Penny Stock addition deleted by Mumbai ITAT in the case of
ITO vs. Arvind Kumar Jain HUF (ITAT Mumbai)
Bogus capital gains from penny stocks: If the DMAT account and contract note. Show details of the share transactions. And the AO has not prove the transactions to be bogus, the capital gains. Earn on the say transactions cannot be treate. As unaccount Income u/s 68. The fact that the broker was tainte. And violated SEBI regulations would not make assessee’s transactions bogus
The AO has treat the share transaction as bogus on the plea that SEBI has initiate investigation in respect of Ramkrishna Fincap Pvt. Ltd. The AO further state that investigation reveale that transaction through M/s Periwal and Co. on the floor of stock exchange was more than 83%. We found that as far as initiation of investigation of broker is concern, the assessee is no way concern with the activity of the broker.
Detail finding has been record by CIT(A) to the effect that assessee has make investment in shares which was purchased on the floor of stock exchange and not from M/s Basant Periwal and Co. Against purchases payment has been make by account payee cheque, delivery of shares were taken, contract of sale was also complete as per the Contract Act, therefore, the assessee is not concerned with any way of the broker. Nowhere the AO has alleged that. The transaction by the assessee with these particular broker or share was bogus. Merely because the investigation was done by SEBI against broker or his activity. Assessee cannot be said to have entered into ingenuine transaction. Insofar as assessee is not concerned with the activity of the broker and have no control over the same.