INCOME TAX OFFICER -22(3)(6), MUMBAI, PIRAMAL CHAMBERS, LALBAUG vs. SAREMAL NIHALCHAND JAIN , WORLI

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ITA 1819/MUM/2024Status: DisposedITAT Mumbai29 January 2025AY 2011-12Bench: Smt. Beena Pillai (Judicial Member), Shri Omkareshwar Chidara ( (Accountant Member)6 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal decided to remit the issue back to the file of the Ld. AO for fresh adjudication, as the assessee's appeal on the same issue had also been remitted. The Revenue's appeal was allowed for statistical purposes.

What were the facts?

The Revenue appealed an addition made by the AO under Section 69A on account of bogus sale of shares and fictitious loss. The CIT(A) had deleted this addition. The appeal arises from the CIT(A)'s deletion of the addition made by the AO.

What were the issues?

Whether the CIT(A) erred in deleting the addition made by the AO for bogus share transactions and fictitious long-term capital loss.

Which sections of the Income-tax Act were involved?

Section 69A,Section 147,Section 148,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Mumbai “J(SMC

Before: Smt. Beena Pillai (JM) & Shri Omkareshwar Chidara (AM)

For Appellant: Shri Asif Karmali
Pronounced: 29/01/2025
1.

"On the facts and circumstances of the case and in law, Ld. ClT(A) has erred in deleting the addition made of Rs.3,80,873/- on account of unexplained Income U/s 69A of the IT Act, 1961 on account of bogus sale of shares and claiming bogus loss." 2. "On the facts and circumstances of the case and in law, the Ld. 011(A) has erred in deleting the additions u/s 69A of the Act of Rs.3,80,873/, allowing the claim of the assessee as Long term capital loss of the Act; without considering the fact that, AO has relied on the report of Investigation Wing of Income-Tax Department, who has published the discreet report with a list of penny stocks/scripts and the assessee by transacting in one of the penny stock company i.e. "M/s Swarnsarita Gems Ltd. (formerly known as Shyam Star Gems Ltd.)" 3. "On the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate the fact that the company and the brokers/other entities were involved in price manipulation in the 2 Saremal Nihalchand Jain

scrip thereby confirming the investigation of the department that the scrip is utilized by entry operators for providing accommodation entries under the garb of long term gain/loss by manipulating/ rigging up the share price." 4. 'On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the fact that the assessee has sold shares of penny stock companies "M/s Swarnsarita Gems Ltd. (formerly known as Shyam Star Gems Ltd.)" of Rs. 3,80,873/- during the year and claimed Long Term Capital Loss of the Act. 5. "On the facts and circumstances of the case and in law the order of the CIT(A) suffers from perversity as it ignores the facts brought on record establishing manipulation of share prices of M/s Swamsarita Gems Ltd. (formerly known as Shyam Star Gems Ltd.)", as part of colorable device to generate fictitious long term gain/loss with the aim to evade taxes due". 6. "On the facts and circumstances of the case and in law the CIT(A) erred in deleting the disallowance of Long Term Capital Loss of Rs.3,80,873/- overlooking the fact that the entire transactions were stage managed with the object to facilitate the assessee to plough back its unaccounted income in the form of fictitious Long Term Capital loss and claim bogus loss" 7. 'On the facts and circumstances of the case and in law the CIT(A) erred in deleting the allowance of Long Term Capital loss of Rs.3,80,873/- without considering the fact that Assessing Office relied on the report of Investigation Wing which is premier investigation authority of Income tax department, therefore the onus is on the assessee to establish the genuineness of the price hike and also has to prove that the price of the share was not manipulated.' 8. The appellant prays that the order of the National Faceless Appeal Centre (NFAC), Delhi on the above grounds be reversed and that of the AO be restored. 9. 'The appellant craves leave to amend or alter any grounds or add a new ground Which may be necessary ?

2.

During the hearing before the Bench, the Ld. AR of the appellant has submitted that the same issue was considered in assessee’s appeal by Hon'ble ITAT and filed a copy of order of ITAT. The Ld. AR has requested the Bench to remit the Revenue’s appeal also to the file of the Ld. AO for fresh adjudication of issue, as the appellant’s appeal on the same issue was remitted to the file of the Ld. AO.

3 Saremal Nihalchand Jain

3.

The Ld. DR did not object to the same.

4.

After hearing both sides, it is decided to remit the issue back to the file of Ld. AO for fresh adjudication.

5.

The Revenue’s appeal is allowed for statistical purposes.

Order pronounced in the open Court on 29/01/2025.

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