Gujarat High Court
The Principal Commissioner Of ... vs Jagat Pravinbhai Sarabhai on 4 July, 2022
Bench: Bhargav D. Karia
C/TAXAP/332/2022 ORDER DATED: 04/07/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 332 of 2022
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THE PRINCIPAL COMMISSIONER OF INCOME TAX 1
Versus
JAGAT PRAVINBHAI SARABHAI
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Appearance:
MR MANISH BHATT, SR.ADVOCATE with MR.KARAN SANGHANI for M R
BHATT & CO.(5953) for the Appellant(s) No. 1
for the Opponent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIA
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 04/07/2022
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE N.V.ANJARIA)
The present Tax Appeal preferred under Section 260A of
the Income Tax Act is directed against judgment and order dated
1.12.2021 of Income Tax Appellate Tribunal, Ahmedabad, 'B'
Bench, Ahmedabad in ITA No.1505 of 2019.
2. As submitted by learned senior advocate Mr.M.R.Bhatt for
M.R.Bhatt and Co., the appellant revenue proposes the following
substantial questions of law, which according to the submission
requires examination.
"Whether on the facts and circumstances of the
case and in law, the decision of Appellate
Tribunal is ex-facie perverse because the
Appellate tribunal deleted the addition of
Rs.2,10,474/- made on account of bogus long
term capital gain, without appreciating the
entire gamut of fact that the assessee transacted
in penny stock namely M/s. Devika Proteins Ltd.
thus earning bogus Long term Capital Gain and
C/TAXAP/332/2022 ORDER DATED: 04/07/2022
claiming it to be exempt under section 10(38) of
the Income Tax Act?"
3. The assessee filed the return of income for the assessment
year 2011-12 on 29.3.2012 declaring his total income
Rs.3,11,490/-. Subsequently the assessment was reopened as
information was received that assessee has indulged into script
of shell company and had claimed long term capital gain on sale
of shares of Devika Proteins Limited to the tune of Rs.2,10,474/-
and that the amount was claimed as exemption under Section
10(38) of the Income Tax Act, 1961 (hereafter referred to as 'the
Act')
3.1 The Assessing Officer made addition of the said amount.
The entire transaction was treated as bogus and in the nature of
penny stock. By adding Rs.2,10,474/- under Section 68 of the
Act, total income was assessed at Rs.5,21,964/-.
3.2 In appeal by the assessee before the Commissioner of
Income Tax (Appeals), the issue was re-examined. According to
the appellate authority the appellant assessee had furnished
evidence to show that the shares were brought as genuine
investment which was long back in the year 2000-01. As the
shares were in the nature of old investment, they could not be
treated as penny stock by any stretch of imagination.
4. The Income Tax Appellate Tribunal further examined the
question in appeal preferred by the revenue and confirmed the
view of the appellate authority noticing that the shares were
purchased in the year 2001 and they were sold after long time in
the year 2010-11.
C/TAXAP/332/2022 ORDER DATED: 04/07/2022
5. The genuineness of investment in the shares by the
assessee was substantiated by him by producing copy of
transaction statement for the period from 1.6.2001 to 1.10.2010.
The investment was made in the year 2000-01. The shares were
retained for more than ten years and were sold after such long
time. These circumstances suggested that the investment was
not bogus or investment made in penny stock. The shares were
purchased in order to invest and not for the purpose of earning
exempted income by frequent trading in short span.
6. The finding recorded by the appellate authority and
confirmed by the appellate tribunal is based on material before
them. They are in the realm of findings of fact. No error could be
noticed in the findings and conclusion that the investment was
longstanding and genuine and was not penny stock on the basis
of which the capital gain was wrongly claimed.
6.1 On the facts of case, no question of law much less
substantial question of law arises.
7. Resultantly, appeal is dismissed.
(N.V.ANJARIA, J)
(BHARGAV D. KARIA, J)
Manshi
