessing Officers have been Informed to consider as to the bona fideness and genuineness of the claims of LTCG/LTCL of the respective assesses qua the findings which emanated during the investigation conducted on the individuals who dealt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and proves that she/he was prejudiced on account of such report/statement mere mentioning that non-furnishing of the report or non-availability of the person for cross examination cannot vitiate the proceedings. The assessees have miserably failed to prove the test of prejudice or that the test of fair hearing has not been satisfied in their individual cases. L. It is well settled principle of law as declared by the Hon'ble Supreme Court in the case of Sumati Dayal Vs. CIT (214 IT 801) (SC) that the true nature of transaction have to be ascertained in the light of surrounding circumstances. It needs to be emphasized that standard of proof beyond reasonable doubt has no applicability in determination of matters under taxing statutes. In the present case, it is clear that apparent is not the real as evidenced from the investigation done by the department. Further, the Hon'ble Supreme Court, in the case of Chuhar Mal Vs CIT (1988) 172 ITR 250, highlighted the fact that the principle of evidence law are not to be ignored by the authorities, but at the same time, human probability has to be the guiding principle, since the AO is not fettered, by technical rules evidence, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, no doubt, true that in all cases in which a receipt is sought to be taxed as income, the burden lies on the department to prove that It is within the taxing provision and if a receipt is in the nature of income; the burden of proving that it is not taxable because it falls within exemption provided by the Act lies upon the assessee, But in view of section 68, where any sum is found credited in the books of the assessee for any previous year, the same may be charged to income-tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory. In such case there is prima facie eYid~|1ce against the assessee, vtz., the receipt of money, and if he falls to rebut the same, the said evidence being un- rebutted, can be used against him by holding that il is a receipt of an income nature .. While considering the explanation of the assessee, the department cannot, however, act unreasonably.Having regard to the conduct of the appellant asdisclosed in her sworn statement as well as other material on the record, an inference could reasonably be drawn that the win ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x proceedings. The questions raised about the tax liability by the AO are to be answered by the assessee by furnishing reasonable and plausible explanations. If assessee is not forthcoming with proper or complete facts or his statement or explanation is contradictory, drawing of suitable inferences and estimation of facts is inevitable. Q. The Ld. CIT Appeals hold that in view of the above discussion, the arguments raised by the appellant are found to be not acceptable and the addition made by AO with regard to disallowance of bogus loss and unexplained expenditure on commission paid for procuring these entries of loss is found to be justified. Therefore, the order of the AO was confirmed. 4.6. SUBMISSION OF THE ASSESSEE A. Your honour, the assessee is a Pvt. Ltd. company doing the business of Real Estate & Share & securities. During the year under consideration the assessee incurred losses of Rs. 1,62,15,971/- from the business of Shares and Securities The assesses made following transaction of purchase and sale in shares - S. No. Scrip Name Buy Sell Loss (in Rs.) Qty Trade Qty Value 1 Turbotech 15000 70,29,898 15000 3,02,000 67,27,898 2 GBL Infra 20000 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord to show that the persons investigated, including entry operators or stock brokers, have named that the assessee was in collusion with them. In absence of such finding how is it possible to link their wrong doings with the assessee. In fact, the investigation wing is a separate department which has not been assigned assessment work and has been delegated the work of only making investigation. O. The assessee relied on the decision held in the case cited [2023] 150 taxmann.com 90 (Ahmedabad - Trib.)/[2023] 201 ITD 132 (Ahmedabad - Trib.)[15-03-2023] in the case of Atulbhai Amritlal Mehta v. Deputy Commissioner of Income-tax (paper book page no. 1-4) wherein it was held that................... P. As regards the sales consideration when the assessee has shown the share sales consideration paid through his bank account and the Ld. AO has not brought on record any material to show that apart from the share sales consideration paid through bank account the assessee has brought his own money back as unaccounted money. The Ld. AO has passed the assessment order based on the statement of third party recorded by the Investigation Wing however, the assessee has specifically demanded t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order. The relevant scanned portion of page no. 38-47, para 5. Hence, your honour, is requested, kindly allow this ground and delete the addition made by the Ld. AO and erroneously confirmed by the Ld. CIT (Appeals) of Rs. 1,62,15,971/- by disallowing the claim of business loss. 5. GOA 2 On the facts & circumstances of the case & in law, also Ld. CIT (Appeals) grossly erred on facts and in Law confirming the addition made by the Ld. AO. of Rs. 9,72,958 on account of alleged commission. Your honour Ld A.O. has also made an addition of Rs. 9,72,958/- being commission paid for acquiring the above referred alleged accommodation entries for bogus short term loss @ 6% of Rs. 1,62, 15,971/- In this respect it is submitted that entire transaction of sales and purchases are genuine. There is no evidence with Ld A.O, of making payment of commission. No question does arise of paying any commission because the transactions are genuine the brokerage has been charged by the brokers in the bills of purchases and sales, which is verifiable. Hence, your honour, is requested, kindly allow this ground and delete the addition made by the Ld. AO and erroneously confirmed by the Ld. CIT (App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared by the revenue that the assessee's misused the claim of bogus long term capital as exempt from tax u/s. 10(38) is not correct and there is no such case of the assessee. The assessee out of the regular income invested in the stock of companies with a view to earn the profit but in fact the company was suffering from the price reduction even though staying invested for 7-8 months and therefore, with a view to save from the further loss sold the investment and has incurred the loss. The purchase of these shares by the assessee is from open market, supported by the SEBI registered broker, the purchase transaction is supported by the bill of the broker having the day, date, and time of purchase of security and therefore, the purchase is from the explained sources. On the other hand even the sale is on account of the continuation down fall of the amount invested by the assessee and to avoid further reduction in the capital invested the assessee has sold these shares in the open market having invoice from the registered broker who have given the invoice having day, date and time of selling the security and have transferred the money from the normal banking channel. The report of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he loss. Thus, as it is evident that the primary onus that is casted upon the assessee has discharged by the assessee and the revenue has merely based on the generalized way and that too while dealing with the cases of 10(38) relied upon the detailed investigation report where in there is no reference as the broker of the assessee with whom the assessee has undertaken the transaction is not discussed or covered and there is no reference of either of the assessee or to his broker the addition cannot be made in the hands of the assessee. We get support of our view in a case having similar set of facts where the Gujarat high court has held the same view in favour of the assessee in case of Principle Commissioner of Income Tax (Central) Vs. Affluence Commodities (P) Ltd., [ 161 taxmann.com 476 (Guj) ] and the relevant finding of the Gujarat high court is reiterated herein below : "2. By this Tax Appeal under section 260A of the Income Tax Act, 1961 ['the Act' for short] the appellant-Revenue has proposed the following questions of law arising out of the order dated 24.04.2023 passed by the Income Tax Appellate Tribunal [for short 'the Tribunal'] in ITA No. 593/AHD/202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of Rs. 73,12,905/- on sale of shares of Alang Industries Gas Ltd and loss on account of low market price in case of Kappac Pharma Ltd has held as under: "5.3 It was gathered by the Deptt/the Assessing Officer that during the year under consideration the appellant had dealt in some pennystocks namely share of M/s. Alang Industries Gases Ltd and M/s. Kappac Pharmaceuticals Ltd., that it had purchased these stocks in AY 2014-15 at high manipulated rate and sold them at very low rate to book business losses and to set off the profits earned in commodities transaction on NMCE platforms. The details are as under: Alang Industries Gases Ltd Date QTY Rate Value Date QTY Rate Value 12.04.2013 15,000 110.74 1661150 08.12.2015 20,000 10.25 2,05,000 15.04.2013 5,000 110.86 Total 20,000 2215450 Total 20,000 2,05,000 PROFIT/LOSS Rs. 20,10,450/- KAPPAC PHARMA Date QTY Rate Value Date QTY Rate Value 25.11.2014 37,912 252.71 95,80,824 37,912 112.85 42,78,369 Total 37,912 95,80,824 Total 37,912 42 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Gases Ltd. It is the case of the assessee that it sold only part of the shares and remaining shares have been held by the assessee in subsequent assessment year also. Thus following Jurisdictional High Court Judgement, the Ld. CIT(A) deleted the addition. 11. Respectfully following the above Jurisditonal High Court judgements and also the fact that the assessee is a retaining kappac Pharma shares as stockin-trade and the closing stock is valued at the market rate. Since the market rate is lower it has incurred a business loss of Rs. 53,02,455/- though the shares are not sold. The difference is only because the valuation of shares which is as per the Accounting standard and the share of Kappack Pharma are still forming part of closing stock of the assessee company as on 31.03.2019. Thus, we have no hestiation in deleting the disallowance made by the AO which was correctly deleted by the Ld. CIT(A). Thus the grounds raised by the Revenue is without any basis and the same is liable to be rejected. The remaining ground Nos. 4 to 6 are general in nature, which does not require specific adjudication." 8. We have considered the concurrent findings of fact arrived at by the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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