“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

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

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

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

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

Mansukh Arjanbhai Sureja, Mumbai vs. DCIT, Circle 42(1)(1), Mumbai

In the result, appeals of the assessee are allowed

ITA 4347/MUM/2023[2012-13]Status: DisposedITAT Mumbai23 Aug 2024AY 2012-13

Bench: Shri Narendra Kumar Billaiya, Hon’Ble & Shri Sandeep Singh Karhail, Hon’Ble

For Appellant: Shri Hariom Tulsiyan, A/RFor Respondent: Smt. Sanyogita Nagpal & Smt. Mahita Nair, Sr. D/R

Section 69C

equity or debt or tax exempt income or a combination of the above transaction, therefore, it is necessary to verify the actual amount of bogus LTCG analyzing the D-mat statement and bank account statement. 3. In this case return of income as fixed for the year under consideration

Kishore Hargovind Patel (HUF), Mumbai vs. Income Tax Officer-Ward 25(2)(5), Mumbai

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

ITA 4631/MUM/2023[2012-13]Status: DisposedITAT Mumbai19 Aug 2024AY 2012-13

Bench: Shri Narender Kumar Choudhry & Shri Ratnesh Nandan Sahayassessment Year: 2012-13

For Appellant: Shri Prakash Jotwani, A.RFor Respondent: Shri P.D. Chougule, (Addl. CIT) Sr. DR

Section 10(38)Section 131Section 147Section 148Section 250Section 68

transactions were done through Bombay Stock Exchange and STT was paid and the transactions are reflected in D-Mat account, so the question of bogus LTCG does not arise. 2.5 The AO though considered the reply of the Assessee, however, not found acceptable mainly on the reason that the Assessee

Atul Shamji Bharani, Mumbai vs. DCIT CC- 4(1), Mumbai

Appeal are allowed

ITA 2023/MUM/2023[2011-12]Status: DisposedITAT Mumbai09 Aug 2024AY 2011-12

Bench: Shri Narendra Kumar Billaiya & Shri Sandeep Singh Karhail

For Appellant: Shri Vinod Kumar BindalFor Respondent: Shri Ajay Chandra

Section 10(38)Section 132Section 143(3)Section 147Section 148Section 151Section 153ASection 250Section 68Section 69C

Atul Shamji Bharani. ITA no.2022/Mum./2023, ITA no.2023/Mum./2023 06.10.2017. During the proceedings, it was noticed that assessee had taken accommodation entries of bogus LTCG through sale of penny stocks viz.Shreenath and M/s. D B International during the F.Y. 2010-11 relevant to A. Y. 2011- 12. The assessee ... exemption u/s 10(38) of the Act amounting to Rs.1,85,86,267/-. 3. It is to mention here that assessee had taken accommodation bogus LTCG and claimed the same as exempt u/s 10(38) of the Act amounting to Rs. 1,85,86,267/- The Directorate of Income

Atul Shamji Bharani, Mumbai vs. DCIT CC- 4(1), Mumbai

Appeal are allowed

ITA 2022/MUM/2023[2013-14]Status: DisposedITAT Mumbai09 Aug 2024AY 2013-14

Bench: Shri Narendra Kumar Billaiya & Shri Sandeep Singh Karhail

For Appellant: Shri Vinod Kumar BindalFor Respondent: Shri Ajay Chandra

Section 10(38)Section 132Section 143(3)Section 147Section 148Section 151Section 153ASection 250Section 68Section 69C

Suresh Kantilal Thakkar, Banaskantha vs. The PCIT, Ahmedabad-3, Ahmedabad

In the result, the appeal of the assessee is dismissed and the Assessing

ITA 1025/AHD/2024[2016-17]Status: DisposedITAT Ahmedabad07 Aug 2024AY 2016-17

Bench: Shri Siddhartha Nautiyal & Shri Makarand V. Mahadeokar

For Appellant: Shri Bhavik Nagori, A.RFor Respondent: Shri Kamlesh Makwana, CIT DR

Section 147Section 263Section 69A

sale of shares of ECL. As discussed in foregoing paragraphs, the trading in the shares of ECL was rigged for the purpose of generating bogus LTCG and STCL for various beneficiaries and assessee is one of them. The genuineness of such transactions was neither explained by the assessee during

Pawan Gupta, Kota vs. ITO Ward 1(3) Kota, Kota

ITA 252/JPR/2024[2012-13]Status: DisposedITAT Jaipur07 Aug 2024AY 2012-13

For Appellant: Shri Rajendra Sisodia AdvFor Respondent: Shri Rajesh Kumar Meena, Addl. CIT-DR

Section 10(38)Section 143(3)Section 148Section 68Section 69C

Bakra Pratisthan Ltd.(as claimed by the assessee) is treated as bogus. The assessee has introduced his unaccounted income under the guise of bogus LTCG and claimed it as exempt u/s 10(38) of the Act. His claim to have exempt income u/s 10(38) is rejected and addition ... that the above transactions of sale-purchase of shares were not made with an intention of investment. This was an adjustment made to generate bogus LTCG. The assessee has produced all relevant documents[(a) Copy of invoice of the broker dated 09.09.2010 showing the details of shares purchased (b) Copy

Madan Mohan Gupta, Kota vs. ITO Ward 1(3), Kota

ITA 246/JPR/2024[2012-13]Status: DisposedITAT Jaipur07 Aug 2024AY 2012-13

For Appellant: Shri Rajendra Sisodia AdvFor Respondent: Shri Rajesh Kumar Meena, Addl. CIT-DR

Section 10(38)Section 143(3)Section 148Section 68Section 69C

Bakra Pratisthan Ltd.(as claimed by the assessee) is treated as bogus. The assessee has introduced his unaccounted income under the guise of bogus LTCG and claimed it as exempt u/s 10(38) of the Act. His claim to have exempt income u/s 10(38) is rejected and addition ... that the above transactions of sale-purchase of shares were not made with an intention of investment. This was an adjustment made to generate bogus LTCG. – The assessee has produced all relevant documents[(a) Copy of invoice of the broker dated 08.09.2010 showing the details of shares purchased (b) Copy

Rajrajeshwari Gupta, Kota vs. ITO, Ward 1(1), Kota

In the result, the appeal of the assessee is allowed with no orders as to costs

ITA 245/JPR/2024[2012-13]Status: DisposedITAT Jaipur07 Aug 2024AY 2012-13

Bench: Hon’ble SHRI SANDEEP GOSAIN (Judicial Member)

For Appellant: Shri Rajendra Sisodia AdvFor Respondent: Shri Rajesh Kumar Meena, Addl. CIT-DR

Section 10(38)Section 143(3)Section 148Section 68Section 69C

Bakra Pratisthan Ltd.(as claimed by the assessee) is treated as bogus. The assessee has introduced his unaccounted income under the guise of bogus LTCG and claimed it as exempt u/s 10(38) of the Act. His claim to have exempt income u/s 10(38) is rejected and addition ... that the above transactions of sale-purchase of shares were not made with an intention of investment. This was an adjustment made to generate bogus LTCG. – The assessee has produced all relevant documents [(a) Copy of invoice of the broker dated 09.09.2010 showing the details of shares purchased (b) Copy

Shailendra Gupta, Kota vs. ACIT, Circle-1, Kota

ITA 206/JPR/2024[2012-13]Status: DisposedITAT Jaipur07 Aug 2024AY 2012-13

For Appellant: Shri Rajendra Sisodia AdvFor Respondent: Shri Rajesh Kumar Meena, Addl. CIT-DR

Section 10(38)Section 143(3)Section 148Section 68Section 69C

DCIT CC, 4(3), Mumbai vs. Nouveau Global Ventures Limited, Mumbai

ITA 3611/MUM/2023[2010-11]Status: DisposedITAT Mumbai31 Jul 2024AY 2010-11

Bench: Shri Om Prakash Kant () & Shri Raj Kumar Chauhan ()

For Appellant: Mr. Ashok Bansal, &For Respondent: Mr. S. Srinivasu, CIT-DR &

Section 132Section 153CSection 68

held that the entities namelyNouveau Global Ventures Ltd.,M/s Mukta Agriculture Ltd. andM/s Mystic Electronics Ltd. have been used to provide accommodation entries of bogus LTCG. Thus, there has definitely been a sugar coating / manipulation of the financials. 6.7. At the same time, there are few material differences. The statement

DCIT CC, 4(3), Mumbai vs. Nouveau Global Ventures Limited, Mumbai

ITA 3609/MUM/2023[2011-12]Status: DisposedITAT Mumbai31 Jul 2024AY 2011-12

Bench: Shri Om Prakash Kant () & Shri Raj Kumar Chauhan ()

For Appellant: Mr. Ashok Bansal, &For Respondent: Mr. S. Srinivasu, CIT-DR &

Section 132Section 153CSection 68

DCIT CC, 4(3), Mumbai vs. Nouveau Global Ventures Limited, Mumbai

In the result, the appeals of the Revenue are allowed for statistical purposes whereas cross statistical purposes whereas cross-objections of the assessee are of the assessee are dismissed

ITA 3608/MUM/2023[2012-13]Status: DisposedITAT Mumbai31 Jul 2024AY 2012-13

Bench: Shri Om Prakash Kant () & Shri Raj Kumar Chauhan ()

For Appellant: Mr. Ashok Bansal, &For Respondent: Mr. S. Srinivasu, CIT-DR &

Section 153CSection 68

have been us Ltd. andM/s Mystic Electronics Ltd. have been us Ltd. andM/s Mystic Electronics Ltd. have been used to provide accommodation entries of bogus LTCG. accommodation entries of bogus LTCG. Thus, there has definitely been a Thus, there has definitely been a sugar coating / manipulation of the financials. sugar ... appellant's role in providing appellant's role in providing accommodation entries in the nature of bogus accommodation entries in the nature of bogus LTCG is evident from the search action, several other LTCG is evident from the search action, several other factors (in the form of factors

Shri Vikram N. Chandan, Mumbai vs. ITO, 19(3)(5), Mumbai

In the result, appeal of the assessee is allowed

ITA 70/MUM/2024[2015-16]Status: DisposedITAT Mumbai30 Jul 2024AY 2015-16

Bench: Shri Pavan Kumar Gadale & Shri Girish Agrawalassessment Year: 2015-16

For Appellant: Shri Neelkanth Khandelwal, CAFor Respondent: Ms. Rajeshwari Menon, Sr. DR

Section 10(38)Section 143(2)Section 143(3)Section 68Section 69C

basis” and also casually noted about “some orders passed by SEBI on the issue of manipulation of share market for providing accommodation entry of bogus LTCG” though without pinpointing anything specific towards assessee, in this regard. 4.4. Ld. Assessing Officer, thus completed the assessment by making an addition

ITO-19(2)(4), Mumbai vs. Priti Bharat Parekh, Mumbai

In the result, the appeal of the revenue stand dismissed

ITA 447/MUM/2024[2014-15]Status: DisposedITAT Mumbai26 Jul 2024AY 2014-15

Bench: Shri Amarjit Singh & Shri Rahul Chaudhary, Ito-19(2)(4) Vs. Priti Bharat Parekh 507, 5Th Floor, Piramal 6C Landsend Chs 29 D Chambers, Parel, Dongersey Road, Mumbai – 400 012 Malabar Hill Maharashtra – 400006 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aaepp1784C Appellant .. Respondent Appellant By : B.V. Jhaveri & Ms. Bhargavi Raval Respondent By : H.M. Bhatt Date Of Hearing 14.05.2024 Date Of Pronouncement 26.06.2024 आदेश / O R D E R Per Amarjit Singh (Am): The Present Appeal Filed By The Revenue Is Directed Against The Order Of Ld. Cit(Nfac) Of The Income Tax Act, 1961 For A.Y. 2014-15. The Revenue Has Raised The Following Grounds Before Us: “1. Whether On The Facts & Circumstances Of The Case & In Law, The Ld. Cit (A) Is Right In Quashing The Reopening By The Ao With The Opinion That The Reopening Is Without Jurisdiction & Bad In Law Without Appreciating That The Facts On Which The Reopening Was Done Are Not Available By The Ao At The Time Of Original Assessment 2. Whether On The Facts & Circumstances Of The Case & In Law, Ld. Cit (A) Is Right In Deleting The Addition Made On Account Of Penny Stock Transaction Without Appreciating The Facts That During The Course Of Investigation, It Was Found That The Scrips In Which The Assessee Traded Is Penny Stock Used For Providing Accommodation Entry Only In Form Of Bogus Ltcg & Stcg & Shared With The Jurisdiction Ao In The Fy 2020-21. 3. Whether On The Facts & Circumstances Of The Case & In Law, The Ld. Cit (A) Is Right In Deleting The Addition Made On Account Of Penny Stock Transaction Without Appreciating The Facts That The Assessee Has Entered

For Appellant: B.V. Jhaveri &For Respondent: H.M. Bhatt

Section 143(2)Section 143(3)Section 147Section 148

investigation, it was found that the scrips in which the assessee traded is penny stock used for providing accommodation entry only in form of bogus LTCG and STCG and shared with the jurisdiction AO in the FY 2020-21. 3. Whether on the facts and circumstances of the case

ITO -24(2)(1), Mumbai, Piramal Chambers vs. Kailash Chandra Gupta, HUF, Mumbai

ITA 4013/MUM/2023[2012-13]Status: DisposedITAT Mumbai26 Jul 2024AY 2012-13

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

dated 12.4.2015 has mentioned that the clients who purchase and sell shares at highest rate through stock exchange do the same only to obtain bogus LTCG and Short Term Capital Loss (STCL) as both of them would be beneficiaries. Mrs. Raj Kumar Kedia, in his statement dated 13.6.2014 has stated ... shares have all occurred as per the modus operandi of the scheme to increase the volume of shares. So that the desired amount of bogus LTCG can be booked into the account of beneficiary i.e., the impugned assessee. It was noted by Ld. AO at page 28, para

Kaushik Chandravadan Parikh, Mumbai vs. NFAC, Delhi

ITA 2064/MUM/2023[2011-12]Status: DisposedITAT Mumbai26 Jul 2024AY 2011-12

Bench: Ms. Kavitha Rajagopal (Jm) & Shri Omkareshwar Chidara (Am)

Section 10(38)Section 132Section 68

persons based on which the beneficiaries claim false 2 Kaushik Chandravadan Parikh exemptions u/s. 10(38). It was also mentioned that Mr. Shah managed bogus LTCG during A.Y. 2011-12 and 2012-13 to many clients in the shares of M/s. Prraneta Industries Ltd. (PIL for short), formerly known ... Satish Chandrakant C. Shah to show that the purchase of shares by the assessee was a part of modus operandi to generate the alleged bogus LTCG and therefore, the A.O. has failed to show that the assessee had any connection of any nature whatsoever with the said Shri Satish Chandrakant

Gilt Commodities Pvt. Ltd., Kolkata vs. I.T.O., Ward-3(1), Kolkata

In the result, the appeal filed by the assessee is allowed

ITA 1447/KOL/2019[2014-15]Status: DisposedITAT Kolkata23 Jul 2024AY 2014-15

Bench: Sri Rajpal Yadav, Vice- & Sri Sanjay Awasthi

also explained Page 8 of 26 I.T.A. No.: 1447/KOL/2019 Assessment Year: 2014-15 Gilt Commodities Pvt. Ltd. the modus operandi of pre-arranged bogus LTCG transactions. The AO further observed that statement of Sri Amit Singh was recorded on oath on 22.12.2015 who in reply to Question No.5 accepted that

Antony Leo Sequeira, Mumbai vs. Assistant Commissioner of Income Tax, Central Circle-2(1), Mumbai

In the result, Grounds taken by the assessee are dismissed

ITA 2010/MUM/2023[2014-2015]Status: DisposedITAT Mumbai10 Jul 2024AY 2014-2015

Bench: Shri Anikesh Banerjee & Shri Gagan Goyal

For Appellant: Shri K. Gopal & Shri Om Kandalkar , Ld. ARFor Respondent: Shri Ajay Chandra & Shri Manoj Kumar

Section 132Section 148Section 250Section 68

from the office of the DGIT (Inv), Pune, which has been subsequently forwarded to this office in regard to the beneficiaries who have obtained bogus LTCG in the shares of M/s. Risa International Limited (hereinafter referred as RIL). M/s RIL was formerly known as M/s. Govindji Trikamdas Export Ltd having ... addition to this an amount of commission amounting to Rs. 16,27,013/- was also made on account of expenses on alleged bogus LTCG. The assessee being aggrieved with this order of AO preferred an appeal before the Ld. CIT (A), who in turn allowed the appeal of the assessee

Niraj Pratapbhai Shah, Ahmedabad vs. The Income Tax Officer, Ward-3(3)(2)(Formerly ITO, Ward-3(3)(3)), Ahmedabad

In the result, the appeal of the assessee in ITA No

ITA 87/AHD/2024[2013-14]Status: DisposedITAT Ahmedabad09 Jul 2024AY 2013-14

Bench: Income Tax Appellate Tribunal, Ahmedabad Bench

For Appellant: Shri Kushal Fofaria, A.RFor Respondent: Smt. Trupti Patel, Sr. D.R

Section 132Section 139Section 143(1)Section 147Section 234ASection 250Section 271(1)(c)Section 68

with incriminating digital as well documentary evidences. The evidences gathered during search revealed that there are clandestine record of unaccounted cash, synchronized trading, providing bogus LTCG in various BSE listed scrips and transport of such cash through angadiyas was found to have been maintained . Thus, as per Revenue, there

Niraj Pratapbhai Shah, Ahmedabad vs. The Income Tax Officer, Ward-3(3)(2), (Formerly ITO, Ward-3(3)(3), Ahmedabad

In the result, the appeal of the assessee in ITA No

ITA 85/AHD/2024[2013-14]Status: DisposedITAT Ahmedabad09 Jul 2024AY 2013-14

Bench: Income Tax Appellate Tribunal, Ahmedabad Bench

For Appellant: Shri Kushal Fofaria, A.RFor Respondent: Smt. Trupti Patel, Sr. D.R

Section 132Section 139Section 143(1)Section 147Section 234ASection 250Section 271(1)(c)Section 68