INCOME TAX OFFICER, WARD - 12(1), KOLKATA V. VASA COMMERCIAL PVT LTD., KOLKATA

ITA 1675/KOL/2024

AI Insights

The case involves Vasa Commercial Pvt. Ltd., which appealed against the addition of \\u20b932,03,840 as Long-Term Capital Gain by the Income Tax Officer, Ward-12(1), Kolkata, arising from the sale of shares deemed as penny stocks. The CIT(A) reversed the AO's decision, leading to the Revenue's appeal to the Tribunal. The Tribunal examined the classification of the shares sold by the assessee and found that they were not penny stocks as per the list provided by the AO. The Tribunal also noted that the assessee had properly reported the income from these shares in their Profit and Loss account and taxed it accordingly.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 41072 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUP CHATTERJEE
• Assessee Lawyers: SIDDHARTH AGARWAL
• Keywords: Maximum Marginal Rate; Penny stocks; Bogus
• Section: 147; 148

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA No.1675/KOL/2024 (Assessment Year:2015-16) Income Tax Officer, Ward-12(1) Aaykar Bhavan, 7 th Floor, P-7, Chowringhee Square, Kolkata- 700069, West Bengal Vs. Vasa Commercial Pvt. ltd. Ground Floor, Siddharth, 29 Dr. Rajendra Road Bhowanipore, Kolkata-700020 West Bengal (Appellant) (Respondent) PAN No. AACCV5108M CO No. 59/KOL/2024 (Arising in ITA No. 1675/KOL/2024 for A.Y. 2015 -16) Income Tax Officer, Ward-12(1) Aaykar Bhavan, 7 th Floor, P-7, Chowringhee Square, Kolkata- 700069, West Bengal Vs. Vasa Commercial Pvt. ltd. Ground Floor, Siddharth, 29 Dr. Rajendra Road Bhowanipore, Kolkata-700020 West Bengal (Appellant) (Respondent) Assessee by : Shri Siddharth Agarwal, AR Revenue by : Shri Arup Chatterjee, DR Date of hearing: 11.03.2025 Date of pronouncement : 17.03.2025 O R D E R Per Rajesh Kumar, AM: These are cross appeals against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 14.06.2024 for the AY 2015-16. 02. The only issue raised by the Revenue in the various grounds of appeal is against the order of ld. CIT (A) allowing the appeal of the assessee Page | 2 ITA No.1675/KOL/2024 & CO No. 59/KOL/2024 Vasa Commercial Pvt. ltd; A.Y. 2015-2016 thereby deleting the addition of ₹32,03,840/- as made by the ld. AO on account of Long-Term Capital Gain arising from sale of penny stock. 03. The facts in brief are that the assessee filed the return of income on 24.09.2015, declaring total income of ₹78,09,700/-. The case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 31.03.2021, after recording the reasons to believe u/s 148(2) of the Act. The ld. AO accordingly issued statutory notices along with questionnaire which was duly replied/complied by the assessee. Finally, the ld. AO held that the assessee has realized ₹32,03,840/- by selling equity shares which is a penny stock namely ‘M/s Indian Infotech & Software Ltd. (INDI NFO & SOF), which is bogus as per letter dated 18.07.2017, received from ADIT (Inv.) Unit-2(3), Kolkata. The AO, finally, added the same to the income of the assessee as Long-Term Capital Gain arising from penny stock in the assessment framed u/s 147 read with section 144B of the Act dated 28.03.2022. 04. In the appellate proceedings, the ld. CIT (A) allowed the appeal of the assessee by holding that the assessee has not claimed said Long Term Capital Gain u/s 10(38) of the Act and showed the same as sale of shares in the Profit and Loss account and the profit earned by the assessee was offered to tax at the maximum marginal rate of tax. 05. After hearing the rival contentions and perusing the materials available on record, we find that the script involved in the present case i.e. M/s Indian Infotech& Software Ltd. is not a penny stock and as not included in the list of 84 Penny stocks. The list thereto is extracted by the ld. AO at page no.7 to 10 of the assessment order. The assessee has also filed before us the copies of contract notes of Page | 3 ITA No.1675/KOL/2024 & CO No. 59/KOL/2024 Vasa Commercial Pvt. ltd; A.Y. 2015-2016 purchase and sales as well as copy of audited balance sheet, wherefrom we have observed that the sale of shares has been shown in the income side of the Profit and Loss account and whatever profit earned therefrom has been offered to tax at the maximum margin rate of tax. We therefore, do not find any mistake or any infirmity in the order of the ld. CIT (A) who has given a clear-cut finding that the Long-Term Capital Gain has not been claimed u/s 10(38) of the Act. Accordingly, we dismiss the appeal of the Revenue by upholding the order of ld. Commissioner of Income-tax (Appeals). 06. Since, the assessee did not press the cross objection filed by the assessee and therefore, same is dismissed as not pressed. 07. In the result, both the cross objection of the assessee as well as appeal of the Revenue are dismissed. Order pronounced in the open court on 17.03.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 17.03.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata "