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Facts
The assessee claimed Short Term Capital Loss (STCL) of Rs. 325.45 Lacs from the sale of shares of M/s Jolly Plastic Ltd. during AY 2014-15. Investigations revealed that M/s Jolly Plastic Ltd. was a penny stock entity whose trading was suspended by SEBI. The Assessing Officer and CIT(A) denied the STCL claim.
Held
The Tribunal upheld the denial of the STCL claim, observing that the losses stemmed from a penny stock entity, a fact corroborated by an investigation report and SEBI's trading suspension. The assessee failed to provide evidence demonstrating the genuineness of the claim.
Key Issues
Whether the Short Term Capital Loss claimed by the assessee from transactions involving a penny stock company, whose trading was later suspended by SEBI, is admissible under the Income Tax Act.
Sections Cited
143(3)
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Income Tax Appellate Tribunal, “A” BENCH, CHANDIGARH
Before: HON’BLE SHRI RAJPAL YADAV & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2014-15 arises out of an order of learned Commissioner of Income Tax (Appeals)-2, Chandigarh [CIT(A)] dated 12-03-2019 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s 143(3) of the Act on 12-12-2016. 2. At the time of hearing, none appeared for assessee. The perusal of order sheet entries would reveal that none is appearing for assessee Assessment Year: 2014-15 since past multiple occasions. Left with no option, we proceed with the adjudication of the appeal on the basis of material on record.
During assessment proceedings, it transpired that the assessee computed Short Term Capital Loss (STCL) on sale of share of an entity namely M/s Jolly Plastic Ltd. for Rs.325.45 Lacs as detailed in para 3.1 of the assessment order. The shares were purchased during August, 2013 and sold in the month of March, 2014 resulting into huge losses to the assessee. Based on enquiries conducted by Pr. DIT (Inv.), Kolkata, it was noted that M/s Jolly Plastic Ltd. was a penny stock entity and trading in this security was suspended w.e.f. 06-01-2015 pursuant to the directions of SEBI. Considering the same, the claim of SCTL was denied by Ld. AO to the assessee. The Ld. CIT(A) confirmed the same in the light of various judicial decisions against which the assessee is in further appeal before us.
From the facts, it emerges that the losses have been booked out of a penny stock entity which is supported by the investigation report of the department coupled with the fact that the trading in scrip was ultimately been suspended following directions of SEBI. This being so, the orders of lower authorities need not be interfered with. The assessee has not placed on evidence on record to show that the impugned claim was genuine in nature.