News shortcuts: From the Courts | Top Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | Professional Updates | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
« From the Courts »
 Delhi High Court issues Video-Conferencing Rules to streamline and consolidate process and its usage in Courts
 Shri Ramesh Kumar Agarwal, 599, 2nd Floor, Gandhi Cloth Market, New Delhi Vs. ITO, Ward-46(3), New Delhi
 Excess ITC has to be Refunded back to Dealer, can’t be carried Forward for Adjustment of Future Tax Liability: Madras HC
 Dy. CIT, Central Circle-29, New Delhi. Vs. M/s. S.R. Credits Pvt. Ltd. 4828-29/24, 1st Floor, Prahlad Lane, Ansari Road, Daryaganj, Delhi
 Urmilla Ghanshyam Dass Ghiraiya A-21, First Floor, Lok Vihar, Pitampura Delhi Vs. ACIT Central Circle, Karnal
 Shri Surat Singh, VPO Bhapra, Samhalka, vs. The Income Tax Officer, Ward : 4, Panipat.
 Dy. CIT, Central Circle-29, New Delhi. Vs. M/s. S.R. Credits Pvt. Ltd. 4, 1st Floor, Prahlad Lane, Ansari Road, Daryaganj, Delhi
 SC directs DRT to Transmit Rent received from Property attached to the Amrapali Account
 Vardhman Automobiles (P.) Ltd., Opposite Air Force School, Old Delhi Road, Gurgaon- Vs. The ITO, TDS Ward, Gurgaon.
 M/s. Sheela Foam Ltd., (Foprmerly known as Sheela Foam Pvt.Ltd.), 37/2, Site-IV, Sahibabad Industrial Area, Ghaziabad. Vs. The ACIT, Central Circle-06, New Delhi.
 ACIT, Central Circle-8, New Delhi Vs Sh. Sohan Singh Dhingra (HUF), 85, Golf Links, New Delhi

Sunita Jain vs. ITO (ITAT Ahmedabad)
April, 14th 2017

Bogus penny stock capital gains: Failure to provide a copy of the statement relied upon and of cross-examination renders the assessment order void. The claim of capital gains from penny stocks cannot be denied on presumption and surmises by disregarding direct evidences relating to the sale/purchase transactions of shares supported by broker’s contract notes, confirmation of receipt of sale proceeds through regular banking channels and the demat account

(i) The entire assessment is based upon the statement of Shri Mukesh Choksi. It is an undisputed fact that neither a copy of the statement was supplied to the assessee nor any opportunity of cross-examination was given by the Assessing Officer/CIT(A). On the strength of the decision of the Hon’ble Supreme Court in the case of Andaman Timber Industries in Civil Appeal No. 4228 of 2006, the assessment order has to be quashed.

(ii) Even on facts of the case, the orders of the authorities below cannot be accepted. There is no denying that consideration was paid when the shares were purchased. The shares were thereafter sent to the company for the transfer of name. The company transferred the shares in the name of the assessee. There is nothing on record which could suggest that the shares were never transferred in the name of the assessee. There is also nothing on record to suggest that the shares were never with the assessee. On the contrary, the shares were thereafter transferred to demat account. The demat account was in the name of the assessee, from where the shares were sold. In our understanding of the facts, if the shares were of some fictitious company which was not listed in the Bombay Stock Exchange/National Stock Exchange, the shares could never have been transferred to demat account. Shri Mukesh Choksi may have been providing accommodation entries to various persons but so far as the facts of the case in hand suggest that the transactions were genuine and therefore, no adverse inference should be drawn.

(iii) In the light of the decisions of the Hon’ble Supreme Court in the case of Andaman Timber Industries (supra) and considering the facts in totality, the claim of the assessee cannot be denied on the basis of presumption and surmises in respect of penny stock by disregarding the direct evidences on record relating to the sale/purchase transactions in shares supported by broker’s contract notes, confirmation of receipt of sale proceeds through regular banking channels and the demat account.

(iv) Accordingly, we direct the A.O. to treat the gains arising out of the sale of shares under the head capital gains- “Short Term” or “Long Term” as the case may be. The other grievance of the assessee becomes infructuous.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2020 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting