TaxTMI 
TaxTMI 
2011 (7) TMI 1295
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....e 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 the A.O. in fully relying on the alleged confessionary statements of third p....
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.... 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 of high profit in near future. There is no sufficient reason for rise of price of its share. The SEBI vide ....
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....n 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 confirmed the same after taking into consideration the various submissions made by the assessee. The ld. CIT(A) in order to reach a reasonable conclusion ....
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....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 case and the modus operandi under which the said matched trades were executed, would only lead to the conclusion that the said trades were the culmination of a pre-determined and well e....
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....atest 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 themselves. The extent of such transactions is given in the following table: Table 7 : Trading data of two brokers - matched transactions Sl.No. Name of the member Ashish % Sunil Kedia % Sanju Kabra % 1. Ashish Stock Broking- D498 0 0.00 3484800 98.92 10000 0.2....
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....een 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 share transactions. Considering the facts of the case , the surrounding circumstances as discussed above, and on a preponderance of probabilities no other conclusion could be drawn but that the huge capital gains earned by the assessee was not a natural windfall but a meticulously planned shower for which the assessee has paid price more and above the disclosed ....
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....is 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 material whatsoever was found relating to the share transactions or any undisclosed income of any nature. The A.R. of the appellant also pointed out that as per the CBDT Instructions in F No. 286/2/2003/TT(INV) dt. 11 .3.03 the confessional statement recorded in the course of the Search has very little evidentiary value unless it is supported by other documentary evidences. It was further submitted that an asse....
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....es 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 Search u/s.132 but also Survey u/s. 133A. But this legal presumption has not been extended in respect of deposition recorded u/s.133A. Hence the deposition recorded u/s.133A has not in the same legal backing as in the case deposition made u/s. 132(4) of the I.T. Act. Even otherwise, as discussed in the Asstt. order / Appellate order Sri Khemka reportedly provided accommodation entries to the members of Maithan Group. This was ....
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....e 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 evidences submitted before him by the assessees. The A.O. also had not made any investigation from the concerned parties from whom sales and purchases of the shares were made. The Hon'ble Tribunal has pointed out that the share transactions were routed through the Brokers who were authorized at the relevant time to trade in the shares and pointed out that if any Broker is suspended from trading in shares subsequently the assessees cannot be faulted ....
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....ich 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 these are not enough evidence for holding that the LTCG disclosed by the assessee was not genuine. The Ld. A.O./CIT(A) have also referred to the SEBI's order against the Share Brokers for alleged manipulation in share prices. A similar issue came up in the case of DCIT-vs-M/s Octal Credit Capital Co. Ltd. referred to above. But the Hon'ble C' bench Kolkata did not accept it as sufficient reason for treating the share transaction as not genuine. The Deptt. also failed to prove ....
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....nbsp;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 30.20 24.12.2004 19200 13 30.40 30.55 30.00 30.00 27.12.2004 77000 15 31.00 31.00 30.05 30.05 28.11.2005 21550 17 160.75 160.75 160.40 160.60 16.11.2006 8000 11 159.00 159.00 158.85 158.90 22.11.2006 9400 17 158.95 158.95 158.90 158.95 04.01.2007 9300 14 158.95 159.00 158.95 159.00 M/s. Offshore FInvest Ltd. 31.10.2003 5000 1 3.70 3.70 3.70 3.70 15.12.2004 33500 23 166.80 174.00 165.50 167.00 Shri Prahlad Rai Agarwalla M/s.Globe Stocks and Securities and Securities Ltd. Date of Transaction Volume Traders Opening Rate High rate Low rate Closing rate 06.02.2002 168350 26 4.85 5.25 4.85 5.00 15.02.2002 56775 28 10.70 10.70....