“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

Alosha Marketing Pvt. Ltd., Kolkata vs. ACIT, Cir. 4(1), Kolkata

In the result, the appeal of the assessee is allowed

ITA 356/KOL/2024[2011-12]Status: DisposedITAT Kolkata08 Jul 2024AY 2011-12

Bench: Dr. Manish Borad (Accountant Member)

Section 143(1)(a)Section 143(2)Section 147Section 148

scenario, it is found that the promoters of the penny stocks, the share brokers and the entry operators are involved in this business of bogus LTCG by rigging the prices. The assessee is found to have enjoyed bogus LTCG of Rs.547749/- in the FY 2010-11 by transacting ... scenario, it is found that the promoters of the penny stocks, the share brokers and the entry operators are involved in this business of bogus LTCG by rigging the prices. The assessee is found to have enjoyed bogus LTCG of Rs.547749/- in the FY 2010-11 by transacting

Assistant Commissioner of Income Tax, Circle-46(1), Delhi, New Delhi vs. Shri Deepak Gambhir, New Delhi

In the result, the appeal of the revenue is dismissed

ITA 2466/DEL/2023[2017-18]Status: DisposedITAT Delhi08 Jul 2024AY 2017-18

Bench: Shri Kul Bharat & Shri M. Balaganeshacit, Vs. Shri Deepak Gambhir, Circle-46(1), 68/8, Nea, Near Sindhi New Delhi Park, Old Rajendra Nagar, New Delhi (Appellant) (Respondent) Pan:Aakpg2768D Assessee By : Shri Ved Jain, Adv Ms. Uma Upadhyay, Ca Revenue By: Shri Vivek Kumar Upadhyay, Sr. Dr Date Of Hearing 09/04/2024 Date Of Pronouncement 08/07/2024

For Appellant: Shri Ved Jain, AdvFor Respondent: Shri Vivek Kumar Upadhyay, Sr. DR

Section 132Section 143(1)Section 147Section 148Section 153CSection 68

which was duly provided on 26.11.2021 and on 14.12.2022 (in which the issue regarding the assessee having received accommodation entry in the form of bogus LTCG/ STCG of ₹3,64,21,799/- from M/s. Alnakit Ltd through one entry operator, namely Sri Alok Kumar Agarwal, was discussed). The assessee filed ... reassessment was followed by the ld AO. In the reassessment proceedings, the ld AO treated the amount received from M/s. Alankit Ltd as bogus LTCG/ STCG and added the sum of ₹3,64,21,799/- as unexplained cash credit u/s 68 of the Act. 4. The ld CIT(A) deleted

M/S Arv Enterprises, Mumbai vs. Assistant Commissioner of Income Tax-22(1), Mumbai

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

ITA 3961/MUM/2023[2011-12]Status: DisposedITAT Mumbai05 Jul 2024AY 2011-12

Bench: Shri Amit Shukla (Jm) & Smt. Renu Jauhri (Am) I.T.A. No. 3961/Mum/2023 (A.Y. 2011-12) M/S. Arv Enterprises Vs. Acit-22(1) 17, Vasant Villa 322, 3Rd Floor Jain Derasar Marg Pirmal Chambers S.V. Road, Santacruz Lalbaug, Parel West, Mumbai-400 Mumbai-400 054. 012. Pan : Aamfa4079M (Appellant) (Respondent) Assessee By Shri Rajesh Kothari Department By Shri Manoj Kumar Sinha Date Of Hearing 16.04.2024 Date Of 05.07.2024 Pronouncement O R D E R Per Renu Jauhri (Am) :-

Section 10(38)Section 143(1)Section 147Section 148Section 149(1)(b)Section 68Section 69C

Officer in his order has made general observations about how the penny stock is used by the entry provide operator to provide benefit of Bogus LTCG, which is claimed as exempt or STCL to set off STCG. After detailed observation and finding, he held that it is in the nature ... letter dated 15/12/2018. Thus, on these facts and circumstances, it cannot be held that assessee was beneficiary of some kind of accommodation entry of bogus LTCG on the scrip of SVC Resources Ltd because it was an intra-trade transaction through bolt in stock exchange. Ld. AO has treated

Smt. Sneha Ankit Salecha, Mumbai vs. Income Tax Office, Ward, 19(3)(4), Mumbai

In the result, appeal of the assessee is allowed

ITA 255/MUM/2024[2014-15]Status: DisposedITAT Mumbai27 Jun 2024AY 2014-15

Bench: Ms Padmavathy S, Am & Shri Raj Kumar Chauhan, Jm

For Appellant: Shri Jalaj Prakash, AdvocateFor Respondent: Shri Mahesh Parwani, Sr. DR

Section 10(38)Section 131Section 68Section 69C

decision of the A.O and Ld. CIT(A) who have passed speaking orders and arrived at the conclusion that the assessee has claimed bogus LTCG as exempt u/s.10(38) of the Act and Addition has rightly been made. 5. The ld. AR vehemently opposed the contentions ... 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 on the basis of cogent material, does not justify his conclusion that the transaction

Naresh Manakchand Jain, Mumbai vs. ACIT 2(1), Mumbai

In the result, the appeals of the assessee are partly allowed

ITA 247/MUM/2023[2011-12]Status: DisposedITAT Mumbai27 Jun 2024AY 2011-12

Bench: Shri Om Prakash Kant & Shri Pavan Kumar Gadale

For Appellant: Shri Sucheck Anchaliya &For Respondent: Shri S. Srinivasu, CIT-DR

Section 132Section 144Section 153ASection 69C

commission income of the assessee for the year under consideration as under: “Shri Naresh Jain has provided mainly three type of accomodation entries namely Bogus LTCG, Bogus STCL/Business Loss and Circular trading. He himself has stated to have earned 3% commission for circular trading of various scrips on the stock ... Jain is the main person operating with his several associates to rig the stock market and to provide accommodation entries (in the form of bogus LTCG, bogus short term loss/gain) to various beneficiaries who intended to bring their unaccounted income into their books of without paying taxes, 8. Further

Naresh Manakchand Jain, Mumbai vs. ACIT 2(1), Mumbai

In the result, the appeals of the assessee are partly allowed

ITA 244/MUM/2023[2017-2018]Status: DisposedITAT Mumbai27 Jun 2024AY 2017-2018

Bench: Shri Om Prakash Kant & Shri Pavan Kumar Gadale

For Appellant: Shri Sucheck Anchaliya &For Respondent: Shri S. Srinivasu, CIT-DR

Section 132Section 144Section 153ASection 69C

Naresh Manakchand Jain, Mumbai vs. ACIT 2(1), Mumbai

In the result, the appeals of the assessee are partly allowed

ITA 243/MUM/2023[2016-2017]Status: DisposedITAT Mumbai27 Jun 2024AY 2016-2017

Bench: Shri Om Prakash Kant & Shri Pavan Kumar Gadale

For Appellant: Shri Sucheck Anchaliya &For Respondent: Shri S. Srinivasu, CIT-DR

Section 132Section 144Section 153ASection 69C

Naresh Manakchand Jain, Mumbai vs. ACIT 2(1), Mumbai

ITA 242/MUM/2023[2015-2016]Status: DisposedITAT Mumbai27 Jun 2024AY 2015-2016

Bench: Shri Om Prakash Kant & Shri Pavan Kumar Gadale

For Appellant: Respondent byFor Respondent: Date of Hearing

Section 132Section 144Section 153ASection 69C

commission income of the assessee for the year under consideration as under: "Shri Naresh Jain has provided mainly three type of accomodation entries namely Bogus LTCG, Bogus STCL/Business Loss and Circular trading. He himself has stated to have earned 3% commission for circular trading of various scrips on the stock ... Jain is the main person operating with his several associates to rig the stock market and to provide accommodation entries (in the form of bogus LTCG, bogus short term loss/gain) to various beneficiaries who intended to bring their unaccounted income into their books of without paying taxes, 8. Further

Naresh Manakchand Jain, Mumbai vs. ACIT-2(1), Mumbai

In the result, the appeals of the assessee are partly allowed

ITA 241/MUM/2023[2014-2015]Status: DisposedITAT Mumbai27 Jun 2024AY 2014-2015

Bench: Shri Om Prakash Kant & Shri Pavan Kumar Gadale

For Appellant: Shri Sucheck Anchaliya &For Respondent: Shri S. Srinivasu, CIT-DR

Section 132Section 144Section 153ASection 69C

Naresh Manakchand Jain, Mumbai vs. ACIT-2(1), Mumbai

In the result, the appeals of the assessee are partly allowed

ITA 240/MUM/2023[2013-2014]Status: DisposedITAT Mumbai27 Jun 2024AY 2013-2014

Bench: Shri Om Prakash Kant & Shri Pavan Kumar Gadale

For Appellant: Shri Sucheck Anchaliya &For Respondent: Shri S. Srinivasu, CIT-DR

Section 132Section 144Section 153ASection 69C

Suva Lal Paharia, Jaipur vs. ITO Ward 6(3), Jaipur

ITA 157/JPR/2024[2008-09]Status: DisposedITAT Jaipur24 Jun 2024AY 2008-09

For Appellant: Sh. Shrawan Kumar Gupta (Adv.) &For Respondent: Smt. Monisha Chaudhary (Addl.CIT)

Section 144Section 147Section 5

आयकर अपीलीय अधिकरण, जयपुर न्यायपीठ, जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR श्री मनीष बोराड, लेखा

Jitendra Udaylal Jain, Maharashtra vs. National Faceless Appeal Centre (NFAC), Delhi

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

ITA 4543/MUM/2023[2011-12]Status: DisposedITAT Mumbai21 Jun 2024AY 2011-12

Bench: Shri Pavan Kumar Gadale & Shri Girish Agrawal

Section 10(38)Section 143(1)Section 234ASection 271(1)(c)Section 68Section 69C

entry operators had devised methods/modus- operandi to beneficiaries to facilitate laundering their black money to white through pre-planned receipt in the form of bogus LTCG, loans etc. But the discussion of lower authorities, we find to be general in nature and there is nothing in the discussion to link/connect ... 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 on the basis of cogent material, does not justify his conclusion that the transaction

The ITO, Ward-1(2)(3), Ahmedabad vs. Shri Mahesh Somabhai Patel, Ahmedabad

In the result, the appeal of the Revenue is dismissed

ITA 1854/AHD/2019[2014-15]Status: DisposedITAT Ahmedabad19 Jun 2024AY 2014-15

Bench: Smt. Annapurna Gupta (Accountant Member), Shri T.R. Senthil Kumar (Judicial Member)

Section 10Section 10(38)Section 143(3)

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 on the basis of cogent material, does not justify his conclusion that the transaction ... which could indicate that assessee was also a part or connected to the alleged racket of providing accommodation entry of bogus LTCG nor any proof of any agreement between the assessee and other persons mentioned in the report has been found. So the basis of addition is primarily

Sri Sujit Singhania, Kolkata vs. ITO, Ward-49(4), Kolkata.

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

ITA 935/KOL/2023[2014-15]Status: DisposedITAT Kolkata19 Jun 2024AY 2014-15

Bench: Dr. Manish Borad & Shri Sonjoy Sarma]

Section 10(38)Section 131Section 142(2)Section 142(3)Section 143(1)Section 143(2)Section 250

assessee. However, the ld. AO viewed that assessee had not any explanation to offer in respect of bogus LTCG claimed exempt income u/s 10(38) of the Act. The ld. AO after elaborate findings viewed that transaction of Smart Champs IT & Infra Ltd. (Cressanda Solutions Ltd.) was a bogus

Shailesh K Patel-HUF, Ahmedabad vs. ITO, Ward-3(3)(5), Ahmedabad

In the result, appeal preferred by the assessee is dismissed

ITA 288/AHD/2019[2015-16]Status: DisposedITAT Ahmedabad18 Jun 2024AY 2015-16

Bench: Ms. Suchitra Raghunath Kamble, Judical Member & Shri Narendra Prasad Sinhaआयकर अपील सं./I.T.A. No. 288/Ahd/2019 (िनधा"रण वष" िनधा"रण वष" िनधा"रण वष" / Assessment Year: 2015-16) िनधा"रण वष" Shailesh K. Patel Huf The Income Tax Officer बनाम बनाम/ बनाम बनाम C/O. Ketan H. Shah, Ward – 3(3)(5), Vs. Advocate Ahmedabad 512, Time Square – I, Op. Ram Baug Bungalow, Thaltej Shilaj Road, Thaltej, Ahmedabad, Gujarat 380059 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aalhs9548E (Appellant) .. (Respondent) Shri Ketan Shah & Shri Aman Shah, अपीलाथ" ओर से /Appellant By : A.Rs. ""यथ" क" ओर से/Respondent By : Shri Ashok Kumar Suthar, Sr. Dr 04/06/2024 Date Of Hearing Date Of Pronouncement 18/06/2024 O R D E R Per Shri Narendra Prasad Sinha, Am: This Appeal Is Filed By The Assessee Against The Order Of The Commissioner Of Income Tax (Appeals)-3, Ahmedabad, (In Short ‘The Cit(A)’) Dated 24.01.2019 For The Assessment Year 2015-16. 2. The Assessee Has Taken Following Grounds Of Appeal:

For Appellant: A.RsFor Respondent: Shri Ashok Kumar Suthar, Sr. DR

Section 10(38)Section 133(6)Section 143(2)Section 145Section 68

these companies were suspended by SEBI. The Ld. DR submitted that these facts were clearly evident from “Investigation Report in the case of Project Bogus LTCG / STCL Through BSE Listed Penny Stocks” dated 27.04.2015 released by Directorate of Income-tax (Investigation), Kolkata. The Ld. DR strongly supported the orders ... colour of LTCG which is exempt u/s. 10(38) of the Act. 19. The department had conducted detailed enquiries in the organized racket of bogus LTCG transactions which were claimed exempt from tax. During the course of investigation the transactions in BSE listed penny stocks, which were used for generating

DCIT, CC-3(3), Kolkata vs. Amicus Real Estate Pvt. Ltd., Kolkata

In the result, appeal of the revenue is dismissed

ITA 803/KOL/2023[2010-11]Status: DisposedITAT Kolkata14 Jun 2024AY 2010-11

Bench: SHRI SANJAY GARG, HON’BLE (Judicial Member), DR. MANISH BORAD, HON’BLE (Accountant Member)

For Appellant: Shri Sunil Surana, A/RFor Respondent: Shri Abhijit Kundu, CIT, D/R

Section 132Section 139(1)Section 143(1)Section 143(2)Section 250

Term Capital Gain. The AO has himself recorded subsequently that in the course of post search investigation, it was found that the assessee booked bogus LTCG in the A.Y: 2012-13. It is, therefore, evident that the said material does not pertain

Jhaveri Trading and Investment Pvt.Ltd., Ahmedabad vs. The DCIT, Cent. Cir. 1(1), Ahmedabad

In the result, the appeal of the assessee is hereby allowed

ITA 403/AHD/2023[2014-15]Status: DisposedITAT Ahmedabad13 Jun 2024AY 2014-15

Bench: Shri Waseem Ahmed & Shri Tr Senthil Kumarआयकर अपील सं./Ita Nos. 401 To 403/Ahd/2023 "नधा"रण वष"/Asstt. Years: (2012-2013 To 2014-2015) & आयकर अपील सं./Ita Nos. 399 & 400/Ahd/2023 "नधा"रण वष"/Asstt. Years: (2010-2011 & 2011-12)

For Appellant: Shri Deepak Shah, ARFor Respondent: Shri Sudhendu Das, CIT.DR

Section 132(4)Section 68