2021 (8) TMI 97 - AT - Income Tax

Tax Tribunal affirms dismissal of appeals over alleged fraudulent share transactions. Lack of evidence and suspicious patterns cited.

Smt. Manjula Kothari, Shri. P. Kashyap Kothari Versus Income Tax Officer, Non Corporate Ward -10 (3), 10 (2), Chennai.

The Tribunal upheld the Commissioner of Income Tax (Appeals)'s findings that the transactions were sham, aimed at introducing unaccounted money as ... Unaccounted money - Revenue recovered evidences with regard to the bogus nature of such transactions, based upon such information, the Assessing Officer reopened the cases of the assessee - HELD THAT:- As transactions are sham aimed only to bring unaccounted money in the guise of long term profit on sale of shares being accretion capital account. We find from the record that the assessees have not placed any material to dislodge the findings recorded by the Ld. CIT(A). Therefore, the appeals filed by each of the assessee vis Smt. Manjula Kothari and Shri. Kashyap Kothari is dismissed Issues involved:Appeal against Commissioner of Income Tax (Appeals) orders for assessment year 2009-10 based on transactions involving purchase and sale of shares, claimed as long term capital gains and exempted income, challenged by assessees. Allegations of fraudulent activities by broker M/s. Alliance Intermediateries and Network Pvt. Ltd. leading to unaccounted money through bogus share transactions.Detailed Analysis:1. Reopening of Assessment:The assessees challenged the reopening of their assessments under section 147 of the Income Tax Act, claiming lack of tangible material to show income escapement. They argued a violation of natural justice as crucial statements were not provided during assessment proceedings.2. Unexplained Cash Credits:The Commissioner of Income Tax (Appeals) denied exemption under section 10(38) and upheld the addition of unexplained cash credits under section 68 of the Income Tax Act. The assessees presented evidence to prove the genuineness of share transactions, including bills and STT certificates.3. Securities Transaction Tax (STT) and Banking Channels:The assessees contended that STT was paid on share purchases and transactions were conducted through banking channels, emphasizing the legitimacy of the transactions.4. Lack of Assessee's Name in Broker's List:It was argued that the assessees' names were not mentioned in the broker's list, challenging the Assessing Officer's allegations.5. Judicial Decisions and Tribunal's Role:The assessees disputed the reliance on case laws and failure to consider the role of the assessee in share price manipulation, emphasizing the Tribunal's decision in similar cases.6. Commissioner's Findings:The Commissioner of Income Tax (Appeals) concluded that the transactions were sham, aimed at introducing unaccounted money as long-term capital gains. The lack of credible evidence and suspicious transaction patterns led to the dismissal of appeals.7. Tribunal's Decision:The Tribunal upheld the Commissioner's findings, noting the absence of material from the assessees to refute the conclusions. Consequently, the appeals were dismissed for both assessees, affirming the orders of the Commissioner of Income Tax (Appeals).8. Dismissal of Appeals:Ultimately, the Tribunal dismissed the appeals filed by the assessees, affirming the decision of the Commissioner of Income Tax (Appeals) regarding the sham transactions involving the purchase and sale of shares to introduce unaccounted money as long-term capital gains.This detailed analysis covers the issues raised in the legal judgment, outlining the arguments presented by the assessees, the findings of the Commissioner of Income Tax (Appeals), and the final decision of the Tribunal.