M/S DEEPS SPECIAL STEELS LIMITED,LUDHIANA V. DCIT, CIRCLE-1, ALWAR

ITA 1016/JPR/2024

AI Insights

M/s Deeps Special Steels Ltd. appealed against the order of the CIT(A), which had dismissed their challenge to the assessment order disallowing a short-term capital loss claimed on the sale of shares of KAPAAC Pharma Ltd. The Assessing Officer had initially disallowed the loss, suspecting the transactions to be part of a scheme to evade taxes by showing inflated losses. The Tribunal examined the arguments and evidence presented, including the Special Investigation Team's report, which suggested that the shares involved were part of a penny stock scheme. The Tribunal found that the assessee had not provided sufficient evidence to prove the genuineness of the transactions and upheld the disallowance of the claimed loss.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 771804 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Assessment Year: 2015-2016
• Other Referred Cases: Principal Commissioner of Income-Tax V. Affluence Commodities (P.) Ltd., Principal Commissioner of Income-Tax V. Champalal Gopiram Agarwal, Principal Commissioner of Income-Tax V. Sangitaben Jagdish kumar Shah, Principal Commissioner of Income-Tax V. Genuine Finance P. Ltd., Assistant Commissioner of Income-tax, Central Circle-8(1), Mumbai V. Jainam Investments, Commissioner of Income Tax vs. Anupam Kapoor, Assistant Commissioner of Income Tax V3. Pardeep Kumar Aggarwal, Pr. Commissioner of Income Tax (Central), Ludhiana vs.Sh. Hitesh Gandhi, Pr. Commissioner of Income Tax (Central), Ludhiana vs. Prem Pal Gandhi, Kishan Chand Chellaram Vs. CIT, CIT vs. Sham Lal, Meenu Goel vs. ITO, Smt. Shikha Dhawan, Vs. ITO, CIT vs. Lavanya Land Pvt. Ltd., Pratik Suryakant Shah vs. ITO, AnilNand Kishore Goyalvs.ACIT, CIT vs. Jamna Devi Agrawal, Commissioner of Income-tax vs. Smt. Sumitra Devi, Shri Dolarrai Hemani vs. ITO, ITO-24(3)(1) vs. M/s. Arvind Kumar Jain HUF, Commissioner of Income-tax-13 vs. ShyamR. Pawar, Vivek Agarwal vs. The Income Tax Officer Ward 1(2), Jaipur, LalithaJewellery Mart (P.) Ltd. vs. Deputy Commissioner of Income-tax, Commissioner of Income Tax -III, Ludhiana vs. Vivek Mehta, Commissioner of Income Tax vs. Himani M. Vakil, Commissioner of Income Tax vs. Udit Narain Agrawal, CIT vs. Paras Cotton Co, Faqir Chand Chaman Lal vs. ACIT, Assam Tea Co. vs. ITO, CIT vs. Carbo Industrial Holdings Ltd., Asstt. CIT vs. BhavikBharatbhai Padia, Ayushi Jain vs. ITO, Shri Prakash Javia HUF vs. ITO, Sidhartha Jain vs. ITO, Rahul Vashist vs. ITO, Mahaveer Kanwarlal Ranka vs. ACIT, PCIT vs. Shri Arnav Goyal, PCIT vs. Affluence Commodities (P) Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA OJHA
• Assessee Lawyers: PANKAJ BHALLA
• Keywords: Set aside; Capital asset; Opportunity of being heard; Additional evidence; Revised return; Reassessment proceedings; Question of law; Corroborative evidences; Sale consideration of property below Jantri Value; Salary income; Commercial expediency; Capital Gains; Sham transactions; Accommodation entries; Share purchase agreement; Liquidation; Penny stocks; Bogus
• Section: 148; 143(3); 142(1); 68; 50C; 133A; 260A

Judgement Text

"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A-Bench” JAIPUR Jh xxu xks;y] ys[kk lnL; ,o aJh ujsUnz dqekj] U;kf;d lnL; ds le{k BEFORE: SHRI GAGAN GOYAL, AM & SHRI NARINDER KUMAR, JM vk;dj vihy la-@ITA No. 1016/JPR/2024 fu/kZkj.ko\"kZ@Assessment Year : 2015-16 M/s Deeps Special Steels Limited 320-321, Industrial Area-A, Ludhiana (East), Ludhiana-141003. cuke Vs. Deputy Commissioner of Income Tax, Circle-1, Alwar. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAACD6027H vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assessee by : Shri Pankaj Bhalla, C.A. jktLo dh vksjls@Revenue by: Shri Rajendra Ojha, CIT lquokbZ dh rkjh[k@Date of Hearing :25/08/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 28/08/2025 vkns'k@ORDER PER: NARINDER KUMAR, JUDICIAL MEMBER . Assessee-appellant has challenged, by way of this appeal, order dated 21.06.2024, passed by Learned CIT(A), National Faceless Appeal Centre, Delhi, whereby the appeal filed by the said assessee, challenging assessment order dated 29.12.2017, passed after selection of the case for scrutiny, relating to the assessment year 2015-16, stands dismissed. Vide assessment order dated 29.12.2017, the Assessing Officer assessed its total income at Rs. 3,70,73,690/-, making addition of Rs. Printed from counselvise.com 2 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. 11,00,000/- i.e. by disallowance of the said amount claimed by the assessee and another addition of Rs. 3,29,978 on breach of contract, by way of disallowance of various expenses, namely, salary, wages, allowance and other benefits, AGM expenses, traveling expenses, and disallowance of loss of Rs. 7,42,75,089/- claimed by the assessee on the sale of share of KAPAAC Pharma. 2. As per impugned order, while dealing with ground No. 3 in the appeal, which related to addition of Rs. 3,29,978/- described above, Learned CIT(A) observed that in the course of arguments, no submissions were put forth by the appellant on the said ground. Accordingly, said ground of appeal was rejected. 3. The other ground raised on behalf of the appellant, before Learned CIT(A), NFAC, pertained to disallowance of short term capital loss of Rs. 7,42,75,089/-, which related to sale of shares of KAPAAC Pharma. 4. It may mentioned here that before us, Ld. AR for the appellant has challenged the impugned order passed by Learned CIT(A) only as regards disallowance of Rs. 7,42,75,089/-, pertaining to sale of shares of KAPAAC Pharma Limited. 5. Arguments heard. File perused. Printed from counselvise.com 3 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. 6. It may be mentioned here that the assessee-appellant is engaged in business of manufacturing of steel. As regards year under consideration, the assessee declared its total income as Nil, while submitting the return of income. The department selected the case for limited scrutiny. Thereupon, notice u/s 143(1) of the Act was issued on 18.03.2016. On initiation of proceedings, notice u/s 142(1) of the Act, accompanied by a questionnaire, was served upon the assessee. Income declared by the Assessee 7. Case of the department is that while declaring its income as ‘Nil’, in the return of income, the assessee was found to have claimed set off of the previous year loss and computed MAT u/s 115JB, to the tune of Rs. 8,20,087/-, but in its revised return of income, furnished on 17.03.2017, i.e. during pendency of the assessment proceedings, the assessee declared its income at Rs. 3,59,73,685/- and also claimed short term capital loss of Rs. 7,42,75,089/- on sale of shares of KAPAAC Pharma Limited, and in this way, net loss to be carry forward was computed at Rs. 3,83,01,404/-. Sale of certain Land-No addition 8. During assessment proceedings, it transpired that on 19.03.2015m the assessee had sold some land measuring 8,03,600 Sq. Meters, in the Printed from counselvise.com 4 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. area of MIA, Alwar, but, in this regard no addition was made, considering the reply furnished by the assessee and finding that the provisions of section 50C were not attracted in the case of lease hold property, and the assessee was found to have taken said land on lease of 99 years, and as such, it was not a capital asset. Sale of shares of KAPPAC PHARMA 9. Coming to the only issue of sale of KAPPAC Pharma, argued before us, during the year under consideration i.e. from 16.09.2014 to 02.01.2015, the assessee purchased said shares, for Rs. 7,84,03,954/- and sold the same only for Rs. 41,28,865/-. 10. Case of the department is that the assessee had planned to minimize his tax liabilities by purchase and sale of shares of dummy company and also that the assessee had received the above said amount as sale consideration, on 17.03.2015, whereas shares were stated to have been sold two days thereafter i.e. on 19.03.2015, show cause notice came to be issued to the assessee on 21.12.2017. The assessee furnished reply thereto. Having considered the entire material available, the Assessing Officer passed assessment order. Printed from counselvise.com 5 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. Said assessment order came to be upheld by Learned CIT(A) while dismissing the appeal filed by the assessee, for the reasons recorded therein. Contentions 11. Ld. AR for the appellant has submitted that this is a case where the assessment order came to be passed, thereby disallowing genuine claim of the assessee, as regards short term capital loss, which had origin from sale of shares, while the Assessing Officer ignored the material submitted by the assessee. 12. It has also been submitted that the assessee-appellant was not provided reasonable opportunity of being heard as complete information, including on the aspect as to who had acted as the operator for the assessee, was provided. 13. While assailing impugned order passed by Learned CIT(A), Ld. AR has contended that for the above said reasons, even the impugned order deserves to be set aside, matter may be remanded for afresh decision, after providing reasonable opportunity of being heard to the assessee- appellant. Printed from counselvise.com 6 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. 14. It may be mentioned here that on behalf of the assessee one paper book consisting of copies of documents, including written submission etc., running from page 1 to 159, has been submitted. 15. Another paper book submitted on behalf of the appellant is by way compilation of plethora of decisions. As tabulated by Learned AR for the appellant, the list of decisions is as under: Sl Particulars Proposition Pages Relevant Pages 1. The Hon'ble Gujarat High Court in case of Principal Commissioner of Income-Tax V. Affluence Commodities (P.) Ltd. [2024] 161 taxmann.com 476 (Gujarat) Losses from share transactions cannot be disallowed or assessments reopened merely on suspicion of penny stock dealings; if trades are through recognized exchanges, backed by proper documents, banking channels, and no evidence of collusion, such losses are allowable. 1-4 1,3,4 2. The Hon'ble Gujarat High Court in case of Principal Commissioner of Income-Tax V. Champalal Gopiram Agarwal [2023] 155 taxmann.com 66 5-9 5,7 3. The Hon'ble Gujarat High Court in case of Principal Commissioner of Income-Tax V. Sangitaben Jagdish kumar Shah [2023] 156 taxmann.com 147 (Gujarat) 10-11 10,11 4. The Hon'ble Gujarat High Court in case of Principal Commissioner of Income-Tax V. Genuine Finance P. Ltd.* [2023] 152 taxmann.com 330 (Gujarat) 12-14 12,14 5. The Hon'ble Bombay High Court in case of Assistant Commissioner of Income-tax, Central Circle-8(1), Mumbai V. Jainam Investments [2021] 131 taxmann.com 327 15-24 15,23,24 6. Hon’ble High Court of Punjab & Haryana in the case of Commissioner of Income Tax vs. Anupam Kapoor reported in ITA No. 356 & 378 of 2004 and 308 of 2005 no adverse inference can be made with respect to sale of equity shares on account of high variation in sale price of the script 25-28 25-26 7. Assistant Commissioner of Income Tax V3. Pardeep Kumar Aggarwal reported in [2016] 70 taxmann.com 154 (Chandigarh - Trib.) 29-41 32,38 8. The Pr. Commissioner of Income Tax (Central), Ludhiana vs.Sh. Hitesh Gandhi reported in ITA No. 18 of 2017 (O&M) 42-46 45,48 9. The Pr. Commissioner of Income Tax (Central), 47-49 Printed from counselvise.com 7 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. Ludhiana vs. Prem Pal Gandhi reported in ITA No. 95- 2017 (O&M) wherein it has held that; 10. Kishan Chand Chellaram Vs. CIT, (1980) 125 ITR 713 (SC) Material collected behind the back of the assessee cannot be used against him unless the assessee has been allowed a chance to rebut the same. 50-88 50,55 11. CIT v. Sham Lal [1981] 127 ITR 816 (Punj. &Har.); 89-90 90 12. Meenu Goel vs. ITO in ITA No. 6235/Del/2017 91-98 97 13 Smt. Shikha Dhawan, Vs. ITO ITA No.3035/Del/2018 99-114 113-114 14 CIT vs. Lavanya Land Pvt. Ltd. [2017] 83taxmann.com 161 (Bom) In absence of any material to show that huge cash was transferred from one side to another, addition cannot be sustained 115-125 115,124 15 Pratik Suryakant Shah vs. ITO [2017] 77 taxmann.com 260 (Ahmedabad Tribunal) 126-131 130-131 16 AnilNand Kishore Goyalvs.ACIT-ITA Nos. 1256/PN/2012 (Pune Tribunal) 132-176 17 CIT vs. Jamna Devi Agrawal [2012] 20 taxmann.com 529 (Bom HC) 177-180 179 18 Commissioner of Income-tax v. Smt. Sumitra Devi [2014] 49 taxmann.com 37 Transaction could not be rejected altogether in absence of cogent evidence to the contrary 181-185 184 19 Shri Dolarrai Hemani vs. ITO, ITA No. 19/Kol/2014, Date of Judgement : 02.12.2016, ITAT-Kolkata 186-196 192 20 ITO-24(3)(1) vs. M/s. Arvind Kumar Jain HUF reported in ITA No. 4862/MUM/2014 Assessment Year: 2005- 06 The claim of appellant cannot rejected where the transaction is supported by documentary evidences. 197-201 200 21 Commissioner of Income-tax-13 ShyamR. Pawar reported in [2015] 54 taxmann.com 108 (Bombay)/[2015] 202-205 202,205 22 Vivek Agarwal vs. The Income Tax Officer Ward 1(2), Jaipur, ITA No. 292/JP/2017 206-214 213-214 23 LalithaJewellery Mart (P.) Ltd. v. Deputy Commissioner of Income-tax reported in [2018] 99 taxmann.com 408 (Madras) 215-224 215 24 Commissioner of Income Tax -III, Ludhiana vs. Vivek Mehta reported in [2012] 17 taxmann.com 197 (Punj. &Har.) 225-226 225-226 25 Commissioner of Income Tax vs. Himani M. Vakil reported in [2014] 41 taxmann.com 425 (Gujarat) 227-228 228 26 Commissioner of Income Tax vs. Udit Narain Agrawal reported in [2013] 31 tasmann.com 76 (Allahabad) 229-233 232-233 27 CIT v. Paras Cotton Co [(2007) 288 ITR 211 (Raj.)] The claim cannot be rejected on basis of suspicion only 234-239 28 Faqir Chand Chaman Lal v. ACIT [(2004) 1 SOT 914 (Asr.)] 240-242 242 29 Assam Tea Co. v. ITO [(2005) 92 ITD 85 (Asr.) (SB)] 243-250 242 30 CIT vs. Carbo Industrial Holdings Ltd. [2000] 244 ITR 422 (Calcutta High Court) Addition cannot be made on default of broker 251-253 253 31 Asstt. CIT vs. BhavikBharatbhai Padia [2017] 78 254-259 259 Printed from counselvise.com 8 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. taxmann.com 133 (Ahmd. Tribunal) 32 Ayushi Jain vs. ITO Ward 22(4), Kolkata ITA No. 2551/KOL/2018 Transaction is shares of M/s Kappac Pharma Ltd. was held to be genuine when supported by documentary evidence 260-277 264- 265,276 33 Shri Prakash Javia HUF vs. ITO 5(1), Indore, ITAT Indore, ITA No. 464/Ind/2019 278-288 288 34 Sidhartha Jain vs. ITO Ward 23(1), New Delhi, I.T.A. No.4459/DEL/2017 289-292 292 16. It may be mentioned here that in the course of arguments, before us, Ld. AR has relied only on the following decisions:-  Shri Mahaveer Kanwarlal Ranka vs. ACIT, ITA No. 224 & 965/M/2024, dated 29.11.2024 (Mumbai Trib.)  PCIT vs. Shri Arnav Goyal, D.B. Income Tax Appeal No. 14/2024, dated 19.02.2024 (Rajasthan H.C.) arising out of decision in Shri Arnav Goyal vs. ITO, ITA No. 275/JP/2020, dated 03.04.2023 (Jaipur Trib.)  PCIT vs. Affluence Commodities (P) Ltd. (2025) 177 taxmann.com 352 (SC) 17. It may also be mentioned here that in the course of arguments, on 18.08.2025 on behalf of the appellant still another paper book, having following index also came to be presented:- SL Particulars Pages 1. Copy of RTI Application filed on 17.02.2025. 160-161 2. Order u/s 7(1) of the RTI Act, 2005 passed by the ACIT, Circle-1, Alwar. 162-164 3. Copy of SIT report provided along with RTI order. 165-214 Printed from counselvise.com 9 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. 4. Historical share price chart obtained from GROWW of M/s Kappac Pharma Limited. 215-2016 However, it is significant to note that the assessee-appellant has not filed any application seeking permission to place on record this additional evidence. For want of any such application or any justification for their non production earlier before the Assessing Officer or the first appellate authority, we are not inclined to take the material sought to be placed by way of this paper book on record. Is it correct that no reasonable opportunity of being heard was provided to the appellant by the Revenue authorities? 18. As regards the contention raised by Ld. AR that no reasonable opportunity was provided to the assessee-appellant, of being heard, it may be mentioned here that as per record, assessment proceedings commenced with issuance of notice u/s 143(2) of the Act, on 18.03.2016, whereupon the assessee was represented by its authorized representative. Notice u/s 142(1) of the Act, accompanied by questionnaire, was issued to the assessee, on 14.02.2017. Due to change in combination, fresh notice under said provision of law accompanied by a questionnaire was issued to the assessee. Printed from counselvise.com 10 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. That is how, the assessee furnished reply thereto, on 17.03.2017. In this way, the assessee had the opportunity to file revised return of income, and he came forward with the claim of short term capital loss. 19. During pendency of the assessment proceedings, a show cause notice dated 21.12.2017 was issued to the assessee, and thereupon, the assessee submitted its reply on 26.12.2017. Said reply runs into about 10 pages i.e. as available from page No. 5 to 17 of the assessment order. All this goes to show that the Assessing Officer provided reasonable opportunity to the appellant of being heard, on the issues involved, and the assessee availed of the said opportunities from time to time. 20. As regards non communication of information, as regards operator stated to be involved for sale of the said shares, is concerned, in the course of arguments, we have enquired from Ld. AR for the appellant if at any point of time, during assessment proceedings, the assessee ever sought for any such information from the Assessing Officer or the department. Ld. AR for the appellant has candidly admitted that no such information was sought from the department/Assessing Officer. Printed from counselvise.com 11 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. It may be mentioned here that from the very beginning case of the Assessee is that the transactions of purchase and sale of shares were made through a renowned broker. When the assessee or its AR did not deem it an appropriate to seek any information from the department/Assessing Officer and presented a very lengthy reply to the show cause notice, it cannot be said that the department/Assessing Officer had no communication of any such information from the assessee or that on said account, the assessee had no reasonable opportunity of being heard. 21. Show cause Notice issued by the Assessing Officer read as under: “You have sold KAPAAC Pharma share to M/s Robinson Worldwide Trade Limited at very low price and claimed loss. The KAPAAC Pharma is delisted from BSE/NSE, you have sold KAPPAC Pharma share physically at very low price and claimed loss it is also noted that the price of share of M/s KAPPAC Pharma Ltd, was ský rocketed without having any awesone profit, EBIDTA margin, EPS, bonus, dividend etc., later on rapidly his value is done. Therefore it seems that the company involved in penny stock. It is also noted that payment received from Sun and Shine worldwide limited on 17.03.2015 whereas shares were transferred on 19.03.2015. Payment received before transfer of share show malafide transactions. Show cause why the loss arises from sale of share is not disallowed and added to the income of the assessee.” Printed from counselvise.com 12 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. 22. Assessee submitted its reply to the said show cause notice, on 26.12.2017. For ready reference, said reply as available in para 8 of the assessment order, is reproduced hereunder:- “A/r of the assessee filed his reply on 26.12.2017, which is re-produced as under :- \"Loss of Rs.74275089/- on sale of share of M/s KAPPAC Pharma Ltd, We hereby submit as under :- That the assessee had purchased equity shares of Kappac Pharma limited in its DEMAT form account maintained with LSE SECURITIES LTD, 1\" Floor, LSE Building, Feroze Gandhi Market, Ludhiana (Copy of DEMAT account DP ID 12025400, Client ID: 00405676 through broker M/s Kewat Banker LSE Securities Ltd, Ludhiana giving transactions details attached (Annexure-1) The summary of purchases of shares alongwith complete purchase invoices confirming the transactions are attached for your kind perusal. (Purchase summary -Annexure 2) The above confirms that the proper procedure has been adapted for investment in shares. The shares have been traded online in our DEMAT account. Further, submitted that as these shares have been purchased on line through stack exchange and at the price as per the index at the date and time of purchase. The investment was made with a purpose for making profit keeping in a view the past trends of the share price of this company. The share of this company touched high of Rs 734.75 in March 2014 and the same was purchased by us in September 2014 to approx average rate of Rs 355/. The historic data chart of this share as sourced from moneycontrol.com confirming the above rates is attached for your kind perusal. (Annexure -3) So, the decision taken at that time to invest in these shares was very practical and logical. Our submission is further reinforced by the movement of this share in initial period which is explained as under and in the details of purchase summary submitted as per Annexure-2 submitted above. Share purchased period No of shares Amount (Rs.) Average rate (Rs.) 12/09/2014 to 13/10/2014 59066 2,10,02,048.18 355/- The price of this share touched a high of Rs 425/- on 14/10/2014. This further proves that our investment decision was correct and we were making profit. Printed from counselvise.com 13 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. Subsequently, because of unpredictable nature of the stock market the price of the shares did not sustain and came down and we invested more money to bring down our average cost of purchase. Unluckily and due to unforeseen circumstances the shores of this company were delisted in January 2015, which was beyond our control, and nobody could predict the same in advance. This resulted in huge fall in the share price of the company. Sensing no immediate future of the listing of the company we made efforts to dispose of the shares at the best price available. Since, the shares were not being traded online to that time these had to be sold off line, outside the stock exchange route. But we emphatically submit that these shores has been transferred electronically through our DEMAT Account and it is wrong to suggest that the shores have been sold physically as pointed out in your goodself abovesaid notice. The shares were sold to Robinson Worldwide Trade Ltd (now Sun and Shine Worldwide Trode Ltd.) and were transferred to their DEMAT account under DP No.JN302269 Client ID no. 10357128 held with India infoline Limited Thane (Copy of the DEMAT Account of Purchaser is attached). (Annexure-4). Copy of credit note confirming purchase of shares by Robinson Worldwide Trade Limited is enclosed. (Annexure-5). Robinson Worldwide Trade Ltd (now Sun and Shine Worldwide Trade Ltd.) has issued a certificate certifying the purchase of shares and transfer of funds which is attached. (Annexure -6) The payment for purchase of shares and receipt of amount for sale of shares has been mode through banking channel only. We are submitting herewith the copies of bank statement of Axis Bank and PNB highlighting the receipt and payment in regard to purchase and sale of shares. (Annexure -7 and Annexure-8) So the above trail confirms that transaction is completely genuine and as per normal practice of trade. Further your observation that it seems company involves in penny stock is not applicable in our case and is also not correct at all. Your observation is based on fact that the price of this share of this share skyrocketed and then fell down and thus making it a Penny Stock. We hereby submit that the share of Kappac Pharma is not Penny Stock since as per stock exchange in India the penny stocks are those that trode at a very low price less than their face value, have very low market capitalization, are mostly illiquid, and are usually listed on a smaller exchange. Penny stocks in the indian stock market con have prices below Rs 10/- whilst Kappac Pharma share was listed on Bombay Stock Exchange and that too at a good price. And regarding the fall in share price of Kappac Pharma, we are to submit that share trading is subject to volatility and quotient of risk is always there. Kappac Pharma is not the only company whose shares have lost value due to fall in Printed from counselvise.com 14 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. price. There have been a number of many other established companies listed on National Stack Exchange and Bombay Stock Exchange whose shares had fost much of their value during the year. We are submitting herewith dota of some companies whose shares fell considerably during the year 2014-15. Company High(Rs.) Low(Rs.) Reduction Reliance Comm. 156.90 56.90 64% Joiparkash Power 26.63 9.90 63% Unitech 38.60 13.27 66% Jaiparkash Asso. 89.85 23.05 74% Lanco Infatech 14.94 4.45 70% GVK Power 20.85 7.75 63% Bhushan Steel 470.05 59.50 87% This data is for some companies and there are many more companies whose shares have lost their value considerably. The details are attached. (Annexure- 9). Since incidentally we had invested in shares of Kappac Phorma and had to incur loss due to circumstances beyond our control because the share lost much of it value, this reason cannot be formed basis for disallowing our loss. We summarise our submissions as under: 1. The shares of Kappac Pharma, a listed company on Bombay Stock Exchange had beenpurchased in DEMAT form through stock exchange paying STT. 2. The consideration price of these shares had been paid through banking channel only. 3. The shares had been in electronic form kept in DEMAT account. 4. The shares had been sold in DEMAT farm and not physically. 5. The payment against sale of these shares had been received through banking channel. 6. The complete transaction is as per normal practice of trade. Even for the hypothetical purpose if this share is considered to be penny stock still the trading in this share cannot be considered illegal or bogus. There are a large no of case lows on the above issue in favour of assessee, some of which are being submitted below for your immediate reference. Commissioner Of Income Tax-l vs Smt Pooja Agarwal on 11 September, 2017 HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.8. Income Tax Appeal No. 385/2011 Commissioner of Income Tax-1, New Central Revenue Building Statue Circle, Jaipur Vs Smt. Pooja Agarwal, 1783, Telepada, Jaipur order 11/09/2017. 1. Since both these appeals arise out of the same order, they are being decided by this common order. Printed from counselvise.com 15 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. 2.By way of these appeals, the appellant has challenged the judgment and order of Tribunal whereby the Tribunal has dismissed the appeal of the department the confirming the order of CIT(A). 3. This Court while admitting the Income Tax Appeal (2 of 6) | ITA-385/2011) No.385/2011 on 14.03.2012 has framed following substantial question of law: \"Whether the Tribunal as well as CIT(A) were justified in deleting the addition of Rs. 98.56.872/- made by the Assessing Officer an account of bogus share transaction, which were nearly accommodation entries, made through one Shri P.K. Agarwal, who was found to be an entry provider, ignoring that the assessee in her deposition during survey specifically denying having made any share transactions in last 5 years?\" 4. This Court also while admitting the income Tax Appeal No.603/2011 on 03.07.2013 has framed following substantial question of law: \"Whether on the facts and in the circumstances of the case, the Tribunal was justified in deleting the oddition of Rs. 1,06,34,000/- which was made by the Assessing Officer and confirmed by CIT(A) on account of undisclosed investment of assessee in land and simply directing to compute 10% profit on the said investment as income of the assessee, even after holding that the investment is assessee's own turnover in land dealing and not the investment made for others?\" 5. However, subsequent to application which was moved by the Department, it was further amended by order dated 29.08.2017. \"1.Whether the Tribunal was justified in confirming the deletion of Rs. 1,06,34,000/-which made by the Assessing Officer on account of undisclosed investment of the assessee, without giving any finding in respect of the same? 2. Whether the Tribunal as well as CIT(A) were justified in not confirming the addition of Rs. 1,06,34,000/- ignoring that the said entries were merely accommodation entries in view of exchange of cosh with broker Shri P.K.Agarwal?\" (3 of 6) ITA-385/2011] 6. Counsel for the appellant has taken us to the order of AD stating that the assessee involved in jewelry business has taken entry for the purpose of converting the black money into white and referred this entry from broker, one Shri P.K.Agarwal. Entry provided from Calcutta has been taken 7. The assessee derives income from salary, copital gains and other sources. A survey under Section 133A of the Act was conducted as the business premises of M/s Royal Jewellers, Telipada of which assessee is 50% partner, on 21 st and 22nd of January, 2008, during which various incriminating documents were found and impounded wherein several unaccounted transaction were recorded. Printed from counselvise.com 16 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. Reassessment proceedings were initiated by issuing notice under Section 147 R/W 148 of the Act. Vide Show Cause Notice the assessee was specifically asked as to why the amount of Rs. 98,56,872/- should not be treated as an accommodation entry. 8. The assessee submitted reply to the Show Couse Notice contending therein that the share transactions are genuine and the 'Short Term Capital Gain' of Rs 98,56,872/- has been earned from the purchases and sales of shores of Konark Commercial Ltd. And Limtux Investment Ltd. Investigation revealed that the entire share transactions were bogus and mere accommodation entries obtained from an entry provider Shri P.K. Agarwal form Kolkata. The said fact was revealed during search carried out by the Investigation Wing, Jaipur in the case of B. C. Purohit Group. (4 of 6) ITA-385/2011] 9. It is pertinent to note that during the survey operation, it was admitted by the assessee that no investment in shares was made by him during the said period. It was further found that the company M/s Konark Commercial Ltd. Was never listed in Calcutta Stock Exchange and the assessee was never its shareholder. 10. After considering the entire factual matrix the Assessing Officer held that the assessee had arranged the said accommodation entries from entry providers for converting its undisclosed money into white money and thus the amount of Rs.98,56,872/- was treated as undisclosed income of the assessee. 11. Counsel for appellant has taken us to the order of AO. 12. However, counsel for the respondent has taken us to the order of CIT(A) and also to the order of Tribunal and contended that in view of the finding reached, which was done through Stock Exchange and taking into consideration the revenue transactions, the addition made was deleted by the Tribunal observing as under:- \"Contention of the AR is considered. One of the main reasons for not accepting the genuineness of the transactions declared by the appellant that at the time of survey the appellant in his statement denied having made any transactions in shures. However, subsequently the facts came on recard that the appellont had transacted not only in the shares which are disputed but shares of various other companies like Satyam Computers, HCL, IPCL, BPCL and Tata Tea etc. Regarding the transactions in question various details like copy of contract note regarding purchase and sole of shares of Limtex and Konark Commerce & Ind. Ltd., assessee's account with P.K. Agarwal & co. share broker, company's master details from registrar of companies, Kolkata were filed. (5 of 6) (ITA-385/2011) Copy of depository a/c or demat account with Alankrit Assignment Ltd., a subsidiary of NSDL was also filed which shows that the Printed from counselvise.com 17 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. transactions were made through demat a/c. When the relevant documents are available the fact of transactions entered into connot be denied simply on the ground that in his statement the appellant denied having made any transactions in shares. The payments and receipts are made through a/c payee cheques and the transactions are routed through Kolkata Stock Exchange. There is no evidence that the cash has gone back in appellants's account. Prima facie the transaction which are supported by documents appear to be genuine transactions. The AO has discussed modus operandi in some sham transactions which were detected in the search case of B.C. Purohit Group. The AO has also stated in the assessment order itself while discussing the modus operandi that accommodation entries of long term capital gain were purchased as long term capital gain either was exempted from tax or was taxable at a lower rate. As the appellant's case is of short term capital gain, it does not exactly fall under that category of accommodation transactions. Further as per the report of DCIT, Central Circle-3 Sh. P.K. Agarwal was found to be an entry provider as stated by Sh. Pawan Purohit of B.C. Purihit and Co. group. The AR made submission before the AO that the fact was not correct as in the statement of Sh. Pawon Purohit there is no mention of Sh. P. K. Agarwal. It was also submitted that there was no mention of Sh. P. K. Agarwal in the order of Settlement Commission in the case of Sh. Sushil Kumar Purohit. Copy of the order of settlement commission was submitted. The AO has failed to counter the objections raised by the appellant during the assessment proceedings. Simply mentioning that these findings are in the appraisal report and appraisal report is made by the Investing Wing after considering all the material facts available on record does not help much. The AO has failed to prove through any independent inquiry or relying on some material that the transactions made by the appellant through share broker P.K. Agarwal were non-genuine or there was any adverse mention about the transaction in question in statement of Sh. Pawan Purohi. Simply because in the sham transactions bank a/c were opened with HDFC bank and the appellant has also received short term capital gain in his account with HDFC bank does not establish that the transaction made by the appellant were non genuine. Considering all these facts the share transactions made through Shri P.K. Agarwal cannot be held as non-genuine. Consequently denying the claim of short term capital gain (6 of 6) | ITA-385/2011) made by the appellant before the AO is not approved. The AD is therefore, directed to accept claim of short term capital gain as shown by the appellant\" 13. The some was confirmed by CIT appeal, in view of this we are of the opinion that the view taken by the Tribunal as well as CIT is correct. 14. in that view of the matter, the issues are answered in favour of the assessee and against the department. Printed from counselvise.com 18 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. 15 The appeals stand dismissed. In case of CIT vs. Smt. Sumitra Devi (2014) 268 CTR 0351 (Raj): (2014) 102 DTR (Raj) 0342 it was held that Cash Credit-Share transaction-Assessee had shown LTCG from the sale of shares and some was claimed as exempt u/s 10(38)-AO observed that companies, whose shares were allegedly dealt with, were not very well known and it was entirely unlikely that there was a huge rise in prices of their shares in a very short span of time-AD treated huge rise in price as manipulation by stock broker and made additions in income of assessee towards transactions of purchase and sale of shares and undisclosed commission paid in cash-CIT(A) observed that shares were sold by assessee for consideration through named stock broker and appellant furnished all the evidence to establish genuineness of transactions-That AO failed to bring any evidence in rebuttal nor was it proved that documents produced by Assessee were false, fabricated or fictitious-ITAT upheld Order of CIT(A) that AO proceeded only on presumptions and was not justified in making additions under Section 68 of the Act. Held, findings of AO were based on presumptions rather than on cogent proof- CIT(A) and ITAT found that AO failed to show material documents placed on record by Assessee were false, fabricated or fictitious-Appellate authorities rightly observed that transaction could not be rejected altogether on basis of facts noticed by AQ, particularly in absence of any cogent evidence to contrary-Finding recorded by appellate authorities, after thorough consideration of material an record, that transaction of purchase and sale of shores could not be treated as non-genuine was justified-No substantial question of law worth consideration in present case -Addition under Section 68 of the Act was not sustainable after due appreciation of evidence on record, on relevant considerations, and on sound reasoning- Finding of Appellate Authorities did not suffer from any perversity-No substantial question of law was involved in Appeal-Assessee's appeal dismissed Held: Findings as ultimately recorded by AO had been based more on presumptions rather than on cogent proof. As found concurrently by the CIT(A) and the ITAT, the AO had failed to show that the material documents placed on record by the assessee like broker's note, contract note, relevant extract of cash book, copies of share certificate, de-mat statement etc. were Flaw, fabricated or fictitious. The appellate authorities have rightly observed that the facts as noticed by the AO, like the notice under Section 136 to the company having been returned unserved; delayed payment to the brokers, and de materialisation of shares just before the sale would lead to suspicion and call for detailed examination and verification but then, for these facts alone, the transaction could not be rejected altogether, particularly in absence of any cogent evidence to the contrary. Printed from counselvise.com 19 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. probe of the stock and the broker dealing in it. \"Merely because SEBI was probing the company and broker activity in it does not mean that ossesee (investor) has entered into in genuine transaction,\" said Saktijit Dey and NK Prodhan, presiding over ITAT's Mumbai bench. VI ACIT (OSD), Circle-4, Ahemdabad, ACIT (OSD)Circle-7, Ahemdabad versus Deepakbhal N. Parekh, Kusum Lato Ben N. Parekh (2017) 44 ITCD 100 (Guj.), order dated 14.08.2017, it is held that that merely because the shares were sold during the said period, when the land was also sold, the former leading to long term capital loss and latter to long term capital gain would not by itself establish a colorable device to establish tax. As is held by this court as well as by Supreme court on large number of occasions, commercial expediency and legitimate tax planning is always open to an assessee. The revenue cannot question the timing of shares only because it happened that the effect of loss resulted in to reduce the ossessee's capitol gain arising out of sale of immovable property. Other Case laws on which assessee has relied upon in this regard: 1-The decisions of the Hon'ble Calcutta High Court in the case of CIT-Vs Carbo Industrial Holdings Ltd (244 ITR 422) and CIT-Vs-Emerald Commercial Ltd (250 ITR 549) are relevant to the issue where the Hon'ble High Court has held that where the payments are made by Account Payee Cheques and the existence of the brokers is not disputed share transactions cannot be held to be bogus. 2. Findings in Bhagwati Prasad Agarwal- Exchange shows that the name of the assessee is not appearing in respect of the transactions-in-question. The tribunal found that the chain of transaction entered into by the assessee have been proved, accounted for, documented and supported by evidence. The assessee produced before the Commissioner of Income Tax (Appeal) the contract notes, details of his DEMAT account and, also, produced documents showing that all payments were received by the assessee through bank. We do not, therefore, think that this appeal involves any substantial question of law requiring interference by this court under section 260A of the Income Tax Act, 1961. The appeal is, therefore, summarily dismissed. 4. Hon'ble Kolkata ITAT in the case of Dolarrai Hemani vs. ITO (I.T.A. No. 19/Kol/2014) (AY 2005-06) (Dt. of pronouncement 02.12.2016) wherein it has been stated that \"We find that the similar issue had been adjudicated by the co-ordinate bench of this tribunal in the case of DCIT vs Sunita Khemka in ITA Nos. 714 to 718/Koi/2011 dated 28.10.2015 and in the case of ITO vs Rajkumar Agarwal in ITA No. 1330 (Kol) of 2007 dated 10.8.2007 wherein it was held that when purchase and sale of shares were supported by proper contract notes, deliveries of shares were received through demat accounts maintained with various agencies, the shares were purchased and said through recognized broker and the sale considerations were received by account payee cheques, the transactions cannot be treated as bogus Printed from counselvise.com 20 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. and the income so disclosed was assessable as LTCG. We find that in the instant case, the addition has been made only on the basis of the suspicion that the difference in purchase and sole price of these shares is unusually high. The revenue had not brought any material on record to support its finding that there has been collusion/ connivance between the broker and the assessee for the introduction of its unaccounted money.\" 3. Roshan Raja (ITAT Mumbai) 2016 Tax Pub(DT) 2777 (MumTrib) Held: Where assessee claimed the income from long term capital gain on sale of listed equity shares and subject to STT as exempt under section 10(38), no adverse finding had been rendered in respect of the direct material evidence placed on record in respect of her transactions. The addition under section 68 was not justified and therefore, AO was directed to accept the LTCG Income shown as exempt under section 10(38). 4. in the case of Pavillion Commercial Pvt Limited Vs. ITO Ward 5(2)/Kolkata ITA No. 935/Kol/2012 date of pronouncement 12/08/2016 held that we find that the transactions were complete in terms of documentation and there was no defect in the papers submitted by the assessee in support of the transactions. We also find that there were entries for the sale purchase of the shares in the bank statements, contract notes, demat account of the assessee in our considered view we find that the assessee has proved the transaction on the basis of documents and therefore the suspension of the broker by SEBI will not hold the transaction invalid 5. ITO vs. Indravadan Jain (HUF) (ITAT Mumbai) Date of Pronouncement 27/05/2016 Held: merely because the investigation was done by SEBI against broker or his activity, assessee cannot be said to have entered into in genuine transaction, insofar as assessee is not concerned with the activity of the broker and have no control over the same.... 6. Judgement of Kolkata Tribunal Rahul Vashist vs. ITO, ITA NO. 140/K/09, Order dated 10.08.2007 Facts Purchase and sale of 16000 shares of M/s PSL Financial Services Pvt Ltd - Shore costing at Rs 3 were sold at Rs 198/- Payment and receipts were thorough account payee cheques All the transaction were made through registered broker. The Script was suspended by SEBI Contrary Findings of the Assessing Officer The party from whom shares were purchased and the party from whom shares were sold(both through broker) were not available Payment from purchase was made after a period of 6 months. The shares were Dematerialized after 16 months of purchase. Offline Transaction. Findings of the tribunal Further, the fact that M/s Ahilya Commercial Pvt. Ltd., through whom the shores are sold. has been barred from entering transactions, w.e.f. September 2005 whereas these transactions entered by the assessee are entered much prior to the suspension of the share broker le on 24.12.2004. Printed from counselvise.com 21 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. Therefore, there is no reason to disbelieve this transaction. From the documents filed by the assessee case, the contract note and ledger note of the brokers and balance sheet wherein the assessee has shown the respect shares in the assets oside in the balance of the share broker on the credit side. Similarly, on sale of shares, the assessee has reflected the sale in the respective dates. The contention of the revenue that the assessee had made payments after the lapse of 16 months is not acceptable, since, In this case, the assessee has entered into several transactions both purchase/soles which is apparent from the ledger copy of M/s 5.B. Buthro & Co which was placed at page no. 6 of the paper book. The endorsement of the company made on 30.08.2003 on the share certificates and confirmation by the PSL Financial Services Ltd. Clearly establishes that the assessee has purchased the shares on 20.06.03. Similarly, the sale transactions are also reflected in the books of the assessee which are supported by the contract notes as well as bank statement which were placed in the paper book.\" Contentions on behalf of Department 23. While dealing with the issue of rejection of the above said claim on the point of short term capital loss, Ld. DR has relied on para 7.4.4, 7.4.5 and 7.4.6 of the impugned order passed by Learned CIT(A), and stood by the reasons recorded therein. Ld. DR has also placed on the following decisions, which were relied on by Learned CIT(A) while passing the impugned order:-  Udit Kalra vs. ITO 50(1), New Delhi, ITA No. 6717/DEL/2017, vide order dated 08.01.2019.  Udit Kalra vs. ITO, Ward-56(!), Delhi, ITA No. 220/2019 & CM No. 10774/2019.  Atmiben Alipit kumar Doshi vs. ITO, ITA No. 940/AHD/2018 ( 2023) 149 taxmann.com 104, and submitted that the same script of M/s Kappac Pharma Ltd. was dealt with therein, while examining the case of penny stock. Printed from counselvise.com 22 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. Ld. DR has contended that in view of the findings recorded in the above said decisions, no fault cannot be found with the observations made by the Assessing Officer and the findings recorded by Learned CIT(A). 24. In Udit Kalra’s case (supra)-ITA 220/2019 and CM No.10774/2019, Hon’ble High Court of Delhi, while dealing with same scrip, observed that it was intriguing that the company had meager resources and reported consistent losses. The astronomical growth of the value of shares of M/s Kappac Pharma naturally excited the suspicion of the Revenue. Said company was even found to have been directed to be delisted from the stock exchange. It is significant to note that this is a case of assessment u/s 143(3) of the Act, and not a case where proceedings commenced u/s 148, as happened in many of the decisions cited on behalf of the assessee, which fact distinguishes it from those matters/decisions. Here, the AO took into consideration all the material, while conducting proceedings u/s 143(3) of the Act. These proceedings are not u/s 148 on subsequent information etc. It is significant to note that the Assessing Officer, while passing the assessment order did not rely merely on the SIT report, but also took steps to find out increase in the value/price of shares. The assessee claims that it had the assistance even of a renowned broker. Printed from counselvise.com 23 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. It may be mentioned here that from page 16 onwards (of the assessment order), the Assessing Officer has reproduced observations made by the Special Investigation Team constituted on black money. Said team was headed by Hon’ble Mr. Justice M.B. Shah (retired), as a Chairman and Hon’ble Mr. Justice Arijit Pasayat (retired) as Vice chairman. Special Investigation Team consisted of 11 members. In its report, the team described modus operandi on black money in the form of Capital Gains 25. At page 24 and 25 of the assessment order, there is specific reference, of the said report submitted by the special investigation team as regard increase in the share price of M/s Kappac Pharma Ltd. , and the conclusion that share of the said company was artificially hiked to create non-genuine LTCG to beneficiaries. 26. Learned DR for the department has submitted that said report is available to the public at large. This fact has not been disputed by Learned AR in the course of arguments. At page 31 of the assessment order, the Assessing Officer reproduced the outcome of the investigation, conducted by SIT, by observing in the manner as:- Printed from counselvise.com 24 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. “The outcome of the investigation in brief is as under:- i) Individuals throughout the country identified who have taken such bogus entries of LTCG amounting to several crores from 2010 to 2015. ii) The result of the enquiry was also shared with SEBI and the SEBI after investigating 11 cases have found the allegation to be correct. The balance cases are still being investigated by SEBI. iii) The TOP 25 groups under each investigation directorate of the country were confronted in course of further investigation. Almost all of them barring a few have accepted having taken the entries for a commission. A sum of crores has been voluntarily surrendered by such assessees. iv) In Kolkata, where this investigation was started some of the beneficiaries who had taken entries of nearly Rs. 40 crores have voluntarily surrendered it for taxation without any further enquiry. v) Several assessees have filed revised return since the enquiry and have taken back their claim of exemption. This is one of the direct evidences to show that the Long Term Capital Gain as claimed by the assessee is not genuine one.” 27. Case of the assessee as put forth by its Ld. AR during assessment proceedings was that the transactions regarding purchase and sale of the said shares were not at all bogus, and that there being no investigation or anything having been unearthed, by way of direct or circumstantial evidence, in the case of the assessee itself, no adverse could be drawn against the assessee, particularly when the transactions were made through a renowned broker. Before us, Learned AR has submitted that the Assessing Officer simply relied on report received from the Investigation Wing. Printed from counselvise.com 25 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. As regards the report of Special Investigation Team, Learned AR has submitted that therein the question involved related to Long Term Capital Loss and Blank Money, but, this is a case of Short Term Capital Loss, and as such, the Assessing Officer wrongly applied the observations made by Special Investigation Team. 28. As per page 16 of the assessment order, the Assessing Officer relied on the observations of SIT, wherein modus operandi on Black money in the form of LTCG was discussed. Therein, beneficiaries of more than Rs. 38 thousand Crores were identified. The report also covered more than 5000 shell/paper companies which were found involved in providing bogus accommodation of various kinds. M/s Kappac Pharma Ltd. was one of 84 scripts, which were identified by the Investigation Department involved in the scam of Bogus LTCG/STCL. It was further observed in the report of SIT that price of share of M/s Kappac Pharma Ltd. sky-rocketed without having any awesome profit, EBIDTA margin, PS, bonus or dividend etc; that all the parameters which are essential for increase in price of share, were not present. It was obvious from the direct evidence, as observed in SIT report that the shares Printed from counselvise.com 26 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. of M/s Kappac Pharma Ltd., were artificially hiked to create LTCG to the benefit of the assessee. Transactions of purchase of shares were during the period from 12.9.2014 to 13.10.2014. 29. Admittedly, shares of Kappac Pharma Ltd. touched high at Rs. 734.75 in March, 2014, but the assessee purchased shares in September, 2014 at a low price.. 30. Learned AR for the appellant has relied on decision in Arnav Goyal v. ITO, ITA No.275/JP/2020, decided on 3.4.2023, by ITAT Bench, Jaipur, and submitted that the addition made as regards purchase and sale of shares of M/s Kappac Pharma, was deleted by the Co-ordinate Bench, and said decision was upheld by Hon’ble High Court. On perusal of said decision, it is found that therein the shares acquired on 16.1.2013 were sold after holding the same for more than 22 months, and the sale of shares was found to have been made at the prevailing market rate, and further entire supporting evidence was produced. Therein, the Assessing Officer had not made any reference to any documentary evidence which could be termed to be incriminating material to reflect that the assessee had availed of accommodation entry by way of long term capital gain. Printed from counselvise.com 27 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. Here, facts and circumstances of present case are distinguishable. 31. On the one hand, the assessee company claims to have invested in the shares, its decision in this regard being practical and logical in January, 2015, but, on the other hand, it claims that due to unforseen circumstances shares of the company were delisted in Jaunary, 2015, resulting in high fall in the share price and as a result, the assessee company had to sell shares at a very low price. Had the assessee-appellant been regularly dealtimg with in such like transaction/sale of shares thing would have been otherwise. As regards present transactions, the Assessing Officer disbelieved the claim of the assessee company about genuineness of said transactions on the mere ground that same were made through banking channel and through renowned broker. Significant to note that it is not case of the assessee that it was regularly engaging in purchase or sale of shares. Admittedly, this was the only transaction relating to said shares of the said company that the assessee claims to have entered into. In the course of arguments, we raised a specific query to ld. AR for the appellant as to whether before or after the present transaction of purchase and sale of shares of Kappac Pharma , the assessee ever Printed from counselvise.com 28 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. entered into any such transaction of purchase/sale of shares., Ld. AR for the appellant has candidly admitted that this is the only transaction of purchase/sale of shares of the said company. Admittedly, the appellant company was in the manufacturing business of steal ingots; that it went into liquidation vide order dated 18.7.2000 passed under BIFER; that even liquidator was appointed by the Hon’ble High Court, Rajasthan, but subsequently vide order dated 4.8.2011 the company as de-liquidated. 32. The shares are stated to have been purchased at the value of Rs. 7,84,03,954/- and on 19.03.2015 same are claimed to have been sold at Rs. 41,28,865/-. This goes to so that duration of purchase and sale of the shares was too short. There is no explanation as to why the shares stated to have been purchased at Rs. 7,84,03,954/-, were sold at a very lesser price that is Rs. 41,28,865/-, particularly when the appellant company is stated to have paid dues of various government offices, and finally, it was allowed out of liquidation vide order dated 4.8.2011. 33. While dismissing the appeal filed by the assessee, Learned CIT(A) rightly relied on decision in the case of Sumati Dayal v. CIT, (1995) 214 ITR 801, wherein Hon’ble Apex Court observed that tax authorities are entitled Printed from counselvise.com 29 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. to look into the surrounding circumstances to find out the realities, and the matter has to be considered by applying test of human probabilities. 34. In this regard, reliance may also be placed on the decision in Durga Prasad More’s case, 82 ITR 540. 35. Learned DR has rightly pointed out that in para 7.6.3 of the impugned order, Learned CIT(A) considered decision in the case of Ayushi Jain v. ITO, ITA No.2551/KOL/2018 in which transaction in shares of M/s Kappac Pharma was held to be genuine, but, as further observed in the impugned order Hon’ble High Court of Calcutta, while relying on the decision in Principal Commissioner of Income Tax v. Swati Bajaj & Ors, had reversed the abovesaid decision in Ayushi Jain’s case. 36. In the given facts and circumstances, the Assessing Officer was rightly of the view that simply because such transaction of purchase and sale of shares are claimed to have been carried out on a given platform with involvement of registered broker and through banking channel, it cannot be said that the transaction was genuine, particularly when such like transaction is made in a designed and arranged manner with an intent to defraud the Revenue. 37. In Mahaveer Kanwarlal Ranka v. ACIT, ITA No.224/M/2024 and another, decided by ITAT, Mumbai Bench, relied on by learned AR for the Printed from counselvise.com 30 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. appellant, on 5.1.2009, the assessee had purchased shares of scrip of M/s JMD Tele Films Industry Ltd., through RTGS and online platform, and subsequently, the shares were split into 1,50,000 shares, and the assessee therein sold the said shares @ Rs. 123/-during the period from 8.1.2010 to 14.1.2010. Therein, the assessee was found to have duly discharged onus cast upon him under section 68 of the Act and no rele was attributed qua rigging of shares. Being distinguishable on facts, the decision cited does not come to the help of the appellant. 38. In PCIT v. Affluence Commodities (P) Ltd., (2025) 177 taxmann.com 352(SC), relied on by learned counsel for the appellant, nodoubt the issue pertained to share of KPL, it was found that the assesse had genuinely incurred losses, particularly with AIGL shares, where only a portion were sold, and rest were held into subsequent assessment year. So, the decision of that case is also distinguishable, and does not come to the aid of the appellant. 39. Ultimately, we find that the Assessing Officer rightly arrived at the conclusion that it stood established that short term capital loss shown by Printed from counselvise.com 31 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. the assessee company was not genuine, and he rejected the said claim of the assessee regarding loss. In view of the above discussion, we hold that Learned CIT(A) was justified in sustained the impugned assessment on the findings that short term capital loss claimed by the assessee company was not genuine. For the same reasons, Learned CIT(A) sustained the assessment order and dismissed the appeal file by the assessee. 40. No other argument has been advanced before us. Result 41. In view of the above discussion, this appeal deserves to be dismissed. Same is accordingly hereby dismissed. File consignment to the record room after the needful is done by the office. Order pronounced in the open court on 28/08/2025. Sd/- Sd/- ¼xxu xks;y½ ¼ujsUnz dqekj½ (GAGAN GOYAL) (NARINDER KUMAR) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 28/08/2025 *Santosh vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- M/s Deeps Special Steels Ltd., Ludhiana. 2. izR;FkhZ@ The Respondent- DCIT, Circle-1, Alwar. 3. vk;dj vk;qDr@ The ld CIT Printed from counselvise.com 32 ITA No. 1016/JPR/2024 M/S Deeps Special Steels Ltd., Ludhiana. 4. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 5. xkMZ QkbZy@ Guard File ITA No. 1016/JPR/2024) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asstt. Registrar Printed from counselvise.com "