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Facts
The assessee filed a return of income for AY 2012-2013. Subsequently, the Assessing Officer (AO) initiated reassessment proceedings under section 148 based on information that the assessee had invested in penny stocks, specifically M/s. Dhwanil Chemicals Ltd., amounting to Rs. 12,64,005/-. The AO treated this as an unexplained investment under section 69 of the Act and added it to the assessee's total income.
Held
The Tribunal noted a contradiction between the assessee's earlier letter acknowledging profit from the said scrip and his subsequent affidavit denying any transaction. Due to this discrepancy, the Tribunal set aside the impugned order and remitted the matter back to the Assessing Officer for fresh examination.
Key Issues
Whether the assessee had indeed entered into transactions for shares of M/s. Dhwanil Chemicals Ltd. and if the source of investment was satisfactorily explained.
Sections Cited
143(3), 147, 148, 142(1), 69, 271(1)(c), 274
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, SURAT BENCH “SMC” SURAT
Before: SHRI SANDEEP GOSAIN & SHRI OM PRAKASH KANT
ORDER PER OM PRAKASH KANT, AM
This appeal by the assessee is directed against order dated 28.03.2025 passed by the Ld. Addl./Joint Commissioner of Income-tax (Appeals) – 2, Nagpur [hereinafter shall be referred as ‘the Ld. CIT(A)’] for assessment year 2012-2013, raising following grounds:
1.0(a) That on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi [here-in-after referred to as Ld. CIT(Appeals)] was not justified and grossly erred by without considering the facts, evidences and documents submitted by the appellant. That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified and grossly erred in confirming the action of the A.O. order passed u/s. 143(3) r.w.s 147 of the I.T. Act, 1961 which is incomplete and also bad on facts.
1.0(b) Without prejudice to above ground that on facts and in 1.0(b) Without prejudice to above ground that on facts and in 1.0(b) Without prejudice to above ground that on facts and in the circumstances of the case, the Ld. CIT(Appeals) was n the circumstances of the case, the Ld. CIT(Appeals) was n the circumstances of the case, the Ld. CIT(Appeals) was not justified and grossly erred in confirming the action of the AO in justified and grossly erred in confirming the action of the AO in justified and grossly erred in confirming the action of the AO in reopening of assessment was not justified because instead of reopening of assessment was not justified because instead of reopening of assessment was not justified because instead of the AO recording his satisfaction, initiated action at the behest the AO recording his satisfaction, initiated action at the behest the AO recording his satisfaction, initiated action at the behest of The Investigating Wing, Ahmedabad of The Investigating Wing, Ahmedabad 2.0(a) That on the fact 2.0(a) That on the facts and in the circumstances of the case, s and in the circumstances of the case, the Ld. CIT(Appeals) was not justified and grossly erred in the Ld. CIT(Appeals) was not justified and grossly erred in the Ld. CIT(Appeals) was not justified and grossly erred in confirming the action of the A.O. in by accepting the addition of confirming the action of the A.O. in by accepting the addition of confirming the action of the A.O. in by accepting the addition of unexplained investment in shares of Rs. 12,64,005/ unexplained investment in shares of Rs. 12,64,005/-. 2.0(b) Without prejudice to above 2.0(b) Without prejudice to above grounds, that on the facts grounds, that on the facts and in the circumstances of the case and in law, the Ld. and in the circumstances of the case and in law, the Ld. and in the circumstances of the case and in law, the Ld. CIT(Appeals) was not justified and grossly erred in confirming CIT(Appeals) was not justified and grossly erred in confirming CIT(Appeals) was not justified and grossly erred in confirming the action of the A.O. by erred in treating long term capital gain the action of the A.O. by erred in treating long term capital gain the action of the A.O. by erred in treating long term capital gain as accommodation entries and bogus entries as accommodation entries and bogus entries. 2.0(c) Without prejudice to above grounds, that on the facts 2.0(c) Without prejudice to above grounds, that on the facts 2.0(c) Without prejudice to above grounds, that on the facts and in the circumstances of the case and in law, the Ld. and in the circumstances of the case and in law, the Ld. and in the circumstances of the case and in law, the Ld. CIT(Appeals) was not justified and grossly erred in confirming CIT(Appeals) was not justified and grossly erred in confirming CIT(Appeals) was not justified and grossly erred in confirming the action of the A.O. by not proving right for cross the action of the A.O. by not proving right for cross- examining examining the director and or promoters and or broker of the company in ctor and or promoters and or broker of the company in ctor and or promoters and or broker of the company in which investment was made. which investment was made. 2.0(d) Without prejudice to above grounds, that on the facts 2.0(d) Without prejudice to above grounds, that on the facts 2.0(d) Without prejudice to above grounds, that on the facts and in the circumstances of the case and in law, the Ld. and in the circumstances of the case and in law, the Ld. and in the circumstances of the case and in law, the Ld. CIT(Appeals) was not justified and grossly erred in confi CIT(Appeals) was not justified and grossly erred in confirming rming the action of the AO where sole reliance was placed on report the action of the AO where sole reliance was placed on report the action of the AO where sole reliance was placed on report of Ahmedabad Investigation Wing report. of Ahmedabad Investigation Wing report. 3.0 That on the facts and in the circumstances of the case, the 3.0 That on the facts and in the circumstances of the case, the 3.0 That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified and grossly erred and Ld. CIT(Appeals) was not justified and grossly erred and Ld. CIT(Appeals) was not justified and grossly erred and indirectly confirming the a indirectly confirming the action of the A.O. in not justified and ction of the A.O. in not justified and erred in confirming the initiated penalty proceedings u/s. erred in confirming the initiated penalty proceedings u/s. erred in confirming the initiated penalty proceedings u/s. 271(1)(c) r.w.s. 274 of the Act. 271(1)(c) r.w.s. 274 of the Act. 4.0 That the appellant craves leave to add, to amend, modify, 4.0 That the appellant craves leave to add, to amend, modify, 4.0 That the appellant craves leave to add, to amend, modify, rescind, supplement or alter any of the grounds stated here rescind, supplement or alter any of the grounds stated here rescind, supplement or alter any of the grounds stated here-in- above, either before or at the time of hearing of this appeal. above, either before or at the time of hearing of this appeal.
Briefly stated, the material facts giving rise to the present Briefly stated, the material facts giving rise to the present Briefly stated, the material facts giving rise to the present appeal are that the assessee filed his return of income for the appeal are that the assessee filed his return of income for the appeal are that the assessee filed his return of income for the relevant assessment year on relevant assessment year on 07.03.2013, declaring a total income , declaring a total income of Rs. 5,15,480/-. . Subsequently, Subsequently, on on receipt receipt of of specific specific information that the assessee had allegedly entered into information that the assessee had allegedly entered into information that the assessee had allegedly entered into transactions involving a so transactions involving a so-called “penny stock” in the scrip of called “penny stock” in the scrip of M/s. Dhwanil Chemicals Ltd. M/s. Dhwanil Chemicals Ltd., and had purportedly pu , and had purportedly purchased shares aggregating to shares aggregating to Rs. 12,64,005/-, the Assessing Officer the Assessing Officer recorded reasons to believe that income chargeable to tax had recorded reasons to believe that income chargeable to tax had recorded reasons to believe that income chargeable to tax had escaped assessment. Consequently, a notice under escaped assessment. Consequently, a notice under section 148 of section 148 of the Income-tax Act, 1961 tax Act, 1961 (“the Act”) was issued on 31.03.2019 31.03.2019.
2.1 The assessee did not initially comply with the said notice. The assessee did not initially comply with the said notice. The assessee did not initially comply with the said notice. Thereafter, statutory notices under Thereafter, statutory notices under section 142(1) of the Act were of the Act were issued, whereupon the assessee intimated that the return of issued, whereupon the assessee intimated that the return of issued, whereupon the assessee intimated that the return of income originally filed may be treated as a return in response income originally filed may be treated as a return in response income originally filed may be treated as a return in response to the notice under section 148. the notice under section 148.
2.2 During the reassessment proceedings, the assessee was During the reassessment proceedings, the assessee was During the reassessment proceedings, the assessee was called upon to produce his called upon to produce his demat statement and to explain the and to explain the source of investment in the shares of M/s. Dhwanil Chemicals source of investment in the shares of M/s. Dhwanil Chemicals Ltd. The assessee, however, failed to furn Ltd. The assessee, however, failed to furnish satisfactory evidence ish satisfactory evidence regarding the source of such investment. The Assessing Officer, regarding the source of such investment. The Assessing Officer, regarding the source of such investment. The Assessing Officer, relying upon information received from the relying upon information received from the DDIT (Inv.) DDIT (Inv.)–1(3), Ahmadabad, in consequence of search proceedings under , in consequence of search proceedings under , in consequence of search proceedings under section 132 in the case of Shri Sanjay Shah and Shr Shri Sanjay Shah and Shri Jignesh Shah i Jignesh Shah— alleged operators of bogus Long alleged operators of bogus Long-Term Capital Gain schemes Term Capital Gain schemes— came to the conclusion that the assessee was one of the came to the conclusion that the assessee was one of the came to the conclusion that the assessee was one of the beneficiaries of accommodation entries in the guise of share beneficiaries of accommodation entries in the guise of share beneficiaries of accommodation entries in the guise of share transactions. 2.3 The Assessing Officer, therefore, treated the investment of The Assessing Officer, therefore, treated the investment of The Assessing Officer, therefore, treated the investment of Rs. 12,64,005/- in shares of M/s. Dhwanil Chemicals Ltd. as in shares of M/s. Dhwanil Chemicals Ltd. as in shares of M/s. Dhwanil Chemicals Ltd. as unexplained investment under section 69 unexplained investment under section 69 of the Act and added of the Act and added the same to the total income of the assessee, initiating penalty the same to the total income of the assessee, initiating penalty the same to the total income of the assessee, initiating penalty proceedings under section s under section 271(1)(c) for concealment of income. for concealment of income. The relevant finding of ld AO is reproduced as under The relevant finding of ld AO is reproduced as under The relevant finding of ld AO is reproduced as under:
“4. In the instant case, information was received from DDIT(Inv.) 4. In the instant case, information was received from DDIT(Inv.) 4. In the instant case, information was received from DDIT(Inv.)- 1.3, Ahmedabad that during the course of Search proceedings u/s 1.3, Ahmedabad that during the course of Search proceedings u/s 1.3, Ahmedabad that during the course of Search proceedings u/s 132 of the IT Act o 132 of the IT Act on 11.09.2018 in the case of Shri Sanjay Shah n 11.09.2018 in the case of Shri Sanjay Shah and Jignesh Shah certain incriminating digital and documentary and Jignesh Shah certain incriminating digital and documentary and Jignesh Shah certain incriminating digital and documentary evidences regarding unaccounted cash, synchronized trading and evidences regarding unaccounted cash, synchronized trading and evidences regarding unaccounted cash, synchronized trading and providing bogus LTCG were found and seized. On perusal of providing bogus LTCG were found and seized. On perusal of providing bogus LTCG were found and seized. On perusal of incriminating documents, it incriminating documents, it was found that the Assessee has was found that the Assessee has entered into transactions in penny stock namely; Dhvanil entered into transactions in penny stock namely; Dhvanil entered into transactions in penny stock namely; Dhvanil Chemicals Limited and has purchased shares of Rs. 12,64,005/ Chemicals Limited and has purchased shares of Rs. 12,64,005/ Chemicals Limited and has purchased shares of Rs. 12,64,005/ during the year under consideration. The persons who have during the year under consideration. The persons who have during the year under consideration. The persons who have traded through/with Shri Sanjay Shah and Jignes traded through/with Shri Sanjay Shah and Jignesh Shah were h Shah were found to have indulged into the bogus transactions in the disguise found to have indulged into the bogus transactions in the disguise found to have indulged into the bogus transactions in the disguise of share trading and the Assessee was one of such beneficiary. of share trading and the Assessee was one of such beneficiary. of share trading and the Assessee was one of such beneficiary. 4.1 During the course of assessment proceedings, the Assessee 4.1 During the course of assessment proceedings, the Assessee 4.1 During the course of assessment proceedings, the Assessee was asked to furnish details of share transactions ( was asked to furnish details of share transactions (purchase and purchase and sales) made during the year along with supporting evidences sales) made during the year along with supporting evidences sales) made during the year along with supporting evidences especially in the shares of M/s Dhvanil Chemicals Ltd. The especially in the shares of M/s Dhvanil Chemicals Ltd. The especially in the shares of M/s Dhvanil Chemicals Ltd. The Assessee was also requested to furnish copy of Demat account Assessee was also requested to furnish copy of Demat account Assessee was also requested to furnish copy of Demat account statement and explain the source of investment. In compliance, statement and explain the source of investment. In compliance, statement and explain the source of investment. In compliance, The Assessee could submit copy of DP transaction report of M/s The Assessee could submit copy of DP transaction report of M/s The Assessee could submit copy of DP transaction report of M/s Sykes & Ray Equities (1) Limited only. Except this no details Sykes & Ray Equities (1) Limited only. Except this no details Sykes & Ray Equities (1) Limited only. Except this no details regarding purchase of shares of M/s Dhvanil Chemicals Limited regarding purchase of shares of M/s Dhvanil Chemicals Limited regarding purchase of shares of M/s Dhvanil Chemicals Limited amounting to Rs. 12,64,005/ amounting to Rs. 12,64,005/- were furnished by the Assessee. were furnished by the Assessee. Neither the Assessee has furnished copy of Demat account nor the Assessee has furnished copy of Demat account nor the Assessee has furnished copy of Demat account nor explained source of investment of Rs. 12,64,005/ explained source of investment of Rs. 12,64,005/- in Penny Stock. in Penny Stock. Therefore, show cause notice was issued to the Assessee on Therefore, show cause notice was issued to the Assessee on Therefore, show cause notice was issued to the Assessee on 09.12.2019 requiring the Assessee to explain as to why an 09.12.2019 requiring the Assessee to explain as to why an 09.12.2019 requiring the Assessee to explain as to why an amount of Rs. 12,64, amount of Rs. 12,64,005/- should not be treated as unexplained should not be treated as unexplained investment and added to total income. In reply of the same, the investment and added to total income. In reply of the same, the investment and added to total income. In reply of the same, the Assessee submitted that each and every transaction made in Assessee submitted that each and every transaction made in Assessee submitted that each and every transaction made in shares through the registered broker with SEBI and STT has shares through the registered broker with SEBI and STT has shares through the registered broker with SEBI and STT has already been paid on these tran already been paid on these transactions. Reply of the Assessee sactions. Reply of the Assessee was considered and not found convincing as the Assessee has was considered and not found convincing as the Assessee has was considered and not found convincing as the Assessee has failed to furnish any documentary evidences to substantiate his failed to furnish any documentary evidences to substantiate his failed to furnish any documentary evidences to substantiate his claim. The Assessee has not furnished any details in respect of claim. The Assessee has not furnished any details in respect of claim. The Assessee has not furnished any details in respect of transaction made with M/s Dhvanil Ch transaction made with M/s Dhvanil Chemicals Limited and also emicals Limited and also failed to furnish any details regarding source of investment. failed to furnish any details regarding source of investment. failed to furnish any details regarding source of investment. Therefore, în absence of any supporting evidences, investment of Therefore, în absence of any supporting evidences, investment of Therefore, în absence of any supporting evidences, investment of Rs. 12,64,005/ Rs. 12,64,005/- made in shares of M/s Dhvanil Chemicals made in shares of M/s Dhvanil Chemicals Limited is treated as unexplained and added to t Limited is treated as unexplained and added to the total income he total income of the Assessee. Since, the Assessee has concealed his of the Assessee. Since, the Assessee has concealed his of the Assessee. Since, the Assessee has concealed his particulars of true income, therefore, penalty proceedings u/s particulars of true income, therefore, penalty proceedings u/s particulars of true income, therefore, penalty proceedings u/s 271(1)(c) of the IT Act are initiated separately. 271(1)(c) of the IT Act are initiated separately.” 2.4 Upon appeal, the ld CIT(A) upheld the findings of the Upon appeal, the ld CIT(A) upheld the findings of the Upon appeal, the ld CIT(A) upheld the findings of the Assessing Officer, by a reasoned and detailed order, thereby Assessing Officer, by a reasoned and detailed order, thereby Assessing Officer, by a reasoned and detailed order, thereby affirming the addition made on account of unexplained affirming the addition made on account of unexplained affirming the addition made on account of unexplained investment.
3. Before us, the learned Counsel for the assessee tendered a Before us, the learned Counsel for the assessee tendered a Before us, the learned Counsel for the assessee tendered a paper book comprising pages 1 to 61 and contended that the mprising pages 1 to 61 and contended that the mprising pages 1 to 61 and contended that the assessee had not entered into any transaction whatsoever not entered into any transaction whatsoever not entered into any transaction whatsoever in the shares of M/s. Dhwanil Chemicals Ltd. He relied upon an shares of M/s. Dhwanil Chemicals Ltd. He relied upon an shares of M/s. Dhwanil Chemicals Ltd. He relied upon an affidavit sworn by the assessee, wherein the deponent has sworn by the assessee, wherein the deponent has sworn by the assessee, wherein the deponent has averred that:
That during th That during the course of reassessment proceedings, I e course of reassessment proceedings, I submitted documentary evidence including a copy of my DP submitted documentary evidence including a copy of my DP submitted documentary evidence including a copy of my DP transaction statement from M/s. Sykes & Ray Equities (1) transaction statement from M/s. Sykes & Ray Equities (1) transaction statement from M/s. Sykes & Ray Equities (1) Limited, clearly demonstrating that I had not entered into any Limited, clearly demonstrating that I had not entered into any Limited, clearly demonstrating that I had not entered into any transaction for the purchase of shares transaction for the purchase of shares of M/s. Dhwanil Chemical of M/s. Dhwanil Chemical Limited amounting to 12,64,005/ Limited amounting to 12,64,005/- or any other amount during the or any other amount during the relevant assessment year. relevant assessment year.
That I categorically affirm before the Hon'ble Income Tax 4. That I categorically affirm before the Hon'ble Income Tax 4. That I categorically affirm before the Hon'ble Income Tax Appellate Tribunal, Surat Bench, that I have not entered into any Appellate Tribunal, Surat Bench, that I have not entered into any Appellate Tribunal, Surat Bench, that I have not entered into any transaction for the purchase of shares of Mis. Dhwanil Chemical r the purchase of shares of Mis. Dhwanil Chemical r the purchase of shares of Mis. Dhwanil Chemical Limited amounting to 12,64,005/ Limited amounting to 12,64,005/- during the relevant year, or at during the relevant year, or at any other time relevant to the assessment in question. any other time relevant to the assessment in question. 5 That I further state that there was and is no intention on my 5 That I further state that there was and is no intention on my 5 That I further state that there was and is no intention on my part to cause any loss part to cause any loss to the revenue or to mislead the Income Tax to the revenue or to mislead the Income Tax Department or Hon'ble Income Tax Appellate Tribunal, Surat Department or Hon'ble Income Tax Appellate Tribunal, Surat Department or Hon'ble Income Tax Appellate Tribunal, Surat Bench in anymanner. In the event that any of the statements Bench in anymanner. In the event that any of the statements Bench in anymanner. In the event that any of the statements made in this affidavit are found to be false or misleading, I made in this affidavit are found to be false or misleading, I made in this affidavit are found to be false or misleading, I undertake full personal respon undertake full personal responsibility and liability for the same. sibility and liability for the same. 4. The assessee further affirmed that there was neither The assessee further affirmed that there was neither The assessee further affirmed that there was neither intention to cause loss to the Revenue nor any attempt to mislead intention to cause loss to the Revenue nor any attempt to mislead intention to cause loss to the Revenue nor any attempt to mislead the authorities.
4.1 In contrast, the In contrast, the learned Departmental Representative (DR) learned Departmental Representative (DR) invited our attention to invited our attention to para -3 of page–2 of paper book of paper book, being a copy of the letter dated 10.12.2019 letter dated 10.12.2019 addressed by the assessee to addressed by the assessee to the Assessing Officer, wherein the assessee himself admitted that the Assessing Officer, wherein the assessee himself admitted that the Assessing Officer, wherein the assessee himself admitted that the name of the company “ the name of the company “Dhwanil Chemicals Ltd. Dhwanil Chemicals Ltd.” had been subsequently changed to “Jagpro”, and that he had earned a subsequently changed to “ ”, and that he had earned a profit of Rs. 59,959/- - there from.
We have heard the rival submissions at length and perused We have heard the rival submissions at length and perused We have heard the rival submissions at length and perused the record. The core issue for adjudication before us is twofold: the record. The core issue for adjudication before us is twofold: the record. The core issue for adjudication before us is twofold:
(i) Whether the assessee had, in fa (i) Whether the assessee had, in fact, entered into transactions ct, entered into transactions involving the scrip of involving the scrip of M/s. Dhwanil Chemicals Ltd. M/s. Dhwanil Chemicals Ltd.; and (ii) If so, whether the (ii) If so, whether the source of investment stands satisfactorily stands satisfactorily explained.
5.1 Upon careful consideration, we observe a clear contradiction Upon careful consideration, we observe a clear contradiction Upon careful consideration, we observe a clear contradiction between the assessee’s between the assessee’s own communication dated 10.12.2019 communication dated 10.12.2019 to the Assessing Officer the Assessing Officer—wherein he acknowledged profit derived wherein he acknowledged profit derived from the said scrip— —and the subsequent affidavit filed before this filed before this Tribunal, wherein he categorically denies any such transaction. Tribunal, wherein he categorically denies any such transaction. Tribunal, wherein he categorically denies any such transaction. The relevant extract of the as The relevant extract of the assessee’s letter dated 10.12.2019, sessee’s letter dated 10.12.2019, placed at PB pages 1 PB pages 1–2, records that the assessee admitted , records that the assessee admitted trading in the scrip (under its changed name “Jagpro”) and trading in the scrip (under its changed name “Jagpro”) and trading in the scrip (under its changed name “Jagpro”) and acknowledged a profit thereon. acknowledged a profit thereon. For ready reference For ready reference, relevant letter filed by the assessee before the ld AO is reproduced as letter filed by the assessee before the ld AO is reproduced as letter filed by the assessee before the ld AO is reproduced as under:
“From: Dhaval Indravadan Gandhi Dhaval Indravadan Gandhi At Areth, Po: Areth, Tal: Mandvi, Bardoli, SURAT 10th December, 2019. 10th December, 2019.
To, The Income Tax Officer, The Income Tax Officer, Ward-1, Bardoli, SURAT Sub: Reply against your s Sub: Reply against your show cause notice for A.Y. 2012-13. Ref :- Your Your Your notice notice notice dated dated dated 09/12/2019 09/12/2019 09/12/2019 having having having number number number ITBA/AST/F/147(SCN)/2019 ITBA/AST/F/147(SCN)/2019- 20/1021998587(1) Respected Sir, 1.0 This is with reference to the above captioned subject, I have received your 1.0 This is with reference to the above captioned subject, I have received your 1.0 This is with reference to the above captioned subject, I have received your above notice dated 09.12.2019 above notice dated 09.12.2019 having number ITBA/AST/147(SCN)/2019 having number ITBA/AST/147(SCN)/2019- 20/1021998587(1) for the year under consideration. In this connection, I have to 20/1021998587(1) for the year under consideration. In this connection, I have to 20/1021998587(1) for the year under consideration. In this connection, I have to submit my written submission on or before 13.12.2019. The humble submission submit my written submission on or before 13.12.2019. The humble submission submit my written submission on or before 13.12.2019. The humble submission is as under: 2.0 As per the Show Cause notice mentioned that 2.0 As per the Show Cause notice mentioned that I have purchased the shares of I have purchased the shares of M/s. Dhavanil Chemicals Ltd of 40200 amounting to Rs. 12,64,005/ M/s. Dhavanil Chemicals Ltd of 40200 amounting to Rs. 12,64,005/ M/s. Dhavanil Chemicals Ltd of 40200 amounting to Rs. 12,64,005/-. Your goodself have treated such script as Penny Stock. In this connection, I would like goodself have treated such script as Penny Stock. In this connection, I would like goodself have treated such script as Penny Stock. In this connection, I would like to know how can your goodself treat such stock as "Penny" and on whic to know how can your goodself treat such stock as "Penny" and on whic to know how can your goodself treat such stock as "Penny" and on which basis such stock treated as "Penny". So, I request your goodself that kindly provide me such stock treated as "Penny". So, I request your goodself that kindly provide me such stock treated as "Penny". So, I request your goodself that kindly provide me the facts/details on which basis your goodself have treated such script/stock as the facts/details on which basis your goodself have treated such script/stock as the facts/details on which basis your goodself have treated such script/stock as penny stock. 3.0 Furthermore, I would like to intimate your goodself that I have not 3.0 Furthermore, I would like to intimate your goodself that I have not 3.0 Furthermore, I would like to intimate your goodself that I have not purchase any script in the name of M/s. Dhavnil Chemicals Ltd. But, I would like to any script in the name of M/s. Dhavnil Chemicals Ltd. But, I would like to any script in the name of M/s. Dhavnil Chemicals Ltd. But, I would like to intimate your goodself that such script name was changed from M/s, Dhavanil intimate your goodself that such script name was changed from M/s, Dhavanil intimate your goodself that such script name was changed from M/s, Dhavanil Chemicals Ltd to "Jagpro". In this script of shares I have net earned profit Chemicals Ltd to "Jagpro". In this script of shares I have net earned profit Chemicals Ltd to "Jagpro". In this script of shares I have net earned profit amounting to Rs.59,959/ ,959/- which was duly considered while filling the return of which was duly considered while filling the return of income. The details profit earned from such transaction are duly attached for income. The details profit earned from such transaction are duly attached for income. The details profit earned from such transaction are duly attached for your ready reference from the books of Sykes and Ray Equities. And, also due your ready reference from the books of Sykes and Ray Equities. And, also due your ready reference from the books of Sykes and Ray Equities. And, also due taxes were already paid by me. taxes were already paid by me. 4.0 The source of investment in such script was out of my regular income as well source of investment in such script was out of my regular income as well source of investment in such script was out of my regular income as well as earlier years saving. Each and every transactions made in such shares were as earlier years saving. Each and every transactions made in such shares were as earlier years saving. Each and every transactions made in such shares were duly covered demate account and due security transaction taxes were already duly covered demate account and due security transaction taxes were already duly covered demate account and due security transaction taxes were already paid by me. The transactions paid by me. The transactions are duly made through registered broker with are duly made through registered broker with SEBI. So, it is requested your goodself not treat such script/share transaction as SEBI. So, it is requested your goodself not treat such script/share transaction as SEBI. So, it is requested your goodself not treat such script/share transaction as "Penny" and also requested your goodself that not to make any addition "Penny" and also requested your goodself that not to make any addition "Penny" and also requested your goodself that not to make any addition amounting to Rs. 12,64,005/ amounting to Rs. 12,64,005/-. Should your honour require Should your honour require any further details, I shall be pleased to submit the any further details, I shall be pleased to submit the same. Thanking you, Yours faithfully.” 5.2 This contradiction, going to the very root of the matter, This contradiction, going to the very root of the matter, This contradiction, going to the very root of the matter, necessitates verification of the correctness and veracity of the necessitates verification of the correctness and veracity of the necessitates verification of the correctness and veracity of the statements so made. While the affi statements so made. While the affidavit may raise a factual plea, davit may raise a factual plea, the earlier letter constitutes an admission which, in law, cannot the earlier letter constitutes an admission which, in law, cannot the earlier letter constitutes an admission which, in law, cannot be lightly disregarded without proper inquiry. be lightly disregarded without proper inquiry.
5.3 In these circumstances, we are of the considered view that In these circumstances, we are of the considered view that In these circumstances, we are of the considered view that the ends of justice would be best served if the would be best served if the matter is matter is remitted to the file of the Assessing Officer to the file of the Assessing Officer for fresh examination fresh examination. The Assessing Officer shall, in particular, verify: Assessing Officer shall, in particular, verify:
Whether the assessee had, in fact, purchased shares of Whether the assessee had, in fact, purchased shares of Whether the assessee had, in fact, purchased shares of M/s. Dhwanil Chemicals Ltd. (now Jagpro) M/s. Dhwanil Chemicals Ltd. (now Jagpro), either through , either through demat or offline mode; offline mode; 2. The veracity of the The veracity of the affidavit filed before this Tribunal vis filed before this Tribunal vis-à- vis the admission admission made in the letter dated 10.12.2019; and made in the letter dated 10.12.2019; and 3. The source of funds source of funds, if any, utilised for such investment. if any, utilised for such investment.
5.4 The Assessing Officer is at liberty to conduct such The Assessing Officer is at liberty to conduct such The Assessing Officer is at liberty to conduct such independent inquiry as may be warranted, including verification as may be warranted, including verification from the concerned depository participant or from the company from the concerned depository participant or from the company from the concerned depository participant or from the company itself, as the case may be. However, he shall ensure that the itself, as the case may be. However, he shall ensure that the itself, as the case may be. However, he shall ensure that the assessee is furnished copies of any material or investigation assessee is furnished copies of any material or investigation assessee is furnished copies of any material or investigation report relied upon, and is afforded a and is afforded a reasonable opportunity of reasonable opportunity of being heard and to explain any discrepancy or adverse finding and to explain any discrepancy or adverse finding and to explain any discrepancy or adverse finding before final determination. before final determination.
5.5 The Assessing Officer shall thereafter adjudicate the issue The Assessing Officer shall thereafter adjudicate the issue The Assessing Officer shall thereafter adjudicate the issue afresh and in accordance with law, by passing a and in accordance with law, by passing a and in accordance with law, by passing a reasoned, speaking order.
5.6 In view of the foregoing discussion, the impugned order of In view of the foregoing discussion, the impugned order of In view of the foregoing discussion, the impugned order of restored to the the learned CIT(A) is the learned CIT(A) is set aside, and the matter is restored file of the Assessing Officer for de novo adjudication in the light of file of the Assessing Officer for de novo adjudication in the light of file of the Assessing Officer for de novo adjudication in the light of the above directions.
5.7 The ground of appeal of the assessee is accordingly allowed ground of appeal of the assessee is accordingly allowed ground of appeal of the assessee is accordingly allowed for statistical purposes. for statistical purposes.
In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for statistical purposes.