for Penny Stock SPEAKER SHRI PARAS KOCHAR, ADVOCATE VENUE I.C.A.I. - PowerPoint PPT Presentation

Workshop on CIT Appeals for Penny Stock SPEAKER – SHRI PARAS KOCHAR, ADVOCATE VENUE – I.C.A.I. (EIRC), KOLKATA

What is penny stock ?

Penny stock companies  Small capital  Low profit and low sale  No track record  No future growth  Low status of promoters or directors.  Low trading volume

How the capital gain is treated as bogus ?  Information through SEBI  Information through own source  Through STR and FIU  Through notice u/s131  Through Survey and searches  OTHERS  Price movement of penny shares  NO NETWORTH & TRACK RECORD OF COMPANY  HEAVY PRICE MOVEMENT OF COMPANY  DIRECTOR OF NO MEANS

Assessment of penny stock shares  Scrutiny u/s 143(3)  Reopening u/s 148  Revision u/s 263  Furnishing of complete documents  Proper reply of show cause notice and notice u/s 142(1)

Contention before CIT(A)  General Issues  Technical Issues

GENERAL ISSUES  All the documents and details were submitted before the AO  CIT vs. Carbo Industrial Holdings Ltd. 244 ITR 422 (Cal.)  CIT vs. Emerald Commercial Ltd. 250 ITR 539 (Cal.)  CIT vs. Bhagwati Prasad Agarwal (ITA no 22 of 2009)  Dolarrai Hemani vs. ITO (I.T.A. No. 19/Kol/2014) (AY 2005-06)  Mrs Roshan Raja (ITAT Mumbai) 2016 TaxPub(DT) 2777 (MumTrib)

GENERAL ISSUES  Suspension of Broker or Script  Pavillion Commercial Pvt Limited Vs. ITO Ward 5(2)/Kolkata ITA No. 935/Kol/2012 date of pronouncement 12/08/2016  ITO vs. Indravadan Jain (HUF) (ITAT Mumbai)Date of Pronouncement – 27/05/2016  Rahul Vashist vs. ITO, ITA NO. 140/K/09 Kolkata Tribunal

GENERAL ISSUES  Cash Trail  Dy. CIT vs. Rohini Builders 256 ITR 360 (Guj.)  Income-tax Officer, Wd-38(1), Kolkata -Vs- Shri Jamna Das Gupta, I.T .A No. 692/Kol/2010 dated 31.08.2010  ACIT vs. Surya Kanta Dalmia (2005) 97 ITD 235 (CAL)  Jalan Timbers vs. CIT (1997) 223 ITR 11 (Gau)  Income-tax Officer, Wd-38(1), Kolkata -Vs- Shri Jamna Das Gupta, I.T .A No. 692/Kol/2010, Order dated 31.08.2010  CIT vs. M/s. Dataware Private Limited, ITAT No. 263 of 2011, GA No. 2856 of 2011

GENERAL ISSUES  Investment in only scrip earning huge gain.  Price movement  Mukesh R. Marolia vs. ACIT [2006] 6 SOT 247 (Mum)

GENERAL ISSUES  Poor Networth of the Penny Stock Co.  www.pennystocks.com  www.allpennystocks.com  www.pennystockobserver.com  www.pennystocklist.com  www.smartmoneygoal.in  www.moneyexcel.com

GENERAL ISSUES  Presumption and Assumption  K.P. Varghese v. Income Tax Officer (SC) (1981) 131 ITR 0597  Farrah Marker vs. ITO (ITAT Mumbai) AY 2005-06 dt. 27.04.2016  Tribunal at Kolkata in case of DCIT vs Sunita Khemka in IT A nos 714 to 718/ kol/2011 ( pronucement date 28.10.2015)  Hon’ble Kolkata ITAT in the case of Dolarrai Hemani vs. ITO (I.T.A. No. 19/Kol/2014) (AY 2005-06) (Dt. of pronouncement 02.12.2016) wherein it has been stated that  ITO vs Rajkumar Agarwal in ITA No. 1330 (Kol) of 2007 dated 10.8.2007  CIT Vs. Smt Sumitra Devi (2014) 268 CTR 0351(Raj.)

GENERAL ISSUES  Purchase Being Proved Genuine  Arvind Asmal Mehta vs. ITO (ITAT Mumbai) AY 2009- 10 dt. 29.02.2016  Rajkumar Agarwal (ITA 1330/Kol/2007 dated 10/08/07)  Pavillion Commercial Pvt Limited Vs. ITO Ward 5(2)/Kolkata ITA No. 935/Kol/2012  Commissioner of Income Tax vs. Korlay Trading Co. Ltd. (1999) 152 CTR 0017

GENERAL ISSUES  Buyer and seller not found or found bogus  Baijnath Agarwal v. Asstt. CIT(2010) 043 DTR 0149  Acquisition of Penny Stock due to Merger  Information through SEBI regarding manipulation of script  Farrah Marker vs. ITO (ITAT Mumbai) AY 2005-06 dt. 27.04.2016

TECHNICAL ISSUES  Information obtained at the back of the assesse  KALRA GLASS FACTORY VS SALES TAX TRIBUNAL – SUPREME COURT 167 ITR 488 OF 1987  LAXMANBHAI S. PATEL V. CIT 327 ITR 291 (2010)  CROSS EXAMINATION OF THE WITNESS  Kishan Chand Chellaram vs CIT (1980) ITR 713 (SC)  CIT vs. Eastern Commercial Enterprises 210 ITR 103 (Cal)  S.K.Bothra & Sons (HUF) vs ITO (2011) 62 DTR (Cal) 234  CIT vs Rajesh Kumar (2008) 306 ITR 27(Del)  Prakash Chand Nahata vs CIT (2008) 301 ITR 134 (MP)

TECHNICAL ISSUES Statement of brokers, buyers promoters of the companies etc  Statement without corroborative evidence  Kailashben Mangarlal Chokshi Vs CIT (2008) 174 Taxmann 466 (Guj.) / (2008) 14 DTR 257 (Guj.)  Shree Chand Soni Vs DCIT (2006) 101 TTJ (JD) 1028

TECHNICAL ISSUES Reopening u/s148  Reasons not recorded properly  CIT vs. Shri Atul Jain (2008) 299 ITR 383 (Del)  CIT vs SFIL Stock Broking Ltd -(2010) 325 ITR 285 (Del)  Reopening u/s within time permitted .  Approval of reopening u/s148 by the appropriate authority.

TECHNICAL ISSUES Revision u/s263,  Erroneous  Prejudicial to the interest of the revenue.  Proper drafting of notice u/s 263

TECHNICAL ISSUES Miscellaneous points  Challenging section 68  Other facts brought on record by AO