TaxTMI 
TaxTMI 
2011 (7) TMI 1295
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....order for the sake of convenience. Therefore, we deal with appeal filed by the assessee in ITA Nos.22/Kol/2011for assessment year 2003-04 in the case of Smt.Rita Devi. 2. The grounds taken in this appeal are as under :- "1. The orders passed by the lower authorities are arbitrary, erroneous, without proper reasons invalid and bad in law. 2.(a) On the facts and in the circumstances of the case, the learned CIT(A) erred in law in upholding initiation of proceedings u/s 153A of the Income-tax Act, 1961, in the case of the appellant when neither the assessment for the year under appeal was pending nor was there any material found during the search in the case of the appellant and specific to the assessment in the case of the appellant which could have led to the conclusion of any under-assessment in the case of the appellant. 2.(b) On the facts and in the circumstances of the case, the learned CIT(A) erred in not holding that the assessment order passed by the A.O. u/s 153A of the Act was beyond his jurisdiction and hence, illegal and invalid. 3. On the facts and in the circumstances of the case, the learned CIT(A) erred in upholding the action of....
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....et LTCG at Rs. 9,59,560/- was shown income of the assessee. The assessee purchases 25000 shares of M/s. Globe Stock & Securities Ltd. @ Rs. 5.02 per share at a cost of Rs. 1,25,500/- on 6.2.2002 from Sunil Kedia out of which 20,500 shares were sold at Rs. 11,92,400/- at about Rs. 60 per share on different dates in March, 2003 through broker Ashish Stock Broking Pvt. Ltd. A search & seizure operation was carried out in different business as well as residential premies of Maithan group of cases on 20.9.2007 and on subsequent dates. One of the allegations lead to search was unaccounted income of the group is brought back in the books of A/c in the form of bogus LTCG. On verification it was detected that SEBI imposed ban on trading of scrip of M/s. Globe Stock & Securities Ltd. on allegation that this "small cap" company used to manipulate its share price with the help of group of brokers namely Sunil Kedia and Ashish Stock Brooking by common modus operandi of matched transaction between the above named two brokers who do not submit the required report etc. to the SEBI. M/s. Globe Stock & Securities Ltd. does not do business sincerely. It has neither lucrative profit nor prospect....
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....tion No.4 & 5......question No.6.............." Thus Sri Subhas Chandra Agarwalla has retreated the statement recorded by him u/s 132(4) of the Act in his own fashion without applying for the same before the department. Shri Arun Kumer Khemka one of such broker as well as Direcor of M/s. Globe Stock & Securities Ltd. vide his statement u./s 132(4) recorded in course of search has admitted that he had received cash from Maithan group and sent cheques in the grab of capital gain for a commission of 2% including expenses and the STT. The list of cases recorded by him includes the name of the assessee. Sri Subhas Chandra Agarwalla by a statement u/s 132(4) accepted the statement of Shri Arun Kumar Khemka (a broker having 40 companies) and also accepted the payment of commission of 2% for creating bogus LTCG. It is, therefore, clear that the assessee purchased LTCG amounting to Rs. 10,89,474/-. The said amount of Rs. 10,89,474/- and commission @ 2% Rs. 21,789/- totaling Rs. 11,11,263/- was paid by the assessee by cash out of his undisclosed income therefore the said amount of Rs. 11,11,263/- is added back as her income from undisclosed sources." 3.1. On appeal the ld. CIT(A) has c....
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....and that their cumulative trades accounted for approximately 63% of the entire trades in the shares of the company at CSE during the relevant time. Ashish Stock Broking Private Limited is hereinafter referred to as the Broker for the sake of brevity. The Broker executed matched trades in the shares of the company. Besides, it was observed that the above mentioned stock brokers had executed similar trades in the shares, of Goenka Business and Finance Limited at CSE during the same period. Thus, it was inter alia observed that the Broker prima fàcie violated the provisions of Securities and Exchange Board of' India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (hereinafter referred to as the FUTP Regulations) and the provisions of Securities and Exchange Board of India (Stock Brokers and Sub- Brokers) Regulations. The circumstances such as common address, common directors etc. would fortify the inference that there was close nexus amongst the Broker, Mr. Sunil Kedia and some of the clients during the relevant period and the trades were executed in the said background. The totality of the facts of the ca....
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....as only Rs. 45 lakh. During the previous year the company had incurred a loss of Rs. 8.58 lakh. The company has an accumulated loss of Rs. 32 lakh at the end of financial year 2004-05. 2.18 As per the latest compliance report obtained from CSE, the company has not submitted the following documents/reports with the exchange: a) Share-holding pattern in respect of 1st and 3rd quarter for the year 2002-03 and 2nd quarter for the year 2005-06. b) Unaudited quarterly results in respect of the 1st, 2nd and 3rd quarter for the year 2002-03, 3rd quarter for the year 2003-04 and 2nd quarter for the year 2005-06. The company has not shown any interest in filing quarterly results with the company since 2002-03. 2.19. Analysis of the trading data revealed that primarily two brokers have traded in the script, the details of which are given below :- Sl.No. Member Name Total Volume % to Scrip Total 1. Ashish Stock Broking - D498 3533910 31.10 2. Sunil Kedia - D712 3539800 31.25 2.20 A further analysis of the trading data revealed that the above members have matching transactions among themsel....
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....the assessee and his family members are the main beneficiaries. Total Capital gain of Rs. 5,59,12,981/ has hen earned by the assessee and his family members in share transactions of above three "penny stocks" Companies . The brokers/promoters of the tainted companies are not manipulating the prices of the shares for charity purposes. The said manipulation have been done with a specific purposes of aiding and abetting the interested parties in legitimizing the Capital Gain . It is a established rule that where it is not possible to obtain evidence which conclusively establish the dubious transaction , the case must be dealt with on reasonable probabilities and legal and factual inferences drawn from the proved facts. The Hon'ble Supreme Court in the case of Sumati Dayal v.CIT [1995] 214 ITR 810 has held that the genuineness of the transaction is to be determined on the basis of surrounding circumstances, human probabilities and the conduct of the connected parties. A transaction does not become genuine merely because a paper trail has been created. In the case under consideration, the assessee, having failed to test of human probabilities, was unable to prove the genuineness of the ....
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....e shares. The Ld. A.O. has claimed in the Asstt. Order that SEBI by its order dt.30.1 1.05 suspended the trading in shares of M/s Globe Stock and Securities Ltd. and also suspended the concerned Brokers viz. Ashish Stock Broking Pvt. Ltd., Sunil Kedia and Sanjoo Kabra. Except the evidences as stated above, the Ld. A.O. has not mentioned any other evidence either direct or circumstantial in his Asstt. Order for assessing the assessee's L.T. capital gain as her income from undisclosed source. 7. Before the Ld. CIT(A) the A.R. of the appellant submitted the details of LTCG along with all supporting evidences i.e. contract note supporting purchase / sale of shares, bank statement reflecting the transactions, Demat statements etc. before the Ld. A.O. But the Ld. A.O. disregarded all these evidences filed before him and treated the long-term capital gain as the assessee's income from undisclosed sources relying on the statements of Sri Arun Khemka and Sri Subhas Chander Agarwala which were subsequently retracted by them. It was also submitted by the A.R. of the assessee that during the course of Search conducted by the Deptt. in her residential / office premises no mate....
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....e has himself not disclosed any unaccounted income in his own Return. Taking into account all these facts, the alleged deposition u/s.132(4) of the I.T. Act reportedly made by Sri Agarwala cannot be used against the assessee. (b) The Ld. A.O. / CIT(A) have also claimed that in the course of a Survey (not Search), Sri Arun Khemka confirmed that he provided accommodation entries in the form of LTCG to various parties including the family members of Maithan Group on charging commission @ 2%. A copy of the alleged deposition of Sri Khemka was not given to the asessee nor the assesee was given an opportunity to cross-examine him. On this ground alone, the deposition of Sri Khemka cannot be used against the assessee. Secondly, it may please be noted that this deposition of Sri Khernka was recorded not in the course of Search u/s. 132 but while making a Survey u/s. 133A of the I.T. Act. Hence, the statement of Sri Khemka has not the legal sanction as in the case of deposition u/s.132(4) of the I.T. Act. It may be mentioned that as per Sec.292C of the I.T. Act, the Law allows the Deptt. to make presumptions as to assets, Books of Accounts etc. found in the course of not only....
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....ed the loss as bogus mainly on the ground that the SEBI suspended the Brokers Promod Kumar Kothari and M/s D.B. & Co. for price rigging and manipulation of shares. But the Ld. CIT(A) allowed the claim of the assessees relying on the documentary evidences e.g. Contract notes showing sales and purchases of the shares, their Demat Accounts, Bank statement etc. He observed that the Assessing Officer could not produce any evidence to show that the assessees as investors were party to manipulation and price rigging of shares in the Calcutta Stock Exchange and the fact that the transactions entered into by the assessees were not cancelled by Calcutta Stock Exchange in view of suspension of the Share Brokers by SEBI. Against the orders of the Ld. CIT(A) allowing relief to the assessee, the Deptt. filed appeals before the Hon'ble Tribunal. While dismissing the Revenue's appeals, the Tribunal observed that the assessees filed detailed reply and evidences and materials before the A.O. supported by copies of purchase bills and Contract notes, copies of relevant transaction statements, copies of bank statements, evidence of payments and the A.O. has not doubted any of the documentary e....
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....jai Marasu reported in 247-ITR-465 wherein it was held that - it is proper for the A.O. to allow the appellant the opportunity to examine the witness and then cross examine them to ascertain the veracity of their different averments at different stages. In the instant case also, the assessee has produced necessary documentary evidences in support of her share transactions by way of Contract notes / bills, bank statements, Demat statement, the genuineness of which have not been disputed by the Ld. A.O. The assessee was also not given copies of deposition recorded from Sri Subhas Chander Agarwala or Sri Arun Khemka nor she was given any opportunity of cross examining them. It may be mentioned that in his remand report to the Ld. CIT(A), the Ld. A.O. claimed that copies of depositions of Shri Agarwalla and Khemka were furnished to the assessee. But in his reply to the remand report, the A/R of the assessee stoutly denied it and requested the Ld. A.O. to produce evidence of supplying copies of the depositions. 11. From the discussion above, it is clear that the retracted depositions of Sri Subhas Chander Agarwala and Sri Arun Khemka may create only a suspicion but the....
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.... 75.90 64.70 70.50 20.03.2003 322420 116 60.00 61.45 52.45 52.45 22.03.2003 214009 132 61.00 61.00 52.00 52.00 26.03.2003 192301 27 40.60 47.60 40.60 40.60 08.04.2003 15000 3 30.20 31.50 30.20 31.50 09.04.2003 5400 5 29.00 30.00 29.00 30.00 10.04.2003 40477 10 32.00 32.35 31.50 32.35 01.10.2003 30100 4 10.50 10.50 10.50 10.50 22.10.2003 28603 14 12.10 12.10 10.50 12.05 01.12.2003 46001 13 8.00 9.00 8.00 9.00 15.10.2004 42001 17 178.00 185.00 170.00 170.00 01.11.2004 43000 24 188.00 189.00 188.00 188.00 02.11.2004 31000 25 189.00 189.00 188.50 189.00 M/s. Shree Nidhi Trading Co.Ltd. 16.11.2004 81100 17 6.00 6.00 6.00 6.00 16.12.2004 45850 18 20.00 22.80 19.90 22.80 22.12.2004 30000 10 30.20 30.20 30.00 3....
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.... 166.00 165.90 166.00 Shri Subodh Agarwalla On comparison of the above table with that of the one which were analysed by the ld. CIT(A) and the SEBI report which was recorded in the impugned order by the ld. CIT(A), it is observed that the SEBI has analysed the transactions for the period April, 2005 to November, 2005 in respect of M/s. Globe Stocks and securities Ltd. only and nowhere they have mentioned in respect of share transactions of M/s.Nidhi Trading Co. Ltd. and M/s. Offshore Finvest Ltd.. But however, in the case of the assesses the revenue has disbelieved the long term capital gain gained by the assessee as well as family members of the assessee. In respect of M/s. Nidhi Trading Ltd. and M/s. Offshore Finvest Ltd along with M/s.Globe Stocks and Securities Ltd. As regarding M/s. Globe Stocks and Securities Ltd. also the period of investigation by the SEBI is for the period April, 2005 to November, 2005 whereas the assessee and her family members has made the transactions in the shares of M/s. Globe Stocks and securities Ltd. much prior to April, 2005 which is evident from the above table as well as the ld. CIT(A)'s analysis. From this fact it i....
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.... Rs.75.90 to 12.03.2003 22.03.2003 2003-04 to -do- 18,000/ to Rs.12.05 1.10.03 14.10.2003 Smt. Rita Devi 40,000/ Rs.5.05 6.02.2002 -do- 13,500 Rs.31 to Rs.32.80 11.04.2003 4.04.2003 Rs.3,63.295/- to 2004-05 Rs.10.45 18,000 Rs.178 to Rs.189/- to 15.10.2004 19.11.2004 to Rs.30,88,400/- 2005-06 Rs.5 to 20,500/ Rs.43 to Rs. 10,89,474/- 18,500 Rs. 10.45to Rs.74.90 20.03.2003 26.03.2003 2003-04 to 19,500 Rs.30 to Rs.5,04,640/ Rs.31.50 08.04.2003 10.04.2003 2004-05 to 18,500/Rs.178 to Rs.31,82,115/- Rs.12.05 30.9.03 1.12.2003 Smt. Sarita Devi 37,000/ Rs.5 Rs.5.05 6.02.2002 Rs.188.50 to 15.10.04 2.11.2004 Rs.74.90 24.03.03 28.03.2003 2005-06 to to 27,000/Rs.39.50 to Rs. 12,65,830/- 10,000/ Rs.32 11.04.03 15.04.2003 2003-04 to R.2,69,100/ to 2004-05 18,500/Rs. 10,45 to 18,500/ Rs.177 to Rs.32,70,685/- -do- Rs.13 30.09.03 23.10.03 Rs.188 to 28.10.04 09.11.04 2005-06 to Smt. Sheela Devi 39,000 Rs.5.02 to 39,000/ Rs.39.50 to Rs.17,49,500/ Rs.5.5 Rs.74 2003-04 6....
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....0.10.03 1.12.2003 Rs.166 to 29.11.04 04.01.2005 2005-06 to Sri Subash Chandra 12,000 Rs.4.40 to 12,000/Rs.159.70 Rs.10,40 to Rs. 162.50 Rs. 18.32.390/ 2005-06 Agarwalla 05.11.03 to 2.12.04 to 1.12.2003 3.12.2004 M/s Nidhi Trading Co. Ltd. Shares/@ L.T.C.G./A/Y Date of Sale 6000/ Rs.158.95 to Rs.9.16.602/ Name of the No.of shares/Date No. of assessee of purchase Shri Prahalad Rai 6,000/ Rs.6 Aggarwala 16.11.2004 Rs.159 18.12.2006 20.12.2006 Smt. Rita Devi 5000/ Rs.6 5000/ Rs.160.40 16.11.2004 28.11.05 -do- 5000/ Rs.20.20 to 5000/ Rs.158.95 Rs.30.58 16.12.04 24.12.04 Smt. Sarita Devi 8000/ Rs.6 Rs.30.25 16.11.04 27.12.04 2007-08 to 16.11.06 to 4.01.07 to Rs.7,71,050/- 2006-07 Rs.6,61,820/- 2007-08 to 8000/ Rs. 158 to Rs.11,47,825/- Rs.159 to 17.11.06 02.01.2007 2007-08 to Smt. Sheela Devi Smt. Agarwalla -do- 8500/ Rs.6.15 to 8500/ Rs.158.95 to Rs. 12,58,090/- Rs.30.30 17.11.04 27.12.04 Subodh 5000/ Rs.6.30 17.11.2004 Rs.159.95 to 6.12.06 to 2.3.07 5000/- Rs.160.20 ....
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....rs Opening High Low rate Closing Transaction Rate rate rate 06.02.2002 168350 26 4.85 5.25 4.85 5.00 12.03.2003 216254 101 64.70 75.90 64.70 70.50 24.03.2003 241900 58 56.15 56.15 47.90 47.90 23.10.2003 28603 14 12.10 12.10 10.50 12.05 27.03.2003 200400 48 37.40 43.60 37.40 37.40 15.04.2003 15000 3 32.00 32.00 31.50 32.00 09.10.2003 41000 5 9.00 10.45 9.00 10.45 14.10.2003 39000 13 11.25 11.25 11.25 11.25 28.10.2004 35500 12 188.50 189.00 188.00 188.65 29.10.2004 14500 12 188.00 188.00 187.35 187.35 09.11.2004 22400 8 188.00 190.00 180.00 189.00 M/s.Shree Nidhi Trading Co.Ltd. 16.11.2004 81100 17 6.00 6.00 6.00 6.00 27.12.2004 77000 15 31.00 31.00 30.05 30.05 21.12.2006 4700 10 158.95 159.00 158.95 159.00 26.12.2006 10000 15 159.00 159.00 158.95 159.00 27.12.2006 13700 24 159.00 159.00 158.95 159.00 29.12.2006 9100 12 158.95 159.00 158.95 158.95 02.01.....
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.... 216254 101 64.70 75.90 64.70 70.50 20.03.2003 322420 116 60.00 61.45 52.45 52.45 22.03.2003 214009 132 61.00 61.00 52.00 52.00 26.03.2003 192301 27 40.60 47.60 40.60 40.60 27.03.2003 200400 48 37.40 43.60 37.40 37.40 09.10.2003 41000 5 9.00 10.45 9.00 10.45 06.12.2004 17800 8 190.00 190.00 190.00 190.00 08.12.2004 41400 21 189.50 190.00 187.85 189.50 10.12.2004 36000 19 189.60 190.00 187.65 187.65 M/s. Shree Nidhi Trading Co.Ltd. 17.11.2004 20000 4 6.15 6.55 6.15 6.55 16.12.2004 45850 18 20.00 22.80 19.90 22.80 27.12.2004 77000 15 31.00 31.00 30.05 30.05 07.12.2004 9100 12 158.95 159.00 158.90 158.90 11.12.2006 12600 20 158.95 159.00 158.95 159.00 09.02.2007 10000 18 159.00 159.00 158.95 158.95 23.02.2007 5800 11 158.95 159.00 158.95 159.00 02.03.2007 5500 9 158.95 159.00 158.95 159,00 M/s. Offshore FInvest Ltd. 22.11.2004 35400 32 153.50 161.10 153.50....