The Delhi bench of the Income Tax Appellate Tribunal (ITAT)has upheld an addition of long term capital gain by observing that the assessee has failed to explain the reason for increase in shares. The department earlier found that the share price has increased due to price manipulation and rigging using a penny stock company.
The assessee, Aditya Saraf HUF, is a resident Hindu Undivided Family (HUF). The return of income filed by the assessee was selected for scrutiny to examine the genuineness of the long term capital gain offered and claimed exempt under section 10(38) of the Act during which it was revealed that for the year under consideration, the assessee stated to have sold 6000 equity shares of M/s. Esteem Bio Organic Food Processing Ltd. for a consideration of Rs.29,18,507/-. Investigation Wing of the department conducted search at various places and found that this company is a penny stock company. Concluding the proceedings on the basis of the investigation report, the Assessing Officer made an addition towards Capital Gains.
Shri Saktijit Dey, Judicial Member has observed that “as per the investigation conducted in relation to the shares of the company, on which, the assessee offered long term capital gain, it was found that it is a penny stock company. It was also found that due to price manipulation and rigging, there was astronomical increase in the price of the shares. As it appears from the facts on record, the assessee has not furnished any strong evidence before the departmental authorities to rebut the adverse materials brought on record by the department. Even before me, the factual position remains unaltered as the assessee neither appeared nor placed contrary materials for enabling me to disturb the finding of the departmental authorities.”
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