The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that Transaction of shares not being in penny stocks canoot be covered by CBDT circular owing to low tax effect
It was submitted that the present appeal is in respect of Long Term Capital Gain earned by the assessee on sale of shares of Nouveau Multimedia Ltd. which has been treated as a penny stock. Learned Assessing Officer has held the transaction in these shares as bogus or sham by way of taking accommodation entry. Therefore, the issue in the present appeal is covered in relation to the exception clause of the said CBDT Circular and thus has to be dealt with on merit of the case.
The learned counsel for the assessee submitted that in the case of Rajesh Aggarwal, similar transactions were undertaken. In the said decision, a letter from the learned Assessing Officer i.e. ITO, Ward 43(6), Delhi dated 07.12.2022 confirmed that Nouveau Global Ventures Ltd. is not a penny stock and, therefore, the case is not recommended for further appeal.
It was pointed out by the learned counsel that name of the company mentioned in the letter is Nouveau Global Ventures Ltd. whose earlier name was Nouveau Multimedia Ltd. The fact of change in name of the company is noted by the Coordinate Bench in the decision of Rajesh Aggarwal. Thus, in the present case, it is not a transaction of shares in penny stock and, therefore, not covered by the exception clause of the aforesaid CBDT Circular.
After hearing both the parties, the two member bench of the tribunal consisting of Chandra Mohan (Judicial member) and Girish Agrawal (Accountant member) held that the Revenue is dismissed owing to the low tax effect. However, liberty was granted to the Revenue, if the learned Assessing Officer finds that appeal is not hit by the aforesaid CBDT Circular, he may approach the Tribunal in accordance with the appropriate provisions of law. Thus the appeal was dismissed.
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