TaxTMI 
TaxTMI 
2016 (9) TMI 596
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..../s. 132 of the Act on 08.05.2007 at the residential and business premises of Bindra Rohira Group of cases. The assessee was also covered in the search operation. The assessee is engaged in the business of construction of buildings. Consequent to search action, the AO issued notice u/s. 153A of the Act calling for return of income. The assessee responded and filed the return of income declaring the same income as done u/s. 139 (1) of the Act. In the return of income, there is a claim of exemption of capital gains. In the assessment proceedings u/s. 153A r.w.s. 143(3) of the Act, the AO determined the assessed income at Rs. 1,44,63,135/- after making additions on account of capital gains. The details of the transactions and conclusions of the AO are given in para 5 of the assessment order. In the re-assessment u/s. 153A of the Act, the AO made the addition of Rs. 28,58,138/- in the regular assessment qua the transactions revolving around the purchase and sale of penny stock of shares of Eltrol Ltd. Further the AO made addition of Rs. 1,03,33,925/- involving the purchase and sale of penny stock of shares of Ramkrishna Fincap Ltd. (RFL in short), and there were other additions too. The....
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.... March 2004. Purchase and sale of these shares happened in the off market and not through exchange. Payments were not done through banking channels. Eventually, the AO noticed that the said shares of RFL were sold by the assessee at a rate as high as Rs. 185/- in the Kolkata Stock Exchange. The AO gathered various details in the assessment proceedings and proceeded to made addition of Rs. 1,03,33,925/- u/s. 68 of the Act. The AO held the financials of RFL are too weak to command such a high price and, therefore, he came to the conclusion that the transactions related to the shares were sham and not genuine. It is a case of colourable device. Aggrieved with the above addition, the assessee filed an appeal before the CIT(A). 5. The assessee submitted before the CIT(A) that the shares of RFL were purchased through SEBI registered brokers. The shares of the assessee were demated immediately thereafter. Subsequently, the shares were sold through SEBI registered brokers and STT was paid on sale of said share transactions. The payments were made through banking channels and transfer of shares took place through demat account. The assessee relied on the contract notes issued by these brok....
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....also relied on the judgment of the Hon'ble Supreme Court in the case of Sumati Dayal [214 ITR 801] and requested us to apply the test of human probability against the assessee. Referring to the impugned order of the CIT(A), the CIT-DR submitted that the jurisdictional High Court judgements in the case of Jamnadevi Agarwal [328 ITR 656] was heavily relied for granting relief to the assessee. In this regard, the CIT-DR is of the opinion that the said judgment only mentioned about the absence of any question of law and there is no finding of fact by the Hon'ble High Court that helps this assessee. Further referring to the penalty order imposed by the SEBI on Basant Periwal & Co., the CIT-DR submitted that penalty of Rs. 3,00,000/- was levied on the broker in connection with the allegation against the broker on price rigging of the RFL shares. For this reason, the CIT-DR submitted that the order of the CIT(A) should be reversed on this issue and that of the AO should be revived. 7. Per contra, the learned AR for the assessee opened his remarks by stating that the case was adjourned periodically by the Bench. Mentioning the requirement of filing of copies of the decision of the Tribuna....
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....nvolved in the case is Bluechip India Ltd. The counsel also relied heavily on the jurisdictional High Court judgment in the case of Jamnadevi Agrawal (supra). The Hon'ble High Court is of the opinion that when the documents produced are in order and the transactions are confirmed by the exchanges and the purchase and sale prices are in sync with the prices appeared on the stock exchanges, other discrepancies relating to off market/cash transactions etc. are no ground for making additions u/s. 68 of the Act. Referring to the decision of jurisdictional High Court in the case of Shyam R Pawar [Income Tax Appeal No. 1568 to 1571 of 2012], the learned counsel submitted the discrepancy with reference to the rectification of client code is not a ground for denying benefits to the assessee as the same constitute flimsy evidence and confirmed the applicability of the Jamnadevi Agrawal judgment while granting relief to the assessee. With reference to the financials of RFL the learned counsel for the assessee submitted that what matters to the assessee, who is a buyer and seller of shares in exchange, is the market rates of the listed shares of RFL and he is not to be bothered by the financia....
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....he cash transfers if any either at the purchase point or at the sale point of share transaction. Nothing adverse was brought about by the search team that the assessee is personally involved in price raising of shares from Rs. 2.5/- to Rs. 185/- per share. There is no adverse inference about the bona fides of the assessee in buying and selling of the said shares of RFL. In such circumstances when there is no evidence against the assessee on the transactions involved, we are of the opinion that why not the assessee should be one genuine investor and, therefore, there is no case for invoking the provisions of section 68 for making the additions on account of transactions involving the shares of RFL. 9. Further we have also perused the cited decisions of the Tribunal in the case of Ms/. Indravardhan Jain & Shri Indravadan Jain (HUF) dated 27.05.2016 [ITA No. 4861/Mum/2014 & ITA 5168/Mum/2014], Ranjeet Singh Bindra [ITA No. 6254 & 6255/Mum/2012 dated 19.11.2014], Jamnadevi Agarwal [328 ITR 656 (Bom)], M/s. Subhlakshmi Vanijya Pvt. Ltd.[ITA No. 1104/Kol/2014] dated 30.07.2015 etc. In the case of Ms/. Indravardhan Jain & Shri Indravadan Jain (HUF), where similar transactions involving R....
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....High Court in the case of Shyam R. Pawar (supra), wherein under similar facts and circumstances, transactions in shares were held to be genuine and addition made by AO was deleted. Respectfully following the same vis-àvis findings recorded by CIT(A) which are as per material on record, we do not find any reason to interfere in the order of CIT(A). 10. We have also perused the decision of the 'D' Bench of the Mumbai Benches of the Tribunal in the case of Ranjeet Singh Bindra and find that the Tribunal granted relief to the assessee on merits and find the contents of para 5 for the proposition that there is no case for making additions on account of transactions involving shares of RFL. "4. On a perusal of the order passed by Ld CIT(A),we notice that the assessee has proved the sources for the purchase of shares of M/s Ramakrishna Fincap Ltd and also furnished broker bill and Contract note in support of the same. The brokers have also confirmed the fact of purchase. Since it was an off market transaction, the purchases were not available with the Stock exchange. Thereafter, the assessee has demated the shares in Sep, 2004 and started selling the shares in installments from....