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“bogus LTCG”

Cash Credits & Unexplained ItemsSection 68Section 68806 judgments

The decision most relied on for bogus LTCG is PCIT v. Swati Bajaj (139 Taxmann.com 352), cited in 443 judgments on BharatTax.

Leading authorities on bogus LTCG

PCIT v. Swati Bajaj
139 Taxmann.com 352 · 2022 · High Court
443
citing judgments

Tax authorities are entitled to examine surrounding circumstances and apply the test of human probabilities to determine the genuineness of long-term capital gains arising from the sale of manipulated penny stock, even if prima facie documents appear to support the transaction.

ITO, 19(3) (4) Mumbai v. Shamim M Bharwani
69 Taxmann.com 65 · 2016 · Reported
142
citing judgments

Long Term Capital Gains (LTCG) from penny stock transactions are liable to be treated as bogus and added back under Section 68 as unexplained cash credits, especially when evidence suggests the involvement of entry operators providing accommodation entries.

Mukesh R.Marolia v. Addl. CIT
6 SOT 247 · 2006 · ITAT
139
citing judgments

The department must substantiate its allegations of a bogus long term capital gain scheme; if not substantiated, the addition made by the Assessing Officer for purported bogus LTCG derived from the purchase/sale of shares cannot be sustained. An assessee's claim for long term capital gains exemption on share transactions should be allowed where documentation supports the transactions.

5. PCIT v. Paramount Communication (P.) Ltd. Delhi High Court
392 ITR 444 · 2017 · High Court
111
citing judgments

For valid initiation of reassessment proceedings, the Assessing Officer must possess tangible material and apply independent mind to form a 'reason to believe' that income has escaped assessment. Reassessment cannot be based on mere borrowed satisfaction or unverified information without proper scrutiny.

Suman Poddar v. ITO
423 ITR 480 · 2020 · High Court
84
citing judgments

The Assessing Officer's detailed findings regarding bogus long-term capital gains from penny stock transactions, established through objective examination of facts and circumstantial evidence, should not be overturned by appellate authorities without a thorough investigation or fresh inquiry.

CIT-I v. Maheshchandra G. Vakil
40 Taxmann.com 326 · 2013 · High Court
69
citing judgments

An Assessing Officer is not justified in treating capital gain from the sale of shares as unexplained cash credit when the assessee proves the genuineness of share transactions with contract notes, broker's bank statements, DMAT accounts, and stock exchange abstracts.

6. CIT v. Jasvinder Kaur
54 Taxmann.com 10 · 2015 · High Court
57
citing judgments

The Assessing Officer must provide the assessee with contrary material if they dispute the genuineness of long-term capital gains claimed under section 10(38). The onus is on the revenue to prove the transaction is a colourable device.

PCIT v. Parasben Kasturchand Kochar
130 Taxmann.com 177 · 2021 · Supreme Court
56
citing judgments

An assessment or reassessment order is considered bad in law and without legal sanction if its completion is not in accordance with prescribed legal procedures or timelines.

Judgments citing bogus LTCG

Smt. Sudha Agarwal, Jaipur vs. ITO, Ward-6(4), Jaipur

In the result, the appeal filed by the assessee stands partly allowed with no orders to cost

ITA 532/JPR/2024[2013-14]Status: HeardITAT Jaipur30 Oct 2024AY 2013-14
For Appellant: Shri P.C. Parwal, CAFor Respondent: Shri Gautam Singh Choudhary,JCIT-DR
Section 10(38)Section 147Section 148Section 69A

reasons recorded has observed that SEBI has passed some order on the issue of manipulation of share market for providing accommodation entry of bogus LTCG. SEBI considering the inputs from the income tax department as well as its own surveillance system and that of the stock exchange has taken appropriate

ITO-41(4)(1), Mumbai, Bandra (East) vs. Chirania Trading LLP, Goregaon (East)

ITA 993/MUM/2024[2014-15]Status: DisposedITAT Mumbai30 Oct 2024AY 2014-15

Bench: SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY (Judicial Member)

For Appellant: Shri Jay BhansaliFor Respondent: Shri H. M. Bhatt/Shri Raj Singh
Section 10(38)Section 143(3)Section 68

named a single person in the entire Assessment Order on whose evidence lead him that the appellant was involved in bogus LTCG. The AO has not granted the appellant right of cross examination. 2.20.2 xx xx 2.20.3 xx xx 20.21. The ld Assessing Officer has recorded the statement

ITO-41(4)(1), Mumbai, Bandra (East) vs. Chirania Trading LLP, Goregaon (East)

ITA 992/MUM/2024[2015-16]Status: DisposedITAT Mumbai30 Oct 2024AY 2015-16

Bench: SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY (Judicial Member)

For Appellant: Shri Jay BhansaliFor Respondent: Shri H. M. Bhatt/Shri Raj Singh
Section 10(38)Section 143(3)Section 68

named a single person in the entire Assessment Order on whose evidence lead him that the appellant was involved in bogus LTCG. The AO has not granted the appellant right of cross examination. 2.20.2 xx xx 2.20.3 xx xx 20.21. The ld Assessing Officer has recorded the statement

ITO-41(4)(1), Mumbai vs. Chirania Trading LLP, Mumbai

ITA 150/MUM/2024[2012]Status: DisposedITAT Mumbai30 Oct 2024

Bench: IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH, MUMBAI SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA No. 150/MUM/2024 (Assessment Year: 2012-13) ITA No. 993/MUM/2024 (Assessment Year: 2014-15) ITA No. 992/MUM/2024 (Assessment Year: 2015-16) Income Tax Officer 41(4)(1), Mumbai Kautilya Bhavan, BKC, Bandra East, Mumbai-400051 Maharashtra Appellant Vs Chirania Trading LLP, Mumbai 914, Corporate Annex, Near Udyog Bhavan, Sonawala Lane, Goregaon East Mumbai-4000

For Appellant: Shri Jay BhansaliFor Respondent: Shri H. M. Bhatt/Shri Raj Singh
Section 10(38)Section 143(3)Section 68

named a single person in the entire Assessment Order on whose evidence lead him that the appellant was involved in bogus LTCG. The AO has not granted the appellant right of cross examination. 2.20.2 xx xx 2.20.3 xx xx 20.21. The ld Assessing Officer has recorded the statement

Dharamendra Bhandari (HUF), Gurgaon vs. Assistant Commissioner of Income Tax, Delhi

In the result, the appeal of the assessee is allowed

ITA 3787/DEL/2023[2013-14]Status: DisposedITAT Delhi28 Oct 2024AY 2013-14

Bench: Shri M. Balaganesh & Ms Madhumita Roydharamendra Bhandari (Huf), Vs. Cit(A), A-126, Sushant Lok-1, National Faceless Appeal Gurgaon, Haryana Centre, Delhi (Appellant) (Respondent) Pan:Aadhd2238J Assessee By : Shri R. S. Ahuja, Ca Shri Pushpdeep Singh, Adv Revenue By: Shri T James Singson, Cit Dr Date Of Hearing 02/08/2024 Date Of Pronouncement 28/10/2024

For Appellant: Shri R. S. Ahuja, CAFor Respondent: Shri T James Singson, CIT DR
Section 10(38)Section 143(3)Section 69C

International Ltd whereby it is noted that price manipulation in scrip of CCL International Ltd was done so as to arrange entry of bogus LTCG to various beneficiaries. But it is pertinent to note that on perusal of the said SEBI order, we find that nowhere even the name ... Department in Kolkata, Delhi, Mumbai and Ahmedabad on penny stocks, which sets out the modus operandi adopted in the business of providing entries of bogus LTCG. However, the reliance placed on the report, without further corroboration Dharamendra Bhandari (HUF) on the basis of cogent material, does not justify his conclusion

Assistant Commissioner of Income Tax 4(1)(1), Mumbai vs. Ankur Agrawal, Mumbai

In the result, the appeal of the revenue is dismissed

ITA 2308/MUM/2024[2011-12]Status: DisposedITAT Mumbai25 Oct 2024AY 2011-12

Bench: Shri Amarjit Singh & Shri Sandeep Singh Karhailassessment Year: 2011-12 Acit 4(1)(1), Mumbai Ankur Agrawal 2401, 2402, Anmol Pride, Opp. Vs. Patel Auto Petrol Pump, Off Sv Road Goregaon West, Mumbai- 400062. Pan: Akopa 7201 P (Appellant) (Respondent)

For Appellant: Shri Neelkanth KhandelwalFor Respondent: Shri Ajay Chandra, CIT, DR
Section 143(1)Section 143(3)Section 147Section 148Section 250Section 271(1)(c)Section 68

which sets out the modus operandi adopted in the business of www.taxguru.in ITA 125/2020 and connected matters Page 8 of 10 providing entries of bogus LTCG. However, the reliance placed on the report, without further corroboration on the basis of cogent material, does not justify his conclusion that the transaction ... entire case of the AO is based on character presumption that the assessee has ploughed back his own unaccounted money in the pion of bogus LTCG. The AO has not given any finding with evidence anywhere in the order to this effect, but went ahead with addition despite not bringing

International Transmission Ltd, Mumbai vs. Deputy Commissioner of Income Tax Circle -15(1)(2), Mumbai

In the result, the appeal by the assessee is allowed

ITA 3240/MUM/2024[2012-13]Status: DisposedITAT Mumbai16 Oct 2024AY 2012-13

Bench: Shri Om Prakash Kantshri Sandeep Singh Karhailinternational Transmission Ltd. 501, 5Th Floor, Vasudeo Chambers, Mulund Goregaon Link Road, Bhandup (W), Mumbai - 400078 ……………. Appellant Pan: Aaaci0975M V/S

For Appellant: Shri V.G. Ginde, AdvFor Respondent: Shri Virabhadra S. Mahajan, Sr.DR
Section 142(1)Section 143(2)Section 143(3)Section 147Section 148Section 151Section 250Section 68

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER SHRI SANDEEP SINGH KARHAIL

ITO Ward-22(1)(6), Mumbai vs. Jalpa Nitesh Shriwardhankar, Mumbai

In the result, the appeal by the Revenue is dismissed

ITA 2842/MUM/2024[2012-13]Status: DisposedITAT Mumbai16 Oct 2024AY 2012-13

Bench: Shri Prashant Maharishishri Sandeep Singh Karhailito, Ward-22(1)(6), Mumbai – 400012 Maharashtra ……………. Appellant

For Appellant: Shri Tejveer Singh, AdvFor Respondent: Shri Sushil Bhagwat Shendge, Sr.DR
Section 143(1)Section 250

idea of shares he had transacted were penny stock. He had transacted through BSE only. Further, he had no intention of claiming any bogus LTCG. Rather, in all scripts (penny stock as per AO) he had transacted had not earned a single penny but incurred losses from sale of scrip ... trading then there is no waydisallowances can be made in lieu of penny stock. In the instant case, appellant had not claimed any bogus LTCG from trading of penny stock rather incurred losses by trading from shares of scrip viz. M/s. Exelon Infrastructure Ltd. Therefore, addition made

Sonal Snehal Shah, Mumbai vs. ITO 19(3)(1), Mumbai

ITA 1653/MUM/2024[2012-13]Status: DisposedITAT Mumbai16 Oct 2024AY 2012-13

Bench: Shri Prashant Maharishi, Am & Shri Rahul Chaudhary, Jm

Section 10(38)Section 143Section 147Section 148Section 68

Page 1 ITA No.1653/M/2024 AY: 2012-13 Sonal Snehal Shah Versus ITO, Mumbai IN THE INCOME TAX APPELLATE TRIBUNAL “G

Shri Anilkumar M. Jain, Ahmedabad vs. The ACIT, Circle-5(2), Ahmedabad

In the result, appeal of the assessee is dismissed

ITA 2239/AHD/2018[2012-13]Status: DisposedITAT Ahmedabad14 Oct 2024AY 2012-13

Bench: Ms. Suchitra Kamble & Shri Narendra Prasad Sinhaassessment Year: 2012-13

Section 10(38)Section 131Section 143(1)Section 143(2)Section 147Section 148

Page 5 of 8 The preliminary finding of DIT (Inv.), Kolkata has identified a list of penny stock which has been used for generating bogus LTCG. The share of Alpha Graphic India Ltd. Is reflected in this list and therefore, it was established that this share has been used ... findings of the Kolkata investigation wing Alpha India Graphic Ltd is reflected in the list of penny stocks which has been used for generating bogus LTCG. Further, the DIT(Inv.) Kolkata conducted investigation on a project basis which has resulted into unearthing of syndicate entry operators share broker and money

Dinesh Prabhudas Hingoo, Jogeshwari (W), Mumbai vs. ACIT Circle-31(1), Mumbai

In the result, the appeal filed by the Assessee stands allowed

ITA 667/MUM/2024[2011-12]Status: DisposedITAT Mumbai11 Oct 2024AY 2011-12

Bench: Shri Narender Kumar Choudhry & Shri Girish Agrawalassessment Year: 2011-12

For Appellant: Shri Ravindra Poojari, A.RFor Respondent: Shri H.M. Bhatt, Sr. D.R
Section 10(38)Section 131Section 143(1)Section 148Section 250

observing the famous saying that there is no such a thing as a “free lunch”, similarly no Assessee’s beneficiary gets the advantage of bogus LTCG without any consideration in return, also added the amount of Rs.15,53,373/- being 3% of Rs. 5,17,79,097/- the amount ... deletion of the addition of Rs.15,53,373/- which was made by the AO being commission expenses incurred for allegedly taking entry of bogus LTCG. As we have deleted the substantive addition itself, which was made on account of bogus LTCG, hence this addition is also un-sustainable. Consequently

DCIT 41(4)(1), Room No, Kautilya Bhawan, G Block, Bkc, Mumbai vs. Dinesh Prabhudas Hingoo, Jogeshwari(W), Mumbai

In the result, the appeal filed by the Assessee stands allowed

ITA 1348/MUM/2024[2011-12]Status: DisposedITAT Mumbai11 Oct 2024AY 2011-12

Bench: Shri Narender Kumar Choudhry & Shri Girish Agrawalassessment Year: 2011-12

For Appellant: Shri Ravindra Poojari, A.RFor Respondent: Shri H.M. Bhatt, Sr. D.R
Section 10(38)Section 131Section 143(1)Section 148Section 250

observing the famous saying that there is no such a thing as a “free lunch”, similarly no Assessee’s beneficiary gets the advantage of bogus LTCG without any consideration in return, also added the amount of Rs.15,53,373/- being 3% of Rs. 5,17,79,097/- the amount ... deletion of the addition of Rs.15,53,373/- which was made by the AO being commission expenses incurred for allegedly taking entry of bogus LTCG. As we have deleted the substantive addition itself, which was made on account of bogus LTCG, hence this addition is also un-sustainable. Consequently

Sarojben Rajkumar Bansal Legal Heir of Late Rajkumar Kakaram Bansal, Bhavnagar vs. The Dy. Commissioner of Income Tax, Circle-1, Bhavnagar

In the result, the appeal of the assessee is treated as allowed for statistical purposes

ITA 306/AHD/2024[2013-14]Status: DisposedITAT Ahmedabad10 Oct 2024AY 2013-14

Bench: Ms. Suchitra Kamble & Shri Makarand V. Mahadeokarआयकर अपील सं /Ita No.306/Ahd/2024 िनधा"रण वष" /Assessment Year : 2013-14 Sarojben Rajkumar Bansal The Dy.Cit बनाम/ Legal Heir Of Circle-1 V/S. Late Shri Rajkumar Kakaram Bhavnagar – 364 001 Bansal Plot No.1497/B, Opp. Theosophical Lodge Bhavnagar, Gujarat 364 001 "थायी लेखा सं./Pan: Aanpb 1618 G अपीलाथ%/ (Appellant) &' यथ%/ (Respondent) Assessee By : Shri Tushar Hemani, Sr. Advocate & Shri Parimalsinh B. Parmar, Ar Revenue By : Shri Prithviraj Meena, Cit-Dr सुनवाई की तारीख/Date Of Hearing : 08/10/2024 घोषणा की तारीख /Date Of Pronouncement: 10/10/2024 आदेश/O R D E R Per Makarand V. Mahadeokar, Am:

For Appellant: Shri Tushar Hemani, Sr. Advocate &For Respondent: Shri Prithviraj Meena, CIT-DR
Section 10(38)Section 143(3)Section 147Section 148Section 250Section 250(6)Section 271(1)(c)Section 68

During the reassessment proceedings, the AO observed that the transactions in KGN shares were part of an organized racket of accommodation entries to create bogus LTCG and evade taxes. The AO concluded that the entire sale consideration of Rs.4,27,83,714/- Sarojben Rajkumar Bansal (L/H. of Late Rajkumar Kakaram

Sanjay Singal, Chandigarh vs. Deputy Commissioner of Income Tax, CC-1, Chandigarh

ITA 655/CHANDI/2023[2015-16]Status: DisposedITAT Chandigarh08 Oct 2024AY 2015-16

Bench: SHRI A.D.JAIN (Vice President), SHRI KRINWANT SAHAY (Accountant Member)

For Appellant: Shri Ashwani Kumar, CAFor Respondent: Smt. Kusum Bansal, CIT, DR
Section 132Section 132(4)Section 250(6)Section 68Section 69ASection 69C

Rs.100-105/- by October-November, 2014, without having any business rationale; that at this stage, the assessee off loaded these shares and earned huge bogus LTCG by selling the shares at a very high price. The AO further collected trade data in respect of counter parties who had bought such shares ... layering the transactions through many paper / shall companies with the involvement of such accommodation entry providers. The appellant has admitted incriminating nature of such bogus LTCG in the statement recorded u/s 132(4) of the Act during the course of search proceedings carried out in his case on 21.02.2014. Though

M/S Sanjay Singal HUF, Chandigarh vs. DCIT, CC-1, Chandigarh

ITA 610/CHANDI/2023[2015-16]Status: DisposedITAT Chandigarh08 Oct 2024AY 2015-16

Bench: SHRI A.D.JAIN (Vice President), SHRI KRINWANT SAHAY (Accountant Member)

For Appellant: Shri Ashwani Kumar, CAFor Respondent: Smt. Kusum Bansal, CIT, DR
Section 132Section 132(4)Section 250(6)Section 68Section 69ASection 69C

Rs.100-105/- by October-November, 2014, without having any business rationale; that at this stage, the assessee off loaded these shares and earned huge bogus LTCG by selling the shares at a very high price. The AO further collected trade data in respect of counter parties who had bought such shares ... layering the transactions through many paper / shall companies with the involvement of such accommodation entry providers. The appellant has admitted incriminating nature of such bogus LTCG in the statement recorded u/s 132(4) of the Act during the course of search proceedings carried out in his case on 21.02.2014. Though

Prabhati Devi, Dausa vs. ITO Ward Dausa, Dausa

ITA 1031/JPR/2024[2011-12]Status: HeardITAT Jaipur01 Oct 2024AY 2011-12
For Appellant: Shri Sarwan Kumar Gupta, Advocate &For Respondent: Shri Gautam Singh Chaudhary, JCIT D/R
Section 144Section 147Section 148Section 234ASection 250

opening of any assessment. Section 147 of Act clearly specify. In impugned case the Ld. AO had claimed that a certain transaction of bogus LTCG on the basis of statements as recorded of third party and Ld. AO could not have been made any enquiry regarding both the facts

Jayshree Ravi Sancheti, Mumbai vs. PCIT-20, Mumbai

In the result, the appeal of the assessee is allowed

ITA 2269/MUM/2024[2013-14]Status: DisposedITAT Mumbai27 Sept 2024AY 2013-14

Bench: Shri Anikesh Banerjee, Jm & Ms Padmavathy S, Am

For Appellant: Shri Prakash Jhunjhunwala, ARFor Respondent: Ms. Rajeshwari Menon, Sr. DR
Section 10(38)Section 147Section 148Section 263Section 68Section 69C

tune of Rs. 2,60,46,279/-. The Assessing Officer (AO) received information from DDIT (Inv.), Kolkata alleging that the assessee has entered into bogus LTCG transactions pertaining shares of M/s JRI Industries and Infrastructure Ltd. which has been claimed as exempt under section ... assessee.” 3. The ld. Authorized Representative (AR) submitted that during reassessment proceedings, the AO called on various details pertaining to the alleged bogus LTCG and after perusing all the details made the addition of the net capital gain claimed by the assessee as exempt under section

DCIT(CC)-2(4), Mumbai vs. Renudevi Hisaria, Mumbai

In the result appeal of the Revenue is dismissed

ITA 1268/MUM/2024[2015-16]Status: DisposedITAT Mumbai27 Sept 2024AY 2015-16

Bench: Shri Satbeer Singh Godara & Shri Girish Agrawalassessment Year: 2015-16

For Appellant: Shri Neelkanth Khandelwal, AdvocateFor Respondent: Smt. Mahita Nair, Sr. DR
Section 132Section 147Section 153ASection 68

erred in deleting the addition made by the AO on account of commission paid by assessee, which is consequential to addition of bogus LTCG on penny stock made by the AO in assessee's case". ii)"Whether on the facts and circumstances of the case ... erred in not considering the fact that vide order dated 09.12.2019 passed u/s 153A r.w.s 143(3) the AO has rightly disallowed the bogus LTCG on penny stock claimed as exempt by the assessee based on the detailed enquiry conducted during the search proceedings

Satishchandra Chandulal Patel, Ahmedabad vs. The Income Tax Officer, Ward-1(1)(3), Ahmedabad

In the result, appeal of the assessee is partly allowed for statistical purpose

ITA 1044/AHD/2024[2014-15]Status: DisposedITAT Ahmedabad26 Sept 2024AY 2014-15

Bench: Ms. Suchitra Kamble & Shri Narendra Prasad Sinhaassessment Year: 2014-15

Section 143(1)Section 147Section 69A

LTCG)/loss using various Penny Stock Companies which are listed in BSE. The assessee was one of the beneficiaries of obtaining accommodation entries and bogus LTCG who has taken accommodation entries of bogus LTCG to the tune of Rs.11,26,400/- on sale of 64,000 shares of M/s. Safal

Ishoo Narang, Hyderabad vs. DCIT Circle -2(1), Hyderabad

In the result, appeal filed by the assessee is allowed

ITA 450/HYD/2022[2014-15]Status: DisposedITAT Hyderabad25 Sept 2024AY 2014-15

Bench: Shri Manjunatha, G. & Shri K. Narasimha Charyआ.अपी.सं /Ita No.450/Hyd/2022 & S.A. No.1/Hyd/2024 (िनधा"रण वष"/Assessment Year: 2014-15) Ishoo Narang Vs. Dy. Cit Hyderabad Circle 2(1) Pan:Aaupn9082B Hyderabad (Appellant) (Respondent) िनधा""रती "ारा/Assessee By: Shri P Murali Mohan Rao, Ca राज" व "ारा/Revenue By:: Smt. Th Vijaya Lakshmi, Cit (Dr) सुनवाई की तारीख/Date Of Hearing: 19/08/2024 घोषणा की तारीख/Pronouncement: 25/09/2024 आदेश/Order Per Manjunatha, G. A.M This Appeal Filed By The Assessee Is Directed Against The Order Dated 15/07/2022 Of The Learned Cit (A)-Nfac Delhi, Relating To A.Y.2014-15. 2. The Assessee Has Raised The Following Grounds: “1. The Ld. Cit(A) Erred In Dismissing The Appeal. 2. The Ld.Cit(A) Erred In Holding That Al The Mandatory Preconditions Before Reopening Of Assessment U/S 147 Of The Act Were Duly Complied & Met With By The A.O.

For Appellant: Shri P Murali Mohan Rao, CAFor Respondent: : Smt. TH Vijaya Lakshmi, CIT (DR)
Section 10(38)Section 133ASection 147Section 68

Kyori Oremin namely Sh. SS Rudraraju had also indulged in bogus share transactions in shares of M/s Turbo Tech Engg. and shown bogus LTCG of Rs. 2,29,74,224/-. i) Appellant admitted that commission @ 1% was paid to earn such bogus accommodation entries of LTCG during statement recorded ... stated that companies which purchased these penny stocks from beneficiaries are shell paper Companies and are controlled by him for providing bogus LTCG entries. 7.15 a) In the GOA no. 14,15,16 the Appellant contended as under: * AO erred in ignoring the affidavit of retraction of statements dated