INCOME TAX OFFICER -22(3)(6), MUMBAI, PIRAMAL CHAMBERS, LALBAUG, V. SAREMAL NIHALCHAND JAIN , WORLI

ITA 1819/MUM/2024

AI Insights

The case involves an appeal by the Income Tax Department against the decision of the CIT(A), which had deleted an addition made by the Assessing Officer (AO) under section 69A of the Income Tax Act, 1961. The addition was initially made on account of alleged bogus sale of shares and claiming fictitious losses. The Revenue contended that the CIT(A) erred in allowing the assessee's claim of long-term capital loss without considering the manipulations and price rigging involved in the transactions of penny stocks. The Tribunal noted that a similar issue had been remitted to the AO in a related assessee's appeal and decided to follow the same course for consistency, remitting the Revenue's appeal back to the AO for a fresh decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471284 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2011-2012
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: ASIF KAR MALI
• Assessee Lawyers: SATYAPRAKASH SINGH
• Keywords: Income from undisclosed sources; Penny stocks; Bogus
• Section: 69A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL Mumbai “J(SMC)” Bench, Mumbai. Before Smt. Beena Pillai (JM) & Shri Omkareshwar Chidara (AM) ITA No. 1819/MUM/2024 (Assessment Year : 2011-12) ITO 22(3)(6) Room No. 213, 2nd Floor Piramal Chambers Lalbagu, Parel Mumbai-400 012. Vs. Saremal Nihalchand Jain 106 BDD Chawl, Shree Ram Mills Road, Worli Mumbai-400 013. PAN : AINPJ0108R Appellant Respondent Assessee by : Shri Satyaprakash Singh Revenue by : Shri Asif Karmali Date of Hearing : 27/01/2025 Date of pronouncement : 29/01/2025 O R D E R Per Omkareshwar Chidara (AM) :- In the above captioned Revenue appeal, an addition under section 69A was made by the Ld. AO on account of bogus sale of shares and claiming the fictitious loss. The following grounds of appeal were taken by the Revenue :- 1. \"On the facts and circumstances of the case and in law, Ld. ClT(A) has erred in deleting the addition made of Rs.3,80,873/- on account of unexplained Income U/s 69A of the IT Act, 1961 on account of bogus sale of shares and claiming bogus loss.\" 2. \"On the facts and circumstances of the case and in law, the Ld. 011(A) has erred in deleting the additions u/s 69A of the Act of Rs.3,80,873/, allowing the claim of the assessee as Long term capital loss of the Act; without considering the fact that, AO has relied on the report of Investigation Wing of Income-Tax Department, who has published the discreet report with a list of penny stocks/scripts and the assessee by transacting in one of the penny stock company i.e. \"M/s Swarnsarita Gems Ltd. (formerly known as Shyam Star Gems Ltd.)\" 3. \"On the facts and circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate the fact that the company and the brokers/other entities were involved in price manipulation in the Saremal Nihalchand Jain 2 scrip thereby confirming the investigation of the department that the scrip is utilized by entry operators for providing accommodation entries under the garb of long term gain/loss by manipulating/ rigging up the share price.\" 4. 'On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the fact that the assessee has sold shares of penny stock companies \"M/s Swarnsarita Gems Ltd. (formerly known as Shyam Star Gems Ltd.)\" of Rs. 3,80,873/- during the year and claimed Long Term Capital Loss of the Act. 5. \"On the facts and circumstances of the case and in law the order of the CIT(A) suffers from perversity as it ignores the facts brought on record establishing manipulation of share prices of M/s Swamsarita Gems Ltd. (formerly known as Shyam Star Gems Ltd.)\", as part of colorable device to generate fictitious long term gain/loss with the aim to evade taxes due\". 6. \"On the facts and circumstances of the case and in law the CIT(A) erred in deleting the disallowance of Long Term Capital Loss of Rs.3,80,873/- overlooking the fact that the entire transactions were stage managed with the object to facilitate the assessee to plough back its unaccounted income in the form of fictitious Long Term Capital loss and claim bogus loss\" 7. 'On the facts and circumstances of the case and in law the CIT(A) erred in deleting the allowance of Long Term Capital loss of Rs.3,80,873/- without considering the fact that Assessing Office relied on the report of Investigation Wing which is premier investigation authority of Income tax department, therefore the onus is on the assessee to establish the genuineness of the price hike and also has to prove that the price of the share was not manipulated.' 8. The appellant prays that the order of the National Faceless Appeal Centre (NFAC), Delhi on the above grounds be reversed and that of the AO be restored. 9. 'The appellant craves leave to amend or alter any grounds or add a new ground Which may be necessary ? 2. During the hearing before the Bench, the Ld. AR of the appellant has submitted that the same issue was considered in assessee’s appeal by Hon'ble ITAT and filed a copy of order of ITAT. The Ld. AR has requested the Bench to remit the Revenue’s appeal also to the file of the Ld. AO for fresh adjudication of issue, as the appellant’s appeal ITA No. 909/Mum/2024 on the same issue was remitted to the file of the Ld. AO. Saremal Nihalchand Jain 3 3. The Ld. DR did not object to the same. 4. After hearing both sides, it is decided to remit the issue back to the file of Ld. AO for fresh adjudication. 5. The Revenue’s appeal is allowed for statistical purposes. Order pronounced in the open Court on 29/01/2025. Sd/- Sd/- (BEEMA PILLAI) (OMKARESHWAR CHIDARA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 29/01/2025 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai PS "