INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Bogus long-term capital gain on sale of shares of penny stock company -

AO based on information emanated from Investigation Wing treated long-term capital gain on sale of shares of alleged penny stock companies as bogus and made addition of sale proceeds under section 68. Held: Detailed enquiries were carried out by Kolkata Investigation Directorate with regard to 84 penny stocks scrip sold by assessee was a penny stock, purchased at a low price, which was over a period of time ramped up by operators acting in Benami names or name lenders. The purchases were off-market purchases, and not reported on the exchange; purchases were back dated, i.e., per a back dated contract note, paid for in cash, so that there was no trail; the purchases were in physical form, and dematerialized only subsequently; generally long after purchase date, being back dated and, further, close to the date of sale; and investee was a penny stock company, with no credentials, and sale rates artificially hiked, with no real buyers, so that inference of the sales being bogus, was unmistakable. Even in spite of availing numerous opportunities, assessee could not explain impugned cash credit. Thus, addition made by AO was justified.

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2014-15

SUBSCRIBE FOR FULL CONTENT