Bangalore ITAT rejects
assessee-individual’s claim of ‘exempt’ long term capital gains (‘LTCG’) of Rs.
42 lakh arising on sale of ‘penny stocks’ during AY 2015-16, upholds AO’s stand
that the LTCG booked by assessee were bogus and the gains were assessable as
‘business income’; Rejects assessee’s stand that the genuineness of LTCG claim
cannot be doubted since the contract notes were placed on record and the
payment were made through cheques identifying the company whose shares were
transacted; Upon examining the financials of the company, ITAT observes that
the financial worth of the company was very meager and not worth to be invested
in, remarks that “With such financials, we are unable to understand how there
can be manifold increase in the shares.”; Further observes that taking
cognizance of BSE websites, money control website, investigation wing, SEBI
reports, AO had noted that the price of these shares saw phenomenal rise and
were constantly traded near the circuit limit (of 5%) so as to avail maximum
price rise without hitting and triggering the circuit limit, and thereby avoid
surveillance by the Stock Exchange Regulator; ITAT concludes that Revenue has
brought sufficient material on record to demonstrate that unaccounted money was
introduced in the books through LTCG by circuitous means.:ITAT
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