IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “D” BENCH : MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER ITA No. A.Y. Appellant Respondent

773/Mum/2022 2013-14 Shri Rajendra M. Jain, ITO, Ward-19(3)(1), 2405, Panchratna, 2^nd Floor, Opera House, 774/Mum/2022 2014-15 Matru Mandir, Charni Road, Grant Road, Mumbai-400004 Mumbai-400007 [PAN: ACPPJ9853R]

775/Mum/2022 2015-16 Assessee by : Ms. Ridhisha Jain a/w.

Shri Karan Jain Revenue by : Shri R.R. Makwana, Sr. DR Date of Hearing : 18-03-2025 Date of Pronouncement : 09-04-2025

ORDER

PER B.R. BASKARAN, A.M :

All the three appeals filed by the assessee are directed against the orders passed by the Ld CIT(A), NFAC, Delhi and they relate to the Assessment Years (AYs.) 2013-14 to 2015-16. In all the three years, the assessee is aggrieved by the decision of the Ld CIT(A) in confirming the addition of sale consideration of shares as unexplained income u/s 68 of the Act and also confirming the addition of estimated expenses. In all the three appeals, the AO has made identical additions as mentioned above.

Accordingly, all the three appeals were heard together and are being disposed of by this common order, for the sake of convenience.

2. All the three appeals were disposed of by the earlier bench of Tribunal on 30-01-2023, since none appeared on behalf of the assessee. Subsequently, the assessee moved miscellaneous applications for recall of the orders passed ex-pare and the said applications were allowed by the Tribunal, vide its order dated 30-08-2023 and the earlier orders were recalled. Accordingly, all these three appeals are placed before us.

3. The facts relating to the above said issue are discussed in brief. In all the three years under consideration, the assessee had claimed exemption of long term capital gains arising on sale of shares u/ 10(38) of the Act. The assessee had earned above said long term capital gain on sale of shares of following companies in the assessment years mentioned below:-

AY 2014-15)

M/s Sunrise Asian Ltd was earlier known as M/s Santoshi Maa Tradelinks Ltd. M/s Radford global Ltd was earlier known as PSI Global Ltd. The AO received information from the Investigation wing of Kolkatta that certain brokers are involved in manipulating the prices of small companies (called “penny stock”) in order to generate bogus capital gains/losses. It was also informed that the above said four companies were also identified as penny stocks. The AO noticed that the assessee has sold the shares for the consideration stated in the table above and declared Long term capital gain of the amount mentioned in each of the year mentioned in the above said table. The assessee claimed the long term capital gains as exempt u/s 10(38) of the Act. Based on the information so given by the Investigation wing, the AO took the view that the long term capital gains declared by the assessee is not genuine one. Accordingly, he reopened the assessments of AYs. 2013-14 and 2014-15. The return of income filed for AY 2015-16 was taken up for scrutiny.

4. Since the shares of above said companies have been identified as penny stocks, the assessing officer relied upon the report given by the investigation wing to arrive at the conclusion that the long term capital gains declared by the assessee in all the three years under consideration was not genuine. He observed that the financial results of the above said companies do not justify steep rise in the prices shares of above said company. He also noticed that the above said companies were declaring very low income and the prices of shares were not commensurate with the income of the companies. The AO also referred to the price movement charts prepared by the Investigation wing, wherein it was observed that the price movements in the form of ups and downs has happened in batches, which was considered as manipulation of price movements. The AO also referred to certain statements taken by the Investigation win