ITO, WARD 2-(1), THANE, THANE vs. PRAKASH FOJMAL JAIN, THANE

From the records, I noticed that appeal filed by the assessee was allowed by Ld. CIT(A) against which the revenue has filed the present appeal and all the grounds raised by the revenue relates to challenging the order of Ld. CIT(A) in deleting the additions made u/s 69 of the Act.

I have heard the counsels for both the parties and perused the material placed on record, orders passed by the revenue authorities. From the records, I noticed that Ld. CIT(A) has dealt with these grounds of appeal by passing a detailed order and the relevant portion is contained in para 4 and the same is reproduced herein below:

The assessment order in this case was passed on 20.12.2019. The appeal was originally filed before the CIT(A), Thane-1. Later, it was transferred to faceless appeals scheme. During the course of appeal proceedings, hearing notices were sent. In response, the appellant filed the same written submissions, which is as under:

I have perused the order passed by the AO and the written submissions filed by the appellant. The issues raised in the grounds, which require adjudication are decided as under:

Ground Nos.1, 2 & 3:

1 In these grounds, the appellant challenged the addition of Rs.8,88,430/- towards sale of equity shares as unexplained investment u/s 69 of the IT Act. It is to be mentioned here that the AO recorded that M/s. Nivya Infrastructure & Telecom Services Ltd. was a penny stock company. As per the assessment order, the appellant purchased 16000 shares for a sum of Rs. 10,78,496/- and sold the same for Rs.8,88,430/- by recording short term capital loss of Rs.1,91,728/-. Prima-facie, the appellant did not claim any benefit of long term capital gain u/s 10(38) of the IT Act which is the usual practice in the penny stock cases. The AO, without conducting any further verification, treated the sale consideration of Rs.8,88,430/- as unexplained investment by invoking Sec.69 of the IT Act. Such addition is blatantly wrong and not maintainable and the AO is directed to delete the addition.

2 In view of the above, Ground Nos. 1,2 & 3 are allowed.

After having perused the material placed on record and orders passed by the revenue authorities, I found that the assessee had purchased the shares of M/s Nivya Infrastructure & Telecom Services Ltd. and sold the same by recording short term capital loss. Since the assessee had not claimed any benefit of long term capital gain u/s 10(38) of the Act which is usual practice in the penny stock cases. Even otherwise the AO has not conducted thorough verification during the course of assessment and treated the sale consideration of Rs. 8,88,430 as 6 Prakash Fojmal Jain, Mumbai unexplained investment by invoking provisions of Sec. 69 of the Act. Whereas assessee had placed on record all the relevant documentary evidences which have not been verified or proved to be wrong by the AO. Since the AO is investigator and also adjudicator, therefore duty cast upon the AO to carryout thorough investigation independently and while not doing so the additions were deleted by Ld. CIT(A) by passing a well reasoned order.

No new facts or circumstances have not been placed before me during the appellate proceedings to rebut the lawful findings so recorded by Ld. CIT(A). Therefore I have no reason to interfere into the orders so passed by the Ld. CIT(A), hence the grounds raised by the revenue stands dismissed.

In the result, the appeal filed by the revenue stands dismissed. Order pronounced in the open court on 27.05.2025. (SANDEEP GOSAIN) JUDICIAL MEMBER

उप/सहायक पंजीकार ( Asst.