The Madhya Pradesh High Court has dismissed the appeal of the Income Tax Department with regards to the deletion of an addition linked to an alleged bogus penny stock company’s long-term capital gains ( LTCG ) claim.
This appeal was filed by the appellant under Section 260A of the Income Tax Act, 1961 being aggrieved by the order dated 27.07.2021 passed by the Income Tax Appellate Tribunal ( ITAT ), Bench Indore for the Assessment Year 2014 – 15 proposing following substantial question of laws in this appeal:
“The issue to be decided was whether on facts and circumstances of the case, the ITAT was justified in law in deleting the addition of Rs.17,78,822/- made by AO, which was confirmed by CIT (A), ignoring the findings of Investigation Wing that M/s Life Line Drugs & Pharma Ltd. was clearly established as a bogus penny stock script company which was used for claiming bogus Long Term Capital Gain as exempt under Section 10 (38) of the Income Tax Act, 1961.”
The Delhi High Court has dealt with similar issues and dismissed the appeal filed by the Revenue. The appellant (Revenue) had preferred a Special Leave Petition (SLP) against an order of the Delhi High Court in the case of the Principal Commissioner of Income Tax-1 vs. Parasben Kasturchand Kochar, which has been dismissed. In upholding the orders passed by the Delhi High Court, it was held that the High Court had erred in ruling that the addition made under Section 68 of the Income Tax Act by treating LTCG as bogus was unjustified and should be deleted.
Thus, the Division member bench comprising Justice Dharam Adhikari and Justice Ganjendra Singh concluded that this issue, considered in a series of appeals, has led to the dismissal of the appeals filed by the revenue through a common order dated April 30, 2024.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
