TaxTMI 
TaxTMI 
2011 (12) TMI 509
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.... 1,17,249/- being 5% of the gross sale consideration of Rs. 23,44,985/- as unexplained expenditure u/s.69C on account of commission/service charges payable to the broker although no such expenditure was incurred by the appellant." 2. After hearing both the parties, we find that a search was conducted in this group wherein some cash and jewellery was found. The search was conducted on the specific information that the assessee in this group had obtained artificial capital gains by manipulating share transactions. It was alleged that assessee had obtained bogus back dated purchase bills and shares and received the delivery in physical format and later on these shares were sold at the stock exchange through engineered transactions availing bogus capital gains. In this case the bogus capital gains were said to be generated on the purchase and sale of 15,500 shares of M/s Robinson Worldwide Trade Ltd. (also known by the name M/s. Robinson Impex India Ltd.). It was noted that the shares were said to have been purchased from M/s. DPS Shares & Securities Pvt. Ltd. A statement u/s.131 of Shri Sujal C. Shah director of M/s. DPS Shares & Securities (P) Ltd. was recorded during the survey con....
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....peculation profit. The shares were sold through Anugrah Stock and Broking Pvt. Ltd. in A.Y 2005-06 and copies of the sales bills were furnished before the AO. The consideration was received by account payee cheques. It was also pointed out that originally the shares were issued in physical format which were dematerialised on 30-11-2004. Thus, it is clear that all evidence for purchase and sale of shares was there which has been ignored by the AO and the transactions were held to be bogus only on the basis of the statements of the two directors, namely, Shri Sujal C. Shah and Shri Pratik C. Shah of M/s. DPS Shares & Securities Pvt. Ltd. It was also submitted that once transactions of purchase and sales were entered into by the assessee there was no need to verify the transactions by him as to whether same were through stock exchange or recorded in the books of the broker. It seems during the search assessee has accepted in the statement u/s.132(4) that this transaction was bogus. During the appellate proceedings it was submitted that assessee had made the surrender u/s.132[4] to buy peace of mind and to avoid litigation. Since department had gone ahead with the litigation, therefore....
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....le the same set of shares several times over by re-materialization. i.e., conversion of shares from electronic form to physical, form and thereby extending the facility of laundering black money to another beneficiary. It has been found during the course of investigation that this cycle of rematerialization/ dematerilzation has, been used several times over in the case of such Penny stocks. During such process, huge amount of black money were converted by fabricating artificial capital gains. 4. He further observed that assessee is also one of the beneficiaries of this Penny Stock scam which was proved during the assessment proceedings through the statement of directors of M/s. DPS Shares & Securities Pvt. Ltd. Even during the cross examination, directors of M/s. DPS Shares & Securities Pvt. Ltd admitted that these transactions were only accommodation transactions. He further observed that assessee has not been able to prove the purchases transactions and no source for the same has been shown. The transaction of purchase of so called transaction of speculation profit was not routed through BSE & NSE. The ld. CIT(A) thereafter discussed the statements of directors of M/s. DPS Share....
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.... of physical shares was given to the assessee. The assessee was not required to find out anything more than this because against the payment in terms of speculation profit assessee was given physical delivery of the shares, therefore, this statement cannot be relied upon at all. He contended that assessee has proved the purchase in the earlier years which has been accepted by the department and nothing more was required to be proved. The income generated from such sales was offered under the head 'long term capital gain' which proved that assessee had generated genuine capital gain. He also relied on the following decisions: 1. Mukesh R. Marolia vs. ACIT 6 SOT 247 (Mum) 2. DCIT vs. Ms. Indiramma 6SOT 261 (Bang) 3. I.T.A.Nos.2669 & 2670-M-06 in the case of Smt. Pushpa R. Shah & Shri Ramesh V. Shah vs. ITO 4. I.T.A.No.1718-M-06 & Ors. In the case of Shri Popatlal Bachubhai Nandu vs. ACIT & Ors. 6. On the other hand, Ld. DR strongly supported the order of the AO and the CIT(A). He also filed a letter dated 14-11-11 and pointed out that when the issue regarding the paper book was taken up with the AO the then DCIT-12, has reported that pages 42 to 45 were not traceable in the ....
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....mati Dayal vs. CIT [supra]. In that case the facts were as under: The appellant carried on business as a dealer in art pieces, antiques and curios at Bangalore. During the assessment year 1971-72, she claimed that received a total amount of Rs. 3,11,831 by way of race winnings in jackpots and treble events in races at Turf Clubs in Bangalore, Madras and Hyderabad. The said amount was shown by the appellant in the capital account in the books. For the assessment year 1972-73, she claimed receipts of Rs. 93500/- as race winnings in two jackpots at Bangalore and Madras and the said amount was credited in the capital account in the books. The Income-tax Officer The included the amount as income from other sources and assessed them. The appellant referred matter to the Settlement Commission. The Settlement Commission by a majority held that the explanation of the assessee was not genuine for the following reasons: (i) The appellant's knowledge of racing is very meagre. (ii) A jackpot is a stake of five events in a single day and one can believe a regular and experienced punter clearing a jackpot occasionally but the claim of the appellant to have won a number of jackpots in three o....
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.... paper book, which is a copy of the transfer form signed by the transferor and the transferee. Page 4 is a copy of the covering letter by the company to the assessee transferring the shares by way of a jumbo certificate i.e. one consolidated certificate in the name of the assessee and page-45 is a copy of the share certificate. It has been pointed out that such papers were filed with the AO with the letter dated 5-11-08 along with annexure K and copy of this letter has been furnished before us which is placed on records. In the column dealing with annexure K it is stated that various documents are being furnished to prove the genuineness of purchases which includes the transfer form placed at pages 42 and 43 and copy of the share certificate at page 45. This makes it clear that documents were filed before the AO because it has not been denied that letter dated 5-11-08 was filed before the AO. In any case, during the hearing photo copies of 150 certificates issued in the name of the assessee by splitting the jumbo certificate, have been filed, which show that shares were in the name of the assessee. A document from the Ministry of Corporate Affairs, Government of India from the cite....
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....s bills were issued by .ny company at the instructions of Mr.Naresh Saboo. As these hills were bogus and off market transaction. the physical shares which were given by us to the said Ms..Jigna A.Kariya were received by us from Naresh Sahoo and were forwarded by us to Ms.Jigna .A. Kariya, because these transactions were not on the floor, the said physical shares had not conic' from BSE. Hence this was an accommodation transaction, we received the shares from Naresh Sahoo and forwarded to Ms..Jigna A.Kariya. Q.34. Do you want to say anything else? Ans. Yes. All these accommodation hills/bogus bills were given by our company for the accommodation of the said assessees for the LTCG purpose and the delivery of physical shares which were given by us to the said assessees were received by us from Mr.Naresh Saboo and handed over to the said assessees. The above clearly shows that the so called bogus shares were issued on the instructions of Shri Naresh Saboo. Before us it was denied that assessee has anything to do with Shri Naresh Saboo. Neither the AO nor the ld. CIT(A) has brought any material on record to show that Shri Naresh Saboo has some connection with the assessee. Even ld. C....
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....ussed the particulars of transfer form. Ultimately, a jumbo share certificate showing 15500 shares was issued by the company, copy of which is at page 45 of the paper book. Later on assessee lodged a demat request with Action Financial Services (India) Ltd. for demat of 15500 shares of M/s Robinson Worldwide Trade Ltd and copy of that request is available at page 46. The demat account statement of the assessee with Action Financial Services (India) Ltd. shows that 15500 shares have been dematerialised. We fail to understand how the shares were actually transferred in physical form and later on dematerialised and how this whole process can be called bogus. This cannot be called bogus unless the connivance of M/s Robinson Worldwide Trade Ltd and Action Financial Services (India) Ltd. is also alleged and proved. But no enquiry seems to have been conducted with these entities. Ultimately, the shares have been sold through Anugrah Stock and Broking Pvt. Ltd. on various dates as under: Date Quantity 09-12-2004 3000 13-12-2004 3000 04-01-2005 6000 06-01-2005 3500 The contract notes for the above sales are placed in the paper book at pages 48 to 55. The above sales have ....